Bank7 Corp.'s board modified the Oklahoma City-based company's capital management plan and took actions intended to improve EPS, return excess capital to shareholders and further align executive management and shareholders' interests.
For one, the board authorized the repurchase of up to 500,000 shares, or approximately 5%, of the company's outstanding common stock. Shares purchased under the buyback program, which has a term of two years, will become treasury shares and may be used for general corporate purposes, including reissuance pursuant to the company's 2018 equity incentive plan.
The board declared a quarterly dividend of 10 cents per share, which will be paid Oct. 16 to shareholders of record on Oct. 1. This is the first dividend that will be paid by the company since its IPO.
On Sept. 5, the Haines Family Trusts transferred shares equal to about 6.5% of Bank7's outstanding common stock to certain executive officers of the company.
The transfer was accomplished in two steps. First, the Haines Family Trusts, which are the controlling shareholders of Bank7, transferred 656,925 shares to the company as a capital contribution. Bank7 then issued 507,500 of the shares to the top three executive officers under the 2018 equity incentive plan and withheld the remaining 149,425 shares for income taxes. The shares issued to the executives under the plan are not subject to any vesting schedule.
Because the shares were transferred from the Haines Family Trusts' personal holdings, the transfer itself did not impact total shareholders' equity or the number of shares outstanding, according to a news release.
The share issuances, which will be accounted for as stock-based compensation, will result in noncash compensation expense of about $11.6 million in the third quarter. This expense is expected to result in a reduction to earnings both for the third quarter and year-to-date. Excluding this one-time noncash expense, however, the company anticipates third-quarter earnings will be comparable to previous quarters.
The company's board elected to retire shares granted to the executives to satisfy income tax withholding obligations into its treasury stock as a complementary action to the buyback program. This allowed the company to effectively repurchase a large block of shares at market value without associated fees payable as part of the repurchase program. The impact of the extinguishment of shares withheld for taxes will be to reduce shares outstanding by 149,425 and reduce total shareholders' equity by approximately $2.6 million.
