Equity Bancshares, Inc. Reports Second Quarter Results, Continued Organic Growth

WICHITA, Kansas, July 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 $15.3 million and $0.94 earnings per diluted share for the quarter ended June 30, 2022.

“In 2022, we’ve demonstrated our ability to deliver organic growth absent a merger partner. Our 8.5% organic loan growth represents the hard work of our sales and operations teams to provide value to customers,” said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc. “We have a great leadership team dedicated to driving loans, treasury services, deposit products, and new products such as our recently introduced healthcare services offerings. These efforts to deliver sophisticated products and customer experience solutions had the effect of increasing earnings, improving net interest margin, increasing fee income and improving our loan to deposit ratio.”

“In the third quarter, we expect to continue to strengthen our loan to deposit ratio and to serve as a resource for our customers as they continue to navigate economic challenges for their businesses and families,” said Mr. Elliott. “Our brand reflects our entrepreneurial spirit, and as we add talent to our leadership teams, new products and services, and new service channels, we’ll continue to operate with our local customers in mind.”

Notable Items:

• During the second quarter, the Company realized continued loan growth excluding the impact of PPP assets and the branch sale, bring annualized loan growth year-to-date to 8.51%.
• During the quarter, the Company realized linked period growth of 5.38% in service fee income, driven by additional debit card revenue and service charges on Equity Bank deposit products.
• The Company closed on the sale of three branches to United Bank & Trust in Belleville, Clyde and Concordia, Kansas, which resulted in a net gain of $540 thousand.
• At June 30, 2022, classified assets to regulatory capital has declined to 13.1% from 17.1% at March 31, 2022.
• The Company continued to emphasize investor returns through repurchase of 355,844 shares during the quarter, at an average price of $31.54, 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 126,900 shares.

Financial Results for the Quarter Ended June 30, 2022

Net income allocable to common stockholders was $15.3 million, or $0.94 per diluted share, for the three months ended June 30, 2022, as compared to $15.7 million, or $0.93 per diluted share, for the three months ended March 31, 2022. The decrease for the second quarter of 2022 is primarily due to increases in non-interest expense of $2.0 million and provision for credit losses of $1.2 million, partially offset by an increase in non-interest income of $615 thousand and net interest income of $277 thousand.

Net Interest Income

Net interest income was $39.6 million for the three months ended June 30, 2022, as compared to $39.3 million for the three months ended March 31, 2022, an increase of $277 thousand, or 0.7%.   The yield on interest-earning assets increased 7-basis points to 3.74% during the quarter ended June 30, 2022, as compared to 3.67% for the quarter ended March 31, 2022. The cost of interest-bearing deposits increased by 6 basis points during the quarter, moving from 0.22% at March 31, 2022 to 0.28% at June 30, 2022.

Provision for Credit Losses

During the three months ended June 30, 2022, there was a provision to the allowance for credit losses of $824 thousand compared to a net release of $412 thousand in the previous quarter. The comparative increase was primarily driven by the increase in general reserves driven by slowing prepayment speeds and the perceived risk associated with the current economic environment, which includes, significant inflation, supply chain concerns and the impact of monetary policy on consumers and businesses.   For the three months ended June 30, 2022, we had net charge-offs of $176 thousand as compared to $362 thousand for the three months ended March 31, 2022.

Non-Interest Income

Total non-interest income was $9.6 million for the three months ended June 30, 2022, as compared to $9.0 million for the three months ended March 31, 2022, or an increase of 6.8%, quarter over quarter. The increase was primarily due to an increase in net gain on acquisition and branch sales of $540 thousand.

Non-Interest Expense

Total non-interest expense for the quarter ended June 30, 2022, was $31.4 million as compared to $29.5 million for the quarter ended March 31, 2022. The $2.0 million change was primarily due to increases in other non-interest expense of $2.0 million driven by a provision to reserve for unfunded commitments of $288 thousand for the quarter ended June 30, 2022, compared to a release of reserve for unfunded commitments of $1.0 million for the quarter ended March 31, 2022.

Asset Quality

As of June 30, 2022, Equity’s allowance for credit losses to total loans remained constant at 1.5%, as compared to March 31, 2022. Nonperforming assets were $37.0 million as of June 30, 2022, or 0.7% of total assets, compared to $37.5 million at March 31, 2022, or 0.7% of total assets. Non-accrual loans were $18.9 million at June 30, 2022, as compared to $20.7 million at March 31, 2022. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $72.1 million, or 13.1% of regulatory capital, down from $94.2 million, or 17.1% of regulatory capital as of March 31, 2022.

During the quarter ended June 30, 2022, non-performing assets decreased $500 thousand due to decreases in non-accrual loans of $1.8 million partially offset by increases in closed bank branches classified as other real estate owned of $881 thousand and other repossessed assets of $83 thousand.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.1%, the total capital to risk-weighted assets was 16.0% and the total leverage ratio was 9.1% at June 30, 2022.   At March 31, 2022, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.8%, the total capital to risk-weighted assets ratio was 15.7% 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 13.9%, a ratio of total capital to risk-weighted assets of 15.1% and a total leverage ratio of 9.9% at June 30, 2022.   At March 31, 2022, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 13.7%, the ratio of total capital to risk-weighted assets was 14.9% and the total leverage ratio was 10.0%.

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, Eric Newell, will hold a conference call and webcast to discuss second quarter results on Wednesday, July 20, 2022 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 July 27, 2022, 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 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 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. 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, except per share data)

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

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

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

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

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

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

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