Equity Bancshares, Inc. Announces First Quarter Results, Completes Acquisition of 3 Bank Locations, Revamps Online Banking Platform, Announces Stock Repurchase Plan and Launches Equity Trust & Wealth Management with Officers in Kansas, Missouri and Oklaho

WICHITA, Kansas, April 22, 2019 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK) (“Equity”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the quarter ended March 31, 2019, including net loss allocable to common stockholders of $4.1 million, or $0.26 per diluted share.

“In the first quarter our teams deserve credit for successfully upgrading our footprint, our customer experience, and expanding our service capabilities,” said Brad Elliott, Chairman and CEO of Equity.  “We’re pleased to add additional markets in Oklahoma that supplement our Southwest Kansas and Guymon markets.  Our Equity Trust & Wealth Management brand provides another set of financial products that appeal to customers throughout our markets, and we believe our new Equity Bank online banking solution is best in class for banking.  Throughout 2019, these key additions and improvements to our platform will yield additional opportunities for organic growth, business banking, and community banking.  As we continue to review merger opportunities, upgrades and innovations will help us become the bank of choice throughout our four states and beyond. 

“In the first quarter, we recorded a $14.5 million provision for loss against a credit relationship.  We will discuss this on our earnings call Tuesday, April 23, 2019.  However, it is important for us to convey we do not believe this represents a systemic trend; rather an isolated individual relationship which is unique to our portfolio.”

On April 18, 2019, the Board of Directors of Equity Bancshares, Inc. authorized the repurchase of up to 1,100,000 shares of our Class A Voting Common Stock, par value $0.01 per share, from time to time, beginning April 29, 2019 and concluding October 30, 2020.  The repurchase program does not obligate us to acquire a specific dollar amount or number of shares and it may be extended, modified or discontinued at any time without notice and is subject to no objection from the Federal Reserve Bank.

On February 8, 2019, Equity completed its acquisition of two bank locations in Guymon, Oklahoma, and one bank location in Cordell, Oklahoma, from MidFirst Bank of Oklahoma City, Oklahoma (“MidFirst”).  The acquisition added total assets of $98.6 million, which included total loans of $6.5 million.  There were total deposits of $98.5 million assumed at the time of the acquisition.  Results of operations of the MidFirst acquisition are included in Equity’s 2019 results of operations subsequent to the acquisition.

Notable Items:

  • Net loss before taxes for the first quarter of 2019 was $5.2 million, or $0.33 per diluted share, compared to net income before taxes of $11.2 million, or $0.75 per diluted share, for the same time period in 2018.  Net loss before taxes, adjusted to exclude merger expense, was $4.6 million, or $0.29 per diluted share, for the first quarter of 2019, compared to net income before taxes, adjusted to exclude merger expense of $11.8 million, or $0.79 per diluted share, for the first quarter of 2018.
  • Stated diluted loss per share in the first quarter of 2019 was $0.26.  Merger expenses, adjusted for estimated income tax, were $487 thousand in the first quarter of 2019, or $0.03 per diluted share. 
  • Net loss allocable to common stockholders, adjusted for the identified specific provision, results in $7.2 million of net income allocable to common stockholders, or $0.45 per diluted share in the first quarter of 2019, compared to 2018 first quarter net income allocable to common stockholders of $8.7 million, or $0.58 per diluted share.
  • Net loss allocable to common stockholders, adjusted for identified specific provision and merger expense, results in $7.7 million of net income allocable to common stockholders, or $0.48 per diluted share in the first quarter of 2019, compared to 2018 first quarter net income allocable to common stockholders, adjusted for merger expenses of $9.1 million, or $0.61 per diluted share.

Highlights of Equity’s growth include:

  • Total loans held for investment of $2.62 billion at March 31, 2019, as compared to total loans held for investment of $2.58 billion at December 31, 2018.  The increase of $43.6 million includes organic growth of $37.1 million, or 1.4%, and $6.5 million of loans added in the MidFirst acquisition.
  • Total deposits were $3.26 billion at March 31, 2019 compared to $3.12 billion at December 31, 2018.  Signature deposits, including core deposits comprised of checking accounts, savings accounts and money market accounts, were $2.22 billion at March 31, 2019, compared to $2.12 billion at December 31, 2018.  Organic signature deposit growth was 2.7% for the quarter.  In addition, the MidFirst acquisition added total deposits of $98.5 million.
  • Total assets of $4.07 billion at March 31, 2019, compared to $4.06 billion at December 31, 2018.  The MidFirst acquisition added total assets of $98.6 million.
  • Book value per common share of $28.66 at March 31, 2019 and $28.87 at December 31, 2018. Tangible book value per common share of $18.55 at March 31, 2019 and $19.08 at December 31, 2018.

Financial Results for Quarter Ended March 31, 2019

Net loss allocable to common stockholders was $4.1 million for the three months ended March 31, 2019, as compared to a net income allocable to common stockholders of $8.7 million for the three months ended March 31, 2018, a decrease of $12.8 million, principally related to the non-typical specific impairment.

Diluted loss per share was $0.26 for the three months ended March 31, 2019, as compared to diluted income per share of $0.58 for the comparable period of 2018.  Weighted average common shares were 15,804,508 and 14,611,379 for the three months ended March 31, 2019 and 2018.  Weighted average fully diluted shares were 16,066,700 and 14,894,180 for the three months ended March 31, 2019 and 2018.  The increase in weighted average fully diluted shares reflects the issuance of 1,164,912 shares in connection with Equity’s May 2018 mergers with Kansas Bank Corporation (“KBC”), based in Liberal, Kansas and Adams Dairy Bancshares, Inc. (“Adams”), based in Blue Springs, Missouri.

Net interest income was $30.6 million for the three months ended March 31, 2019, as compared to $27.8 million for the three months ended March 31, 2018, a $2.9 million, or 10.3% increase.  The additional net interest income was primarily driven by growth in loans and securities balances and, to a lesser extent, an increase in average yield on loans, partially offset by an increase in interest expense as we funded the growth in earning assets with more deposits and borrowings and an overall increase in the average cost of funds.

Our net interest margin was 3.49% for the three months ended March 31, 2019, as compared to 3.91% for the three months ended March 31, 2018.  The decrease in net interest margin was partly due to a reduction in loan fees, additional callable bond premium amortization and the movement to nonaccrual related to a large credit relationship.  Also, our cost of funds has increased primarily due to both retail and public fund deposits.  The cost of retail deposits have increased as the general level of interest rates have risen and from an increased level of market competition for this type of deposit, which are desirable due to their lower level of interest-rate sensitivity.  The cost of public fund deposits have increased due to the level of competition for these deposits, from both other financial institutions and state investment funds, and due to the timing of the investment of these funds in an elevated interest rate environment.

The provision for loan losses was $15.6 million for the three months ended March 31, 2019, reflecting the non-typical specific impairment.  The provision for loan losses was $1.2 million for the three months ended March 31, 2018.  For the three months ended March 31, 2019, we had net charge-offs of $760 thousand, as compared to net charge-offs of $352 thousand for the same period in 2018.

Total non-interest income for the quarter ended March 31, 2019 was $5.3 million, compared to $4.3 million for the quarter ended March 31, 2018.  Increases in service charges and fees and debit card income are principally attributable to the addition of accounts and higher transaction volumes associated with the KBC and Adams mergers.  There were also additional accounts and higher transaction volumes associated with the August 2018 acquisition of City Bank and Trust Company (“City Bank”), based in Guymon, Oklahoma, and the February 2019 acquisition of three MidFirst branches.  Non-interest income includes the increase in value of bank-owned life insurance of $488 thousand and $652 thousand for the three-month periods ended March 31, 2019 and 2018.

Total non-interest expense was $25.5 million for the quarter ended March 31, 2019, compared to $19.6 million for the quarter ended March 31, 2018.  These results reflect the effect of the May 2018 addition of five locations in southwest Kansas plus one location in Blue Springs, Missouri; the August 2018 addition of one location in Guymon, Oklahoma; and the February 2019 acquisition of two additional locations in Guymon, Oklahoma, and one location in Cordell, Oklahoma.  In addition, the results reflect added lending, customer service, corporate and operations staff indirectly attributable to mergers and organic growth and increased data processing costs due to more accounts, higher transaction volumes and our new online banking platform and trust and wealth management infrastructure.  Non-interest expense also includes merger expenses of $639 thousand ($487 thousand after tax) for the three months ended March 31, 2019.  Merger expenses for the three months ended March 31, 2018, totaled $531 thousand ($436 thousand after tax).

Equity’s effective tax rate for the quarter ended March 31, 2019 was 22.1% as compared to 22.5% for the quarter ended March 31, 2018.  For both of the comparable periods, the estimated annual effective tax rate at which income tax expense (benefits) have been provided reflect, in addition to statutory tax rates, the levels of tax-exempt interest income, non-taxable life insurance income, non-deductible facilitative merger expense and other non-deductible expense in proportion to anticipated annual income before income taxes, as well as federal income tax credits anticipated to be available in each annual period.

Loans, Deposits and Total Assets

Loans held for investment were $2.62 billion at March 31, 2019, as compared to $2.58 billion at December 31, 2018, an increase of $43.6 million.  The increase in loans held for investment includes $6.5 million of net loans acquired in the February 2019 MidFirst acquisition plus $37.1 million of organic loan growth.

As of March 31, 2019, Equity’s allowance for loan losses to total loans was 1.01%, as compared to 0.44% at December 31, 2018.  Total reserves, including purchase discounts, to total loans were approximately 1.53% as of March 31, 2019, as compared to 1.02% at December 31, 2018.  Nonperforming assets of $73.0 million as of March 31, 2019, were 1.80% of total assets.  Nonperforming assets at December 31, 2018, were $39.6 million or 0.97% of total assets.

Total deposits were $3.26 billion at March 31, 2019, as compared to $3.12 billion at December 31, 2018.  Total deposits increased $137.4 million between December 31, 2018 and March 31, 2019.  This increase included $98.5 million assumed in the MidFirst acquisition and $38.9 million in organic growth. Signature deposits were $2.22 billion at March 31, 2019, as compared to $2.12 billion at December 31, 2018.

At March 31, 2019, Equity had consolidated total assets of $4.07 billion, as compared to $4.06 billion at December 31, 2018, an increase of $3.6 million.  The increase in total assets includes $98.6 million of total assets acquired in the MidFirst acquisition.

Borrowings and Capital

At March 31, 2019, borrowings totaled $331.2 million, as compared to $464.7 million at December 31, 2018.  The decrease in borrowings was principally due to a $119.9 million pay down in Federal Home Loan Bank advances, largely from growth in deposits, and a $7.0 million pay down on the bank stock loan.

At March 31, 2019, common stockholders’ equity totaled $453.5 million, $28.66 per common share, compared to $455.9 million, $28.87 per common share, at December 31, 2018.  Tangible common equity was $293.5 million and tangible book value per common share was $18.55 at March 31, 2019.  Tangible common equity was $301.3 million and tangible book value per common share was $19.08 at December 31, 2018.  The ratio of common equity tier 1 capital to risk-weighted assets was approximately 10.46% and the total capital to risk-weighted assets was approximately 11.87% at March 31, 2019.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of this press release.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Greg Kossover, will hold a conference call and webcast to discuss first quarter 2019 results on Tuesday, April 23, 2019 at 10 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 Tuesday, April 23, 2019, 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. 8667358.

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 30, 2019, accessible at (855) 859-2056 with conference ID no. 8667358 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.

No Offer or Solicitation

This press release shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended.

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 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 20, 2019 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, 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.

Media Contact:

John J. Hanley
SVP, Director of Marketing
Equity Bancshares, Inc.
(816) 505-4063
jhanley@equitybank.com

Investor Contact:

Jacob Willis
Investor Relations Officer
Equity Bancshares, Inc.
(316) 779-1675
jwillis@equitybank.com

Unaudited Financial Tables

  • Table 1. Selected Financial Highlights
  • Table 2. Quarterly Analysis of Changes in Net Interest Income
  • Table 3. Consolidated Balance Sheets
  • Table 4. Consolidated Statements of Income
  • Table 5. Non-GAAP Financial Measures

TABLE 1. 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,  
  2019     2018     2018     2018     2018  
Statement of Income Data                                      
Net interest income $ 30,639     $ 33,336     $ 32,755     $ 30,920     $ 27,787  
Provision for loan losses   15,646       750       1,291       750       1,170  
Net gains (losses) from securities transactions   6       5       (4 )     (2 )     (8 )
Other non-interest income   5,318       5,444       5,437       4,594       4,259  
Total non-interest income   5,324       5,449       5,433       4,592       4,251  
Merger expense   639       938       757       5,236       531  
Other non-interest expense   24,904       24,200       22,890       20,739       19,096  
Total non-interest expense   25,543       25,138       23,647       25,975       19,627  
Income (loss) before income taxes   (5,226 )     12,897       13,250       8,787       11,241  
Provision for income taxes (benefits)   (1,153 )     2,972       2,928       1,920       2,530  
Net income (loss)   (4,073 )     9,925       10,322       6,867       8,711  
Net income (loss) allocable to common stockholders   (4,073 )     9,925       10,322       6,867       8,711  
Basic earnings (loss) per share   (0.26 )     0.63       0.65       0.45       0.60  
Diluted earnings (loss) per share   (0.26 )     0.62       0.64       0.44       0.58  
                                       
Balance Sheet Data (at period end)                                      
Available-for-sale securities $ 166,355     $ 168,875     $ 172,388     $ 180,238     $ 174,717  
Held-to-maturity securities   749,493       748,356       713,899       665,995       522,021  
Gross loans held for investment   2,618,986       2,575,408       2,598,729       2,451,772       2,134,596  
Allowance for loan losses   26,340       11,454       11,010       10,083       9,316  
Intangible assets, net   159,944       154,665       155,430       146,538       115,032  
Total assets   4,065,354       4,061,716       3,931,036       3,712,185       3,176,062  
Total deposits   3,260,870       3,123,447       2,821,246       2,635,048       2,368,297  
Non-time deposits   2,220,110       2,115,541       1,969,715       1,829,902       1,647,105  
Borrowings   331,221       464,676       652,755       631,501       414,415  
Total liabilities   3,611,891       3,605,775       3,487,799       3,278,903       2,794,575  
Total stockholders’ equity   453,463       455,941       443,237       433,282       381,487  
Tangible common equity*   293,519       301,276       287,807       286,744       266,455  
                                       
Selected Average Balance Sheet Data (quarterly average)                                      
Investment securities $ 918,804     $ 893,642     $ 860,940     $ 767,038     $ 699,055  
Total gross loans receivable   2,560,030       2,590,610       2,516,833       2,317,071       2,122,973  
Interest-earnings assets   3,560,815       3,578,487       3,457,871       3,158,187       2,883,960  
Total assets   3,926,359       3,935,722       3,804,114       3,475,786       3,169,131  
Interest-bearing deposits   2,709,596       2,501,227       2,251,937       2,148,361       2,043,784  
Borrowings   269,492       480,417       642,575       495,558       389,120  
Total interest-bearing liabilities   2,979,088       2,981,644       2,894,512       2,643,919       2,432,904  
Total deposits   3,178,164       2,991,657       2,709,741       2,556,982       2,390,648  
Total liabilities   3,466,646       3,486,272       3,364,343       3,062,312       2,791,236  
Total stockholders' equity   459,713       449,450       439,771       413,474       377,895  
Tangible common equity*   302,398       294,506       289,515       279,328       261,261  
                                       
Performance ratios                                      
Return on average assets (ROAA) annualized   (0.42 )%     1.00 %     1.08 %     0.79 %     1.11 %
Return on average equity (ROAE) annualized   (3.59 )%     8.76 %     9.31 %     6.66 %     9.35 %
Return on average tangible common equity (ROATCE) annualized*   (4.62 )%     14.17 %     14.91 %     10.58 %     14.01 %
Yield on loans annualized   5.79 %     5.91 %     5.73 %     5.73 %     5.55 %
Cost of interest-bearing deposits annualized   1.61 %     1.45 %     1.15 %     1.00 %     0.94 %
Cost of total deposits annualized   1.37 %     1.21 %     0.95 %     0.84 %     0.80 %
Net interest margin annualized   3.49 %     3.70 %     3.76 %     3.93 %     3.91 %
Efficiency ratio*   69.26 %     62.40 %     59.93 %     58.40 %     59.59 %
Non-interest income / average assets   0.55 %     0.55 %     0.57 %     0.53 %     0.54 %
Non-interest expense / average assets   2.64 %     2.53 %     2.47 %     3.00 %     2.51 %
                                       
Capital Ratios                                      
Tier 1 Leverage Ratio   8.36 %     8.60 %     8.60 %     9.36 %     9.45 %
Common Equity Tier 1 Capital Ratio   10.46 %     10.95 %     10.49 %     11.04 %     11.78 %
Tier 1 Risk Based Capital Ratio   10.95 %     11.45 %     11.00 %     11.56 %     12.38 %
Total Risk Based Capital Ratio   11.87 %     11.86 %     11.37 %     11.94 %     12.78 %
Total stockholders' equity to total assets   11.15 %     11.23 %     11.28 %     11.67 %     12.01 %
Tangible common equity to tangible assets*   7.52 %     7.71 %     7.62 %     8.04 %     8.70 %
Book value per common share $ 28.66     $ 28.87     $ 28.07     $ 27.44     $ 26.09  
Tangible book value per common share* $ 18.55     $ 19.08     $ 18.22     $ 18.16     $ 18.22  
Tangible book value per diluted common share* $ 18.30     $ 18.73     $ 17.86     $ 17.78     $ 17.85  
                                       

* The value noted is considered a Non-GAAP financial measure.  For a reconciliation of Non-GAAP financial measures, see Table 5. Non-GAAP Financial Measures

TABLE 2. QUARTERLY ANALYSIS OF CHANGES IN NET INTEREST INCOME (Unaudited)
(Dollars in thousands)

  Quarter ended 03/31/2019     Quarter ended 03/31/2018  
  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) $ 2,560,030     $ 36,533       5.79 %   $ 2,122,973     $ 29,048       5.55 %
Total securities   918,804       6,035       2.66 %     699,055       4,602       2.67 %
Federal funds sold and other   81,981       634       3.14 %     61,932       473       3.10 %
Total interest-earning assets   3,560,815       43,202       4.92 %     2,883,960       34,123       4.80 %
Interest-bearing liabilities                                              
Total interest-bearing demand and savings   1,693,227       5,667       1.36 %     1,270,968       2,223       0.71 %
Certificates of deposit   1,016,369       5,063       2.02 %     772,816       2,495       1.31 %
Total interest-bearing deposits   2,709,596       10,730       1.61 %     2,043,784       4,718       0.94 %
FHLB advances & LOC   197,610       1,305       2.68 %     332,438       1,299       1.59 %
Other borrowings   71,882       528       2.98 %     56,682       319       2.28 %
Total interest-bearing liabilities   2,979,088       12,563       1.71 %     2,432,904       6,336       1.06 %
                                               
Net interest income         $ 30,639                     $ 27,787          
Interest rate spread                   3.21 %                     3.74 %
Net interest margin (2)                   3.49 %                     3.91 %
(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.  
   


  For the three months ended  
  March 31, 2019 vs. 2018  
  Total Increase/(Decrease)  
  Volume Variance (1)     Yield/Rate Variance (1)     Total Variance  
Interest-earning assets                      
Loans $ 6,193     $ 1,292     $ 7,485  
Total securities   1,449       (16 )     1,433  
Federal funds sold and other   155       6       161  
Total interest-earning assets   7,797       1,282       9,079  
Interest-bearing liabilities                      
Total interest-bearing demand and savings   916       2,528       3,444  
Certificates of deposit   943       1,625       2,568  
Total interest-bearing deposits   1,859       4,153       6,012  
FHLB advances & LOC   (661 )     667       6  
Other borrowings   138       71       209  
Total interest-bearing liabilities   1,336       4,891       6,227  
                       
Net interest income $ 6,461     $ (3,609 )   $ 2,852  
                       
(1) The effect of changes in volume is determined by multiplying the change in volume by the previous year's average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the prior year's volume. The changes attributable to both volume and rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each.  
   

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

  March 31,     December 31,  
  2019     2018  
ASSETS              
Cash and due from banks $ 167,016     $ 192,735  
Federal funds sold   437       83  
Cash and cash equivalents   167,453       192,818  
Interest-bearing time deposits in other banks   4,742       4,991  
Available-for-sale securities   166,355       168,875  
Held-to-maturity securities, fair value of $752,207 and $739,989   749,493       748,356  
Loans held for sale   2,140       2,972  
Loans, net of allowance for loan losses of $26,340 and $11,454   2,592,646       2,563,954  
Other real estate owned, net   6,382       6,372  
Premises and equipment, net   81,496       80,442  
Bank-owned life insurance   73,594       73,105  
Federal Reserve Bank and Federal Home Loan Bank stock   22,569       29,214  
Interest receivable   16,423       17,372  
Goodwill   136,432       131,712  
Core deposit intangibles, net   22,296       21,725  
Other   23,333       19,808  
Total assets $ 4,065,354     $ 4,061,716  
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Deposits              
Demand $ 483,107     $ 503,831  
Total non-interest-bearing deposits   483,107       503,831  
Savings, NOW and money market   1,737,003       1,611,710  
Time   1,040,760       1,007,906  
Total interest-bearing deposits   2,777,763       2,619,616  
Total deposits   3,260,870       3,123,447  
Federal funds purchased and retail repurchase agreements   43,433       50,068  
Federal Home Loan Bank advances   264,954       384,898  
Bank stock loan   8,500       15,450  
Subordinated debentures   14,334       14,260  
Contractual obligations   3,964       3,965  
Interest payable and other liabilities   15,836       13,687  
Total liabilities   3,611,891       3,605,775  
Commitments and contingent liabilities              
Stockholders’ equity              
Common stock   173       173  
Additional paid-in capital   379,931       379,085  
Retained earnings   95,868       101,326  
Accumulated other comprehensive loss   (2,767 )     (4,867 )
Employee stock loans   (87 )     (121 )
Treasury stock   (19,655 )     (19,655 )
Total stockholders’ equity   453,463       455,941  
Total liabilities and stockholders’ equity $ 4,065,354     $ 4,061,716  
               

TABLE 4. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

  Three months ended March 31,  
  2019     2018  
Interest and dividend income              
Loans, including fees $ 36,533     $ 29,048  
Securities, taxable   5,082       3,723  
Securities, nontaxable   953       879  
Federal funds sold and other   634       473  
Total interest and dividend income   43,202       34,123  
Interest expense              
Deposits   10,730       4,718  
Federal funds purchased and retail repurchase agreements   32       23  
Federal Home Loan Bank advances   1,305       1,299  
Bank stock loan   162       27  
Subordinated debentures   334       269  
Total interest expense   12,563       6,336  
               
Net interest income   30,639       27,787  
Provision for loan losses   15,646       1,170  
Net interest income after provision for loan losses   14,993       26,617  
Non-interest income              
Service charges and fees   1,923       1,580  
Debit card income   1,738       1,253  
Mortgage banking   317       313  
Increase in value of bank-owned life insurance   488       652  
Net gains (losses) from securities transactions   6       (8 )
Other   852       461  
Total non-interest income   5,324       4,251  
Non-interest expense              
Salaries and employee benefits   14,098       10,891  
Net occupancy and equipment   1,967       1,802  
Data processing   2,405       1,674  
Professional fees   1,156       715  
Advertising and business development   646       619  
Telecommunications   585       369  
FDIC insurance   278       244  
Courier and postage   327       255  
Free nationwide ATM cost   361       292  
Amortization of core deposit intangibles   779       384  
Loan expense   268       346  
Other real estate owned   112       268  
Merger expenses   639       531  
Other   1,922       1,237  
Total non-interest expense   25,543       19,627  
Income (loss) before income tax   (5,226 )     11,241  
Provision for income taxes (benefits)   (1,153 )     2,530  
Net income (loss) and net income (loss) allocable to common stockholders $ (4,073 )   $ 8,711  
Basic earnings (loss) per share $ (0.26 )   $ 0.60  
Diluted earnings (loss) per share $ (0.26 )   $ 0.58  
               

TABLE 5. Non-GAAP Financial Measures (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,  
  2019     2018     2018     2018     2018  
Total stockholders' equity $ 453,463     $ 455,941     $ 443,237     $ 433,282     $ 381,487  
Less: goodwill   136,432       131,712       131,723       125,485       103,412  
Less: core deposit intangibles, net   22,296       21,725       22,466       19,800       10,355  
Less: mortgage servicing asset, net   10       11       13       14       16  
Less: naming rights, net   1,206       1,217       1,228       1,239       1,249  
Tangible common equity $ 293,519     $ 301,276     $ 287,807     $ 286,744     $ 266,455  
Common shares issued at period end   15,820,303       15,793,095       15,792,695       15,780,777       14,609,414  
RSU shares vested   108                   6,768       11,844  
Common shares outstanding at period end   15,820,411       15,793,095       15,792,695       15,787,545       14,621,258  
Diluted common shares outstanding at period end   16,036,700       16,085,729       16,118,067       16,131,096       14,923,798  
Book value per common share $ 28.66     $ 28.87     $ 28.07     $ 27.44     $ 26.09  
Tangible book value per common share $ 18.55     $ 19.08     $ 18.22     $ 18.16     $ 18.22  
Tangible book value per diluted common share $ 18.30     $ 18.73     $ 17.86     $ 17.78     $ 17.85  
                                       
Total assets $ 4,065,354     $ 4,061,716     $ 3,931,036     $ 3,712,185     $ 3,176,062  
Less: goodwill   136,432       131,712       131,723       125,485       103,412  
Less: core deposit intangibles, net   22,296       21,725       22,466       19,800       10,355  
Less: mortgage servicing asset, net   10       11       13       14       16  
Less: naming rights, net   1,206       1,217       1,228       1,239       1,249  
Tangible assets $ 3,905,410     $ 3,907,051     $ 3,775,606     $ 3,565,647     $ 3,061,030  
Total stockholders' equity to total assets   11.15 %     11.23 %     11.28 %     11.67 %     12.01 %
Tangible common equity to tangible assets   7.52 %     7.71 %     7.62 %     8.04 %     8.70 %
Total average stockholders' equity $ 459,713     $ 449,450     $ 439,771     $ 413,474     $ 377,895  
Less: average intangible assets   157,315       154,944       150,256       134,146       116,634  
Average tangible common equity $ 302,398     $ 294,506     $ 289,515     $ 279,328     $ 261,261  
Net income (loss) allocable to common stockholders $ (4,073 )   $ 9,925     $ 10,322     $ 6,867     $ 8,711  
Amortization of intangible assets   791       752       707       637       396  
Less: tax effect of intangible assets amortization   166       158       148       134       83  
Adjusted net income (loss) allocable to common stockholders $ (3,448 )   $ 10,519     $ 10,881     $ 7,370     $ 9,024  
Return on total average stockholders' equity (ROAE) annualized   (3.59 )%     8.76 %     9.31 %     6.66 %     9.35 %
Return on average tangible common equity (ROATCE) annualized   (4.62 )%     14.17 %     14.91 %     10.58 %     14.01 %
Non-interest expense $ 25,543     $ 25,138     $ 23,647     $ 25,975     $ 19,627  
Less: merger expenses   639       938       757       5,236       531  
Non-interest expense, excluding merger expenses $ 24,904     $ 24,200     $ 22,890     $ 20,739     $ 19,096  
Net interest income $ 30,639     $ 33,336     $ 32,755     $ 30,920     $ 27,787  
Non-interest income   5,324       5,449       5,433       4,592       4,251  
Less: net gains (losses) from securities transactions   6       5       (4 )     (2 )     (8 )
Non-interest income, excluding gains (losses) from securities transactions $ 5,318     $ 5,444     $ 5,437     $ 4,594     $ 4,259  
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions $ 35,957     $ 38,780     $ 38,192     $ 35,514     $ 32,046  
Non-interest expense to net interest income plus non-interest income   71.03 %     64.81 %     61.92 %     73.14 %     61.26 %
Efficiency ratio   69.26 %     62.40 %     59.93 %     58.40 %     59.59 %
                                       

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Source: Equity Bancshares, Inc.