What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-12 compared with 2024-03-25 · 311 added, 400 removed, 1258 unchanged (36% of the section changed)

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Shareholders, Board of Directors, and Audit Committee

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee Bank7 Corp.

Oklahoma City, Oklahoma

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We have audited the accompanying consolidated balance sheets of Bank7 Corp.

(“Company”) as of December 31, 2023 and 2022, the related consolidated statements of

comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements

of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the

consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of

the years in the three-year period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Notes 1 and 6 to the financial statements, the Company changed its method of accounting for loans and the allowance for credit losses in 2023 due

to the adoption of Accounting Standards Codification Topic 326, Financial Instruments – Credit Losses .

consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in

the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control

over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2025 expressed an unqualified opinion thereon .

Basis for Opinion

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based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with

respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance

Those standards require that we plan and perform the audits to obtain reasonable assurance

about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing

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Shareholders, Board of Directors, and Audit Committee

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to

be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements which was communicated or is required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical

audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts

or disclosures to which they relate.

The communication of

critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the

accounts or disclosures to which they relate.

Allowance for Credit Losses – Loans

The Company adopted Topic 326 effective January 1, 2023.

The Company’s loan portfolio totaled $1.34 billion as of December 31, 2023 and the

allowance for credit losses – loans (“ACL") was $19.7 million.

As more fully described in Notes 1 and 6 to the financial statements, the ACL is a contra-asset valuation account, calculated in accordance with Topic 326, that is deducted from

the amortized cost basis of loans to present the net amount expected to be collected.

The amount of the ACL represents management’s best estimate of current expected credit losses on loans considering all available information from internal and

external sources, relevant to assessing exposure to credit loss over the contractual term of the loans.

As discussed in Notes 1 and 6 to the consolidated financial statements, the Company’s total loans and associated allowance for credit losses (ACL) were $1.4

billion and $17.9 million, respectively, as of December 31, 2024.

The amount of the ACL represents management’s best estimate of current expected credit losses on loans considering all available information from internal and external sources,

relevant to assessing exposure to credit loss over the contractual term of the loans.

Loans with similar risk characteristics are aggregated into homogenous segments for assessment.

Reserve factors are based on estimated

probability of default (“PD”) and loss given default (“LGD”) for substantially all segments.

The estimates include economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables

that have a statistical relationship.

Management qualitatively adjusts its model results for risk factors such as that were not considered within the modeling processes but were still relevant in

assessing the expected credit losses within the loan pools.

In some cases, management determined that an individual loan exhibited unique characteristics which differentiated the loan from other loans with the identified loan pools.

cases, the loans were evaluated for expected credit losses on an individual basis and excluded from the collective evaluation.

Auditing management’s estimate of the ACL involved a high degree of subjectivity due to the nature of the qualitative factor adjustments included in the ACL and

complexities of the PD and LGD model.

Management’s identification and measurement of the qualitative factor adjustments are highly judgmental and had a significant effect on the ACL.

The primary audit procedures we performed as of December 31, 2023 to address this critical matter included:

Obtained an understanding of the Company’s process for establishing the ACL

Evaluated and tested the design of internal controls over the reliability and accuracy of data used to calculate and estimate the components of the ACL

Loan data completeness and accuracy

Grouping of loans by segment

Model inputs including PD, LGD, and discounted cash flow

Model assumptions

Establishment of qualitative factors

Loan risk ratings

Tested the completeness and accuracy of the data utilized in the ACL

Tested the model’s mathematical accuracy

Evaluated the relevance and reliability of data and assumptions used in the estimate

Evaluated the qualitative and economic forecast adjustments to the historical loss rates, including assessing the basis for the adjustments and the

reasonableness of the significant assumptions

Evaluated credit quality trends in delinquencies, non-accruals, charge offs, and loan risk gradings

Tested the internal loan review function and evaluated the reasonableness of loan grades

Shareholders, Board of Directors, and Audit Committee

Evaluated the reasonableness of specific allocations associated with individually evaluated loans

Evaluated the overall reasonableness of the ACL and compared to trends identified within peer group

Evaluated the reasonableness of methodology utilized by a third party in determining loss driver economic performance variables

Evaluated the accuracy and completeness of Topic 326 disclosures in the financial statements

Other Assets – Oil and Gas Property

The value of the Oil and Gas Property was $13.5 million at December 31, 2023.

The asset is included in other assets on the consolidated balance

As more fully described in Note 1 to the financial statements, the Oil and Gas Property held by the Company is accounted for under the successful efforts method of accounting.

The fair value of proved properties (no unproved properties are held) are measured using valuation techniques that convert future cashflows to a single

discounted amount.

To estimate the value of reserves, management employs a specialist who makes significant estimates using significant inputs and assumptions including forecasting timing, volume of production, and corresponding rate of

production decline for producing properties.

Auditing management’s estimate of fair value of proved properties involved a high degree of subjectivity and complexity due to the nature of inputs and

The changes in certain inputs and assumptions which are subjective in nature could have a significant impact on depletion expense and the fair value of the Oil and Gas Property.

The primary audit procedures we performed as of December 31, 2023 to address this critical matter included:

Obtained an understanding of the Company’s process for preparing the oil and gas reserve estimates

Identified inputs and assumptions that were significant to the period end determination of proved reserve volumes and tested management’s process of

determining the significant inputs and assumptions, as follows:

Assessed the reasonableness of operating cost inputs by comparing the forecasted amount to current year actual costs

Assessed the reasonableness of forecasted capital expenditures by comparing to management’s planned future investment

Assessed the reasonableness of forecasted production estimates by (i) comparing forecasted production amounts to actual results and (ii) comparing

forecasted production amounts in the current year reserve report to the actual historical production amounts in the current year

Vouched the working and royalty interests used in the reserve report to underlying ownership records

Assessed the reasonableness of pricing inputs and market differentials by comparing to third-party sources and actual results in the current year

For substantially all loan segments, the Company uses the discounted cash flow method to estimate expected losses.

For each loan segment, the Company generates

cash flow projections at the instrument level adjusting payment expectations for estimated prepayment speed, curtailments, probability of default, and loss given default.

Management qualitatively adjusts its model results for risk factors not considered within the modeling processes but still relevant in assessing the expected

credit losses within the loan pools.

Auditing management’s estimate of the ACL involved a high degree of subjectivity due to management’s identification and measurement of the qualitative factor

adjustments being highly judgmental.

The primary procedures we performed related to this critical audit matter included:

Obtained an understanding of the Company’s process for establishing the qualitative adjustment.

Evaluated and tested the design and operating effectiveness of controls over the establishment of qualitative factors.

Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the reasonableness of the significant assumptions.

/s/ Forvis Mazars, LLP

We have served as the Company’s auditor since 2013.

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shares issued and outstanding:

9,197,696 and 9,131,973 at December 31, 2023 and December

31, 2022 respectively

9,390,211 and 9,197,696 at December 31,

2024 and December 31, 2023, respectively

Additional paid-in capital

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Consolidated Statements of Comprehensive Income

(Dollar amounts in thousands, except per share data)

(Dollar amounts in thousands, except par share data)

Year ended December 31,

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Other comprehensive income (loss)

Unrealized gains (losses) on securities, net of (tax expense) tax benefit of ($ 1.0

million), $ 2.8 million, and $ 0 for the years ended December 31, 2023 , 2022 , and 2021 ,

Reclassification adjustment for realized loss included in net income net of tax of $ 4 ,

$ 31 , and $ 0

for the years ended 2023 , 2022 , and 2021 , respectively

Unrealized gains (losses) on securities, net of tax (expense) benefit of ($ 335 ),

($ 1 million), and $ 2.8

million for the years ended December 31, 2024 , 2023 , and 2022 , respectively

Reclassification adjustment for realized losses included in net income net of tax of $ 1 ,

for the years ended December 31, 2024 , 2023 , and 2022 , respectively

Other comprehensive

income (loss)

Comprehensive Income

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Consolidated Statements of Shareholders Equity

(Dollar amounts in thousands, except per share data)

(Dollar amounts in thousands, except par value)

Year Ended December 31,

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Balance at beginning of period

Shares issued for restricted stock units

Net shares purchased and retired for restricted stock units and issue for stock options

Balance at end of period

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Balance at beginning of period

Cumulative effect of change in accounting principle, net of tax of $ 178 (Note 1)

Cumulative effect of change in accounting principle, net of tax of $ 178

Cash dividends declared ($ 0.89 , $ 0.74 and $ 0.52 per share for

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Balance at end of period

Accumulated Other Comprehensive Income(Loss)

Accumulated Other Comprehensive Loss

Balance at beginning of period

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Provision for credit losses

Amortization of premiums and discounts on securities

(Accretion)Amortization of premiums and discounts on securities

Gain on sales of loans

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Investing Activities

Net cash (paid) received for acquisition

Net cash paid for acquisition

Maturities of interest-bearing time deposits in other banks

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Change in nonmarketable equity securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Financing Activities

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Common stock issued for restricted stock units

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Net Increase/(Decrease) in Cash and Due from Banks

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Measurement period goodwill adjustment

Supplemental Disclosure of Investing Activities

Cash consideration for acquisition

Fair value of assets acquired in acquisition

Fair value of liabilities assumed in acquisition

See accompanying notes to Consolidated Financial Statements

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Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, valuation

of other real estate owned, other-than-temporary impairments, income taxes, goodwill and intangibles and fair values of financial instruments.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, income

taxes, goodwill and intangibles and fair values of financial instruments.

Reclassifications

Certain reclassifications have been made to the 2022 and 2021 consolidated financial statements to conform to classification used for December 31, 2023.

These reclassifications had no impact on net

income, shareholders’ equity or cash flows as previously reported.

Certain reclassifications have been made to the 2022 consolidated financial statements to conform to classification used for December 31, 2023.

These reclassifications had no impact on net income,

shareholders’ equity or cash flows as previously reported.

Cash Equivalents

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents.

equivalents may include deposits held at Federal Home Loan Banks, which are not insured by the FDIC.

Interest-Bearing Time Deposits in Other Banks

Interest-bearing time deposits in other banks totaled $ 17.7 million and $ 5.5 million at December 31, 2023 and December 31, 2022

respectively, and have original maturities generally ranging from three months to five years .

Interest-bearing time deposits in other banks totaled $ 6.7 million and $ 17.7 million at December 31, 2024 and December 31, 2023 respectively, and have

original maturities generally ranging from three months to five years .

Available-for-Sale Debt Securities

Available-for-sale debt securities are carried at fair value with unrealized gains and losses excluded from earnings and reported separately in

other comprehensive income.

The Company currently has no securities designated as trading or held-to-maturity.

Interest income is

recognized at the coupon rate adjusted for amortization and accretion of premiums and discounts.

Discounts are accreted into interest income over the estimated life of the related security and premiums are amortized against income to the earlier of

the call date or weighted average life of the related security using the interest method.

Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

They are included in

noninterest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income.

other comprehensive income, except for the credit-related impairment, as discussed in the following section.

The Company currently has no

securities designated as trading or held-to-maturity.

Interest income is recognized at the coupon rate adjusted for amortization and accretion of premiums and discounts.

Discounts are accreted into interest income over the estimated life of the

related security and premiums are amortized against income to the earlier of the call date or weighted average life of the related security using the interest method.

Gains and losses on the sale of securities are recorded on the trade date and are

determined using the specific identification method.

They are included in noninterest income or expense and, when applicable, are reported as a reclassification adjustment in other comprehensive income(loss).

Notes to Consolidated Financial Statements

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On January 1, 2023, the Company was required to adopt a new credit loss methodology, the Current Expected Credit Losses (“CECL”)

See Note 1, Recent Accounting Pronouncements, for additional information regarding adoption.

Allowance for Credit Losses - AFS Securities - The Company evaluates its available-for-sale securities portfolio on a

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For debt securities the Company

does not intend to sell or is not more likely than not required to sell, prior to expected recovery of amortized cost basis, the credit portion of the impairment is recognized through earnings, with a corresponding entry to an allowance for

does not intend to sell and is not more likely than not required to sell, prior to expected recovery of amortized cost basis, the credit portion of the impairment is recognized through earnings, with a corresponding entry to an allowance for

credit losses, and the noncredit portion is recognized through accumulated other comprehensive loss.

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Past-due status is based on contractual terms of the loan.

In all cases, loans are placed on nonaccrual or

charged off at an earlier date if collection of principal or interest is considered doubtful.

In all cases, loans are placed on

nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off are reversed against interest income.

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On January 1, 2023, the Company was required to adopt a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology.

Note 1, Recent Accounting Pronouncements, for additional information regarding adoption.

The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to

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LGD rates generally reflect the historical average net loss rate by loan pool.

Expected cash flows are further adjusted to incorporate the impact of loan prepayments which will vary by loan segment

and interest rate conditions.

In general, prepayment rates are based on observed prepayment rates occurring in the loan portfolio and consideration of forecasted interest rates.

Expected cash flows are further adjusted to incorporate the impact of loan prepayments which will vary by loan

segment and interest rate conditions.

In general, prepayment rates are based on peer group benchmark reporting of observed prepayment rates occurring in the loan portfolios of the peer group, and consideration of forecasted interest rates.

Forecast Factors

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funded over its estimated life and applies the same estimated loss rate as determined for current outstanding loan balances by segment.

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation.

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Any losses on premises identified to be sold are charged to operating expense.

Certain operating leases are included as right of use lease assets in

interest receivable and other assets on the consolidated balance sheet and a related lease liability is included in interest payable and other liabilities on the consolidated balance sheet.

Right of use assets represent the Company’s right to

use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

The lease liability is measured as the present value of the unpaid lease payments, and the right

of use assets value is derived from the calculation of the lease liability.

To calculate the discount rate for each lease, the Company uses the rate implicit in the lease if available, otherwise an appropriate Federal Home Loan Bank (“FHLB”)

advance borrowing rate is used that correlates with the term of the lease.

Non-Marketable Equity Securities

Non-marketable equity securities consist primarily of Federal Home Loan Bank of Topeka (FHLB) stock and Federal Reserve Bank of Kansas City

stock and are required investments for financial institutions that are members of the FHLB and Federal Reserve systems.

Non-marketable equity securities consist primarily of Federal Home Loan Bank of Topeka stock and Federal Reserve Bank of Kansas City stock and

are required investments for financial institutions that are members of the FHLB and Federal Reserve systems.

The required investment in common stock is based on a predetermined formula, carried at cost and evaluated for impairment.

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recognized during the years ended December 31, 2024, 2023, and 2022.

Notes to Consolidated Financial Statements

Foreclosed Assets Held for Sale

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Revenue and expenses from operations and changes in the valuation allowance are included in current operations.

Notes to Consolidated Financial Statements

Business Combinations

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The excess of fair value of the consideration transferred over the acquisition date fair value of net assets acquired is recorded as goodwill.

Further, one-time extraordinary expenses related to the acquisition are expected to be incurred.

Asset Acquisition

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Intangible assets totaled $ 878 ,000

million and goodwill, net of accumulated amortization totaled $ 8.5 million for the year ended December 31, 2023, compared to intangible

assets of $ 1.3 million and goodwill, net of accumulated amortization of $ 8.6 million for the year ended December 31, 2022.

The decrease in intangible assets is due to amortization of core deposit intangibles and the decrease in goodwill recognized is tax

provision adjustments that relate to the acquisition of Watonga Bancshares, Inc.

on December 9, 2021.

and goodwill, net of accumulated amortization totaled $ 8.5 million for the year ended December 31, 2024, compared to intangible assets

of $ 1.0 million and goodwill, net of accumulated amortization of $ 8.5 million for the year ended December 31, 2023.

Goodwill resulting from a business combination represents the excess of the fair value of the consideration transferred over the fair value of

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Such assets are periodically evaluated as to the recoverability of their carrying values.

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial

performance is evaluated on a Company-wide basis.

Discrete financial information is not available other than on a Company-wide basis.

Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The Company’s chief operating decision-maker (“CODM”) is the Chief Executive Officer.

Operating segments are defined as components of a business

about which separate financial information is available and evaluated regularly by the CODM in deciding how to allocate resources and assess performance.

While the CODM monitors the revenue streams of the various products and services offered by

the Bank, the Company’s operations are managed and financial performance is evaluated on a Company-wide basis as a single reportable operating segment, which is the Bank.

Discrete financial information, with a full allocation of revenue, costs, and capital from key corporate functions, is not available at a level other than on a Company-wide basis.

Although the CODM has some limited financial information about the

Company’s various financial products and services, this information is not complete and is insufficient for making resource allocation decisions or performance assessments at a more granular level.

Therefore, management considers all financial

service operations to be aggregated within one reportable operating segment, the Bank, and evaluates financial performance on a

company-wide basis using net income as reported on the Consolidated Statement of Income.

The measure of segment assets is total assets, as reported on the Consolidated Statements of Condition.

The CODM uses net income to monitor budget versus

actual results and in the determination of allocating resources across the Company.

The Company’s single reportable segment, the Bank, generates revenues primarily from interest income from financial instruments and non-interest income and service charges on deposit accounts.

There are no intra-entity sales or transfers within

Management continues to evaluate the Company’s business units for potential separate reporting in the future as facts and circumstances evolve.

Notes to Consolidated Financial Statements

Stock-based Compensation

The Company recognizes stock-based compensation as

salaries and employee benefits expense in the consolidated statements of comprehensive income based on the fair value of the Company’s stock options and restricted stock units (“RSU’s”) on the measurement date, which, for the Company, is the

date of the grant.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model and was based on certain assumptions including risk-free rate of return, dividend yield, stock price

volatility and the expected term.

The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of grant.

The fair value of each option and RSU is expensed over its vesting period.

The Company uses a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements tax positions taken or

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federal or state tax examinations for years before 2021.

Notes to Consolidated Financial Statements

Comprehensive Income

Comprehensive income includes all changes in stockholders’ equity during a period, except those resulting from transactions with stockholders.

Comprehensive income includes all changes in shareholders’ equity during a period, except those resulting from transactions with shareholders.

Besides net income, other components of the Company’s comprehensive income includes the after tax effect of changes in the net unrealized gain/loss on debt securities available-for-sale.

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In addition to lending and related activities, the Company offers various services to customers that generate revenue.

Contract performance

typically occurs in one year or less.

Incremental costs of obtaining a contract are expensed when incurred when the amortization period is one year or less.

Contract performance typically occurs in one year or less.

Incremental costs of obtaining a contract are expensed when incurred

when the amortization period is one year or less.

Service and transaction fees on depository accounts

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typically received in the period the transactions occur, or in some cases, within 90 days of the service period.

Notes to Consolidated Financial Statements

Interchange Fees

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Interchange fees are included with noninterest income and recorded net of related expenses as the Bank acts as an agent, introducing the customer transactions to the

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations

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The oil and gas related accounts payable balance is included in “Interest payable and other liabilities” on the consolidated balances sheets.

Notes to Consolidated Financial Statements

Revenue Recognition

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assessed by governmental authorities on oil, natural gas and NGL sales are included in “Other” noninterest expense on the consolidated statements of comprehensive income.

Notes to Consolidated Financial Statements

Oil and Gas Property (Successful Efforts Method of Accounting)

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are amortized by producing unit, based on proved developed producing reserves.

Depletion, depreciation, and amortization expense related to proved oil and gas properties was $ 3.6 million for the year ended December 31, 2023, and is included in “Other” noninterest expense on the consolidated statements of comprehensive income.

Depletion, depreciation, and amortization expense related to proved oil and gas properties was $ 2.7 million and $ 3.6 million for the years ended December 31,

2024 and December 31, 2023, respectively, and is included in “Other” noninterest expense on the consolidated statements of comprehensive income.

Capitalized costs are evaluated for impairment in accordance with FASB ASC Topic 360, Accounting for the Impairment or Disposal of Long-Lived Assets (ASC Topic 360), whenever events or changes in circumstances indicate that an asset’s carrying

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consolidated statements of comprehensive income.

As of December 31, 2023, the Company has a single contract for oil swaps that settle monthly from January to December 2024.

The total notional barrels

under this contract are 63,000 barrels at a fixed swap price of $ 73.25 per barrel.

The estimated fair value of this contract utilizing future price estimates is $ 0.1 million and are included in “Interest receivable and other assets” on the consolidated balance sheets.

For the year ended December 31, 2023, the Company recognized an unrealized gain

of $ 0.1 million.

With respect to its derivatives, the Company recognized an unrealized loss of $ 0.1 million and an unrealized gain of $ 0.1 million for the

years ended December 31, 2024 and December 31, 2023, respectively, and recognized a realized loss of $ 0.2 million and $ 0 for the years ended December 31, 2024, and December 31, 2023, respectively.

Notes to Consolidated Financial Statements

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Standards Adopted During Current Period:

In March 2022, the FASB issued ASU No.

2022-02, “Financial

Instruments – Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures.” On January 1, 2023, the Company adopted ASU 2022-02, which eliminates the accounting guidance for troubled debt restructurings in Accounting

Standards Codification (“ASC”) 310-40, “Receivables -Troubled Debt Restructurings by Creditors” for entities that have adopted the current expected credit loss model introduced by ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326),

Measurement of Credit Losses on Financial Instruments.” ASU 2022-02 also requires that public business entities disclose current-period gross charge-offs by year of origination for financing receivables and net investments in leases within the

scope of Subtopic 326-20, “Financial Instruments—Credit Losses—Measured at Amortized Cost.

In June 2016, the FASB issued ASU No.

2016-13, “Financial

Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” On January 1, 2023 the Company adopted ASU 2016-13, which replaces the incurred loss methodology with an expected loss methodology that is referred

to as the current expected credit loss (“CECL”) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a

lessor in accordance with Topic 842 on leases.

In addition, Accounting Standards Codification (“ASC”) 326 made changes to the accounting for purchased loans and securities with credit deterioration and available-for-sale debt securities.

The Company adopted ASC 326 using the modified retrospective

method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Operating results for periods from January 1, 2023 are presented in accordance with ASC 326 while prior period amounts continue to be reported in

accordance with previously applicable standards and the accounting policies described in our 2022 Form 10-K.

The Company recorded a net decrease to retained earnings of $ 572 ,000, gross of $ 750 ,000 net of tax of $ 178 ,000, as of January 1, 2023 for the cumulative effect of adopting ASC 326, and the impact on our results of operations and cash flows was not

The Company has not recorded an allowance for credit losses against its available-for-sale securities, as the credit risk is not material.

The following table illustrates the impact of ASC 326 on the allowance for credit losses on the Company’s loans as of January 1, 2023 (dollars in thousands).

January 1, 2023

Under ASC 326

Impact of ASC

Construction & development

1 - 4 family real estate

Commercial real estate - other

Total commercial real estate

Commercial & industrial

Allowance for credit losses on loans

Allowance for credit losses on off-balance sheet credit exposures (unfunded

commitments), see Note (6) and Note (17)

Notes to Consolidated Financial Statements

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU

2023-07”), which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

The amendments in this update introduce a new requirement to disclose significant segment expenses regularly

provided to the chief operating decision maker, extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply Topic 280 in its entirety, permit more than one measure of segment profit or loss to

be reported under certain conditions and require disclosure of the title and position of the chief operating decision maker.

ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim

periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company has evaluated the impact of adopting ASU 2023-07 and concluded the impact to be immaterial on its consolidated financial position, results

of operations, or disclosures.

See Note 1 for the corresponding segments disclosure.

Standards Not Yet Adopted:

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 amendments are effective for fiscal years

beginning after December 15, 2025, including interim periods within those fiscal years.

The Company does not currently have any convertible debt instruments;

therefore, the Company does not expect the adoption of this ASU to have a material

impact on its consolidated financial position, results of operations, or disclosures.

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 position, results of operations, or disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU

2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid.

ASU 2023-09 requires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and

provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income by the applicable

statutory income tax rate).

ASU 2023-09 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company will complete an evaluation of the impact this

standard will have on its results of operations, financial position or disclosures.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment

Disclosures (“ASU 2023-07”), which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

The amendments in this update introduce a new requirement to disclose significant segment

expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply Topic 280 in its entirety, permit more than one measure of segment

profit or loss to be reported under certain conditions and require disclosure of the title and position of the chief operating decision maker.

ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15,

2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The adoption of ASU 2023-07 is not expected to have a material impact on the Company’s operations, financial position or disclosures.

Improvements to Income Tax Disclosures (“ASU 2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid.

requires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling

items is equal to or greater than 5 percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate).

ASU 2023-09 is effective for fiscal years, and interim periods within those fiscal years beginning after

December 15, 2024, with early adoption permitted.

The Company has evaluated the impact of adopting ASU 2023-09 and concluded that the adoption impact is not material as it will primarily result in expanded income tax disclosures in the notes to

the financial statements.

Notes to Consolidated Financial Statements

Legislative and Regulatory Developments

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PPP loans are fully guaranteed by the SBA and thus have a zero percent risk weight under applicable risk-based capital rules.

As of December 31, 2023, the Company had one PPP loan with balances totaling $ 2.0

million, and two PPP loans with balances totaling $ 2.6 million as of December 31, 2022.

The Company recognized $ 50 ,000 in fee

income during the year ended December 31, 2023, with $ 0 remaining to be recognized, as compared to $ 219 ,000 recognized and $ 50 ,000 to be

recognized as of December 31, 2022.

The Company had no PPP loans as of December 31, 2024.

As of December 31, 2023, the Company had one

PPP loan with a balance of $ 2.0 million.

The Company recognized $ 0 in fee income during the year ended December 31, 2024, with $ 0

remaining to be recognized, as compared to $ 50 ,000 recognized and $ 0 to be recognized as of December 31, 2023.

Company evaluated subsequent events through the date the consolidated financial statements were issued.

There were no subsequent events requiring recognition or disclosure.

Notes to Consolidated Financial Statements

Recent Events, Including Mergers and Acquisitions

On December 9, 2021, the Company’s largest shareholder sold approximately 1.1 million shares of stock pursuant to an S-3 registered secondary offering.

The Company incurred $ 423 ,000 in non-recurring expenses associated with the offering, which are included in noninterest expenses.

The effect of this purchase and related expenses was included in the consolidated

financial statement of the Company as of December 31, 2021.

Business Combinations

On December 9, 2021, the Company acquired 100 % of the outstanding equity of Watonga Bancshares, Inc.

(“Watonga”), the bank holding company for Cornerstone Bank, for $ 29.3 million in cash.

Immediately following the acquisition, Watonga was dissolved and Cornerstone Bank merged with and into Bank7.

A summary of the fair value of assets acquired and liabilities assumed from Watonga are as follows:

Estimated Fair Value

(in thousands)

Assets Acquired

Cash and cash equivalents

Available-for-sale debt securities

Federal funds sold

Premises and equipment

Core deposit intangible

Prepaid expenses and other assets

Total assets acquiried

Liabilities Assumed

Accounts payable and accrued expenses

Total liabilities assumed

Net assets acquired

Consideration transferred

Goodwill decreased $ 146 ,000

for the year ended December 31, 2023 related to tax provision adjustments.

As of the acquisition

date, the Company evaluated $ 117.3 million of net loans ($ 118.5 million gross loans less $ 1.2 million discount) purchased

in conjunction with the acquisition of Watonga Bancshares, Inc.

in accordance with the provisions of FASB ASC Topic 310-20, Nonrefundable Fees and Other Costs.

As of December 31, 2023, the net loan balance of the ASC Topic 310-20 purchased loans

is $ 48.4 million.

Upon acquisition, the fair values of assets

acquired and liabilities assumed were preliminary and based on valuation estimates and assumptions.

The accounting for business combinations require estimates and judgments regarding expectations of future cash flows of the acquired business,

and the allocations of those cash flows to identifiable tangible and intangible assets.

The estimates and assumptions underlying the preliminary valuations were subject to collection of information necessary to complete the valuations

(specifically related to projected financial information) within the measurement periods, which are up to one year from the acquisition date.

Adjustments to our estimates of purchase price allocation were made in the periods in which the

adjustments were determined, and the cumulative effect of such adjustments were calculated as if the adjustments had been completed as of the acquisition date.

As we are now outside of the measurement periods, no further adjustments will be

Notes to Consolidated Financial Statements

Summary of Unaudited Pro Forma Information

The following table presents unaudited pro-forma information as if the acquisition of Watonga had occurred on January 1, 2020.

This pro-forma

information gives effect to certain adjustments, including purchase accounting fair value adjustments, amortization of core deposit and other intangibles and related income tax effects and is based on our historical results for the periods

Transaction-related costs related to each acquisition are not reflected in the pro-forma amounts.

The pro-forma information does not necessarily reflect the results of operations that would have occurred had the Company acquired

Watonga at the beginning of fiscal year 2020.

Cost savings are also not reflected in the unaudited pro-forma amounts.

Actual from Acquisition

Pro-Forma for Year Ended December 31,

December 31, 2021

Net interest income

Non-interest income

Pro-forma earnings per share:

On October 31, 2023, the Company entered into an asset purchase and sale agreement, effective September 1, 2023 , to acquire proven oil and natural gas properties from HB2 Origination, LLC, which consisted of nine wells in formations in four

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The purchase price and related asset retirement obligations were allocated based on the relative fair values of the assets acquired and $ 1.7 million was allocated to proved leasehold costs while the remaining $ 15.4 million was allocated to “interest receivable and other assets” on the consolidated balance sheets.

As of December 31,

2024, the Company had oil and gas assets and related receivables of $ 12.1 million included in “interest receivable and other assets” on

the consolidated balance sheets, assets retirement obligations and oil and gas related liabilities of $ 0.9 million included in

“interest payable and other liabilities” on the consolidated balance sheets, oil and gas related revenues of $ 8.5 million included in

“Other” noninterest income on the consolidated statements of comprehensive income, and oil and gas related expenses of $ 4.8 million

included in “Other” noninterest expense on the consolidated statements of comprehensive income.

As of December 31, 2023, the Company had oil and gas assets and related receivables of $ 16.8 million included in “interest receivable and other assets” on the consolidated balance sheets, assets retirement obligations and oil and gas

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and 2022, respectively;

Restricted stock units outstanding of 156,186 , 0 , and 0 as of December 31, 2023, 2022, and

2021, respectively.

Restricted stock units outstanding of 0 , 156,186 , and 0 as of December 31, 2024, 2023,

and 2022, respectively.

Notes to Consolidated Financial Statements

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Total available-for-sale

There was one holding of securities of issuers in an

amount greater than 10% of stockholders equity at December 31, 2023, a

Treasury note with a fair value of $ 99.32 million .

As of December 31, 2024, there were no holdings of securities in an amount greater than

10% of stockholders equity.

As of December 31, 2023, there was one holding of securities of issuers in an amount greater than

10% of stockholders equity, a U.S.

Treasury note with a fair value

of $ 99.3 million .

The following table presents a summary of realized gains and losses from the sale, prepayment and call of debt securities for the year ended December 31, 2024 and

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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 December 31, 2023:

The following table details book value of pledged securities as of December 31, 2024 and December 31, 2023:

Year Ended December 31,

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million are not rated as of December 31, 2024 and December 31, 2023, respectively .

Our corporate debt securities are not rated.

Notes to Consolidated Financial Statements

Loans and Allowance for Loan Losses

Loans and Allowance for Credit Losses

A summary of loans at December 31, 2024 and December 31, 2023, are as follows (dollars in thousands):

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Included in the

commercial & industrial loan balances are $ 2.0 million and $ 2.6 million of loans that were originated under the SBA PPP program as of December 31, 2023 and December 31, 2022, respectively.

commercial & industrial loan balances are $ 0 and $ 2.0 million of loans that were originated under the SBA PPP program as of December 31, 2024 and December 31, 2023, respectively.

Notes to Consolidated Financial Statements

On January 1,

2023, the Company adopted ASU 2016-13, which replaces the incurred loss methodology for determining its provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model.

Note (1) for additional information regarding the factors that influenced the Company’s current estimate of expected credit losses.

Upon adoption, the allowance for credit losses was increased by $ 250 ,000 and $ 500 ,000 for loans and unfunded commitments,

respectively, with no impact to the consolidated statement of income.

Subsequent to the adoption of ASU 2016-13, the Company recorded a $ 21.2

million and ($ 36 ,000) provision for credit losses related to loans and unfunded commitments, respectively, for the twelve months

of 2023 utilizing the newly adopted CECL methodology.

The following table presents, by portfolio segment, the

activity in the allowance for credit losses for the years ended December 31, 2023 and 2022 (dollars in thousands):

On January 1, 2023, the Company adopted ASU 2016-13,

which replaces the incurred loss methodology for determining its provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model.

See Note (1) for additional information

regarding the factors that influenced the Company’s current estimate of expected credit losses.

Upon adoption, the allowance for credit losses was increased by $ 250 ,000 and $ 500 ,000 for loans and unfunded commitments, respectively, with no impact to the

consolidated statement of income.

Subsequent to the adoption of ASU 2016-13, the Company recorded a $ 21.2 million and ($ 36 ,000) provision for credit losses related to loans and unfunded commitments, respectively, for the twelve months of 2023 utilizing the newly

adopted CECL methodology.

The following table presents, by portfolio segment,

the activity in the allowance for credit losses for the years ended December 31, 2024, 2023, and 2022 (dollars in thousands):

Construction &

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Balance, beginning of period

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

Total Provision for Credit Losses

Construction &

Real Estate -

December 31, 2023

Balance, beginning of period

Impact of CECL adoption

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Notes to Consolidated Financial Statements

The following table presents the credit risk profile of

the Company’s loan portfolio based on internal rating category, prior to the adoption of ASU 2016-13, as of December 31, 2022 (dollars in thousands):

Construction &

Real Estate -

December 31, 2022

The following

table presents the amortized cost of the Company’s loan portfolio with the gross charge-offs for the twelve months ended by year of origination based on internal rating category as of December 31, 2023 (dollars in thousands):

As of December 31, 2023

Construction & development

3 (Special Mention)

4 (Substandard)

Total construction & development

Current-period gross charge-offs

1 - 4 family real estate

3 (Special Mention)

4 (Substandard)

Total 1 - 4 family real estate

Current-period gross charge-offs

Commercial real estate - other

3 (Special Mention)

4 (Substandard)

Total Commercial real estate - other

Current-period gross charge-offs

Commercial and industrial

3 (Special Mention)

4 (Substandard)

Total Commercial and industrial

Current-period gross charge-offs

3 (Special Mention)

4 (Substandard)

Total agriculural

Current-period gross charge-offs

3 (Special Mention)

4 (Substandard)

Total consumer

Current-period gross charge-offs

Total loans held for investment

Total current-period gross charge-offs

Aged Analysis of Past Due Loans

The following table presents the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2023 and December 31, 2022 (dollars in thousands):

The following

table presents the Company’s loan portfolio aging analysis of the recorded investment in loans as of December 31, 2024 and December 31, 2023 (dollars in thousands):

December 31, 2024

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Commercial & industrial (1)

The $ 9.95 m illi on

and $ 9.92 million that is greater than 90 days past due as of December 31, 2023 and December 31, 2022, respectively, primarily consists of a single borrower that is well collateralized and for which collection is being diligently pursued .

million that is greater than 90 days past due as of December 31, 2023, primarily consists of a single borrower that is well collateralized

and for which collection is being diligently pursued .

The $ 80 ,000 that is greater than 90 days past due as of December 31, 2023, consists of a single borrower that is well secured and for which

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Nonaccrual Loans

The following table presents information regarding nonaccrual loans as of December 31 , 2023 (dollars in thousand s):

The following table presents information regarding nonaccrual loans as of December 31 , 2024 and December 31, 2023 (dollars in thousand s):

December 31, 2024

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Commercial & industrial

The following table presents impaired loans, prior to the adoption of ASU 2016-13, as of December 31, 2022 (dollars in thousands):

December 31, 2023

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borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.

During the nine months ended December 31, 2023, no material amount of interest income was

recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.

During the twelve months ended December 31, 2024 and December 31, 2023, no material amount

of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.

At a minimum, the estimated value of the collateral for loan equals the current book value.

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Commercial & industrial

Loan Modifications to Troubled Borrowers

As part of the Company’s ongoing risk management

practices, the Company attempts to work with borrowers 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.

Troubled loans are considered those in which the

borrower is experiencing financial difficulty.

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.

Notes to Consolidated Financial Statements

Modifications to Borrowers Experiencing Financial

The following tables present the amortized cost basis

at the end of the reporting period of loans modified to borrowers experiencing financial difficulty, disaggregated by class of financing receivable and type of modification made, as well as the financial effect of the modifications made as

of December 31, 2023:

Term Extension and Payment Deferral

Amortized Cost Basis

% of Total Class

Financial Effect

December 31, 2023

Construction & development

1 - 4 Family Real Estate

Commercial Real Estate - other

Commercial & industrial

Extended the maturity of loan by four months , and payment of principal and interest

deferred until the sale of collateral

The Company closely monitors the performance of the

loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table depicts the performance of loans

that have been modified in the last 12 months:

30-89 Days Past Due

90+ Days Past Due

Collateral Type

December 31, 2023

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Notes to Consolidated Financial Statements

Troubled Debt Restructurings

(Prior to the adoption of ASU 2022-02)

Impaired loans included nonperforming loans and also included loans modified in troubled-debt restructurings where concessions had been

granted to borrowers experiencing financial difficulties.

These concessions could include a reduction in interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize

certain loan categories in the impaired loans were troubled debt restructurings that were classified as impaired.

At December 31, 2022, the Company had $ 1.2 million of commercial real estate loans.

There were no newly

modified troubled-debt restructurings during the year ended December 31, 2022.

December 31, 2022, there were no troubled-debt restructurings modified and subsequently defaulted for the year ended December

The following table represents information regarding nonperforming assets at December 31, 2022 (dollars in thousands):

Construction &

Real Estate -

December 31, 2022

Nonaccrual loans

Troubled-debt restructurings (1)

Accruing loans 90 or more days past due

Total nonperforming loans

(1) $ 1.2 million of TDRs as of December 31, 2022, are included in the nonaccrual loans balance.

Loan Modifications to Borrowers Experiencing Financial

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

Each occurrence is unique to the borrower and is evaluated separately.

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

During the twelve months ended December 31, 2024,

the Company modified a single commercial real estate loan to a borrower who was experiencing financial difficulty, which

included a term extension and interest rate reduction in exchange for credit enhancements.

The loan had a period-end amortized cost basis of $ 2.7

million and represented 0.5 % of the commercial real estate class of loans at December 31, 2024.

During the twelve months ended December 31, 2023, the Company modified a single commercial loan to a borrower who was

experiencing financial difficulty, which included a term extension and payment of principal and interest deferral until the sale of collateral.

The loan had a period-end amortized cost basis of $ 10.1 million and represented 1.9 % of the commercial and

industrial class of loans at December 31, 2023.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

There were no loans to borrowers experiencing financial

difficulty that had a payment default during the twelve months ended December 31, 2024 and were modified in the twelve months prior to default.

Notes to Consolidated Financial Statements

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Core deposit intangibles

See Note 2 for discussion on the $ 146 ,000

in adjustments to Goodwill as of the year-ended December 31, 2023.

Amortization expense for intangible assets

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Increase (decrease) resulting from:

Permanent Differences

Return to provision and deferred true ups

FIN 48 Activity

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Deferred tax assets:

Allowance for loan losses

Allowance for credit losses

Non-accrual Loans

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Net unrealized loss on securities available for sale

Accrued expenses

Lease liabilities

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Right of Use Asset

Net unrealized gains on securities available for sale

Total deferred tax liabilities

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Outstanding letters of credit to secure these public funds at December 31, 2024 and 2023 were $ 750,000 and $ 400,000 , respectively.

Loans with a collateral

value of approximately $ 159.6 million and $ 130.0 million were used to secure the letters of credit at December 31, 2023 and 2022, respectively.

Loans with a collateral value of

approximately $ 191.7 million and $ 159.6

million were used to secure the letters of credit at December 31, 2024 and 2023, respectively.

Advances and Borrowings

The Bank has a blanket floating lien security agreement with a maximum borrowing capacity of $ 159.2 million and $ 129.2 million at December 31, 2023

The Bank has a blanket floating lien security agreement with a maximum borrowing capacity of $ 190.9 million and $ 159.2 million at December 31, 2024 and

December 31, 2023, respectively, with the FHLB, under which the Bank is required to maintain collateral for any advances, including its stock in the FHLB, as well as qualifying first mortgage and other loans.

The Bank had no advances from the FHLB at December 31, 2024 or 2023.

The Bank had additional liquidity with the Federal Reserve Bank of $ 336.1 million and $ 0 as of December

31, 2024 and December 31, 2023, respectively.

Shareholders’ Equity

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shares available for future grants as of December 31, 2024.

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 .

The Company grants to employees and directors restricted stock units (“RSU’s”) which vest ratably over one , three , four , five , or eight years and stock options which vest ratably over four years .

All RSUs and stock options are granted at the fair value of the common stock at the time of the award.

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 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 (dollar amounts in thousands, except per share

2018 Equity Incentive Plan (dollar amounts in

thousands, except per share data):

Exercise Price

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Notes to Consolidated Financial Statements

The following table shows the assumptions used for

computing stock-based compensation expense under the fair value method on options granted during the year ended December 31, 2022, there were no

options granted during the year ended December 2023:

Risk-free interest rate

Dividend yield

Stock price volatility

Expected term

There were no options granted during the years ended December 31, 2024 and December 31, 2023.

The following table summarizes share information about RSUs for the years ended December 31, 2024 and 2023:

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December 31, 2024

Impaired loans (collateral- dependent)

Collateral-dependent loans

Asset retirement obligations

December 31, 2023

Impaired loans (collateral- dependent)

Collateral-dependent loans

Asset retirement obligations

Notes to Consolidated Financial Statements

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the reported fair value is described below.

Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses

Collateral-Dependent Loans, Net of Allowance for Credit Losses

The estimated fair value of collateral-dependent impaired loans is based on fair value, less estimated cost to sell.

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impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers evaluation analysis as the starting point for determining fair value and then considers other factors and events in the

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.

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December 31, 2024

Collateral-dependent impaired loans

Estimated cash to be received pending resolution

of bankruptcy proceedings

Collateral-dependent loans

Estimated cash to be received pending

liquidation of collateral

Estimated cost to sell

Asset retirement obligaions

Asset retirement obligations

Expected present value

Plugging and abandonment expense

Plugging and abandonment

December 31, 2023

Collateral-dependent impaired loans

Appraisals from comparable assets

Collateral-dependent loans

Estimated cash to be received pending

resolution of bankruptcy proceedings

Estimated cost to sell

Asset retirement obligations

Expected present value

Plugging and abandonment

Notes to Consolidated Financial Statements

following table presents estimated fair values of the Company’s financial instruments not recorded at fair value at December 31, 2024 and December 31, 2023 (dollars in thousands):

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Interest-bearing time deposits in other banks

Loans, net of allowance

Loans held for sale

Nonmarketable equity securities

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Interest-bearing time deposits in other banks

Loans, net of allowance

Loans held for sale

Nonmarketable equity securities

Interest receivable

Interest receivable and other assets

Financial Liabilities

Interest payable

Interest payable and other liabilities

Notes to Consolidated Financial Statements

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carrying amount approximates fair value.

For the determination of fair value of oil and gas assets, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations.

For the determination of fair value of oil and gas assets, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and

Natural Gas Reserves Operations.

Interest Payable and Other Liabilities

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If the fair value of the estimated ARO changes, an adjustment is recorded for both the ARO and the asset retirement cost.

following table is a reconciliation of changes in the Company’s asset retirement obligations for the periods ended December 31, 2023:

following table is a reconciliation of changes in the Company’s asset retirement obligations for the years ended December 31, 2024 and December 31, 2023 (dollars in thousands):

Asset retirement obligations as of January 1, 2024

Liability additions

Sale of wells

Accretion expense

Asset retirement obligations as of December 31, 2024

Asset retirement obligations as of January 1, 2023

Liability additions

Accretion expense

Asset retirement obligations as of December 31, 2023

The fair value of the ARO is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate.

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corresponding adjustment is made to the oil and gas property balance.

General Litigation

The Company is involved in the later stages of a process related to a loan customer that filed for bankruptcy in the third quarter of 2023.

that process, one of the parties involved has also filed a separate lawsuit that is also being adjudicated by the bankruptcy court.

of December 31, 2023, the Company has recorded a specific reserve related to the loans with this customer, included in the allowance for credit losses.

As of the date of the financial statements, management believes the specific reserve for these

loans is sufficient to cover the remaining costs related to the bankruptcy process and related litigation.

Notes to Consolidated Financial Statements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data