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