Equity Bancshares, Inc. Reports Results for Q4 and 2016

Active year includes a merger completion, merger announcement and private placement closing

WICHITA, Kan., Jan. 26, 2017 (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 year ended December 31, 2016, including net income allocable to common stockholders of $9.4 million.

Brad Elliott, Chairman and CEO of Equity, said, “Our Equity Bank markets and team members have grown during 2016 as a result of continued opportunities to expand into vibrant, diverse markets like our Ozark Mountain region in Arkansas, and upcoming additions to our Western Kansas market. Our results and success directly reflect talent, commitment, and collaboration of Equity Bank employees and their work to deliver the best banking experience to consumer, commercial, and community customers throughout our region. In 2017, we’ll continue to be innovative with our processes, products, and delivery to customers, and we’ll continue to search for partnerships that are a fit with our culture and communities.”

Equity announced today the 2017 relocation of its Equity Bank location at 225 West Central in Andover, Kansas, to a nearby facility serving Andover. Equity will break ground on the new bank location in the first quarter of 2017, and expects to complete construction late in 2017. Equity’s Andover branch was the first bank location in Equity’s three-state footprint. Following formation of Equity in 2002, the company acquired the National Bank of Andover in 2003 and renamed it Equity Bank.

Equity also received regulatory approval on January 5, 2017, for its definitive merger agreement to acquire all the common stock of Prairie State Bancshares, Inc. (“Prairie”), originally announced October 20, 2016. Following the consummation of the transaction in the first quarter of 2017, Equity Bank will operate branch locations in Hoxie, Grinnell and Quinter, Kansas, bringing its branch total to 37.

Equity closed a private placement of 770,000 shares of its Class A common stock at $32.50 per share on December 20, 2016. The net proceeds of $23.6 million, after offering costs of $1.4 million, were used to pay off Equity’s $6.0 million line of credit and will provide working capital for Equity’s continuing growth strategies.

Equity completed its acquisition of Community First Bancshares, Inc. (“Community”) of Harrison, Arkansas on November 10, 2016. The merger added five branch locations in Berryville, Eureka Springs, Harrison and Pea Ridge, Arkansas to the Equity footprint, and marked the company’s expansion into Arkansas. At acquisition, Community had assets of $462.9 million, net loans of $354.1 million, and total deposits of $375.4 million. Results of operations of Community were included in Equity’s results of operations beginning November 11, 2016.

Highlights of Equity’s growth include:

  • Total loans held for investment of $1.38 billion at December 31, 2016, as compared to total loans held for investment of $960.4 million at December 31, 2015.  The increase of $423.3 million includes $354.1 million of loans added in the Community merger.
  • Total deposits were $1.63 billion at December 31, 2016, and $1.22 billion at December 31, 2015.  Signature Deposits, or core deposits comprised of checking accounts, savings accounts, and money market accounts, were $1.08 billion at December 31, 2016, compared to $777.3 million at December 31, 2015.  The Community merger added total deposits of $375.4 million, including core deposits of $278.0 million.
  • Total assets of $2.19 billion at December 31, 2016, compared to $1.59 billion at December 31, 2015.  The Community merger added total assets of $462.9 million.
  • Private placement of 770,000 shares at $32.50 per share added $23.6 million, net of offering costs of $1.4 million, to total stockholders’ equity.
  • Book value per common share of $22.09 at December 31, 2016 and $18.37 at December 31, 2015. Tangible book value per common share of $16.64 at December 31, 2016 and $15.97 at December 31, 2015.

Financial Results For Year and Quarter Ended December 31, 2016

Net income allocable to common stockholders was $9.4 million for the year ended December 31, 2016, as compared to $10.1 million for the year ended December 31, 2015, a decrease of $750 thousand or 7.4%.  Beginning October 10, 2015, financial results reflect the merger of First Independence Corporation and its subsidiary, First Federal Savings & Loan of Independence, Kansas, collectively referred to as “First Independence.” The merger of First Independence added four branch locations in southeast Kansas with total assets of $135.0 million.  Results of operations of Community were included in Equity’s results of operations beginning November 11, 2016.  Merger expenses of $5.3 million, $3.9 million after tax, are included in 2016 results.  These costs were incurred in connection with the Community merger and pending Prairie merger.  Merger expenses associated with the First Independence acquisition totaled $1.7 million, $1.1 million after tax, are included in 2015 results.

Diluted earnings per share were $1.07 for the year ended December 31, 2016, as compared to $1.54 for the comparable period of 2015.  Weighted average fully diluted shares were 8,755,526 and 6,560,021 for the years ended December 31, 2016 and 2015.  The increase in weighted average fully diluted shares reflect the issuance of 1,941,000 shares in connection with Equity’s November 2015 initial public offering, the issuance of 2,689,690 shares in connection with the November 2016 merger of Community, and 770,000 shares issued on December 20, 2016 in a private placement.  

Net interest income was $52.6 million for the year ended December 31, 2016 as compared to $46.3 million for the year ended December 31, 2015, a $6.3 million or 13.7% increase. The increase in net interest income was primarily driven by growth in loan and securities balances, partially offset by an increase in interest expense as we funded the increase in earning assets with increased deposits and borrowings.

Our net interest margin was 3.30% for the year ended December 31, 2016 as compared to 3.65% for the year ended December 31, 2015. The decrease in net interest margin was primarily due to the decrease in overall yield on interest-earning assets and the utilization of our “leverage” or “spread” opportunity. The decrease in yield on interest-earning assets is primarily due to growth in a continually low interest rate environment and the pay down of older higher yielding assets.  Our spread opportunity, as more fully discussed in our Annual Report on Form 10-K, positively impacts net income but negatively impacts net interest margin due to investing in lower yielding interest-earning assets. Net interest margin excluding this spread opportunity was approximately 3.51% for the twelve months ended December 31, 2016 and approximately 3.75% for the same time period in 2015.  Equity suspended the utilization of this strategy effective October 1, 2016.

The provision for loan losses was $2.1 million for the year ended December 31, 2016 as compared to $3.0 million for the year ended December 31, 2015.  Net charge-offs for the twelve months ended December 31, 2016 were $1.2 million compared to net charge-offs of $3.5 million for the comparable period of 2015.

Total non-interest income was $10.5 million for the year ended December 31, 2016 as compared to $9.8 million for the year ended December 31, 2015. Increases in service charges and fees and in debit card income are principally attributable to the addition of accounts and higher transaction volumes associated with the First Independence merger and to a lesser extent the November 2016 Community merger.  Non-interest income includes net gain from securities transactions of $479 thousand and $756 thousand for the twelve-month periods ended December 31, 2016 and 2015.

Total non-interest expense was $47.1 million for the year ended December 31, 2016 as compared to $38.6 million for the year ended December 31, 2015.  These results reflect the full-year effect of the First Independence merger, the November 2016 addition of five locations in Arkansas, as well as additions to lending, customer service, and operations staff and increased data processing costs principally associated with increased debit card volumes. Non-interest expense also includes merger expenses of $5.3 million for the year ended December 31, 2016.  These costs were incurred in connection with the Community merger and pending Prairie merger.  Merger expenses for the year ended December 31, 2015 were associated with the First Independence merger and totaled $1.7 million.

Equity’s effective tax rate for the twelve-month period ended December 31, 2016 was 32.4% as compared to 28.7% for the comparable period ended December 31, 2015.  The effective tax rates for each of the comparable periods reflect the levels of tax-exempt interest income, non-taxable life insurance income, non-deductible facilitative merger expenses, and other non-deductible expenses included in income before income taxes as well as federal income tax credits in Equity’s financial results for the respective periods.  The lower effective tax rate in 2015 was principally due to the benefit of increased income tax credits from investments in qualified affordable housing projects, including an additional project acquired in the First Independence acquisition.

Fourth Quarter Financial Results

Net income allocable to common stockholders was $417 thousand for the three months ended December 31, 2016, as compared to $2.5 million for the three months ended December 31, 2015.  Diluted earnings per share were $0.04 for the three-month period ended December 31, 2016, as compared to $0.34 for the comparable period of 2015.  Weighted average fully diluted shares were 10,012,395 and 7,360,898 for the three-month periods ended December 31, 2016 and 2015. 

Net interest income for the quarter ended December 31, 2016 was $15.7 million as compared to $12.3 million for the quarter ended December 31, 2015. Growth in loan and securities balances, partially offset by the increased deposits and borrowings required to fund that growth resulted in the increased net interest income.

Our net interest margin was 3.60% for the quarter ended December 31, 2016 and 3.26% for the comparable quarter of the prior year.  

The provision for loan losses was $760 thousand for the quarter ended December 31, 2016 as compared to $1.2 million for the quarter ended December 31, 2015. Net charge-offs for the three months ended December 31, 2016 were $405 thousand compared to net charge-offs of $712 thousand for the comparable period of 2015.

Total non-interest income for the quarter ended December 31, 2016 was $2.8 million, compared to $3.3 million for the quarter ended December 31, 2015.  Non-interest income in the fourth quarter of 2015 included a net gain of $682 thousand on the acquisition of First Independence and net gain from securities transactions of $386 thousand.

Total non-interest expense for the quarter ended December 31, 2016 was $16.7 million, compared to $11.7 million for the quarter ended December 31, 2015. Non-interest expense includes merger expenses of $5.1 million for the three-months ended December 31, 2016, compared to $1.6 million for the comparable period of 2015.  Increased non-interest expense reflects the effect of the Community merger, as well as additions to lending, customer service, and operations staff and increased data processing costs principally associated with increased debit card volumes.

Equity’s provision for income taxes was $564 thousand for the quarter ended December 31, 2016, as compared to provision for income taxes of $240 thousand for the quarter ended December 31, 2015.

Loans, Deposits, And Total Assets

Loans held for investment were $1.38 billion at December 31, 2016, compared to $960.4 million at December 31, 2015, an increase of $423.3 million.  The year-over-year increase in loans held for investment includes $354.1 million of net loans acquired in the Community merger in the fourth quarter of 2016 and $69.2 million, or 7.2%, of other loan growth.

As of December 31, 2016, Equity’s allowance for loan losses to total loans was 0.46%, compared to 0.57% at December 31, 2015.  Total reserves, including purchase discounts, to total loans were approximately 1.37% as of December 31, 2016, compared to 0.81% at December 31, 2015.  Nonperforming assets of $31.3 million as of December 31, 2016 were 1.43% to total assets, and include $20.5 million of nonperforming assets acquired in the Community merger.  Nonperforming assets at December 31, 2015 were $14.0 million or 0.89% of total assets.

Total deposits were $1.63 billion at December 31, 2016, as compared to $1.22 billion at December 31, 2015.  Total deposits increased $414.5 million between December 31, 2015 and December 31, 2016, including $375.4 million of deposits assumed in the Community merger and $39.1 million, or 3.2%, of non-acquisition related deposit growth.  Signature Deposits were $1.08 billion at December 31, 2016, as compared to $777.3 million at December 31, 2015. 

At December 31, 2016, Equity had consolidated total assets of $2.19 billion, compared to $1.59 billion at December 31, 2015, an increase of $606.5 million.  The increase in total assets includes $462.9 million of total assets acquired in the Community merger.

Capital and Borrowings

On November 16, 2015, Equity completed our initial public offering (“IPO”) of 1,941,000 shares.  In January 2016, a portion of the IPO net proceeds of $38.9 million were used to retire our Small Business Lending Fund obligation of $16.4 million and repay our bank stock loan of $18.6 million.

In connection with the Community merger, Equity issued 2,689,690 shares valued at $27.62 per share, Equity’s closing price on November 10, 2016.  Net of $549 thousand of stock issuance costs, the Community merger added $73.7 million to stockholders’ equity.

Total stockholders’ equity also increased $23.6 million in connection with the private placement of 770,000 shares on December 20, 2016. The net proceeds of the private placement were used to pay off Equity’s $6.0 million line of credit and will provide working capital for Equity’s continuing growth strategies.
   
At December 31, 2016, common stockholders’ equity totaled $258.0 million, $22.09 per common share, compared to $167.2 million, $18.37 per common share, at December 31, 2015.  Tangible common equity was $194.4 million and tangible book value per common share was $16.64 at December 31, 2016. Tangible common equity was $131.2 million and tangible book value per common share was $15.97 at December 31, 2015.  The ratio of common equity tier 1 capital to risk-weighted assets was approximately 13.34% and the total capital to risk-weighted assets was approximately 14.67% at December 31, 2016.

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 Bancshares will host a conference call and webcast to review these results on Friday, January 27, 2017 at 9:00 a.m. central time. Investors, news media, and others may 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. 82330056.  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 February 3, 2017, accessible at (855) 859-2056 with conference ID no. 82330056 or 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, and treasury management services. As of December 31, 2016, Equity had $2.19 billion in consolidated total assets, with 34 locations throughout Kansas, Missouri, and Arkansas, including corporate headquarters in Wichita and branches throughout the Kansas City metropolitan area. Learn more at www.equitybank.com.

Equity seeks to provide an enhanced banking experience for customers by providing a suite of sophisticated banking products and services tailored to their needs, 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.”

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 (“SEC”) on March 17, 2016 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, Form S-3 or Form S-4. 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.

Important Additional Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. Investors and security holders are urged to carefully review and consider Equity’s public filings with the SEC, including but not limited to its Annual Report on Form 10-K, its proxy statement, its Current Reports on Form 8-K and its Quarterly Reports on Form 10-Q. The documents filed by Equity with the SEC may be obtained free of charge at Equity’s investor relations website at investor.equitybank.com or at the SEC’s website at www.sec.gov. Alternatively, these documents, when available, can be obtained free of charge from Equity upon written request to Equity Bancshares, Inc., Attn: Investor Relations, 7701 East Kellogg Drive, Suite 300, Wichita, Kansas 67207 or by calling (316) 612-6000.

In connection with the proposed transaction between Equity and Prairie State Bancshares, Inc. (“Prairie”), Equity filed a registration statement on Form S-4 with the SEC on December 27, 2016, which included a proxy statement of Prairie and a prospectus of Equity, and will file other documents regarding the proposed transaction with the SEC. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF PRAIRIE ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. A proxy statement/prospectus will be sent to the stockholders of Prairie seeking the required stockholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Equity by writing to the address provided above.

Equity and Prairie and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Prairie stockholders in connection with the proposed transaction. Information about Equity’s participants may be found in the definitive proxy statement of Equity relating to its 2016 Annual Meeting of Stockholders filed with the SEC on March 28, 2016. The definitive proxy statement can be obtained free of charge from the sources indicated above. Additional information regarding the interests of such participants will be included in the proxy statement and other relevant documents regarding the proposed merger transaction filed with the SEC when they become available, copies of which may also be obtained free of charge from the sources indicated above.

Unaudited Financial Tables

  • Table 1. Selected Financial Highlights
  • Table 2. Consolidated Balance Sheets
  • Table 3. Consolidated Statements of Income
  • Table 4. 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
  December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
December 31,
2015
Statement of Income Data          
Net interest income $ 15,663   $ 11,982   $ 12,194   $ 12,758   $ 12,313  
Provision for loan losses   760     104     532     723     1,180  
Net gain on acquisition                   682  
Net gains from securities transactions           59     420     386  
Total non-interest income   2,789     2,527     2,452     2,698     3,325  
Merger expenses   5,057     237             1,614  
Total non-interest expense   16,711     10,734     9,941     9,689     11,664  
Income before income taxes   981     3,671     4,173     5,044     2,794  
Provision for income taxes   564     1,000     1,327     1,604     240  
Net income   417     2,671     2,846     3,440     2,554  
Dividends and discount accretion on preferred stock               (1 )   (48 )
Net income allocable to common stockholders   417     2,671     2,846     3,439     2,506  
Basic earnings per share   0.04     0.32     0.35     0.42     0.35  
Diluted earnings per share   0.04     0.32     0.34     0.41     0.34  
           
Balance Sheet Data (at period end)          
Securities available-for-sale $ 95,732   $ 102,391   $ 74,976   $ 113,821   $ 130,810  
Securities held-to-maturity   465,709     349,915     317,509     301,931     310,539  
Gross loans held for investment   1,383,605     956,070     980,110     938,055     960,355  
Allowance for loan losses   6,432     6,080     6,030     5,980     5,506  
Goodwill and core deposit intangibles, net   63,589     19,419     19,506     19,592     19,679  
Total assets   2,192,192     1,557,082     1,544,857     1,528,729     1,585,727  
Total deposits   1,630,451     1,177,732     1,196,767     1,234,165     1,215,914  
Non-time deposits   1,077,293     740,623     753,168     803,653     777,302  
Borrowings   293,909     203,569     179,801     130,651     194,064  
Total liabilities   1,934,228     1,395,834     1,386,669     1,373,637     1,418,494  
Total stockholders’ equity   257,964     161,248     158,188     155,092     167,233  
Tangible common equity*   194,352     141,804     138,656     135,472     131,153  
           
Selected Average Balance Sheet Data (quarterly average)          
Total gross loans receivable $ 1,175,300   $ 968,402   $ 950,243   $ 944,366   $ 921,312  
Investment securities   516,988     414,376     412,095     425,434     425,450  
Interest-earning assets   1,729,927     1,555,511     1,541,405     1,542,794     1,499,139  
Total assets   1,886,002     1,668,534     1,655,317     1,657,655     1,613,499  
Interest-bearing deposits   1,210,571     1,022,155     1,045,784     1,060,618     991,109  
Borrowings   256,330     314,181     284,631     280,097     311,871  
Total interest-bearing liabilities   1,466,900     1,336,336     1,330,415     1,340,715     1,302,980  
Total deposits   1,412,587     1,184,717     1,204,861     1,214,738     1,151,932  
Total liabilities   1,681,226     1,508,647     1,498,914     1,503,726     1,473,292  
Total stockholders’ equity   204,773     159,887     156,403     153,929     140,207  
Tangible common equity   148,287     136,771     135,094     133,313     110,893  
           
Performance ratios          
Return on average assets (ROAA) annualized   0.09 %   0.64 %   0.69 %   0.83 %   0.63 %
Return on average equity (ROAE) annualized   0.81 %   6.65 %   7.32 %   8.99 %   7.23 %
Return on average tangible common equity (ROATCE) annualized*   1.39 %   7.94 %   8.64 %   10.55 %   9.18 %
Yield on loans annualized   5.21 %   4.72 %   4.89 %   5.04 %   4.95 %
Cost of interest-bearing deposits annualized   0.68 %   0.66 %   0.64 %   0.61 %   0.61 %
Cost of total deposits annualized   0.58 %   0.57 %   0.56 %   0.53 %   0.52 %
Net interest margin annualized   3.60 %   3.06 %   3.18 %   3.33 %   3.26 %
Efficiency ratio*   63.16 %   72.35 %   68.15 %   64.05 %   68.98 %
Non-interest income / average assets   0.59 %   0.60 %   0.60 %   0.65 %   0.82 %
Non-interest expense / average assets   3.52 %   2.56 %   2.42 %   2.35 %   2.87 %
           
Capital Ratios          
Tier 1 Leverage Ratio   11.80 %   9.42 %   9.32 %   9.10 %   9.47 %
Common Equity Tier 1 Capital Ratio   13.34 %   13.57 %   13.04 %   13.13 %   12.35 %
Tier 1 Risk Based Capital Ratio   14.25 %   14.45 %   13.90 %   14.01 %   13.85 %
Total Risk Based Capital Ratio   14.67 %   15.02 %   14.45 %   14.57 %   14.35 %
Total stockholders’ equity to total assets   11.77 %   10.36 %   10.24 %   10.15 %   10.55 %
Tangible common equity to tangible assets*   9.13 %   9.22 %   9.09 %   8.98 %   8.37 %
Book value per share $ 22.09   $ 19.62   $ 19.25   $ 18.89   $ 18.37  
Tangible common book value per share* $ 16.64   $ 17.25   $ 16.87   $ 16.50   $ 15.97  
Tangible book value per diluted common share* $ 16.37   $ 16.95   $ 16.64   $ 16.29   $ 15.74  

* The value noted is considered a Non-GAAP financial measure.  For a reconciliation of Non-GAAP financial measures, see Table 4. Non-GAAP Financial Measures.


TABLE 2. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
 
  December 31,
2016
December 31,
2015
ASSETS    
Cash and due from banks $ 34,137   $ 36,276  
Federal funds sold   958     20,553  
             
Cash and cash equivalents   35,095     56,829  
             
Interest-bearing time deposits in other banks   3,750     5,245  
Available-for-sale securities   95,732     130,810  
Held-to-maturity securities, fair value of $352,768 and $312,802   465,709     310,539  
Loans held for sale   4,830     3,504  
Loans, net of allowance for loan losses of $6,432 and $5,506   1,377,173     954,849  
Other real estate owned, net   8,656     5,811  
Premises and equipment, net   50,515     39,147  
Bank owned life insurance   48,055     32,555  
Federal Reserve Bank and Federal Home Loan Bank stock   16,652     11,013  
Interest receivable   6,991     4,540  
Goodwill   58,874     18,130  
Core deposit intangible, net   4,715     1,549  
Other   15,445     11,206  
             
Total assets $ 2,192,192   $ 1,585,727  
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Deposits            
Demand $ 207,668   $ 157,834  
             
Total non-interest bearing deposits   207,668     157,834  
             
Savings, NOW, and money market   869,625     619,468  
Time   553,158     438,612  
             
Total interest-bearing deposits   1,422,783     1,058,080  
             
Total deposits   1,630,451     1,215,914  
             
Federal funds purchased and retail repurchase agreements   20,637     20,762  
Federal Home Loan Bank advances   259,588     145,439  
Bank stock loan       18,612  
Subordinated debentures   13,684     9,251  
Contractual obligations   2,504     3,093  
Interest payable and other liabilities   7,364     5,423  
Total liabilities   1,934,228     1,418,494  
             
             
Stockholders’ equity            
Preferred stock, Series C (liquidation preference of $16,372)       16,372  
Common stock   132     97  
Additional paid-in capital   236,103     138,077  
Retained earnings   44,328     34,955  
Accumulated other comprehensive loss   (2,702 )   (2,371 )
Employee stock loans   (242 )   (242 )
Treasury stock   (19,655 )   (19,655 )
Total stockholders’ equity   257,964     167,233  
Total liabilities and stockholders’ equity $ 2,192,192   $ 1,585,727  
             


TABLE 3. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
 
  Three Months Ended
December 31,
Year Ended
December 31,
  2016 2015 2016 2015
Interest and dividend income        
Loans, including fees $ 15,387 $ 11,499   $ 50,272   $ 43,361  
Securities, taxable   2,060   2,193     8,111     7,634  
Securities, nontaxable   611   311     1,654     1,057  
Federal funds sold and other   249   427     1,762     976  
         
Total interest and dividend income   18,307   14,430     61,799     53,028  
         
Interest expense        
Deposits   2,058   1,517     7,042     4,926  
Federal funds purchased and retail repurchase agreements   16   14     58     61  
Federal Home Loan Bank advances   337   228     1,400     495  
Bank stock loan   31   195     31     641  
Subordinated debentures   202   163     671     643  
         
Total interest expense   2,644   2,117     9,202     6,766  
         
Net interest income   15,663   12,313     52,597     46,262  
Provision for loan losses   760   1,180     2,119     3,047  
         
Net interest income after provision for loan losses   14,903   11,133     50,478     43,215  
Non-interest income        
Service charges and fees   1,115   885     3,552     2,708  
Debit card income   771   624     2,898     2,161  
Mortgage banking   375   233     1,394     1,088  
Increase in value of bank owned life insurance   254   257     1,000     957  
Net gain from acquisition     682         682  
Net gain from securities transactions     386     479     756  
Other   274   258     1,143     1,450  
         
Total non-interest income   2,789   3,325     10,466     9,802  
         
Non-interest expense        
Salaries and employee benefits   6,102   4,959     21,951     19,202  
Net occupancy and equipment   1,265   1,077     4,586     4,155  
Data processing   978   812     3,568     2,939  
Professional fees   531   676     2,075     2,086  
Advertising and business development   297   336     1,198     1,199  
Telecommunications   298   229     1,101     811  
FDIC insurance   141   272     894     840  
Courier and postage   201   169     683     544  
Free nation-wide ATM cost   184   136     672     468  
Amortization of core deposit intangible   153   93     413     275  
Loan expense   186   116     599     388  
Other real estate owned   222   113     386     287  
Loss on debt extinguishment         58     316  
Merger expenses   5,057   1,614     5,294     1,691  
Other   1,096   1,062     3,597     3,374  
         
Total non-interest expense   16,711   11,664     47,075     38,575  
         
Income before income taxes   981   2,794     13,869     14,442  
Provision for income taxes   564   240     4,495     4,142  
         
Net income   417   2,554     9,374     10,300  
Dividends and discount accretion on preferred stock     (48 )   (1 )   (177 )
         
Net income allocable to common stockholders $ 417 $ 2,506   $ 9,373   $ 10,123  
         
Basic earnings per share $ 0.04 $ 0.35   $ 1.09   $ 1.55  
         
Diluted earnings per share $ 0.04 $ 0.34   $ 1.07   $ 1.54  
                       


TABLE 4. Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per share data)
 
  As of and for the three months ended
  December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
December 31,
2015
Total stockholders’ equity $   257,964    $   161,248    $   158,188    $   155,092    $   167,233   
Less: preferred stock     —        —                16,372   
Less: goodwill     58,874        18,130        18,130        18,130        18,130   
Less: core deposit intangibles, net     4,715        1,289        1,376        1,462        1,549   
Less: mortgage servicing asset     23        25        26        28        29   
           
Tangible common equity $   194,352    $   141,804    $   138,656    $   135,472    $   131,153   
           
Common shares outstanding at period end     11,680,308        8,219,415        8,219,415        8,211,727        8,211,727   
           
Diluted common shares outstanding at period end     11,873,480        8,365,283        8,334,445        8,317,882        8,332,762   
           
Book value per common share $   22.09    $   19.62    $   19.25    $   18.89    $   18.37   
           
Tangible book value per common share $   16.64    $   17.25    $   16.87    $   16.50    $   15.97   
           
Tangible book value per diluted common share $   16.37    $   16.95    $   16.64    $   16.29    $   15.74   
           
Total assets $   2,192,192    $   1,557,082    $   1,544,857    $   1,528,729    $   1,585,727   
Less: goodwill     58,874        18,130        18,130        18,130        18,130   
Less: core deposit intangibles, net     4,715        1,289        1,376        1,462        1,549   
Less: mortgage servicing asset     23        25        26        28        29   
           
Tangible assets $   2,128,580    $   1,537,638    $   1,525,325    $   1,509,109    $   1,566,019   
           
Equity to assets     11.77 %     10.36 %     10.24 %     10.15 %     10.55 %
           
Tangible common equity to tangible assets     9.13 %     9.22 %     9.09 %     8.98 %     8.37 %
           
Total average stockholders’ equity $   204,773    $   159,887    $   156,403    $   153,929    $   140,207   
Less: average intangible assets and preferred stock     56,486        23,116        21,309        20,616        29,314   
           
Average tangible common equity $   148,287    $   136,771    $   135,094    $   133,313    $   110,893   
           
Net income allocable to common stockholders $   417    $   2,671    $   2,846    $   3,439    $   2,506   
Amortization of intangible assets     155       88        88        88        93   
Less: Tax effect of intangible assets amortization     54        31        31        31        33   
           
Adjusted net income allocable to common stockholders $   518    $   2,728    $   2,903    $   3,496    $   2,566   
           
Return on total average stockholders’ equity (ROAE) annualized     0.81 %     6.65 %     7.32 %     8.99 %     7.23 %
           
Return on average tangible common equity (ROATCE) annualized     1.39 %     7.94 %     8.64 %     10.55 %     9.18 %
           
Non-interest expense $   16,711    $   10,734    $   9,941    $   9,689    $   11,664   
Less: merger expenses     5,057        237        —            1,614   
Less: loss on debt extinguishment     —        —        —        58        —   
           
Non-interest expense, excluding merger expenses and loss on debt extinguishment $   11,654    $   10,497    $   9,941    $   9,631    $   10,050   
           
Net interest income $   15,663    $   11,982    $   12,194    $   12,758    $   12,313   
           
Non-interest income $   2,789    $   2,527    $   2,452    $   2,698    $   3,325   
Less: net gain from securities transactions     —        —        59        420        386   
Less: net gain on acquisition     —        —                682   
           
Non-interest income, excluding net gains on security transactions and net gain on acquisition $   2,789    $   2,527    $   2,393    $   2,278    $   2,257   
           
Net interest income plus non-interest income, excluding net gains on security transactions and net gains on acquisition $   18,452    $   14,509    $   14,587    $   15,036    $   14,570   
Non-interest expense to net interest income plus non-interest income     90.56 %     73.98 %     67.88 %     62.69 %     74.59 %
           
Efficiency ratio     63.16 %     72.35 %     68.15 %     64.05 %     68.98 %
           


Media and Investor Contact:
John Hanley, SVP, Director of Investor Relations
913-583-8004 / jhanley@equitybank.com
investor.equitybank.com

Primary Logo

Equity Bancshares, Inc.