Equity Bancshares, Inc. Second Quarter Results Highlighted by Record Net Interest Income and Net Interest Margin Expansion

Rhea-AI Impact

(Neutral)

Rhea-AI Sentiment

(Neutral)

Insights

Equity Bancshares has demonstrated notable financial performance in the second quarter, particularly with its record net interest income and an improved net interest margin (NIM) of 3.94%. The increase in net interest income to $46.5 million, compared to $44.2 million in the previous quarter, reflects the company’s effective asset management and cost control over deposits. This suggests that the bank is efficiently leveraging its assets, which is a positive indicator for investors.

The company's strategic acquisition of KansasLand Bancshares, Inc., finalized on July 1, is expected to further strengthen its footprint in Kansas. Mergers and acquisitions (M&A) typically come with integration risks and costs, as seen with the $2.3 million merger expenses, but they also offer opportunities for growth and economies of scale. It’s important to monitor how effectively Equity Bancshares manages these integrations in the future.

The bank's proactive share repurchase plan, with 152,982 shares bought at an average cost of $33.35, indicates management’s confidence in the company’s valuation and future prospects. For retail investors, share repurchases can imply potential stock price support, though it also suggests an opportunity cost where funds might have been utilized elsewhere.

Despite positive earnings adjustments, it is essential to note the slight increase in non-performing assets and classified assets, which rose from $39.2 million to $48.4 million. While still manageable, these figures warrant close attention as they could indicate emerging credit quality issues amidst broader economic uncertainties.

Overall, Equity Bancshares' quarterly performance is solid yet requires vigilance regarding asset quality and successful integration of recent acquisitions.

The announced merger with KansasLand Bancshares, Inc. is a strategic move that aligns with Equity Bancshares, Inc.'s goals of expanding its geographic presence and consolidating its position in Kansas. This merger comes on the heels of the Bank of Kirksville acquisition, highlighting the company's aggressive expansion strategy. For investors, such consolidation can lead to improved market share and customer base, which can translate into enhanced long-term profitability.

However, M&A activities can also pose risks, including integration challenges and potential short-term disruptions. The success of these mergers will largely depend on how well the company can integrate these acquisitions into its existing operations without affecting service quality or incurring unexpected costs.

Moreover, the non-interest income of $9.0 million for the quarter, although lower than the previous quarter due to one-time gains not repeating, suggests steady growth in service fee revenue streams like deposit services, credit cards and wealth management. This diversification in revenue sources beyond traditional interest income is beneficial, reducing reliance on fluctuating interest rates and providing a stable income stream.

As an investor, it's important to consider both the growth potential and the inherent risks associated with such an expansion strategy. Monitoring post-merger integration and its impact on the company’s overall financial health will be key in assessing long-term value.

The fluctuation in the effective tax rate from 20.8% in the previous quarter to 28.1% is significant and primarily attributable to the financial implications of the BOLI repositioning. The surrender of $11.5 million in BOLI led to an increased tax gain and penalty. This move is critical to understand because BOLI transactions can provide tax benefits; however, their surrender can result in substantial tax obligations.

Excluding the BOLI impact, the normalized tax rate would have been 17.5%, highlighting the one-off nature of this event. Investors should pay attention to such tax-related activities as they can cause significant short-term variances in reported earnings but might not reflect the company's ongoing operational performance.

Additionally, Equity Bancshares' investment in tax credit structures further underscores its efforts to manage its tax liabilities effectively. These credits can offer substantial tax reliefs and are an indication of the company's proactive approach in financial planning.

For retail investors, understanding these tax-related movements is important as they directly impact net earnings and, consequently, the perceived profitability of the company. It's also important to note that high effective tax rates due to such events might not be recurring, hence should be viewed in the larger context of annual performance.

07/16/2024 - 04:45 PM

Reports NIM of 3.94%, Announces Merger with KansasLand Bancshares, Inc., Adding to Kansas Franchise

WICHITA, Kan.--(BUSINESS WIRE)-- Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $11.7 million or $0.76 earnings per diluted share for the quarter ended June 30, 2024. Adjusting to exclude $2.3 million in costs associated with mergers and $1.7 million in costs associated with the surrender and re-positioning of bank owned life insurance (“BOLI”), net income was $15.3 million or $0.99 per diluted share.

“Our Company realized another excellent quarter driven by a continued increase in margin," said Brad S. Elliott, Chairman and CEO of Equity. "Our team continued to capitalize on opportunities to enhance customer relationships and build stockholder value as we look to leverage our balance sheet position to grow our franchise."

"In addition, during the quarter, our team effectively merged core systems following the Bank of Kirksville transaction while also analyzing, negotiating, and subsequently closing our acquisition of KansasLand Bank," Mr. Elliott said. "We continue to be positioned to facilitate strategic M&A. We have the teams, the processes and the experience to be the preferred consolidation partner in our geography."

Notable Items:

The Company realized earnings per diluted share of $0.99, adjusted to exclude merger expenses of $2.3 million and $1.7 million in surrender costs related to repositioning of BOLI contracts.
The Company integrated the operations of its previously completed merger with Rockhold Bancshares, Inc., while also announcing and subsequently closing (July 1) its merger with KansasLand Bancshares, Inc.
The Company realized expansion in net interest income and net interest margin, as the benefits of previously announced strategic transactions continued to be realized. Total net interest income for the quarter was $46.5 million, an all-time high for the Company.
The Company was active in its share repurchase plan during the quarter, purchasing 152,982 shares at a weighted average cost of $33.35. Under the repurchase plan announced in the fourth quarter of 2023, 637,427 shares remain available for purchase.
Classified assets as a percentage of total risk based capital at Equity Bank closed the period at 8.5% while non-performing assets remained historically low. The allowance for credit losses closed the quarter at 1.3% of total loans.

Financial Results for the Quarter Ended June 30, 2024

Net income allocable to common stockholders was $11.7 million, or $0.76 per diluted share. Excluding merger expenses and the costs associated with repositioning a portion of our BOLI portfolio, net income was $15.3 million, or $0.99 per diluted share. Excluding the impact of the merger expenses and opening balance sheet provisioning for Bank of Kirksville balances, operating net income for the previous quarter was $16.1 million. The drivers of the periodic change are discussed in detail in the following sections.

Net Interest Income

Net interest income was $46.5 million for the period, as compared to $44.2 million for the three months ended March 31, 2024, the increase was driven by increasing average assets as well as a positive trend in margin. Net interest margin increased to 3.94% from 3.75% as the yield on interest-earning assets increased 28 basis points to 6.37% and the cost of interest-bearing deposits remained materially consistent at 2.78%. Total cost of deposits declined during the quarter to 2.14%, while utilization of debt and associated costs increased. Total cost of interest-bearing liabilities expanded 10 bps to 3.09%.

The earning asset improvement was driven by the continued increase in originated and re-priced loan coupons, loan and investment assets added through the Bank of Kirksville merger and the expiration of a receive-fixed swap during the quarter. Deposits acquired from the Bank of Kirksville contributed to maintaining cost of interest-bearing deposits and dropping total cost of deposits.

Provision for Credit Losses

During the quarter, there was a provision of $265 thousand compared to a provision of $1.0 million in the previous quarter. The provision was attributable to charge-offs realized during the period. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayment rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. During the quarter, we realized net charge-offs of $1.2 million as compared to $667 thousand for the previous quarter.

Non-Interest Income

Total non-interest income was $9.0 million for the quarter, as compared to $11.7 million for the three months ended March 31, 2024. The previous quarter included $1.2 million in gain on acquisition and $2.3 million in gains on resolution of special assets that did not repeat in the current quarter. Excluding these items non-interest income increased $777 thousand during the quarter, driven by increased service fee revenue including deposit services, treasury, debit card, credit card, insurance and wealth management.

Non-Interest Expense

Total non-interest expense for the quarter was $38.9 million as compared to $37.1 million for the previous quarter. Adjusting for merger expenses in both periods, the increase quarter over quarter was $1.0 million driven by the addition of Bank of Kirksville, including $320 thousand in intangible amortization as well as additional salary, technology and facility expenses.

The conversion of systems following the acquisition of Bank of Kirksville was completed in the second quarter.

Income Tax Expense

The effective tax rate for the quarter was 28.1% as compared to 20.8% for the quarter ended March 31, 2024. The increase in rate during the quarter was the result of an $11.5 million tax gain and related penalty recognized in our annual effective tax rate due to the surrender of BOLI. The impact of this transaction was partially offset by tax benefit related to a new investment in tax credit structures made by the Company in the quarter. The tax rate in the second quarter, normalized to exclude the impact of the BOLI surrender, would have been 17.5%.

Loans, Total Assets and Funding

Loans held for investment were $3.5 billion at June 30, 2024, decreasing $27.8 million during the quarter. Total assets were $5.2 billion as of the end of the period, increasing $6.5 million during the quarter.

Total deposits were $4.3 billion at June 30, 2024, decreasing $29.6 million from the previous quarter end. Of the total deposit balance, non-interest-bearing accounts comprise approximately 22.7%. Total Federal Home Loan Bank borrowings were $250.3 million as of the end of the quarter, up $30.4 million as compared to March 31, 2024.

Asset Quality

As of June 30, 2024, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to March 31, 2024. Nonperforming assets were $27.2 million as of June 30, 2024, or 0.5% of total assets, compared to $25.4 million at March 31, 2024, or 0.5% of total assets. Non-accrual loans were $26.6 million at June 30, 2024, as compared to $24.2 million at March 31, 2024. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $48.4 million, or 8.47% of regulatory capital, up from $39.2 million, or 6.9% of regulatory capital as of March 31, 2024.

Capital

Quarter over quarter, book capital increased $4.7 million to $461.4 million and tangible capital increased $5.9 million to $390.7 million. The increase in capital is primarily due to earnings, partially offset by treasury share purchases of $5.2 million, increase in unrealized loss on bonds and cash flow hedges of $1.2 million and dividends declared of $1.9 million. Tangible capital was also positively affected by the amortization of core deposit intangibles during the quarter.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 11.1%, the total capital to risk-weighted assets was 14.6% and the total leverage ratio was 9.1% at June 30, 2024. At March 31, 2024, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.1%, the total capital to risk-weighted assets ratio was 14.7% and the total leverage ratio was 9.1%.

Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 12.9%, total capital to risk-weighted assets was 14.0% and the total leverage ratio was 10.1% at June 30, 2024. At March 31, 2024, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 13.2%, the ratio of total capital to risk-weighted assets was 14.3% and the total leverage ratio was 10.2%.

Non-GAAP Financial Measures

In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is a common comparable metric used by banks to understand the expense structure relative to total revenue. In other words, for every dollar of total revenue recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Return on average assets before income tax provision and provision for loan losses is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.

Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 6 in the following press release tables.

Conference Call and Webcast

Equity’s Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Chris Navratil, will hold a conference call and webcast to discuss second quarter results on Wednesday, July 17, 2024, at 10 a.m. eastern time or 9 a.m. central time.

A live webcast of the call will be available on the Company’s website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.

A replay of the call and webcast will be available two hours following the close of the call until August 1, 2024, accessible at investor.equitybank.com.

About Equity Bancshares, Inc.

Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NYSE National, Inc. under the symbol “EQBK.” Learn more at www.equitybank.com.

Special Note Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “positioned,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2024, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties arise from time to time and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.

Unaudited Financial Tables

Table 1. Consolidated Statements of Income
Table 2. Quarterly Consolidated Statements of Income
Table 3. Consolidated Balance Sheets
Table 4. Selected Financial Highlights
Table 5. Year-To-Date Net Interest Income Analysis
Table 6. Quarter-To-Date Net Interest Income Analysis
Table 7. Quarter-Over-Quarter Net Interest Income Analysis
Table 8. Non-GAAP Financial Measures

TABLE 1. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands)

	Three months ended June 30,						Six months ended June 30,
	2024			2023			2024			2023
Interest and dividend income
Loans, including fees	$	61,518		$	52,748		$	120,347		$	101,129
Securities, taxable		10,176			5,813			20,053			11,760
Securities, nontaxable		401			568			792			1,237
Federal funds sold and other		3,037			2,127			5,707			3,253
Total interest and dividend income		75,132			61,256			146,899			117,379
Interest expense
Deposits		22,662			17,204			45,517			31,025
Federal funds purchased and retail repurchase agreements		306			192			632			387
Federal Home Loan Bank advances		3,789			953			4,933			1,971
Federal Reserve Bank borrowings		—			1,528			1,361			1,663
Subordinated debt		1,899			1,950			3,798			3,794
Total interest expense		28,656			21,827			56,241			38,840

Net interest income		46,476			39,429			90,658			78,539
Provision (reversal) for credit losses		265			298			1,265			(68	)
Net interest income after provision (reversal) for credit losses		46,211			39,131			89,393			78,607
Non-interest income
Service charges and fees		2,541			2,653			5,110			5,198
Debit card income		2,621			2,653			5,068			5,207
Mortgage banking		245			213			433			301
Increase in value of bank-owned life insurance		911			757			1,739			2,340
Net gain on acquisition and branch sales		60			—			1,300			—
Net gains (losses) from securities transactions		(27	)		(1,322	)		16			(1,290	)
Other		2,607			1,996			7,023			3,794
Total non-interest income		8,958			6,950			20,689			15,550
Non-interest expense
Salaries and employee benefits		17,827			15,237			35,924			31,929
Net occupancy and equipment		3,787			2,940			7,322			5,819
Data processing		5,036			4,493			9,864			8,409
Professional fees		1,778			1,645			3,170			3,029
Advertising and business development		1,291			1,249			2,529			2,408
Telecommunications		572			516			1,227			1,001
FDIC insurance		590			515			1,161			875
Courier and postage		620			463			1,226			921
Free nationwide ATM cost		531			524			1,025			1,049
Amortization of core deposit intangibles		1,218			918			2,117			1,836
Loan expense		195			136			304			253
Other real estate owned		17			71			(67	)		190
Merger expenses		2,287			—			3,843			—
Other		3,122			4,423			6,378			8,640
Total non-interest expense		38,871			33,130			76,023			66,359
Income (loss) before income tax		16,298			12,951			34,059			27,798
Provision for income taxes		4,582			1,495			8,275			4,019
Net income (loss) and net income (loss) allocable to common stockholders	$	11,716		$	11,456		$	25,784		$	23,779
Basic earnings (loss) per share	$	0.77		$	0.74		$	1.68		$	1.52
Diluted earnings (loss) per share	$	0.76		$	0.74		$	1.66		$	1.51
Weighted average common shares		15,248,703			15,468,378			15,337,206			15,662,515
Weighted average diluted common shares		15,377,980			15,554,255			15,473,386			15,789,061

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Interest and dividend income
Loans, including fees	$	61,518		$	58,829		$	54,932		$	55,152		$	52,748
Securities, taxable		10,176			9,877			6,417			5,696			5,813
Securities, nontaxable		401			391			354			369			568
Federal funds sold and other		3,037			2,670			2,591			3,822			2,127
Total interest and dividend income		75,132			71,767			64,294			65,039			61,256
Interest expense
Deposits		22,662			22,855			20,074			19,374			17,204
Federal funds purchased and retail repurchase agreements		306			326			298			246			192
Federal Home Loan Bank advances		3,789			1,144			1,005			968			953
Federal Reserve Bank borrowings		—			1,361			1,546			1,546			1,528
Subordinated debt		1,899			1,899			1,904			1,893			1,950
Total interest expense		28,656			27,585			24,827			24,027			21,827

Net interest income		46,476			44,182			39,467			41,012			39,429
Provision (reversal) for credit losses		265			1,000			711			1,230			298
Net interest income after provision (reversal) for credit losses		46,211			43,182			38,756			39,782			39,131
Non-interest income
Service charges and fees		2,541			2,569			2,299			2,690			2,653
Debit card income		2,621			2,447			2,524			2,591			2,653
Mortgage banking		245			188			125			226			213
Increase in value of bank-owned life insurance		911			828			925			794			757
Net gain on acquisition and branch sales		60			1,240			—			—			—
Net gains (losses) from securities transactions		(27	)		43			(50,618	)		(1	)		(1,322	)
Other		2,607			4,416			1,331			2,435			1,996
Total non-interest income		8,958			11,731			(43,414	)		8,735			6,950
Non-interest expense
Salaries and employee benefits		17,827			18,097			16,598			15,857			15,237
Net occupancy and equipment		3,787			3,535			3,244			3,262			2,940
Data processing		5,036			4,828			4,471			4,553			4,493
Professional fees		1,778			1,392			1,413			1,312			1,645
Advertising and business development		1,291			1,238			1,598			1,419			1,249
Telecommunications		572			655			460			502			516
FDIC insurance		590			571			660			660			515
Courier and postage		620			606			577			548			463
Free nationwide ATM cost		531			494			508			516			524
Amortization of core deposit intangibles		1,218			899			739			799			918
Loan expense		195			109			155			132			136
Other real estate owned		17			(84	)		224			128			71
Merger expenses		2,287			1,556			297			—			—
Other		3,122			3,256			4,054			4,556			4,423
Total non-interest expense		38,871			37,152			34,998			34,244			33,130
Income (loss) before income tax		16,298			17,761			(39,656	)		14,273			12,951
Provision for income taxes (benefit)		4,582			3,693			(11,357	)		1,932			1,495
Net income (loss) and net income (loss) allocable to common stockholders	$	11,716		$	14,068		$	(28,299	)	$	12,341		$	11,456
Basic earnings (loss) per share	$	0.77		$	0.91		$	(1.84	)	$	0.80		$	0.74
Diluted earnings (loss) per share	$	0.76		$	0.90		$	(1.84	)	$	0.80		$	0.74
Weighted average common shares		15,248,703			15,425,709			15,417,200			15,404,992			15,468,378
Weighted average diluted common shares		15,377,980			15,569,225			15,417,200			15,507,172			15,554,255

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)

	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
ASSETS
Cash and due from banks	$	244,321		$	217,611		$	363,289		$	183,404		$	262,604
Federal funds sold		15,945			17,407			15,810			15,613			15,495
Cash and cash equivalents		260,266			235,018			379,099			199,017			278,099
Available-for-sale securities		1,042,176			1,091,717			919,648			1,057,009			1,094,748
Held-to-maturity securities		5,226			2,205			2,209			2,212			2,216
Loans held for sale		1,959			1,311			476			627			2,456
Loans, net of allowance for credit losses⁽¹⁾		3,410,920			3,437,714			3,289,381			3,237,932			3,278,126
Other real estate owned, net		2,989			1,465			1,833			3,369			4,362
Premises and equipment, net		114,264			116,792			112,632			110,271			106,186
Bank-owned life insurance		130,326			125,693			124,865			124,245			123,451
Federal Reserve Bank and Federal Home Loan Bank stock		33,171			27,009			20,608			20,780			21,129
Interest receivable		27,381			27,082			25,497			23,621			21,360
Goodwill		53,101			53,101			53,101			53,101			53,101
Core deposit intangibles, net		16,636			17,854			7,222			7,961			8,760
Other		147,102			102,075			98,021			105,122			100,889
Total assets	$	5,245,517		$	5,239,036		$	5,034,592		$	4,945,267		$	5,094,883
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	984,872		$	981,623		$	898,129		$	936,217		$	978,968
Total non-interest-bearing deposits		984,872			981,623			898,129			936,217			978,968
Demand, savings and money market		2,560,091			2,574,871			2,483,807			2,397,003			2,397,524
Time		796,474			814,532			763,519			748,950			854,458
Total interest-bearing deposits		3,356,565			3,389,403			3,247,326			3,145,953			3,251,982
Total deposits		4,341,437			4,371,026			4,145,455			4,082,170			4,230,950
Federal funds purchased and retail repurchase agreements		38,031			43,811			43,582			39,701			44,770
Federal Home Loan Bank advances and Federal Reserve Bank borrowings		250,306			219,931			240,000			240,000			240,000
Subordinated debt		97,196			97,058			96,921			96,787			96,653
Contractual obligations		23,770			18,493			19,315			29,019			29,608
Interest payable and other liabilities		33,342			31,941			36,459			39,460			34,467
Total liabilities		4,784,082			4,782,260			4,581,732			4,527,137			4,676,448
Commitments and contingent liabilities
Stockholders’ equity
Common stock		208			208			207			207			207
Additional paid-in capital		491,709			490,533			489,187			488,137			487,225
Retained earnings		163,068			153,201			141,006			171,188			160,715
Accumulated other comprehensive income (loss), net of tax		(62,005	)		(60,788	)		(57,920	)		(122,047	)		(110,225	)
Treasury stock		(131,545	)		(126,378	)		(119,620	)		(119,355	)		(119,487	)
Total stockholders’ equity		461,435			456,776			452,860			418,130			418,435
Total liabilities and stockholders’ equity	$	5,245,517		$	5,239,036		$	5,034,592		$	4,945,267		$	5,094,883

⁽¹⁾ Allowance for credit losses	$	43,487		$	44,449		$	43,520		$	44,186		$	44,544

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023
Loans Held For Investment by Type
Commercial real estate	$	1,793,545		$	1,797,192		$	1,759,855		$	1,721,761		$	1,764,460
Commercial and industrial		663,718			649,035			598,327			585,129			583,664
Residential real estate		572,523			581,988			556,328			558,188			560,389
Agricultural real estate		219,226			198,291			196,114			205,865			202,317
Agricultural		104,341			149,312			118,587			103,352			104,510
Consumer		101,054			106,345			103,690			107,823			107,330
Total loans held-for-investment		3,454,407			3,482,163			3,332,901			3,282,118			3,322,670
Allowance for credit losses		(43,487	)		(44,449	)		(43,520	)		(44,186	)		(44,544	)
Net loans held for investment	$	3,410,920		$	3,437,714		$	3,289,381		$	3,237,932		$	3,278,126


Asset Quality Ratios
Allowance for credit losses on loans to total loans		1.26	%		1.28	%		1.31	%		1.35	%		1.34	%
Past due or nonaccrual loans to total loans		1.15	%		1.10	%		1.10	%		1.03	%		0.78	%
Nonperforming assets to total assets		0.52	%		0.49	%		0.53	%		0.42	%		0.31	%
Nonperforming assets to total loans plus other real estate owned		0.79	%		0.73	%		0.79	%		0.63	%		0.47	%
Classified assets to bank total regulatory capital		8.47	%		6.85	%		7.09	%		6.27	%		7.94	%


Selected Average Balance Sheet Data (QTD Average)
Investment securities	$	1,065,979		$	1,074,101		$	985,591		$	1,085,905		$	1,155,971
Total gross loans receivable		3,459,476			3,452,553			3,293,755			3,281,483			3,337,497
Interest-earning assets		4,745,713			4,742,200			4,480,279			4,635,384			4,678,744
Total assets		5,196,258			5,152,915			4,892,712			5,046,179			5,064,912
Interest-bearing deposits		3,275,765			3,319,907			3,092,637			3,206,300			3,226,965
Borrowings		450,178			390,166			391,691			385,125			385,504
Total interest-bearing liabilities		3,725,943			3,710,073			3,484,328			3,591,425			3,612,469
Total deposits		4,250,843			4,254,883			4,019,362			4,177,332			4,204,334
Total liabilities		4,740,936			4,692,671			4,469,505			4,619,919			4,640,050
Total stockholders' equity		455,322			460,244			423,207			426,260			424,862
Tangible common equity^*		383,899			398,041			361,451			363,625			361,409


Performance ratios
Return on average assets (ROAA) annualized		0.91	%		1.10	%		(2.29	)%		0.97	%		0.91	%
Return on average assets before income tax and provision for loan losses*		1.28	%		1.46	%		(3.16	)%		1.22	%		1.05	%
Return on average equity (ROAE) annualized		10.35	%		12.29	%		(26.53	)%		11.49	%		10.82	%
Return on average equity before income tax and provision for loan losses*		14.63	%		16.39	%		(36.51	)%		14.43	%		12.51	%
Return on average tangible common equity (ROATCE) annualized^*		13.31	%		14.96	%		(30.39	)%		14.18	%		13.55	%
Yield on loans annualized		7.15	%		6.85	%		6.62	%		6.67	%		6.34	%
Cost of interest-bearing deposits annualized		2.78	%		2.77	%		2.58	%		2.40	%		2.14	%
Cost of total deposits annualized		2.14	%		2.16	%		1.98	%		1.84	%		1.64	%
Net interest margin annualized		3.94	%		3.75	%		3.49	%		3.51	%		3.38	%
Efficiency ratio^*		66.03	%		65.16	%		74.35	%		68.83	%		69.44	%
Non-interest income / average assets		0.69	%		0.92	%		(3.52	)%		0.69	%		0.55	%
Non-interest expense / average assets		3.01	%		2.90	%		2.84	%		2.69	%		2.62	%


Capital Ratios
Tier 1 Leverage Ratio		9.14	%		9.10	%		9.46	%		9.77	%		9.54	%
Common Equity Tier 1 Capital Ratio		11.12	%		11.14	%		11.74	%		12.65	%		12.23	%
Tier 1 Risk Based Capital Ratio		11.70	%		11.73	%		12.36	%		13.28	%		12.84	%
Total Risk Based Capital Ratio		14.61	%		14.71	%		15.48	%		16.42	%		15.96	%
Total stockholders' equity to total assets		8.80	%		8.72	%		8.99	%		8.46	%		8.21	%
Tangible common equity to tangible assets^*		7.55	%		7.45	%		7.87	%		7.29	%		7.06	%
Dividend payout ratio		15.79	%		13.31	%		(6.65	)%		15.13	%		13.53	%
Book value per common share	$	30.36		$	29.80		$	29.35		$	27.13		$	27.18
Tangible book value per common share^*	$	25.70		$	25.10		$	25.37		$	23.09		$	23.08
Tangible book value per diluted common share^*	$	25.44		$	24.87		$	25.05		$	22.96		$	22.98

^* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GGAP financial measures, see Table 8. Non-GAAP Financial Measures.

TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited) (Dollars in thousands)

	For six months ended						For six months ended
	June 30, 2024						June 30, 2023
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	634,879	$	25,194		7.98%	$	584,081	$	20,519		7.08%
Commercial real estate		1,425,143		49,142		6.93%		1,324,010		40,987		6.24%
Real estate construction		378,815		16,618		8.82%		434,793		14,926		6.92%
Residential real estate		580,382		13,024		4.51%		568,710		11,848		4.20%
Agricultural real estate		201,520		7,412		7.40%		202,742		6,501		6.47%
Agricultural		129,167		5,493		8.55%		100,795		3,183		6.37%
Consumer		106,107		3,464		6.57%		106,546		3,165		5.99%
Total loans		3,456,013		120,347		7.00%		3,321,677		101,129		6.14%
Securities
Taxable securities		1,008,742		20,053		4.00%		1,076,108		11,760		2.20%
Nontaxable securities		61,298		792		2.60%		94,538		1,237		2.64%
Total securities		1,070,040		20,845		3.92%		1,170,646		12,997		2.24%
Federal funds sold and other		217,902		5,707		5.27%		152,747		3,253		4.29%
Total interest-earning assets	$	4,743,955		146,899		6.23%	$	4,645,070		117,379		5.10%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,525,710		31,605		2.52%	$	2,336,791		18,957		1.64%
Time deposits		772,126		13,912		3.62%		894,446		12,068		2.72%
Total interest-bearing deposits		3,297,836		45,517		2.78%		3,231,237		31,025		1.94%
FHLB advances		208,160		4,933		4.77%		95,497		1,971		4.16%
Other borrowings		212,013		5,791		5.48%		221,601		5,844		5.32%
Total interest-bearing liabilities	$	3,718,009		56,241		3.04%	$	3,548,335		38,840		2.21%

Net interest income			$	90,658					$	78,539
Interest rate spread						3.19%						2.89%

Net interest margin ⁽²⁾						3.84%						3.41%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.
⁽⁴⁾ Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited) (Dollars in thousands)

	For the three months ended						For the three months ended
	June 30, 2024						June 30, 2023
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	635,123	$	12,782		8.09%	$	590,634	$	10,885		7.39%
Commercial real estate		1,401,109		24,541		7.04%		1,303,520		20,875		6.42%
Real estate construction		402,831		8,843		8.83%		465,231		8,231		7.10%
Residential real estate		580,338		6,563		4.55%		567,297		6,048		4.28%
Agricultural real estate		206,018		3,944		7.70%		202,584		3,387		6.71%
Agricultural		127,298		3,102		9.80%		101,333		1,704		6.74%
Consumer		106,759		1,743		6.57%		106,898		1,618		6.07%
Total loans		3,459,476		61,518		7.15%		3,337,497		52,748		6.34%
Securities
Taxable securities		1,006,018		10,176		4.07%		1,068,653		5,813		2.18%
Nontaxable securities		59,961		401		2.70%		87,318		568		2.61%
Total securities		1,065,979		10,577		3.99%		1,155,971		6,381		2.21%
Federal funds sold and other		220,258		3,037		5.54%		185,276		2,127		4.61%
Total interest-earning assets	$	4,745,713		75,132		6.37%	$	4,678,744		61,256		5.25%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,530,899		15,946		2.53%	$	2,323,685		10,503		1.81%
Time deposits		744,866		6,716		3.63%		903,280		6,701		2.98%
Total interest-bearing deposits		3,275,765		22,662		2.78%		3,226,965		17,204		2.14%
FHLB advances		302,972		3,789		5.03%		101,845		953		3.75%
Other borrowings		147,206		2,205		6.03%		283,659		3,670		5.19%
Total interest-bearing liabilities	$	3,725,943		28,656		3.09%	$	3,612,469		21,827		2.42%

Net interest income			$	46,476					$	39,429
Interest rate spread						3.28%						2.83%

Net interest margin ⁽²⁾						3.94%						3.38%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.
⁽⁴⁾ Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited) (Dollars in thousands)

	For the three months ended						For the three months ended
	June 30, 2024						March 31, 2024
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	635,123	$	12,782		8.09%	$	634,637	$	12,412		7.87%
Commercial real estate		1,401,109		24,541		7.04%		1,449,177		24,601		6.83%
Real estate construction		402,831		8,843		8.83%		354,801		7,775		8.81%
Residential real estate		580,338		6,563		4.55%		580,426		6,461		4.48%
Agricultural real estate		206,018		3,944		7.70%		197,023		3,468		7.08%
Agricultural		127,298		3,102		9.80%		131,035		2,391		7.34%
Consumer		106,759		1,743		6.57%		105,454		1,721		6.56%
Total loans		3,459,476		61,518		7.15%		3,452,553		58,829		6.85%
Securities
Taxable securities		1,006,018		10,176		4.07%		1,011,466		9,877		3.93%
Nontaxable securities		59,961		401		2.70%		62,635		391		2.51%
Total securities		1,065,979		10,577		3.99%		1,074,101		10,268		3.84%
Federal funds sold and other		220,258		3,037		5.54%		215,546		2,670		4.98%
Total interest-earning assets	$	4,745,713		75,132		6.37%	$	4,742,200		71,767		6.09%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,530,899		15,946		2.53%	$	2,520,521		15,660		2.50%
Time deposits		744,866		6,716		3.63%		799,386		7,195		3.62%
Total interest-bearing deposits		3,275,765		22,662		2.78%		3,319,907		22,855		2.77%
FHLB advances		302,972		3,789		5.03%		113,348		1,144		4.06%
Other borrowings		147,206		2,205		6.03%		276,818		3,586		5.21%
Total interest-bearing liabilities	$	3,725,943		28,656		3.09%	$	3,710,073		27,585		2.99%

Net interest income			$	46,476					$	44,182
Interest rate spread						3.28%						3.10%

Net interest margin ⁽²⁾						3.94%						3.75%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.
⁽⁴⁾ Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2024			2024			2023			2023			2023

Total stockholders' equity	$	461,435		$	456,776		$	452,860		$	418,130		$	418,435
Less: goodwill		53,101			53,101			53,101			53,101			53,101
Less: core deposit intangibles, net		16,636			17,854			7,222			7,961			8,760
Less: mortgage servicing rights, net		25			50			75			100			126
Less: naming rights, net		979			989			1,000			1,011			1,022
Tangible common equity	$	390,694		$	384,782		$	391,462		$	355,957		$	355,426
Common shares outstanding at period end		15,200,194			15,327,799			15,428,251			15,413,064			15,396,739
Diluted common shares outstanding at period end		15,358,396			15,469,531			15,629,185			15,500,749			15,468,319
Book value per common share	$	30.36		$	29.80		$	29.35		$	27.13		$	27.18
Tangible book value per common share	$	25.70		$	25.10		$	25.37		$	23.09		$	23.08
Tangible book value per diluted common share	$	25.44		$	24.87		$	25.05		$	22.96		$	22.98

Total assets	$	5,245,517		$	5,239,036		$	5,034,592		$	4,945,267		$	5,094,883
Less: goodwill		53,101			53,101			53,101			53,101			53,101
Less: core deposit intangibles, net		16,636			17,854			7,222			7,961			8,760
Less: mortgage servicing rights, net		25			50			75			100			126
Less: naming rights, net		979			989			1,000			1,011			1,022
Tangible assets	$	5,174,776		$	5,167,042		$	4,973,194		$	4,883,094		$	5,031,874
Total stockholders' equity to total assets		8.80	%		8.72	%		8.99	%		8.46	%		8.21	%
Tangible common equity to tangible assets		7.55	%		7.45	%		7.87	%		7.29	%		7.06	%

Total average stockholders' equity	$	455,322		$	460,244		$	423,207		$	426,260		$	424,862
Less: average intangible assets		71,423			62,203			61,756			62,635			63,453
Average tangible common equity	$	383,899		$	398,041		$	361,451		$	363,625		$	361,409
Net income (loss) allocable to common stockholders	$	11,716		$	14,068		$	(28,299	)	$	12,341		$	11,456
Add: amortization of intangible assets		1,254			935			775			835			954
Less: tax effect of intangible assets amortization		263			196			163			175			200
Adjusted net income (loss) allocable to common stockholders	$	12,707		$	14,807		$	(27,687	)	$	13,001		$	12,210
Return on total average stockholders' equity (ROAE) annualized		10.35	%		12.29	%		(26.53	)%		11.49	%		10.82	%
Return on average tangible common equity (ROATCE) annualized		13.31	%		14.96	%		(30.39	)%		14.18	%		13.55	%

Non-interest expense	$	38,871		$	37,152		$	34,998		$	34,244		$	33,130
Less: merger expense		2,287			1,556			297			—			—
Adjusted non-interest expense	$	36,584		$	35,596		$	34,701		$	34,244		$	33,130
Net interest income	$	46,476		$	44,182		$	39,467		$	41,012		$	39,429
Non-interest income		8,958			11,731			(43,414	)		8,735			6,950
Less: net gain on acquisition and branch sales		60			1,240			—			—			—
Less: net gains (losses) from securities transactions		(27	)		43			(50,618	)		(1	)		(1,322	)
Adjusted non-interest income	$	8,925		$	10,448		$	7,204		$	8,736		$	8,272
Net interest income plus adjusted non-interest income	$	55,401		$	54,630		$	46,671		$	49,748		$	47,701
Non-interest expense to net interest income plus non-interest income		70.12	%		66.45	%		-886.70	%		68.84	%		71.43	%
Efficiency ratio		66.03	%		65.16	%		74.35	%		68.83	%		69.45	%
Net income (loss) allocable to common stockholders	$	11,716		$	14,068		$	(28,299	)	$	12,341		$	11,456
Add: income tax provision		4,582			3,693			(11,357	)		1,932			1,495
Add: provision (reversal) of credit losses		265			1,000			711			1,230			298
Pre-tax, pre-provision income	$	16,563		$	18,761		$	(38,945	)	$	15,503		$	13,249
Total average assets	$	5,196,258		$	5,152,915		$	4,892,712		$	5,046,179		$	5,064,912
Total average stockholders' equity	$	455,322		$	460,244		$	423,207		$	426,620		$	424,862
Return on average assets (ROAA) annualized		0.91	%		1.10	%		(2.29	)%		0.97	%		0.91	%
Adjusted return on average assets		1.28	%		1.46	%		(3.16	)%		1.22	%		1.05	%
Adjusted return on average equity		14.63	%		16.39	%		(36.51	)%		14.43	%		12.51	%

Net income (loss) allocable to common stockholders	$	11,716		$	14,068		$	(28,299	)	$	12,341		$	11,456
Add: Day 1 -Provision		—			1,000			—			—			—
Less: Gain (loss) from securities transactions		(27	)		43			(50,618	)		(1	)		(1,322	)
Add: Merger expense		2,287			1,556			297			—			—
Adjusted non-core items		2,314			2,513			50,915			1			1,322
Tax effected non-core items		1,828			1,985			40,223			1			1,044
BOLI tax adjustment		1,730			—			—			—			—
Adjusted operating net income	$	15,274		$	16,053		$	11,924		$	12,342		$	12,500
GAAP earnings (loss) per diluted share	$	0.76		$	0.90		$	(1.84	)	$	0.80		$	0.74
Adjusted earnings (loss) per diluted share	$	0.99		$	1.03		$	0.77		$	0.80		$	0.81
Total average assets	$	5,196,258		$	5,152,915		$	4,892,712		$	5,046,179		$	5,064,912
Adjusted Operating ROAA		1.18	%		1.25	%		0.97	%		0.97	%		1.00	%
Weighted average diluted common shares		15,377,980			15,569,225			15,417,200			15,507,172			15,554,255

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716962204/en/

Investor Contact:

Brian J. Katzfey

VP, Director of Corporate Development and Investor Relations

Equity Bank

(316) 858-3128

bkatzfey@equitybank.com

Media Contact:

John J. Hanley

Chief Marketing Officer

Equity Bancshares, Inc.

(913) 583-8004

jhanley@equitybank.com

Source: Equity Bancshares

FAQ

What was Equity Bancshares' (EQBK) net income for Q2 2024?

Equity Bancshares reported net income of $11.7 million or $0.76 earnings per diluted share for Q2 2024. Adjusted net income, excluding merger and BOLI repositioning costs, was $15.3 million or $0.99 per diluted share.

How did Equity Bancshares' (EQBK) net interest margin perform in Q2 2024?

Equity Bancshares' net interest margin expanded to 3.94% in Q2 2024, up from 3.75% in Q1 2024, driven by increasing average assets and positive margin trends.

What mergers did Equity Bancshares (EQBK) complete or announce in Q2 2024?

Equity Bancshares completed the integration of its merger with Rockhold Bancshares and announced the merger with KansasLand Bancshares, which closed on July 1, 2024.

What was Equity Bancshares' (EQBK) allowance for credit losses as of June 30, 2024?

Equity Bancshares' allowance for credit losses remained consistent at 1.3% of total loans as of June 30, 2024.

Equity Bancshares, Inc. Second Quarter Results Highlighted by Record Net Interest Income and Net Interest Margin Expansion

Insights

FAQ

What was Equity Bancshares' (EQBK) net income for Q2 2024?

How did Equity Bancshares' (EQBK) net interest margin perform in Q2 2024?

What mergers did Equity Bancshares (EQBK) complete or announce in Q2 2024?

What was Equity Bancshares' (EQBK) allowance for credit losses as of June 30, 2024?

NYSE:EQBK

EQBK Rankings

EQBK Latest News

EQBK Stock Data

Trending News

Equity Bancshares, Inc. Second Quarter Results Highlighted by Record Net Interest Income and Net Interest Margin Expansion

Insights

Financial Analyst positive

Market Research Analyst positive

Tax Expert positive

FAQ

What was Equity Bancshares' (EQBK) net income for Q2 2024?

How did Equity Bancshares' (EQBK) net interest margin perform in Q2 2024?

What mergers did Equity Bancshares (EQBK) complete or announce in Q2 2024?

What was Equity Bancshares' (EQBK) allowance for credit losses as of June 30, 2024?

NYSE:EQBK

EQBK Rankings

EQBK Latest News

EQBK Stock Data