Equity Bancshares, Inc. Fourth Quarter Results Highlighted by 6.1% Annualized Loan Growth and Strategic Balance Sheet Repositioning
Equity Bancshares, Inc. announced a net loss of $28.3 million for the quarter ended December 31, 2023, primarily driven by a loss on sales of available-for-sale securities. The company reported a significant increase in loans and deposits, with a planned merger with Rockhold Bancorp. Despite the loss, the company experienced growth in stockholders' equity and tangible book value.
Positive
Significant expansion in gross loans held-for-investment and deposit growth
Planned merger with Rockhold Bancorp, parent company of Bank of Kirksville
Increase in stockholders' equity and tangible book value
Negative
Net loss of $28.3 million for the quarter
Loss on sales of available-for-sale securities of $50.6 million
The reported net loss of Equity Bancshares of $28.3 million for the quarter ended December 31, 2023, reflects a significant financial event which is crucial for shareholder and potential investor evaluation. The loss is primarily attributed to a $50.6 million gross loss on the sale of securities. It's imperative to consider the one-time nature of these losses when assessing the company's underlying performance. The operating income, excluding these one-time costs, was $11.9 million, indicating that the core business remains profitable.
The merger with the Bank of Kirksville represents a strategic expansion that could enhance market presence and drive future growth. However, such mergers often come with integration risks and potential for unforeseen costs. The tangible equity growth, indicated by the increase in tangible book value per share from $23.09 to $25.37, presents a stronger balance sheet position, which is a positive signal to the market.
Furthermore, the shift in deposit composition and the repositioning of the bond portfolio suggest active balance sheet management in response to the changing interest rate environment. This proactive approach could be viewed favorably, as it may lead to improved net interest margins over time. However, investors should closely monitor the impact of these strategies on the company's liquidity and interest rate risk profile.
The banking industry is currently navigating a complex interest rate landscape and Equity Bancshares' repositioning of its bond portfolio, resulting in the reported loss, is a reflection of these broader market conditions. The strategic decision to sell lower-yielding securities and reinvest in higher-yielding assets is a move that could benefit the company in a rising rate environment, despite the short-term losses incurred.
The expansion of gross loans held-for-investment and deposit growth are positive indicators of the company's market competitiveness and ability to attract and retain customers. The focus on commercial lending categories for growth aligns with broader economic trends where businesses seek financing to capitalize on post-pandemic recovery opportunities.
Asset quality metrics, such as the low classified asset ratio and consistent allowance for credit losses, suggest a healthy credit environment within Equity Bancshares. This stability is essential for investor confidence, especially when considering the potential risks associated with the upcoming merger and market volatility.
The announcement of Equity Bancshares' merger with Rockhold Bancorp and the Bank of Kirksville involves complex legal processes and regulatory approvals. It's crucial to analyze the legal implications, such as antitrust considerations and compliance with banking regulations. The successful navigation of these legal hurdles is critical to the timely and effective completion of the merger.
Additionally, the legal structuring of the merger will have implications for shareholder rights and potential dilution. It is important for stakeholders to understand the terms of the deal and how it will affect their holdings. The communication of these details must be clear and in compliance with SEC regulations to ensure transparency and maintain market integrity.
Lastly, the legal team's expertise in due diligence is vital to uncover any potential liabilities or risks associated with the Bank of Kirksville's portfolio that could impact Equity Bancshares post-merger. The thoroughness of this process can significantly influence the long-term success of the merger and the financial stability of the combined entity.
01/24/2024 - 05:29 PM
Company Announces Merger with Bank of Kirksville and Tangible Equity Growth
WICHITA, Kan., Jan. 24, 2024 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported a net loss of $28.3 million or $(1.84) earnings per diluted share for the quarter ended December 31, 2023. Excluding the impact of our previously announced bond repositioning and merger related expenses, operating income would have been $11.9 million or $0.77 earnings per diluted share.
“Our Company entered the fourth quarter positioned to take advantage of market opportunities which we expect will drive our operating growth in the future,” said Brad S. Elliott, Chairman and CEO of Equity. “With our team’s efforts around capital creation and management, we were able to announce our newest strategic combination with the Bank of Kirksville, Missouri, as well as a repositioning of our bond portfolio. Each of these transactions reflect our entrepreneurial spirit and, we believe, position our Company for continued success.”
"In addition to the transformative transactions, our teams continued to emphasize core customer creation and service, while maintaining strong credit quality," Mr. Elliott said. "Our classified asset ratio continues to be historically low, while both capital and on balance sheet reserves remain high, positioning Equity to be strategic for organic and acquisitive growth opportunities."
Notable Items:
The Company realized linked quarter gross loans held-for-investment expansion of $50.8 million , or 6.1% annualized. Commercial lending categories were the primary contributors to realized growth. The Company realized linked quarter deposit growth of $63.3 million , including $13.3 million in non-brokered deposit balances. The Company sold $493.6 million in securities par value, realizing gross loss of $50.6 million . Securities included in the transaction were yielding 1.20% at the date of sale. Funds received were redeployed in bond purchases, loan production, cash, and the avoidance of high-cost borrowings. Stockholders' Equity increased $34.7 million linked quarter, while tangible book value increased $35.5 million . Tangible book value per share closed the year at $25.37 compared to $23.09 as of September 30, 2023 and $21.67 as of December 31, 2022. The Company announced its planned merger with Rockhold Bancorp, the parent company of Bank of Kirksville (“BoK”) which operates eight banking locations in northcentral Missouri. As of September 30, 2023 BoK reported total assets of $406 million , including $122 million in loans, and $344 million in deposits. Classified assets as a percentage of total risk based capital at Equity Bank closed the period at 7.1% while non-performing assets remained historically low. The allowance for credit losses closed the quarter at 1.31% of total loans. Financial Results for the Quarter Ended December 31, 2023
Net loss allocable to common stockholders was $28.3 million , or $(1.84) per diluted share, for the three months ended December 31, 2023, as compared to $12.3 million , or $0.80 per diluted share, for the three months ended September 30, 2023. The decrease during the quarter was primarily driven by a loss on sales of available-for-sale securities of $50.6 million . Excluding the tax-effected impact of loss on sale, operating net income would have been $11.9 million , or $0.77 per diluted share.
Net Interest Income
Net interest income was $39.5 million for the three months ended December 31, 2023, as compared to $41.0 million for the three months ended September 30, 2023, a decrease of $1.5 million , or 3.77% . Net interest margin decreased to 3.49% from 3.51% as the yield on interest-earning assets increased 12 basis points to 5.69% and the cost of interest-bearing deposits increased 18 basis points to 2.83% . Continued increases in loan coupon were offset by a decline in purchase accounting and non-accrual loan costs.
Average deposits declined during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At December 31, 2023, non-interest-bearing deposits declined $38.1 million from September 30, 2023, and $199.8 million from December 31, 2022. The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts coupled with declining excess liquidity positions of our customer base.
Provision for Credit Losses
During the three months ended December 31, 2023, there was a provision of $711 thousand compared to a provision of $1.2 million in the previous quarter. The provision for the quarter is the result of increased loss rates within the portfolio as well as realized charge-offs; however, overall we continue to experience positive credit trends. 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. For the three months ended December 31, 2023, we had net charge-offs of $1.4 million as compared to $1.6 million for the three months ended September 30, 2023.
Non-Interest Income
Total non-interest income was $(43.4) million for the three months ended December 31, 2023, as compared to $8.7 million for the three months ended September 30, 2023, or a decrease of 597.0% , quarter-over-quarter. The $52.1 million decrease was primarily due to an increase in losses on the sale of available-for-sale securities of $50.7 million . During the fourth quarter the Company repositioned it's investment portfolio by selling lower yielding securities and reinvesting into higher yielding assets, resulting in the loss.
Exclusive of the investment portfolio re-positioning, non-interest income was driven down by the fair valuation of portfolio derivatives as market rates trended down in the quarter, as well as a decline in the benefits from specific credits related to the Almena State Bank transaction of $526 thousand .
Non-Interest Expense
Total non-interest expense for the quarter ended December 31, 2023, was $35.0 million as compared to $34.2 million for the quarter ended September 30, 2023, an increase of $754 thousand . Adjusting for merger expenses, the increase quarter over quarter was $462 thousand due to increased incentive and insurance accruals within the salary and employee benefits line item.
Income Tax Expense
At December 31, 2023, the effective tax rate for the quarter was 28.6% as compared to 13.5% at September 30, 2023. The year-to-date tax rate is (223.9)% compared to 14.1% at September 30, 2023. The increase in the rate linked to the quarter represents additional benefit associated with the sale of bonds generating pre-tax losses recognized in the fourth quarter ending December 31, 2023. The year-to-date tax rate represents the anticipated tax planning benefits and credits amplified by a reduction in pre-tax book income for the year due to the pre-tax losses generated in the fourth quarter related to the sale of bonds. The anticipated tax rate for the full year, normalized for the sale of the bonds, would have been 12.8% .
Loans, Total Assets and Funding
Loans held for investment were $3.33 billion at December 31, 2023, increasing $50.8 million compared to the previous quarter. Total assets were $5.03 billion as of December 31, 2023, increasing $89.3 million or 1.8% from September 30, 2023.
Total deposits were $4.1 billion at December 31, 2023, increasing $63.3 million from the previous quarter end and decreasing $96.4 million from the same period end in 2022. During the fourth quarter, there were increases in brokered deposits of $50.0 million . Excluding the impact of brokered deposits, totals deposits increased $13.3 million as compared to September 30, 2023. Of the total deposit balance, non-interest-bearing accounts comprise approximately 21.7% . Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from September 30, 2023.
Asset Quality
As of December 31, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to September 30, 2023. Nonperforming assets were $26.5 million as of December 31, 2023, or 0.5% of total assets, compared to $20.5 million at September 30, 2023, or 0.4% of total assets. Non-accrual loans were $25.0 million at December 31, 2023, as compared to $19.4 million at September 30, 2023. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $40.5 million , or 7.1% of regulatory capital, up from $37.6 million , or 6.3% of regulatory capital as of September 30, 2023.
Capital
Quarter over quarter, book capital increased $34.7 million to $452.9 million and tangible capital increased $35.5 million to $391.5 million . The increase in book and tangible capital is primarily due to a decrease in the unrealized loss position in our investment portfolio of $65.0 million , partially offset by net loss for the quarter of $28.3 million , dividends declared of $1.9 million and a decrease in unrealized gains on cash-flow derivatives of $1.0 million .
The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 11.7% , the total capital to risk-weighted assets was 15.5% and the total leverage ratio was 9.5% at December 31, 2023. At September 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.7% , the total capital to risk-weighted assets ratio was 16.4% and the total leverage ratio was 9.8% .
Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 13.9% , total capital to risk-weighted assets was 15.1% and the total leverage ratio was 10.6% at December 31, 2023. At September 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.7% , the ratio of total capital to risk-weighted assets was 15.9% and the total leverage ratio was 10.8% .
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 fourth quarter results on Thursday, January 25, 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 registration link
A replay of the call and webcast will be available two hours following the close of the call until January 31, 2024, accessible at investor.equitybank.com
About Equity Bancshares, Inc. 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 9, 2023, 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.
Investor Contact:
Brian J. Katzfey
Media Contact:
John J. Hanley
Unaudited Financial Tables
Table 1 . Consolidated Statements of IncomeTable 2 . Quarterly Consolidated Statements of IncomeTable 3 . Consolidated Balance SheetsTable 4 . Selected Financial HighlightsTable 5 . Year-To-Date Net Interest Income AnalysisTable 6 . Quarter-To-Date Net Interest Income AnalysisTable 7 . Quarter-Over-Quarter Net Interest Income AnalysisTable 8 . Non-GAAP Financial MeasuresTABLE 1. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended Year ended 2023 2022 2023 2022 Interest and dividend income Loans, including fees $ 54,932 $ 46,149 $ 211,213 $ 160,859 Securities, taxable 6,417 5,946 23,873 22,713 Securities, nontaxable 354 678 1,960 2,698 Federal funds sold and other 2,591 651 9,666 1,978 Total interest and dividend income 64,294 53,424 246,712 188,248 Interest expense Deposits 20,074 8,013 70,473 16,321 Federal funds purchased and retail repurchase agreements 298 82 931 232 Federal Home Loan Bank advances 1,005 1,500 3,944 2,094 Federal Reserve Bank borrowings 1,546 — 4,755 — Subordinated debt 1,904 1,798 7,591 6,771 Total interest expense 24,827 11,393 87,694 25,418 Net interest income 39,467 42,031 159,018 162,830 Provision (reversal) for credit losses 711 (151 ) 1,873 125 Net interest income after provision (reversal) for credit losses 38,756 42,182 157,145 162,705 Non-interest income Service charges and fees 2,299 2,705 10,187 10,632 Debit card income 2,524 2,557 10,322 10,677 Mortgage banking 125 116 652 1,416 Increase in value of bank-owned life insurance 925 758 4,059 3,113 Net gain on acquisition and branch sales — 422 — 962 Net gains (losses) from securities transactions (50,618 ) 14 (51,909 ) 5 Other 1,331 1,757 7,560 9,152 Total non-interest income (43,414 ) 8,329 (19,129 ) 35,957 Non-interest expense Salaries and employee benefits 16,598 16,113 64,384 62,006 Net occupancy and equipment 3,244 2,919 12,325 12,223 Data processing 4,471 4,334 17,433 15,883 Professional fees 1,413 1,404 5,754 4,951 Advertising and business development 1,598 1,903 5,425 5,042 Telecommunications 460 517 1,963 1,916 FDIC insurance 660 360 2,195 1,140 Courier and postage 577 533 2,046 1,881 Free nationwide ATM cost 508 510 2,073 2,103 Amortization of core deposit intangibles 739 924 3,374 4,042 Loan expense 155 262 540 828 Other real estate owned 224 388 542 589 Merger expenses 292 68 297 594 Other 4,059 5,014 17,250 15,182 Total non-interest expense 34,998 35,249 135,601 128,380 Income (loss) before income tax (39,656 ) 15,262 2,415 70,282 Provision for income taxes (11,357 ) 3,654 (5,406 ) 12,594 Net income (loss) and net income (loss) allocable to common stockholders $ (28,299 ) $ 11,608 $ 7,821 $ 57,688 Basic earnings (loss) per share $ (1.84 ) $ 0.73 $ 0.50 $ 3.56 Diluted earnings (loss) per share $ (1.84 ) $ 0.72 $ 0.50 $ 3.51 Weighted average common shares 15,417,200 15,948,360 15,535,772 16,214,049 Weighted average diluted common shares 15,417,200 16,204,185 15,648,842 16,437,906
TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
As of and for the three months ended December 31, September 30, June 30, March 31, December 31, Interest and dividend income Loans, including fees $ 54,932 $ 55,152 $ 52,748 $ 48,381 $ 46,149 Securities, taxable 6,417 5,696 5,813 5,947 5,946 Securities, nontaxable 354 369 568 669 678 Federal funds sold and other 2,591 3,822 2,127 1,126 651 Total interest and dividend income 64,294 65,039 61,256 56,123 53,424 Interest expense Deposits 20,074 19,374 17,204 13,821 8,013 Federal funds purchased and retail repurchase agreements 298 246 192 195 82 Federal Home Loan Bank advances 1,005 968 953 1,018 1,500 Federal Reserve Bank borrowings 1,546 1,546 1,528 135 — Subordinated debt 1,904 1,893 1,950 1,844 1,798 Total interest expense 24,827 24,027 21,827 17,013 11,393 Net interest income 39,467 41,012 39,429 39,110 42,031 Provision (reversal) for credit losses 711 1,230 298 (366 ) (151 ) Net interest income after provision (reversal) for credit losses 38,756 39,782 39,131 39,476 42,182 Non-interest income Service charges and fees 2,299 2,690 2,653 2,545 2,705 Debit card income 2,524 2,591 2,653 2,554 2,557 Mortgage banking 125 226 213 88 116 Increase in value of bank-owned life insurance 925 794 757 1,583 758 Net gain on acquisition and branch sales — — — — 422 Net gains (losses) from securities transactions (50,618 ) (1 ) (1,322 ) 32 14 Other 1,331 2,435 1,996 1,798 1,757 Total non-interest income (43,414 ) 8,735 6,950 8,600 8,329 Non-interest expense Salaries and employee benefits 16,598 15,857 15,237 16,692 16,113 Net occupancy and equipment 3,244 3,262 2,940 2,879 2,919 Data processing 4,471 4,553 4,493 3,916 4,334 Professional fees 1,413 1,312 1,645 1,384 1,404 Advertising and business development 1,598 1,419 1,249 1,159 1,903 Telecommunications 460 502 516 485 517 FDIC insurance 660 660 515 360 360 Courier and postage 577 548 463 458 533 Free nationwide ATM cost 508 516 524 525 510 Amortization of core deposit intangibles 739 799 918 918 924 Loan expense 155 132 136 117 262 Other real estate owned 224 128 71 119 388 Merger expenses 292 — — — 68 Other 4,059 4,556 4,423 4,217 5,014 Total non-interest expense 34,998 34,244 33,130 33,229 35,249 Income (loss) before income tax (39,656 ) 14,273 12,951 14,847 15,262 Provision for income taxes (benefit) (11,357 ) 1,932 1,495 2,524 3,654 Net income (loss) and net income (loss) allocable to common stockholders $ (28,299 ) $ 12,341 $ 11,456 $ 12,323 $ 11,608 Basic earnings (loss) per share $ (1.84 ) $ 0.80 $ 0.74 $ 0.78 $ 0.73 Diluted earnings (loss) per share $ (1.84 ) $ 0.80 $ 0.74 $ 0.77 $ 0.72 Weighted average common shares 15,417,200 15,404,992 15,468,378 15,858,808 15,948,360 Weighted average diluted common shares 15,417,200 15,507,172 15,554,255 16,028,051 16,204,185
TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
December 31, September 30, June 30, March 31, December 31, ASSETS Cash and due from banks $ 363,289 $ 183,404 $ 262,604 $ 249,982 $ 104,013 Federal funds sold 15,810 15,613 15,495 384 415 Cash and cash equivalents 379,099 199,017 278,099 250,366 104,428 Available-for-sale securities 919,648 1,057,009 1,094,748 1,183,247 1,184,390 Held-to-maturity securities 2,209 2,212 2,216 1,944 1,948 Loans held for sale 476 627 2,456 648 349 Loans, net of allowance for credit losses(1) 3,289,381 3,237,932 3,278,126 3,285,515 3,265,701 Other real estate owned, net 1,833 3,369 4,362 4,171 4,409 Premises and equipment, net 112,632 110,271 106,186 104,789 101,492 Bank-owned life insurance 124,865 124,245 123,451 122,971 123,176 Federal Reserve Bank and Federal Home Loan Bank stock 20,608 20,780 21,129 33,359 21,695 Interest receivable 25,497 23,621 21,360 20,461 20,630 Goodwill 53,101 53,101 53,101 53,101 53,101 Core deposit intangibles, net 7,222 7,961 8,760 9,678 10,596 Other 98,021 105,122 100,889 86,466 89,736 Total assets $ 5,034,592 $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Demand $ 898,129 $ 936,217 $ 978,968 $ 1,012,671 $ 1,097,899 Total non-interest-bearing deposits 898,129 936,217 978,968 1,012,671 1,097,899 Demand, savings and money market 2,483,807 2,397,003 2,397,524 2,334,463 2,329,584 Time 763,519 748,950 854,458 939,799 814,324 Total interest-bearing deposits 3,247,326 3,145,953 3,251,982 3,274,262 3,143,908 Total deposits 4,145,455 4,082,170 4,230,950 4,286,933 4,241,807 Federal funds purchased and retail repurchase agreements 43,582 39,701 44,770 45,098 46,478 Federal Home Loan Bank advances and Federal Reserve Bank borrowings 240,000 240,000 240,000 251,222 138,864 Subordinated debt 96,921 96,787 96,653 96,522 96,392 Contractual obligations 19,315 29,019 29,608 19,372 15,218 Interest payable and other liabilities 36,459 39,460 34,467 32,446 32,834 Total liabilities 4,581,732 4,527,137 4,676,448 4,731,593 4,571,593 Commitments and contingent liabilities Stockholders’ equity Common stock 207 207 207 206 205 Additional paid-in capital 489,187 488,137 487,225 486,658 484,989 Retained earnings 141,006 171,188 160,715 150,810 140,095 Accumulated other comprehensive income (loss), net of tax (57,920 ) (122,047 ) (110,225 ) (101,238 ) (113,511 ) Treasury stock (119,620 ) (119,355 ) (119,487 ) (111,313 ) (101,720 ) Total stockholders’ equity 452,860 418,130 418,435 425,123 410,058 Total liabilities and stockholders’ equity $ 5,034,592 $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 (1) Allowance for credit losses $ 43,520 $ 44,186 $ 44,544 $ 45,103 $ 45,847
TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Loans Held For Investment by Type Commercial real estate $ 1,759,855 $ 1,721,761 $ 1,764,460 $ 1,746,834 $ 1,721,269 Commercial and industrial 598,327 585,129 583,664 605,576 594,862 Residential real estate 556,328 558,188 560,389 563,791 570,550 Agricultural real estate 196,114 205,865 202,317 202,274 199,189 Agricultural 118,587 103,352 104,510 106,169 120,003 Consumer 103,690 107,823 107,330 105,974 105,675 Total loans held-for-investment 3,332,901 3,282,118 3,322,670 3,330,618 3,311,548 Allowance for credit losses (43,520 ) (44,186 ) (44,544 ) (45,103 ) (45,847 ) Net loans held for investment $ 3,289,381 $ 3,237,932 $ 3,278,126 $ 3,285,515 $ 3,265,701 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.31 % 1.35 % 1.34 % 1.35 % 1.38 % Past due or nonaccrual loans to total loans 1.10 % 1.03 % 0.78 % 0.66 % 0.72 % Nonperforming assets to total assets 0.53 % 0.42 % 0.31 % 0.33 % 0.37 % Nonperforming assets to total loans plus other 0.79 % 0.63 % 0.47 % 0.51 % 0.55 % Classified assets to bank total regulatory capital 7.09 % 6.27 % 7.94 % 10.09 % 9.98 % Selected Average Balance Sheet Data (QTD Average) Investment securities $ 985,591 $ 1,085,905 $ 1,155,971 $ 1,185,482 $ 1,184,452 Total gross loans receivable 3,293,755 3,281,483 3,337,497 3,305,681 3,275,284 Interest-earning assets 4,480,279 4,635,384 4,678,744 4,611,019 4,538,177 Total assets 4,892,712 5,046,179 5,064,912 4,994,417 4,930,231 Interest-bearing deposits 3,092,637 3,206,300 3,226,965 3,235,557 3,032,902 Borrowings 391,691 385,125 385,504 247,932 299,191 Total interest-bearing liabilities 3,484,328 3,591,425 3,612,469 3,483,489 3,335,557 Total deposits 4,019,362 4,177,332 4,204,334 4,279,451 4,185,904 Total liabilities 4,469,505 4,619,919 4,640,050 4,573,917 4,531,961 Total stockholders' equity 423,207 426,260 424,862 420,500 398,270 Tangible common equity* 361,451 363,625 361,409 356,053 332,820 Performance ratios Return on average assets (ROAA) annualized (2.29 )% 0.97 % 0.91 % 1.00 % 0.93 % Return on average assets before income tax and (3.16 )% 1.22 % 1.05 % 1.18 % 1.22 % Return on average equity (ROAE) annualized (26.53 )% 11.49 % 10.82 % 11.89 % 11.57 % Return on average equity before income tax and (36.51 )% 14.43 % 12.51 % 13.97 % 15.05 % Return on average tangible common equity* (30.39 )% 14.18 % 13.55 % 14.89 % 14.74 % Yield on loans annualized 6.62 % 6.67 % 6.34 % 5.94 % 5.59 % Cost of interest-bearing deposits annualized 2.58 % 2.40 % 2.14 % 1.73 % 1.05 % Cost of total deposits annualized 1.98 % 1.84 % 1.64 % 1.31 % 0.76 % Net interest margin annualized 3.49 % 3.51 % 3.38 % 3.44 % 3.67 % Efficiency ratio* 74.35 % 68.83 % 69.44 % 70.00 % 70.47 % Non-interest income / average assets (3.52 )% 0.69 % 0.55 % 0.74 % 0.67 % Non-interest expense / average assets 2.84 % 2.69 % 2.62 % 2.74 % 2.84 % Capital Ratios Tier 1 Leverage Ratio 9.46 % 9.77 % 9.54 % 9.60 % 9.61 % Common Equity Tier 1 Capital Ratio 11.74 % 12.65 % 12.23 % 12.21 % 12.26 % Tier 1 Risk Based Capital Ratio 12.36 % 13.28 % 12.84 % 12.83 % 12.88 % Total Risk Based Capital Ratio 15.48 % 16.42 % 15.96 % 15.98 % 16.08 % Total stockholders' equity to total assets 8.99 % 8.46 % 8.21 % 8.24 % 8.23 % Tangible common equity to tangible assets* 7.87 % 7.29 % 7.06 % 7.09 % 7.02 % Dividend payout ratio (6.65 )% 15.13 % 13.53 % 10.49 % 14.01 % Book value per common share $ 29.35 $ 27.13 $ 27.18 $ 27.03 $ 25.74 Tangible book value per common share* $ 25.37 $ 23.09 $ 23.08 $ 22.96 $ 21.67 Tangible book value per diluted common share* $ 25.05 $ 22.96 $ 22.98 $ 22.83 $ 21.35 * 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)
For the year ended For the year ended December 31, 2023 December 31, 2022 Average Outstanding Balance Interest Average(3)(4) Average Outstanding Balance Interest Average(3)(4) Interest-earning assets Loans (1) Commercial and industrial $ 580,451 $ 42,901 7.39 % $ 583,295 $ 32,258 5.53 % Commercial real estate 1,302,568 83,441 6.41 % 1,259,257 65,122 5.17 % Real estate construction 447,516 33,764 7.54 % 363,902 18,269 5.02 % Residential real estate 565,711 23,799 4.21 % 597,196 22,004 3.68 % Agricultural real estate 201,326 13,820 6.86 % 201,295 11,399 5.66 % Agricultural 100,394 6,966 6.94 % 125,342 6,697 5.34 % Consumer 106,542 6,522 6.12 % 102,185 5,110 5.00 % Total loans 3,304,508 211,213 6.39 % 3,232,472 160,859 4.98 % Securities Taxable securities 1,027,726 23,873 2.32 % 1,185,750 22,713 1.92 % Nontaxable securities 74,917 1,960 2.62 % 106,955 2,698 2.52 % Total securities 1,102,643 25,833 2.34 % 1,292,705 25,411 1.97 % Federal funds sold and other 193,941 9,666 4.98 % 107,278 1,978 1.84 % Total interest-earning assets $ 4,601,092 246,712 5.36 % $ 4,632,455 188,248 4.06 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,362,365 46,206 1.96 % $ 2,433,364 10,797 0.44 % Time deposits 827,652 24,267 2.93 % 663,790 5,524 0.83 % Total interest-bearing deposits 3,190,017 70,473 2.21 % 3,097,154 16,321 0.53 % FHLB advances 98,380 3,944 4.01 % 79,775 2,094 2.63 % Other borrowings 254,666 13,277 5.21 % 151,172 7,003 4.63 % Total interest-bearing liabilities $ 3,543,063 87,694 2.48 % $ 3,328,101 25,418 0.76 % Net interest income $ 159,018 $ 162,830 Interest rate spread 2.88 % 3.30 % Net interest margin (2) 3.46 % 3.51 % (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)
For the three months ended For the three months ended December 31, 2023 December 31, 2022 Average Interest Average(3)(4) Average Interest Average(3)(4) Interest-earning assets Loans (1) Commercial and industrial $ 580,726 $ 11,397 7.79 % $ 594,221 $ 9,264 6.19 % Commercial real estate 1,309,588 21,630 6.55 % 1,327,438 19,127 5.72 % Real estate construction 439,708 9,000 8.12 % 367,935 5,827 6.28 % Residential real estate 561,382 5,866 4.15 % 576,357 5,667 3.90 % Agricultural real estate 196,468 3,421 6.91 % 200,492 3,353 6.64 % Agricultural 100,226 1,928 7.63 % 104,146 1,443 5.50 % Consumer 105,657 1,690 6.35 % 104,695 1,468 5.57 % Total loans 3,293,755 54,932 6.62 % 3,275,284 46,149 5.59 % Securities Taxable securities 932,376 6,417 2.73 % 1,083,986 5,946 2.18 % Nontaxable securities 53,215 354 2.64 % 100,466 678 2.68 % Total securities 985,591 6,771 2.73 % 1,184,452 6,624 2.22 % Federal funds sold and other 200,933 2,591 5.12 % 78,441 651 3.29 % Total interest-earning assets $ 4,480,279 64,294 5.69 % $ 4,538,177 53,424 4.67 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,351,663 13,918 2.35 % $ 2,294,639 5,336 0.92 % Time deposits 740,974 6,156 3.30 % 738,263 2,677 1.44 % Total interest-bearing deposits 3,092,637 20,074 2.58 % 3,032,902 8,013 1.05 % FHLB advances 102,432 1,005 3.89 % 155,964 1,500 3.82 % Other borrowings 289,259 3,748 5.14 % 146,691 1,880 5.09 % Total interest-bearing liabilities $ 3,484,328 24,827 2.83 % $ 3,335,557 11,393 1.36 % Net interest income $ 39,467 $ 42,031 Interest rate spread 2.86 % 3.31 % Net interest margin (2) 3.49 % 3.67 % (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 December 31, 2023 September 30, 2023 Average Interest Average(3)(4) Average Interest Average(3)(4) Interest-earning assets Loans (1) Commercial and industrial $ 580,726 $ 11,397 7.79 % $ 573,039 $ 10,984 7.60 % Commercial real estate 1,309,588 21,630 6.55 % 1,253,362 20,824 6.59 % Real estate construction 439,708 9,000 8.12 % 480,355 9,838 8.13 % Residential real estate 561,382 5,866 4.15 % 564,138 6,085 4.28 % Agricultural real estate 196,468 3,421 6.91 % 203,399 3,898 7.60 % Agricultural 100,226 1,928 7.63 % 99,773 1,856 7.38 % Consumer 105,657 1,690 6.35 % 107,417 1,667 6.16 % Total loans 3,293,755 54,932 6.62 % 3,281,483 55,152 6.67 % Securities Taxable securities 932,376 6,417 2.73 % 1,027,889 5,696 2.20 % Nontaxable securities 53,215 354 2.64 % 58,016 369 2.52 % Total securities 985,591 6,771 2.73 % 1,085,905 6,065 2.22 % Federal funds sold and other 200,933 2,591 5.12 % 267,996 3,822 5.66 % Total interest-earning assets $ 4,480,279 64,294 5.69 % $ 4,635,384 65,039 5.57 % Interest-bearing liabilities Demand savings and money market deposits $ 2,351,663 13,918 2.35 % $ 2,423,380 13,331 2.18 % Time deposits 740,974 6,156 3.30 % 782,920 6,043 3.06 % Total interest-bearing deposits 3,092,637 20,074 2.58 % 3,206,300 19,374 2.40 % FHLB advances 102,432 1,005 3.89 % 100,000 968 3.84 % Other borrowings 289,259 3,748 5.14 % 285,125 3,685 5.13 % Total interest-bearing liabilities $ 3,484,328 24,827 2.83 % $ 3,591,425 24,027 2.65 % Net interest income $ 39,467 $ 41,012 Interest rate spread 2.86 % 2.92 % Net interest margin (2) 3.49 % 3.51 % (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)
As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2023 2023 2023 2023 2022 Total stockholders' equity $ 452,860 $ 418,130 $ 418,435 $ 425,123 $ 410,058 Less: goodwill 53,101 53,101 53,101 53,101 53,101 Less: core deposit intangibles, net 7,222 7,961 8,760 9,678 10,596 Less: mortgage servicing rights, net 75 100 126 151 176 Less: naming rights, net 1,000 1,011 1,022 1,033 1,044 Tangible common equity $ 391,462 $ 355,957 $ 355,426 $ 361,160 $ 345,141 Common shares outstanding at period end 15,428,251 15,413,064 15,396,739 15,730,257 15,930,112 Diluted common shares outstanding at period end 15,629,185 15,500,749 15,468,319 15,822,536 16,163,253 Book value per common share $ 29.35 $ 27.13 $ 27.18 $ 27.03 $ 25.74 Tangible book value per common share $ 25.37 $ 23.09 $ 23.08 $ 22.96 $ 21.67 Tangible book value per diluted common share $ 25.05 $ 22.96 $ 22.98 $ 22.83 $ 21.35 Total assets $ 5,034,592 $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 Less: goodwill 53,101 53,101 53,101 53,101 53,101 Less: core deposit intangibles, net 7,222 7,961 8,760 9,678 10,596 Less: mortgage servicing rights, net 75 100 126 151 176 Less: naming rights, net 1,000 1,011 1,022 1,033 1,044 Tangible assets $ 4,973,194 $ 4,883,094 $ 5,031,874 $ 5,092,753 $ 4,916,734 Total stockholders' equity to total assets 8.99 % 8.46 % 8.21 % 8.24 % 8.23 % Tangible common equity to tangible assets 7.87 % 7.29 % 7.06 % 7.09 % 7.02 % Total average stockholders' equity $ 423,207 $ 426,260 $ 424,862 $ 420,500 $ 398,270 Less: average intangible assets 61,756 62,635 63,453 64,447 65,450 Average tangible common equity $ 361,451 $ 363,625 $ 361,409 $ 356,053 $ 332,820 Net income (loss) allocable to common stockholders $ (28,299 ) $ 12,341 $ 11,456 $ 12,323 $ 11,608 Add: amortization of intangible assets 775 835 954 954 961 Less: tax effect of intangible assets amortization 163 175 200 200 202 Adjusted net income (loss) allocable to common $ (27,687 ) $ 13,001 $ 12,210 $ 13,077 $ 12,367 Return on total average stockholders' equity (26.53 )% 11.49 % 10.82 % 11.89 % 11.57 % Return on average tangible common equity (30.39 )% 14.18 % 13.55 % 14.89 % 14.74 % Non-interest expense $ 34,998 $ 34,244 $ 33,130 $ 33,229 $ 35,249 Less: merger expense 297 — — — 68 Adjusted non-interest expense $ 34,701 $ 34,244 $ 33,130 $ 33,229 $ 35,181 Net interest income $ 39,467 $ 41,012 $ 39,429 $ 39,110 $ 42,031 Non-interest income (43,414 ) 8,735 6,950 8,600 8,329 Less: net gain on acquisition and branch sales — — — — 422 Less: net gains (losses) from securities transactions (50,618 ) (1 ) (1,322 ) 32 14 Adjusted non-interest income $ 7,204 $ 8,736 $ 8,272 $ 8,568 $ 7,893 Net interest income plus adjusted non-interest income $ 46,671 $ 49,748 $ 47,701 $ 47,678 $ 49,924 Non-interest expense to (886.70 )% 68.84 % 71.43 % 69.65 % 69.99 % Efficiency ratio 74.35 % 68.83 % 69.45 % 69.69 % 70.47 % Net income (loss) allocable to common stockholders $ (28,299 ) $ 12,341 $ 11,456 $ 12,323 $ 11,608 Add: income tax provision (11,357 ) 1,932 1,495 2,524 3,654 Add: provision (reversal) of credit losses 711 1,230 298 (366 ) (151 ) Pre-tax, pre-provision income $ (38,945 ) $ 15,503 $ 13,249 $ 14,481 $ 15,111 Total average assets $ 4,892,712 $ 5,046,179 $ 5,064,912 $ 4,994,417 $ 4,930,231 Total average stockholders' equity $ 423,207 $ 426,620 $ 424,862 $ 420,500 $ 398,270 Return on average assets (ROAA) annualized (2.29 )% 0.97 % 0.91 % 1.00 % 0.93 % Adjusted return on average assets (3.16 )% 1.22 % 1.05 % 1.18 % 1.22 % Adjusted return on average equity (36.51 )% 14.43 % 12.51 % 13.97 % 15.05 %
What was Equity Bancshares, Inc.'s net loss for the quarter ended December 31, 2023?
The net loss was $28.3 million, or $(1.84) per diluted share.
What notable items contributed to the company's growth?
The company experienced significant expansion in gross loans held-for-investment and deposit growth.
What is the ticker symbol for Equity Bancshares, Inc.?
The ticker symbol is EQBK.
What was the impact of the loss on sales of available-for-sale securities?
The loss on sales of available-for-sale securities was $50.6 million.
What was the increase in tangible book value per share?
Tangible book value per share closed the year at $25.37 compared to $23.09 as of September 30, 2023 and $21.67 as of December 31, 2022.
What was the planned merger announced by Equity Bancshares, Inc.?
The company announced its planned merger with Rockhold Bancorp, the parent company of Bank of Kirksville.
What was the increase in stockholders' equity and tangible book value?
Stockholders' Equity increased $34.7 million linked quarter, while tangible book value increased $35.5 million.
