Equity Bancshares Inc (EQBK) 8-K Earnings Release, Regulated Disclosure

WICHITA, Kansas, April 19, 2022 (GLOBE NEWSWIRE) – Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported net income of $15.7 million and $0.93 earnings per diluted share for the quarter ended March 31, 2022.

“I’m pleased with the entrepreneurial spirit of our bankers, including our market leaders, bank leaders and our support and operations teams for their collaboration and their continued focus on our customers,” said Brad Elliott, Chairman and CEO. “We began 2022 as a franchise of nearly 70 bank locations in our four-state network and we’ve continued to sustain momentum in our first quarter with customers by being responsive and open, and providing additional products and services to our new communities.”

“Our first quarter reflects our approach as a brand, providing sophisticated and innovative solutions delivered with trusted expertise of bankers dedicated to local communities,” said Mr. Elliott. “As we continue to review opportunities to expand our brand via merger, our service and sales teams continue to boost organic growth, by delivering new solutions each and every day to our customers.”

Notable Items:

•

During the first quarter, the Company realized period over period growth in loans held for investment of 14.53% excluding the impact of PPP assets, effectively deploying excess cash balances from the end of the year into higher yielding asset classes.

•

The Company realized economic benefit of $5.7 million from the American State Bancshares and Almena State Bank acquisitions during the quarter as specific credits saw improvement resulting in release of specific reserves generated against these assets. In addition to the release of specific reserves, the Company also reversed repurchase obligations associated with certain of these assets further benefiting income by $500 thousand.

•

The Company continued to successfully manage our problem asset portfolio to positive outcomes for the Company and its shareholders. As compared to December 31, 2021, all non-performing ratios have improved in excess of 30%, while classified assets to regulatory capital has fallen to 17.1%, its lowest level since December 31, 2015.

•

The Company continued to position itself in the event of the realization of losses following economic turmoil domestically due in part to inflation and monetary policy as well as geopolitical concerns arising from Russia’s actions in Ukraine.

•

The Company continued to emphasize investor returns through repurchase of 384,383 shares during the quarter, at an average price of $32.21, as well as the continuation of our quarterly dividend program at $0.08 per share. Under the currently active repurchase program, the Company is authorized to purchase an additional 482,744 shares.

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

Financial Results for the Quarter Ended March 31, 2022

Net income allocable to common stockholders was $15.7 million, or $0.93 per diluted share, for the three months ended March 31, 2022, as compared to $10.5 million, or $0.61 per diluted share, for the three months ended December 31, 2021, an increase of $5.2 million. The increase for the first quarter of 2022 is primarily due to increases in loan and investment security interest income of $1.4 million and $545 thousand, respectively, and decreases in non-interest expenses of $8.6 million.

Net Interest Income

Net interest income was $39.3 million for the three months ended March 31, 2022, as compared to $37.2 million for the three months ended December 31, 2021, an increase of $2.1 million, or 5.6%. The increase was mainly due to increasing yields on interest-earning assets with relatively unchanged yields on interest-bearing liabilities. Loans were responsible for the majority of the increase in interest income, with a $14.5 million increase in average balance and a 25 basis point increase in yield. The cost of time deposits fell by 9 basis points during the quarter, moving from 0.56% at December 31, 2021 to 0.47% at March 31, 2022. Total yield on interest-earning assets increased 24 basis points, while total cost of interest-bearing liabilities decreased 2 basis points.

Provision for Credit Losses

During the three months ended March 31, 2022, there was a net release of $412 thousand from the allowance for credit losses recognized through the provision for credit losses as compared to a net release of $2.1 million from the allowance for credit losses for the three months ended December 31, 2021. The net release of allowance for credit losses was mainly driven by decreases in specific reserves on purchased credit deteriorated loans due to improvement in credit quality during the quarter. Offsetting the reduction in allowance for loans specifically analyzed for impairment was an increase in general reserves driven by increasing loan balances as well as perceived risk associated with near term economic turmoil including significant inflation, supply chain concerns which are potentially exacerbated by geopolitical issues, and uncertainty around the impact of monetary policy on consumers and businesses. For the three months ended March 31, 2022, we had net charge-offs of $362 thousand as compared to $7.9 million for the three months ended December 31, 2021.

Non-Interest Income

Total non-interest income was $9.0 million for the three months ended March 31, 2022, as compared to $9.2 million for the three months ended December 31, 2021, or a decrease of 1.9%, quarter over quarter. The decrease was due to decreased income from the valuation of bank-owned life insurance of $195 thousand, insurance commissions and fees of $157 thousand, and mortgage banking revenue of $160 thousand, partially offset by an increase in fee income and other of $152 thousand and an increase of $104 thousand of income related to derivative transactions in the quarter ending March 31, 2022.

Non-Interest Expense

Total non-interest expense for the quarter ended March 31, 2022, was $29.5 million as compared to $38.1 million for the quarter ended December 31, 2021. The $8.6 million change was primarily due to decreases in merger expenses of $4.2 million and other non-interest expense of $3.0 million. The comparative change in other non-interest expense was primarily driven by a release of reserve for unfunded commitments of $1.0 million and a reduction in the cost of our solar investments of an additional $900 thousand.

Asset Quality

As of March 31, 2022, Equity’s allowance for credit losses to total loans had remained constant at 1.5%, as compared to December 31, 2021. Nonperforming assets were $37.5 million as of March 31, 2022, or 0.7% of total assets, compared to $66.0 million at December 31, 2021, or 1.3% of total assets. Non-accrual loans were $20.7 million at March 31, 2022, as

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

compared to $29.4 million at December 31, 2021. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $94.2 million, or 17.1% of regulatory capital, down from $138.5 million, or 25.3% of regulatory capital as of December 31, 2021.

During the quarter ended March 31, 2022, non-performing assets decreased $28.5 million due to decreases in non-accrual loans of $8.7 million and other repossessed assets of $20.0 million. The decrease in non-accrual loans was largely due to $8.2 million in loans upgraded to accrual status during the quarter due to repayment performance and improvements in specific credit concerns. The change in other repossessed assets was primarily due to the sale of a group of assets that were moved to other repossessed assets in the fourth quarter of 2021.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 11.8%, the total capital to risk-weighted assets was 15.7% and the total leverage ratio was 9.1% at March 31, 2022. At December 31, 2021, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.0%, the total capital to risk-weighted assets ratio was 16.0% and the total leverage ratio was 9.1%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 13.7%, a ratio of total capital to risk-weighted assets of 14.9% and a total leverage ratio of 10.0% at March 31, 2022. At December 31, 2021, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.0%, the ratio of total capital to risk-weighted assets was 15.3% and the total leverage ratio was 10.1%.

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

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

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 Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2022 first quarter results on Wednesday, April 20, 2022, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Wednesday, April 20, 2022, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 1392188.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until April 27, 2022, accessible at (855) 859-2056 with conference ID no. 1392188 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 NASDAQ Global Select Market 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,” “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 COVID-19 related impacts; 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 9, 2022, 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

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

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. New risks and uncertainties arise from time to time, such as COVID-19, 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.

Investor Contact:

Chris Navratil

SVP, Finance

Equity Bancshares, Inc.

(316) 612-6014

cnavratil@equitybank.com

Media Contact:

John J. Hanley

SVP, Senior Director of Marketing

Equity Bancshares, Inc.

(913) 583-8004

jhanley@equitybank.com

Unaudited Financial Tables

•

Table 1. Quarterly Consolidated Statements of Income

•

Table 2. Consolidated Balance Sheets

•

Table 3. Selected Financial Highlights

•

Table 4. Quarter-To-Date Net Interest Income Analysis

•

Table 5. Quarter-Over-Quarter Net Interest Income Analysis

•

Table 6. Non-GAAP Financial Measures

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

TABLE 1. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data)

	As of and for the three months ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
Interest and dividend income
Loans, including fees	$	36,306		$	34,942		$	37,581		$	33,810		$	31,001
Securities, taxable		5,391			4,754			3,920			3,523			3,799
Securities, nontaxable		655			747			655			717			724
Federal funds sold and other		300			349			290			268			288
Total interest and dividend income		42,652			40,792			42,446			38,318			35,812
Interest expense
Deposits		1,722			1,939			1,881			2,025			2,410
Federal funds purchased and retail repurchase agreements		33			32			24			26			22
Federal Home Loan Bank advances		9			14			10			80			65
Subordinated debt		1,599			1,592			1,556			1,557			1,556
Total interest expense		3,363			3,577			3,471			3,688			4,053

Net interest income		39,289			37,215			38,975			34,630			31,759
Provision (reversal) for credit losses		(412	)		(2,125	)		1,058			(1,657	)		(5,756	)
Net interest income after provision (reversal) for credit losses		39,701			39,340			37,917			36,287			37,515
Non-interest income
Service charges and fees		2,522			2,471			2,360			2,169			1,596
Debit card income		2,628			2,633			2,574			2,679			2,350
Mortgage banking		562			722			801			848			935
Increase in value of bank-owned life insurance		865			1,060			1,169			676			601
Net gain on acquisition		—			—			—			663			(78	)
Net gains (losses) from securities transactions		40			8			381			—			17
Other		2,405			2,305			546			2,065			1,291
Total non-interest income		9,022			9,199			7,831			9,100			6,712
Non-interest expense
Salaries and employee benefits		15,068			15,119			13,588			12,769			12,722
Net occupancy and equipment		3,170			2,967			2,475			2,327			2,368
Data processing		3,769			3,867			3,257			3,474			2,663
Professional fees		1,171			1,565			1,076			999			1,073
Advertising and business development		976			1,129			760			799			682
Telecommunications		470			435			439			512			580
FDIC insurance		180			360			465			425			415
Courier and postage		423			389			344			327			369
Free nationwide ATM cost		501			515			519			513			472
Amortization of core deposit intangibles		1,050			1,080			1,030			1,030			1,034
Loan expense		185			308			207			181			238
Other real estate owned		(1	)		617			(342	)		(468	)		5
Loss on debt extinguishment		—			—			372			—			—
Merger expenses		323			4,562			4,015			460			152
Other		2,174			5,176			2,484			2,458			2,108
Total non-interest expense		29,459			38,089			30,689			25,806			24,881
Income (loss) before income tax		19,264			10,450			15,059			19,581			19,346
Provision for income taxes (benefit)		3,614			(16	)		3,286			4,415			4,271
Net income (loss) and net income (loss) allocable to common stockholders	$	15,650		$	10,466		$	11,773		$	15,166		$	15,075
Basic earnings (loss) per share	$	0.94		$	0.62		$	0.82		$	1.06		$	1.04
Diluted earnings (loss) per share	$	0.93		$	0.61		$	0.80		$	1.03		$	1.02
Weighted average common shares		16,652,556			16,865,167			14,384,302			14,356,958			14,464,291

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

Weighted average diluted common shares

16,869,152

17,141,174

14,669,312

14,674,838

14,734,083

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

TABLE 2. CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
ASSETS
Cash and due from banks	$	89,764		$	259,131		$	141,645		$	138,869		$	136,190
Federal funds sold		286			823			673			452			498
Cash and cash equivalents		90,050			259,954			142,318			139,321			136,688
Interest-bearing time deposits in other banks		—			—			—			—			249
Available-for-sale securities		1,352,894			1,327,442			1,157,423			1,041,613			998,100
Loans held for sale		1,575			4,214			4,108			6,183			8,609
Loans, net of allowance for credit losses⁽¹⁾		3,194,987			3,107,262			2,633,148			2,763,227			2,740,215
Other real estate owned, net		9,897			9,523			10,267			10,861			10,559
Premises and equipment, net		103,168			104,038			90,727			90,876			90,322
Bank-owned life insurance		120,928			120,787			103,431			103,321			102,645
Federal Reserve Bank and Federal Home Loan Bank stock		19,890			17,510			14,540			18,454			15,174
Interest receivable		16,923			18,048			15,519			15,064			16,655
Goodwill		54,465			54,465			31,601			31,601			31,601
Core deposit intangibles, net		13,830			14,879			12,963			13,993			15,023
Other		100,016			99,509			47,223			33,702			30,344
Total assets	$	5,078,623		$	5,137,631		$	4,263,268		$	4,268,216		$	4,196,184
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	1,255,793		$	1,244,117		$	984,436		$	992,565		$	972,364
Total non-interest-bearing deposits		1,255,793			1,244,117			984,436			992,565			972,364
Savings, NOW and money market		2,511,478			2,522,289			2,092,849			2,035,496			2,074,261
Time		612,399			653,598			585,492			659,494			587,905
Total interest-bearing deposits		3,123,877			3,175,887			2,678,341			2,694,990			2,662,166
Total deposits		4,379,670			4,420,004			3,662,777			3,687,555			3,634,530
Federal funds purchased and retail repurchase agreements		48,199			56,006			39,137			47,184			40,339
Federal Home Loan Bank advances		50,000			—			—			9,208			9,926
Subordinated debt		96,010			95,885			88,030			87,908			87,788
Contractual obligations		17,307			17,692			18,771			4,469			4,856
Interest payable and other liabilities		35,422			47,413			36,804			18,897			20,930
Total liabilities		4,626,608			4,637,000			3,845,519			3,855,221			3,798,369
Commitments and contingent liabilities
Stockholders’ equity
Common stock		204			203			178			176			175
Additional paid-in capital		480,106			478,862			392,321			389,394			387,939
Retained earnings		102,632			88,324			79,226			68,625			53,459
Accumulated other comprehensive income, net of tax		(50,012	)		1,776			9,475			13,450			12,019
Treasury stock		(80,915	)		(68,534	)		(63,451	)		(58,650	)		(55,777	)
Total stockholders’ equity		452,015			500,631			417,749			412,995			397,815
Total liabilities and stockholders’ equity	$	5,078,623		$	5,137,631		$	4,263,268		$	4,268,216		$	4,196,184

⁽¹⁾ Allowance for credit losses	$	47,590		$	48,365		$	52,763		$	51,834		$	55,525

Equity Bancshares, Inc.

PRESS RELEASE – 4/19/2022

TABLE 3. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)

(Dollars in thousands, except per share data)

	As of and for the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2022			2021			2021			2021			2021
Loans Held For Investment by Type
Commercial real estate	$	1,552,134		$	1,486,148		$	1,308,707		$	1,261,214		$	1,218,537
Commercial and industrial		629,181			567,497			569,513			732,126			820,736
Residential real estate		613,928			638,087			490,633			503,110			438,503
Agricultural real estate		198,844			198,330			138,793			129,020			134,944
Agricultural		150,077			166,975			93,767			97,912			93,764
Consumer		98,413			98,590			84,498			91,679			89,256
Total loans held-for-investment		3,242,577			3,155,627			2,685,911			2,815,061			2,795,740
Allowance for credit losses		(47,590	)		(48,365	)		(52,763	)		(51,834	)		(55,525	)
Net loans held for investment	$	3,194,987		$	3,107,262		$	2,633,148		$	2,763,227		$	2,740,215


Asset Quality Ratios
Allowance for credit losses on loans to total loans		1.47	%		1.53	%		1.96	%		1.84	%		1.99	%
Past due or nonaccrual loans to total loans		0.82	%		1.18	%		2.78	%		2.09	%		2.30	%
Nonperforming assets to total assets		0.74	%		1.28	%

Equity Bancshares Inc (EQBK) SEC Filing 8-K Material Event for the period ending Tuesday, April 19, 2022

SEC Filings

EQBK Valuations

EQBK Annual Reports

EQBK Quarterly Reports

EQBK Corporate News

EQBK Merger Prospectus