S-4
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As filed with the Securities and Exchange Commission on February 8, 2018

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

EQUITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Kansas   6022   72-1532188

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

7701 East Kellogg Drive, Suite 300

Wichita, Kansas 67207

(316) 612-6000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Brad S. Elliott

Chairman and Chief Executive Officer

Equity Bancshares, Inc.

Wichita, Kansas 67207

(316) 612-6000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Michael G. Keeley, Esq.

Norton Rose Fulbright US LLP

2200 Ross Avenue, Suite 3600

Dallas, Texas 75201-7932

(214) 855-3906

 

Andrew J. Nolan, Esq.

Foulston Siefkin LLP

1551 N. Waterfront Parkway, Suite 100

Wichita, Kansas 67206

(316) 291-9542

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and all other conditions to the proposed merger described herein have been satisfied or waived.


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If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☐  (Do not check if a smaller reporting company)    Smaller reporting company  
Emerging Growth Company       

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☒

If applicable, place an ☒ in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount

to be

registered(1)

 

Proposed

maximum

offering price

per share

 

Proposed

maximum

aggregate

offering price(2)

 

Amount of

registration fee(3)

Class A Common Stock, par value $0.01 per share

  820,904   N/A   $15,220,879.20   $1,895.00

 

 

(1) Represents the maximum number of shares of Registrant common stock that could be issued in connection with the merger described herein.
(2) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933, as amended (the “Securities Act”), and computed pursuant to Rule 457(f)(2) and (f)(3) under the Securities Act, by multiplying the book value of Kansas Bank Corporation’s common stock of approximately $396.45 per share as of September 30, 2017, the latest practicable date prior to the date of filing this registration statement, by 80,696, the maximum number of shares of Kansas Bank Corporation’s common stock to be cancelled in the merger described herein, less the estimated aggregate cash consideration to be paid in the merger of $16,771,050.
(3) Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $124.50 per $1,000,000 of the proposed maximum aggregate offering price.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting to buy these securities, in any state where the offer or sale is not permitted.

 

 

PRELIMINARY – SUBJECT TO COMPLETION, DATED FEBRUARY 8, 2018

 

PROXY STATEMENT/PROSPECTUS

 
LOGO   LOGO
Prospectus of Equity Bancshares, Inc.   Proxy Statement of Kansas Bank Corporation

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

 

 

To Stockholders of Kansas Bank Corporation:

On December 16, 2017, Equity Bancshares, Inc., a Kansas corporation (which we refer to in this proxy statement/prospectus as “Equity”), Oz Merger Sub, Inc., a Kansas corporation and wholly-owned subsidiary of Equity (which we refer to in this proxy statement/prospectus as “Merger Sub”), and Kansas Bank Corporation, a Kansas corporation (which we refer to in this proxy statement/prospectus as “KBC”), entered into an Agreement and Plan of Reorganization (which we refer to in this proxy statement/prospectus as the “merger agreement”). Subject to its terms and conditions, the merger agreement provides that Merger Sub will merge with and into KBC (which we refer to in this proxy statement/prospectus as the “merger”), with KBC continuing as the surviving corporation and a wholly-owned subsidiary of Equity. Immediately following, and in connection with, the merger, Equity will cause KBC to be merged with and into Equity, with Equity surviving the merger (which we refer to in this proxy statement/prospectus as the “second merger”).

At the effective time of the merger (which we refer to in this proxy statement/prospectus as the “effective time”), each outstanding share of common stock, par value $20.00 per share, of KBC (which we refer to in this proxy statement/prospectus as “KBC common stock”) will be converted, at the election of each KBC common stockholder, into the right to receive, either (i) an amount in cash equal to the per share consideration calculated pursuant to the merger agreement, which has a maximum of $558.69 (which we refer to in this proxy statement/prospectus as the “per share cash consideration”); or (ii) the number of shares of Class A Common Stock, par value $0.01 per share, of Equity (which we refer to in this proxy statement/prospectus as the “Equity common stock”) equal to the quotient of the per share consideration divided by the agreed Equity stock price of $34.49 (which we refer to in this proxy statement/prospectus as the “exchange ratio”), which has a maximum of approximately 16.20 shares of Equity common stock for each share of KBC common stock; provided, that, in each case, there is no downward adjustment to the merger consideration. The merger consideration payable for each share of KBC common stock will be at the election of such KBC common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration described in this proxy statement/prospectus, which may result in KBC common stockholders receiving a form of merger consideration different from what they elect.

The merger consideration has an aggregate value of approximately $45,084,038 and is composed of approximately $16,771,050 in cash, or 37.2% of the total merger consideration, and approximately $28,312,988 (the agreed value in the merger agreement) of Equity common stock, or 62.8% of the total merger consideration; provided, however, that if KBC’s consolidated capital, surplus and retained earnings accounts less all intangible assets and KBC merger costs (which we refer to in this proxy statement/prospectus as the “KBC adjusted shareholders’ equity”) is less than $29,293,303, as of the close of business on the calculation date, which will be the fifth business day before the closing of the merger or such other mutually agreed date, then the aggregate cash consideration eligible to be paid to holders of KBC common stock will be reduced by $1.53 for each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303 (which we refer to in this proxy statement/prospectus as a “downward adjustment”). If there is a downward adjustment, the cash component of the merger consideration will be reduced and both the per share cash consideration and exchange ratio will be reduced. In the event that the KBC adjusted shareholders’ equity is less than $18,331,833 and Equity proceeds with the


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merger, then the holders of KBC common stock would receive no cash consideration, and would instead receive only Equity common stock as consideration, subject to payment of cash in lieu of issuing fractional shares of Equity common stock. As of September 30, 2017, KBC’s shareholders’ equity was approximately $31.99 million. KBC estimates that it will earn approximately $1.78 million from October 1, 2017 to the anticipated closing of the merger in the second quarter of 2018. As of January 31, 2018, KBC estimated that the KBC Merger Costs (as defined in the merger agreement) would be approximately $2.8 million on an after-tax basis. Based on the foregoing estimates, KBC expects that the KBC stockholders will receive approximately (i) $558.69 in cash for each share of KBC common stock that elects and receives the per share cash consideration and (ii) 16.20 shares of Equity common stock for each share of KBC common stock that elects and receives the per share stock consideration.

Equity common stock is listed on the Nasdaq Global Select Market (which we refer to in this proxy statement/prospectus as the “Nasdaq”) under the symbol “EQBK.” The closing price of Equity common stock was of $35.10 for on Nasdaq on December 15, 2017, the last trading day before public announcement of the merger, and the closing price of Equity common stock was $[        ] on Nasdaq on [        ], 2018, the latest practicable trading day before the printing of this proxy statement/prospectus. The market value of the shares of Equity common stock to be paid as consideration will fluctuate with the market price of Equity common stock; therefore, the market value of the shares of Equity common stock at the closing of the merger will not be known at the time the KBC stockholders vote on the merger.

We urge you to obtain current market quotations for Equity common stock. There are no current market quotations for KBC common stock because KBC is a privately owned corporation and its common stock is not traded on any established public trading market.

KBC will hold a special meeting (which we refer to in this proxy statement/prospectus as the “KBC special meeting”) of its stockholders in connection with the merger. KBC stockholders will be asked to vote to approve the merger agreement and related matters as described in this proxy statement/prospectus.

KBC’s board of directors unanimously recommends that KBC stockholders vote “FOR” the adoption of the merger agreement and “FOR” the other matters to be considered at the KBC special meeting.

This proxy statement/prospectus describes the KBC special meeting, the merger, the issuance of the Equity common stock in connection with the merger, the documents related to the merger and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors,” beginning on page 26, for a discussion of the risks relating to the proposed merger. You also can obtain information about Equity from documents that it has filed with the Securities and Exchange Commission (which we refer to in this proxy statement/prospectus as the “SEC”).

 

LOGO    LOGO

Brad S. Elliott

Chairman and Chief Executive Officer

Equity Bancshares, Inc.

  

Melvin Winger

Chairman

Kansas Bank Corporation

 

 

Neither the SEC nor any state securities commission has approved or disapproved of the securities to be issued in the merger or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either Equity or KBC, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this proxy statement/prospectus is [        ], 2018, and it is first being mailed or otherwise delivered to the stockholders of KBC on or about [        ], 2018.

 


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LOGO

1700 N Lincoln Avenue

Liberal, KS 67901

 

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

 

To the Stockholders of Kansas Bank Corporation:

Notice is hereby given that Kansas Bank Corporation (“KBC”) will hold the KBC special meeting at the First National Bank of Liberal main bank Boardroom located at 1700 North Lincoln Avenue, Liberal, Kansas, on [            ], 2018, at 10:00 a.m. local time, to consider and vote upon the following matters:

 

    a proposal to approve the Agreement and Plan of Reorganization (the “merger agreement”), dated December 16, 2017, by and among Equity Bancshares, Inc. (“Equity”), Oz Merger Sub, Inc. (“Merger Sub”) and KBC, pursuant to which Merger Sub will merge with and into KBC (the “merger”), with KBC surviving as a wholly-owned subsidiary of Equity, as more fully described in this proxy statement/prospectus (which we refer to in this proxy statement/prospectus as the “Merger Proposal”); and

 

    a proposal to adjourn the KBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Merger Proposal (which we refer to in this proxy statement/prospectus as the “Adjournment Proposal”).

KBC has fixed the close of business on [    ], 2018 as the record date for the KBC special meeting (the “KBC record date”). Only KBC stockholders of record at that time are entitled to notice of, and to vote at, the KBC special meeting, or any adjournment or postponement of the KBC special meeting. Approval of the Merger Proposal requires the affirmative vote of holders of a majority of the outstanding shares of KBC common stock. The Adjournment Proposal will be approved if a majority of the shares entitled to vote on the subject matter and present in person or represented by proxy at the KBC special meeting are voted in favor of such proposal.

KBC stockholders have the right to demand appraisal of their shares of KBC common stock and obtain payment in cash of the appraised fair value of their shares of KBC common stock under applicable provisions of the Kansas Statutes Annotated (which we refer to in this proxy statement/prospectus as the “K.S.A.”). In order for a KBC stockholder to perfect his or her appraisal rights, such KBC stockholder must carefully follow the procedures set forth in the K.S.A. A copy of the applicable statutory provisions of the K.S.A. is included as Annex E to this proxy statement/prospectus and a summary of the provisions can be found under the section of this proxy statement/prospectus entitled “The Merger—Appraisal Rights in the Merger.”

KBC’s board of directors has unanimously approved the merger agreement, has determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable and in the best interests of KBC and its stockholders, and unanimously recommends that KBC stockholders vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

Your vote is very important. Equity and KBC cannot complete the merger unless KBC’s stockholders approve the Merger Proposal. Regardless of whether you plan to attend the KBC special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of KBC, please complete,

 


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sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a bank or broker, please follow the instructions on the voting instruction card furnished by the record holder.

This proxy statement/prospectus provides a detailed description of the KBC special meeting, the Merger Proposal and the documents related to the merger and other related matters. You are urged to read this proxy statement/prospectus, including any documents they refer you to, and its annexes carefully and in their entirety. We look forward with pleasure to seeing and visiting with you at the KBC special meeting.

 

By Order of the Board of Directors,
LOGO
Melvin Winger
Chairman

 


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ADDITIONAL INFORMATION

This proxy statement/prospectus references important business and financial information about Equity and KBC from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this proxy statement/prospectus by accessing the SEC’s website maintained at http://www.sec.gov, for documents regarding Equity, or by requesting copies in writing or by telephone from the appropriate company, as set forth below, for documents regarding either Equity or KBC:

 

Equity Bancshares, Inc.
7701 East Kellogg Drive, Suite 300

Wichita, Kansas 67207

Attention: Investor Relations

Telephone: (316) 612-6000

 

Kansas Bank Corporation
1700 N Lincoln Avenue

Liberal, Kansas 67901

Attention: Tina Call

Telephone: (620) 624-1971

You will not be charged for any of these documents that you request. To receive timely delivery of these documents in advance of the special meeting, you must make your request no later than [    ], 2018.

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission (which we refer to in this proxy statement/prospectus as the “SEC”) by Equity (File No. 333-[    ]), constitutes a prospectus of Equity under Section 5 of the Securities Act of 1933, as amended (which we refer to in this proxy statement/prospectus as the “Securities Act”), with respect to the shares of Equity common stock to be issued to KBC stockholders pursuant to the terms of the merger agreement. This document also constitutes a proxy statement for KBC. It also constitutes a notice of special meeting with respect to the KBC special meeting.

You should rely only on the information contained in, or incorporated by reference into, this document. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this document. This document is dated [        ], 2018, and you should assume that the information in this document is accurate only as of such date. You should assume that the information incorporated by reference into this document is accurate as of the date of such document. Neither the mailing of this document to KBC stockholders nor the issuance by Equity of shares of Equity common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this document regarding Equity has been provided by Equity and information contained in this document regarding KBC has been provided by KBC.

For more details, see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 101.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     10  

RECENT DEVELOPMENTS

     18  

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF EQUITY

     20  

RISK FACTORS

     26  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     33  

THE KBC SPECIAL MEETING

     36  

Date, Time and Place of the KBC Special Meeting

     36  

Matters to Be Considered

     36  

Recommendation of the KBC Board

     36  

KBC Record Date and Quorum

     36  

Required Vote; Treatment of Abstentions; Broker Non-Votes and Failure to Vote

     37  

Voting on Proxies; Incomplete Proxies

     37  

Revocability of Proxies and Changes to a KBC Stockholder’s Vote

     37  

Solicitation of Proxies

     38  

Attending the KBC Special Meeting

     38  

Assistance

     38  

KBC PROPOSALS

     39  

Proposal No. 1 Merger Proposal

     39  

Proposal No. 2 Adjournment Proposal

     39  

THE MERGER

     40  

Terms of the Merger

     40  

Background of the Merger

     40  

KBC’s Reasons for the Merger; Recommendation of the KBC Board

     42  

Opinion of KBC’s Financial Advisor

     43  

Equity’s Reasons for the Merger

     51  

Interests of KBC’s Directors and Executive Officers in the Merger

     52  

Public Trading Markets

     53  

Equity’s Dividend Policy

     53  

Restrictions on Resale of Equity Common Stock

     53  

Appraisal Rights in the Merger

     53  

Regulatory Approvals Required for the Merger

     55  

THE MERGER AGREEMENT

     57  

Structure of the Merger

     57  

Merger Consideration

     57  

Fractional Shares

     62  

Governing Documents; Directors and Officers; Governance Matters

     62  

Closing and Effective Time

     62  

Conversion of Shares; Election as to Form of Consideration; Exchange of Certificates

     62  

Representations and Warranties

     64  

Covenants and Agreements

     67  

Stockholder Meeting and Recommendation of KBC’s Boards of Directors

     70  

Agreement Not to Solicit Other Offers

     71  

Conditions to Complete the Merger

     72  

Termination of the Merger Agreement

     74  

Effect of Termination

     75  

Termination Fee

     75  

Expenses and Fees

     76  

Amendment, Waiver and Extension of the Merger Agreement

     76  

 

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     Page  

KBC Director Support Agreements

     77  

KBC Voting Agreement

     77  

ACCOUNTING TREATMENT

     78  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     78  

KBC SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERSHIP

     83  

INFORMATION ABOUT KBC

     84  

Information About KBC’s Business

     84  

Information About KBC’s Properties

     85  

Legal Proceedings

     85  

DESCRIPTION OF CAPITAL STOCK OF EQUITY

     86  

Overview

     86  

Equity Common Stock

     86  

Preferred Stock

     87  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     88  

COMPARATIVE MARKET PRICES AND DIVIDENDS

     99  

Equity

     99  

KBC

     100  

LEGAL MATTERS

     101  

EXPERTS

     101  

Equity

     101  

Eastman National Bancshares, Inc.

     101  

Cache Holdings, Inc.

     101  

Community First Bancshares, Inc.

     101  

WHERE YOU CAN FIND MORE INFORMATION

     101  

 

Annex A

   Agreement and Plan of Reorganization     A-1  

Annex B

   Form of KBC Director Support Agreement     B-1  

Annex C

   Form of Voting Agreement     C-1  

Annex D

   Opinion of Sheshunoff and Company     D-1  

Annex E

   Kansas Statutes Annotated Appraisal Rights     E-1  

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a KBC stockholder, may have about the merger and the KBC special meeting, and brief answers to those questions. You are urged to read the remainder of this proxy statement/prospectus carefully because the information in this section does not provide all of the information that might be important to you with respect to the merger, the KBC special meeting or the proposals presented at that meeting. Additional important information is also contained in the annexes to this proxy statement/prospectus. For details about where you can find additional important information, please see the section of this proxy statement/prospectus entitled “Where You Can Find More Information.”

Unless the context otherwise requires, references in this proxy statement/prospectus to “Equity” refer to Equity Bancshares, Inc., a Kansas corporation, and its affiliates, including Equity Bank, a Kansas state bank and a wholly-owned subsidiary of Equity (which we refer to in this proxy statement/prospectus as “Equity Bank”). Additionally, unless the context otherwise requires, references in this proxy statement/prospectus to “KBC” refer to Kansas Bank Corporation, a Kansas corporation, and its affiliates, including the First National Bank of Liberal, a national association with its principal offices in Liberal, Kansas, and a wholly-owned subsidiary of KBC (which we refer to in this proxy statement/prospectus as “FNB”).

 

Q: What is the merger?

 

A: Equity, Merger Sub and KBC entered into the merger agreement on December 16, 2017. Under the merger agreement, Merger Sub will merge with and into KBC, with KBC surviving the merger as a wholly-owned subsidiary of Equity. Immediately following, and in connection with the merger, Equity will cause KBC to merge with and into Equity, with Equity surviving the second merger (we refer to the merger and second merger collectively in this proxy statement/prospectus as the “integrated mergers”). Immediately following the integrated mergers (or at such later time as Equity may determine in its sole discretion), Equity will cause FNB to merge with and into Equity Bank (which we refer to in this proxy statement/prospectus as the “bank merger”), with Equity Bank surviving the bank merger.

A copy of the merger agreement is included in this proxy statement/prospectus as Annex A.

The merger cannot be completed unless, among other things, the KBC stockholders approve the Merger Proposal.

 

Q: Why am I receiving this proxy statement/prospectus?

 

A: KBC is delivering this document to you because it is a proxy statement being used by KBC’s board of directors (which we refer to in this proxy statement/prospectus as the “KBC Board”) to solicit proxies of its stockholders entitled to vote on the matters in connection with the approval of the Merger Proposal.

KBC has called a special meeting of its stockholders to approve the Merger Proposal. This document serves as a proxy statement for the KBC special meeting and describes the proposals to be presented at the KBC special meeting. It also constitutes a notice of special meeting with respect to the KBC special meeting.

In addition, this document is also a prospectus that is being delivered to KBC stockholders because Equity is offering shares of Equity common stock to KBC stockholders in connection with the merger.

This proxy statement/prospectus contains important information about the Merger Proposal and the other proposal being voted on at the KBC special meeting and important information to consider in connection with an investment in Equity common stock. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending the KBC special meeting. Your vote is important, and you are encouraged to submit your proxy as soon as possible.



 

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Q: What are KBC stockholders being asked to vote on at the KBC special meeting?

 

A: KBC is soliciting proxies from its stockholders with respect to the following proposals:

 

    a proposal to approve the merger agreement, pursuant to which Merger Sub will merge with and into KBC, with KBC surviving as a wholly-owned subsidiary of Equity, as more fully described in this proxy statement/prospectus (which we refer to in this proxy statement/prospectus as the “Merger Proposal”); and

 

    a proposal to adjourn the KBC special meeting, if necessary or appropriate, to solicit additional proxies in favor of the Merger Proposal (which we refer to as the “Adjournment Proposal”). Completion of the merger is not conditioned upon approval of the Adjournment Proposal.

 

Q: What will KBC stockholders be entitled to receive in the merger?

 

A: If the merger is completed, each share of KBC common stock (other than shares of KBC common stock held by KBC, Equity or any KBC stockholder who has perfected such stockholder’s appraisal rights under applicable law including the terms and provisions of K.S.A. § 17-6712 et. seq. (which we refer to in this proxy statement/prospectus as a “dissenting stockholder”)) will be converted into the right to receive, either:

 

  (i) an amount in cash (which we refer to as the “per share cash consideration”) equal to the per share consideration, which has a maximum of $558.69; provided, that there is no downward adjustment to the merger consideration; or

 

  (ii) the number of shares of Equity common stock (which we refer to as the “per share stock consideration”) equal to the quotient of the per share consideration divided by the agreed Equity stock price of $34.49 (which we refer to as the “exchange ratio”). Assuming there is no downward adjustment to the merger consideration, the exchange ratio will be approximately 16.20 per share of KBC common stock that elects to receive the stock consideration.

In each case the merger consideration payable for each share of KBC common stock will be at the election of such KBC common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration described under “The Merger Agreement—Conversion of Shares; Election as to Form of Consideration; Exchange of Certificates” beginning on page 62. KBC common stockholders will make their election on a share-by-share basis.

The merger consideration payable is subject to a downward adjustment if the KBC adjusted shareholders’ equity is less than $29,293,303, which we refer to in this proxy statement/prospectus as a “downward adjustment.” If there is a downward adjustment, the cash component of the merger consideration will be reduced and both the per share cash consideration and exchange ratio will be reduced. For a discussion of the possible downward adjustment to the cash component of the merger consideration, the KBC shareholders’ equity as of a recent date and KBC’s estimate of the KBC Merger Costs, see “Questions and Answers—What is a downward adjustment?” beginning on page 3 and “The Merger Agreement—Merger Consideration” beginning on page 57.

The amount of cash and stock that the stockholders of KBC will receive is subject to proration and adjustment in accordance with the terms of the merger agreement, which provides that in the aggregate, before making any possible adjustments to the merger consideration, the aggregate cash consideration will be approximately $16,771,050, or 37.2% of the total merger consideration, and the aggregate stock consideration will be approximately $28,312,988, or 62.8% of the total merger consideration. We refer to the cash consideration and the stock consideration together as the “merger consideration.” Although the per share cash consideration and per share stock consideration will be both be determined based on the same per share consideration value, because the price of EQBK common stock used to calculate the per share stock consideration is fixed at $34.49, the values of the two forms of consideration at the closing of the merger are not likely to be the same.



 

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Equity will not issue any fractional shares of Equity common stock in the merger. KBC stockholders who would otherwise be entitled to a fraction of a share of Equity common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent), determined by multiplying the fractional share by $34.49.

Based on the number of shares of Equity common stock and KBC common stock outstanding as of [        ], 2018, the last date before the date of this proxy statement/prospectus for which it was practicable to obtain this information, approximately [    ]% of outstanding Equity common stock following the merger, and approximately [    ]% of outstanding Equity common stock following the merger and the Adams Merger (as defined below), will be held by stockholders who were holders of Equity common stock immediately prior to the effectiveness of the merger and approximately [    ]% of outstanding Equity common stock following the merger and [    ]% of outstanding Equity common stock following the merger and the Adams Merger will be held by stockholders who were holders of KBC common stock immediately prior to the effectiveness of the merger.

 

Q: Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the merger is completed?

 

A: The value of the per share stock consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for Equity common stock. Any fluctuation in the market price of Equity common stock after the date of this proxy statement/prospectus will change the value of the shares of Equity common stock that KBC stockholders are allocation pursuant to the merger agreement will be entitled to receive.

The closing price of Equity common stock was of $35.10 for on Nasdaq on December 15, 2017, the last trading day before public announcement of the merger and the closing price of Equity common stock was $[        ] on Nasdaq on [        ], 2018, the latest practicable trading day before the printing of this proxy statement/prospectus. We urge you to obtain current market quotations for Equity common stock (trading symbol “EQBK”).

The merger consideration payable is subject to a downward adjustment if the KBC adjusted shareholders’ equity is less than $29,293,303. For a discussion of the possible downward adjustment to the cash component of the merger consideration, the KBC shareholders’ equity as of a recent date and KBC’s estimate of the KBC Merger Costs, see “Questions and Answers—What is a downward adjustment?” beginning on page 3 and “The Merger Agreement—Merger Consideration” beginning on page 57.

 

Q: What is a downward adjustment?

The cash component of the merger consideration may be subject to a downward adjustment based upon the KBC adjusted shareholders’ equity. If the KBC adjusted shareholders’ equity is less than $29,293,303 on the calculation date, which will be the fifth business day before the closing of the merger, then the aggregate cash consideration will be reduced by $1.53 for each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303. As a result, both the per share cash consideration and exchange ratio will be reduced. In the event that the KBC adjusted shareholders’ equity is less than $18,331,833 and Equity proceeds with the merger, then the holders of KBC common stock will not receive any cash consideration. As of [        ], 2018, the most recent practicable date before the printing of this proxy statement/prospectus, KBC adjusted shareholders’ equity would have been estimated to be $[        ] million.

The KBC Merger Costs are the costs and expenses that KBC will incur in connection with the merger that are not reflected in KBC’s shareholders’ equity as of the calculation date, which will be the fifth business day before the closing of the merger or such other mutually agreed date. The KBC Merger Costs will be subtracted



 

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from KBC’s shareholders’ equity as of the calculation date to calculate the KBC adjusted shareholders’ equity. The KBC Merger Costs is defined in the merger agreement and it includes, among other costs and expenses:

 

    contract termination costs, including employment related agreements and obligations;

 

    all transaction costs and legal, accounting and financial advisory fees of KBC associated with the merger;

 

    the payment of severance, stay-pay, certain bonuses and change-in-control payments to employees of KBC;

 

    certain tax obligations; and

 

    any unrealized gains or any unrealized losses (as the case may be) in KBC’s securities portfolio due to mark-to-market adjustments required by generally accepted accounting principles, or GAAP.

The following table presents the effect of the estimated KBC Merger Costs on the per share consideration to be received by the KBC stockholders. If KBC’s adjusted shareholders’ equity is less than $29,293,303, then both the cash consideration payable and exchange ratio will be reduced. As of January 31, 2018, the most recent practicable date before the initial filing of this proxy statement/prospectus, KBC estimates that the KBC Merger Costs would be approximately $2,800,000 on an after-tax basis. The table also presents up to $1,000,000 of additional KBC Merger Costs in increments of $250,000. For a discussion of the risks and assumptions associated with the estimates and forecasts included in this table, see “Risk Factors—Risks Relating to the Merger—The sum of KBC’s consolidated capital, surplus and retained earnings accounts less all intangible assets prior to the closing of the merger could be an amount that results in the reduction of the amount of the cash portion of the merger consideration that KBC stockholders would be entitled to receive.”

 

Estimated KBC
shareholders’
equity on the
calculation

date(1)

   Estimated
KBC Merger
Costs(2)
     Estimated KBC
adjusted
shareholders’
equity
     Reduction in
aggregate
consideration
     Total stock
consideration
     Total cash
consideration
     Cash
consideration
payable to cash
election shares
     Exchange
Ratio for
stock
election
shares
 

$33,773,000

   $ 2,800,000      $ 30,973,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,050,000      $ 30,723,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,300,000      $ 30,473,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,550,000      $ 30,223,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,800,000      $ 29,973,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

 

(1) This number reflects the KBC shareholders’ equity at September 30, 2017 of approximately $31,992,000, plus KBC’s estimated earnings from October 1, 2017 through the anticipated calculation date of approximately $1,781,000. The calculation date is the fifth business day before the closing of the merger. The closing of the merger is expected to occur in the second quarter of 2018. The estimated earnings of KBC are based on the financial and operating forecast provided by KBC’s management.
(2) Reflects KBC’s estimate of $2,800,000 on an after-tax basis as of January 31, 2018 of the KBC Merger Costs and additional KBC Merger Costs in increments of $250,000.

 

Q: Will KBC common stockholders receive the form of consideration they elect?

 

A:

A KBC common stockholder may not receive the form of consideration that such stockholder elects in the merger. The proration and adjustment procedures in the merger agreement will result, regardless of the elections made, in the total cash consideration being equal to the cash component. Accordingly, the number of shares of KBC common stock to be converted into the right to receive the cash consideration (which we refer to as the “max cash shares number”) will be determined by dividing the total cash consideration by the per share cash amount, and the balance of the shares will be converted into the right to receive the stock consideration. Pursuant to proration and adjustment procedures in the merger agreement, if the number of



 

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  shares of KBC common stock for which a cash election has been made exceeds the max cash shares number, a pro rata portion of all those shares for which a cash election has been made will instead be converted into the right to receive the stock consideration. Similarly, if the number of shares of KBC common stock for which a cash election has been made is less than the max cash shares number, a pro rata portion of all the shares of KBC common stock for which a stock election has been made will instead be converted into the right to receive the cash consideration. In each case, outstanding shares of KBC common stock with respect to which no election has been made will be converted to the undersubscribed form of merger consideration first. The allocation of the consideration payable to KBC common stockholders in the merger will not be known until the results of the merger consideration elections made by KBC common stockholders are tallied, which will not occur until near or after the closing of the merger. See “The Merger Agreement—Merger Consideration” beginning on page 57.

 

Q: How will KBC common stockholders make their election to receive either the cash consideration, the stock consideration or mixed consideration in the merger?

 

A: An election form is being mailed to each holder of record of KBC common stock as of the KBC record date. The election deadline is 5:00 p.m. local time on [        ], 2018 unless Equity and KBC agree to extend such deadline. Equity will also make an election form available to each KBC common stockholder who requests such form before the election deadline. Each KBC common stockholder should complete and return the election form, along with KBC stock certificate(s) (or a properly completed notice of guaranteed delivery), according to the instructions included with the form.

KBC common stockholders will make their election on a share-by-share basis. When making an election, KBC common stockholders may specify different elections with respect to different shares of KBC common stock held by them (for example, a KBC common stockholder with 100 shares of KBC common stock could make a cash election with respect to 50 shares and a stock election with respect to the other 50 shares). Depending on the elections made by other KBC common stockholders, a KBC common stockholder might receive a portion of the merger consideration in a form such holder did not elect.

If you own shares of KBC common stock in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the bank, broker or other nominee holding your shares concerning how to make an election. If you do not send in the election form with your stock certificate(s) by the election deadline, you will be treated as though you had not made an election.

 

Q: What happens if a KBC common stockholder does not make a valid election to receive the cash consideration, the stock consideration or mixed consideration?

 

A: If a KBC common stockholder does not return a properly completed election form by the election deadline specified in the election form, such stockholder’s shares of KBC common stock will be considered “non-election” shares and will be converted into the right to receive the per share stock consideration and/or the per share cash consideration according to the allocation procedures specified in the merger agreement. Generally, in the event one form of merger consideration (i.e., cash or shares of Equity common stock) is undersubscribed, shares of KBC common stock for which no election was validly made will be allocated to that form of merger consideration before shares of KBC common stock electing the oversubscribed form of merger consideration will be allocated to the undersubscribed form of merger consideration pursuant to the proration and adjustment procedures. Accordingly, although electing one form of merger consideration will not guarantee you will receive that form of merger consideration for all of your shares of KBC common stock, in the event proration is necessary, electing shares will be allocated the undersubscribed form of consideration only after such consideration is allocated to “non-election” shares.


 

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Q: How does the KBC Board recommend that I vote at the KBC special meeting?

 

A: The KBC Board unanimously recommends that you vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

 

Q: When and where is the special meeting?

 

A: The KBC special meeting will be held at the First National Bank of Liberal main bank Boardroom located at 1700 North Lincoln Avenue, Liberal, Kansas, at 10:00 a.m. local time, on [            ], 2018.

 

Q: What do I need to do now?

 

A: After you have carefully read this proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at your special meeting. If you hold your shares in your name as a stockholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker. “Street name” stockholders who wish to vote in person at their special meeting will need to obtain a legal proxy from the institution that holds their shares.

 

Q: What is the difference between a stockholder of record and a “street name” holder?

 

A: If you are a KBC stockholder and if your shares of KBC common stock are registered directly in your name, you are considered the stockholder of record with respect to those shares of KBC common stock. On the KBC record date, KBC had [    ] holders of record.

If your shares of KBC common stock are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” This proxy statement/prospectus and the KBC proxy card have been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning how to vote your shares by using the voting instructions it included in the mailing or by following its instructions for voting.

 

Q: If my shares of KBC common stock are held in “street name” by my bank or broker, will my bank or broker automatically vote my shares for me?

 

A: No. Your bank or broker cannot vote your shares without instructions from you. You should instruct your bank or broker how to vote your shares in accordance with the instructions provided to you. Please check the voting form used by your bank or broker.

 

Q: What is a broker non-vote?

 

A: A broker non-vote occurs when a broker or nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

If you are a KBC stockholder, your broker does not have discretionary authority to vote your shares with respect to the Merger Proposal, but your broker does have discretionary authority to vote your shares with respect to the Adjournment Proposal.

 

Q: How are broker non-votes and abstentions treated?

 

A:

Brokers, as holders of record, are permitted to vote on certain routine matters, but not on non-routine matters. A broker non-vote occurs when a broker does not have discretionary authority to vote the shares and has not received voting instructions from the beneficial owner of the shares. The only routine matter to



 

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  be presented at the KBC special meeting is the Adjournment Proposal. If you hold shares in “street name” and do not provide voting instructions to your broker, those shares will be counted as broker non-votes for all non-routine matters. Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum.

Abstentions and broker non-votes by KBC stockholders will have the effect of a vote against the Merger Proposal because Kansas law requires the Merger Proposal to be approved by a majority of the outstanding KBC common stock.

Abstentions and broker non-votes will not have the effect of a vote against the Adjournment Proposal. As the Adjournment Proposal is considered a routine matter and a broker or other nominee may generally vote on routine matters, no broker non-votes are expected to occur in connection with this proposal.

 

Q: What constitutes a quorum for the KBC special meeting?

 

A: The presence (in person or by proxy) of holders of at least a majority of the outstanding shares of KBC common stock entitled to be voted at the KBC special meeting constitutes a quorum for transacting business at the KBC special meeting. All shares of KBC common stock present in person or represented by proxy, including abstentions and broker non-votes, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the KBC special meeting.

 

Q: What is the vote required to approve each proposal at the KBC special meeting?

 

A: Merger Proposal: The affirmative vote of at least a majority of the outstanding shares of KBC common stock is required to approve the Merger Proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card, fail to vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Merger Proposal, it will have the effect of a vote against the Merger Proposal.

Adjournment Proposal: The affirmative vote of a majority of shares entitled to vote on the subject matter and presented in person or represented by proxy at the KBC special meeting is required to approve the Adjournment Proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Adjournment Proposal, it will have no effect on the proposal.

 

Q: Why is my vote important?

 

A: If you do not vote, it will be more difficult for KBC to obtain the necessary quorum to hold its special meeting and to obtain approval of the proposals to be voted upon at the special meeting. In addition, your failure to vote will have the effect of a vote against the Merger Proposal. The KBC Board unanimously recommends that you, as a KBC stockholder, vote “FOR” the Merger Proposal.

 

Q: Can I attend the meeting and vote my shares in person?

 

A: Yes. All stockholders of KBC, including stockholders of record and stockholders who hold their shares in “street name” through banks, brokers, nominees or any other holder of record, are invited to attend the KBC special meeting. Holders of record of KBC common stock can vote in person at the KBC special meeting. If you are not a stockholder of record, you must obtain a proxy card, executed in your favor, from the record holder of your shares, such as a broker, bank or other nominee, to be able to vote in person at the KBC special meeting. If you plan to attend the KBC special meeting, you must hold your shares in your own name or have a letter from the record holder of your shares confirming your ownership. In addition, you must bring a form of personal photo identification with you in order to be admitted. KBC reserves the right to refuse admittance to anyone without proper proof of share ownership or without proper photo identification. The use of cameras, sound recording equipment, communications devices or any similar equipment during the KBC special meeting is prohibited without KBC’s express written consent.


 

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Q: Can I change my vote?

 

A: Yes. If you are a holder of record of KBC common stock, you may change your vote or revoke any proxy at any time before it is voted by (1) attending and voting in person at the KBC special meeting; (2) giving notice of revocation of the proxy prior to the start of the KBC special meeting; or (3) delivering to the Secretary of KBC (i) a written notice of revocation or (ii) a duly executed proxy card relating to the same shares, bearing a date later than the proxy card previously executed. Attendance at the KBC special meeting by itself will not automatically revoke your proxy. A revocation or later-dated proxy received by KBC after the vote will not affect the vote. KBC’s corporate secretary’s mailing address is: 1700 N Lincoln Avenue, Liberal, Kansas 67901.

If you hold your shares of KBC common stock in “street name” through a bank or broker, you should contact your bank or broker to change your vote or revoke your proxy.

 

Q: What are the expected U.S. federal income tax consequences to a holder of KBC common stock as a result of the transactions contemplated by the merger agreement?

 

A: Equity and KBC intend that the integrated mergers shall together be treated as an integrated transaction that will qualify for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). If the integrated mergers qualify as a reorganization under Section 368(a) of the Code, a U.S. holder (as defined in the section titled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 78) of KBC common stock who exchanges KBC common stock for a combination of Equity common stock and cash should recognize gain (but not loss) in the exchange equal to the lesser of the cash received by such holder and the amount, if any, by which the cash plus the fair market value of Equity common stock received by such holder exceeds the tax basis of such holder’s KBC common stock surrendered in exchange therefor (in each case excluding cash received in lieu of a fractional share of Equity common stock). Further, a U.S. holder of KBC common stock generally will recognize gain or loss with respect to cash received in lieu of fractional shares of Equity common stock that the U.S. holder would otherwise be entitled to receive.

For further information, please see “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 78.

The U.S. federal income tax consequences described above may not apply to all holders of KBC common stock. Your tax consequences will depend on your individual situation. Accordingly, you are strongly urged to consult your tax advisor for a full understanding of the particular tax consequences of the integrated mergers to you.

 

Q: Are KBC stockholders entitled to appraisal rights?

 

A: Yes, KBC stockholders may assert appraisal rights. For further information, see “The Merger—Appraisal Rights in the Merger” beginning on page 53, which discussion is qualified by that description and by the text of the provisions of the Kansas Statutes Annotated (which we refer to in this proxy statement/prospectus as the “K.S.A.”) relating to appraisal rights set forth in Annex E hereto.

 

Q: If I am a KBC stockholder, should I send in my KBC stock certificates now?

 

A: Yes, you should submit your KBC stock certificates with your election form, in accordance with the instructions set forth on the election form. Following the closing of the merger, Equity’s transfer agent, Continental Stock Transfer and Trust Company (which we refer to in this proxy statement/prospectus as “Continental”), will send a letter of transmittal and instructions for exchanging KBC stock certificates for the merger consideration to each KBC common stockholder who has not submitted their physical stock certificate(s) with a form of election. See “The Merger Agreement— Conversion of Shares; Election as to Form of Consideration; Exchange of Certificates” beginning on page 62.


 

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Q: Whom may I contact if I cannot locate my KBC stock certificate(s)?

 

A: If you are unable to locate your original KBC stock certificate(s), you should contact Tina Call at (620) 624-1971.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: KBC stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of KBC common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of KBC common stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of KBC common stock that you own.

 

Q: When do you expect to complete the merger?

 

A: Equity and KBC currently expect to complete the merger in the second calendar quarter of 2018. However, neither Equity nor KBC can assure you of when or if the merger will be completed. Before the merger is completed, KBC must obtain the approval of KBC stockholders for the Merger Proposal, the necessary regulatory approvals must be obtained and certain other closing conditions must be satisfied.

 

Q: What happens if the merger is not completed?

 

A: If the merger is not completed, holders of KBC common stock will not receive any consideration for their shares in connection with the merger. Instead, KBC will remain an independent company. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by KBC. See the section of this proxy statement/prospectus entitled “The Merger Agreement—Termination Fee” beginning on page 75 for a complete discussion of the circumstances under which termination fees will be required to be paid.

 

Q: Whom should I call with questions?

 

A: If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus or need help voting your shares of KBC common stock, please contact Tina Call, at (620) 624-1971.


 

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SUMMARY

This summary highlights selected information from this proxy statement/prospectus. It may not contain all of the information that is important to you. You are urged to read the entire proxy statement/prospectus carefully, including the annexes, and the other documents to which they refer in order to fully understand the merger. A copy of the merger agreement is attached as Annex A. For more information about Equity, see “Where You Can Find More Information” beginning on page 101. Each item in this summary refers to the page of this proxy statement/prospectus on which that subject is discussed in more detail.

Information about the companies (pages 84 and 101)

Equity Bancshares, Inc.

7701 East Kellogg Drive, Suite 300

Wichita, Kansas 67207

(316) 612-6000

Equity is a Kansas corporation and bank holding company headquartered in Wichita, Kansas. Equity’s wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through Equity’s network of 42 full-service branches located in Kansas, Missouri, Arkansas and Oklahoma. As of September 30, 2017, on a pro forma basis after giving effect to Equity’s mergers with Cache Holdings, Inc. and Eastman National Bancshares, Inc., Equity had consolidated total assets of $3.01 billion, total loans held for investment of $1.99 billion (net of allowances), total deposits of $2.37 billion and total shareholders’ equity of $367.73 million. Equity’s stock is traded on Nasdaq under the symbol “EQBK.” For more information about Equity’s mergers with Cache Holdings, Inc. and Eastman National Bancshares, Inc., see “Recent Developments” beginning on page 18.

Equity Bank is a Kansas state-chartered bank and member of the Federal Reserve (jointly supervised by both the Federal Reserve Bank of Kansas City and the Office of the Kansas State Bank Commissioner), and its deposits are insured by the FDIC. Equity Bank conducts a complete range of commercial and personal banking activities. Equity Bank operates a total of 42 branches, consisting of four branches in the Wichita, Kansas metropolitan area, six branches in the Kansas City metropolitan area, three branches in Topeka, Kansas, ten branches in Western Missouri, five branches in Western Kansas, four branches in Southeast Kansas, five branches in Arkansas, and five branches in Oklahoma.

Equity’s principal office is located at 7701 East Kellogg Drive, Suite 300, Wichita, Kansas 67207, and its telephone number at that location is (316) 612-6000. Additional information about Equity and its subsidiaries is included in documents referred to in the section of this proxy statement/prospectus entitled “Where You Can Find More Information,” beginning on page 101.

Kansas Bank Corporation

1700 N Lincoln Avenue

Liberal, Kansas 67901

Attention: Tina Call

Telephone: (620) 624-1971

KBC is headquartered in Liberal, Kansas and is the holding company for the First National Bank of Liberal (which we refer to in this proxy statement/prospectus as “FNB”), which dates back to 1900. KBC owns 100% of FNB. FNB is a locally-owned community bank whose mission in part is to provide excellent customer service and total relationship banking and to provide an environment that encourages, promotes, and rewards the professional development and growth of its officers and employees. FNB is a national association and its primary



 

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regulator is the Office of the Comptroller of the Currency. KBC’s branch offices include four locations in the town of Liberal, Kansas and one location in Hugoton, Kansas.

As of September 30, 2017, KBC had consolidated total assets of $311.0 million, total loans of $170.0 million ($168.0 million net of allowances), total deposits of $274.0 million and total shareholders’ equity of $31.992 million. KBC does not file reports with the SEC.

KBC’s principal executive offices are located at 1700 N Lincoln Avenue, Liberal, Kansas 67901, and its telephone number at that location is (620) 624-1971. For additional information about KBC and FNB see the section of this proxy statement/prospectus entitled “Where You Can Find More Information” beginning on page 101.

In the merger, KBC stockholders will be entitled to receive shares of Equity common stock and/or cash (pages 40 and 57)

If the merger is completed, each share of KBC common stock (other than shares of KBC common stock held by KBC, Equity and any dissenting stockholder) will be converted into the right to receive, either:

 

  (i) an amount in cash (which we refer to as the “per share cash consideration”) equal to the per share consideration, which has a maximum of $558.69; provided, that there is no downward adjustment to the merger consideration; or

 

  (ii) the number of shares of Equity common stock (which we refer to as the “per share stock consideration”) equal to the quotient of the per share consideration divided by the agreed Equity stock price of $34.49 (which we refer to as the “exchange ratio”). Assuming there is no downward adjustment to the merger consideration, the exchange ratio will be approximately 16.20 per share of KBC common stock that elects to receive the stock consideration.

In each case the merger consideration payable for each share of KBC common stock will be at the election of such KBC common stockholder, subject to procedures applicable to oversubscription and undersubscription for cash consideration described under “The Merger Agreement—Conversion of Shares; Election as to Form of Consideration; Exchange of Certificates” beginning on page 62. KBC common stockholders will make their election on a share by share basis.

The merger consideration payable is subject to a downward adjustment if the KBC adjusted shareholders’ equity is less than $29,293,303. For each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303, the aggregate cash consideration will be reduced by $1.53. If there is a downward adjustment, the cash component of the merger consideration will be reduced and both the per share cash consideration and exchange ratio will be reduced. For a discussion of the possible downward adjustment to the cash component of the merger consideration, the KBC shareholders’ equity as of a recent date and KBC’s estimate of the KBC Merger Costs, see “Questions and Answers—What is a downward adjustment?” beginning on page 3 and “The Merger Agreement—Merger Consideration” beginning on page 57.

The amount of cash and stock that the stockholders of KBC will receive is subject to proration and adjustment in accordance with the terms of the merger agreement, which provides that in the aggregate, before making any possible adjustments to the merger consideration, the aggregate cash consideration will be approximately $16,771,050, or 37.2% of the total merger consideration, and the aggregate stock consideration will be approximately $28,312,988, or 62.8% of the total merger consideration. Although the per share cash consideration and per share stock consideration will be both be determined based on the same per share consideration value, because the price of EQBK common stock used to calculate the per share stock consideration is fixed at $34.49, the values of the two forms of consideration at the closing of the merger are not likely to be the same.



 

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Equity will not issue any fractional shares of Equity common stock in the merger. KBC stockholders who would otherwise be entitled to a fraction of a share of Equity common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent), determined by multiplying the fractional share by $34.49.

Based on the number of shares of Equity common stock and KBC common stock outstanding as of [        ], 2018, the last date before the date of this proxy statement/prospectus for which it was practicable to obtain this information, approximately [    ]% of outstanding Equity common stock following the merger, and approximately [    ]% of outstanding Equity common stock following the merger and the Adams Merger (as defined below), will be held by stockholders who were holders of Equity common stock immediately prior to the effectiveness of the merger and approximately [    ]% of outstanding Equity common stock following the merger and [    ]% of outstanding Equity common stock following the merger and the Adams Merger will be held by stockholders who were holders of KBC common stock immediately prior to the effectiveness of the merger.

The KBC Board unanimously recommends that KBC stockholders vote “FOR” the Merger Proposal and the Adjournment Proposal (page 42)

The KBC Board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of KBC and its stockholders and has unanimously approved the merger agreement. The KBC Board unanimously recommends that KBC stockholders vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal. For the factors considered by the KBC Board in reaching its decision to approve the merger agreement, see “The Merger—KBC’s Reasons for the Merger; Recommendation of the KBC Board.”

Certain executive officers, directors, affiliates, founders and their family members, and holders of 5% or more of the voting equity securities of KBC have entered into a voting agreement with Equity, solely in their capacity as stockholders of KBC, pursuant to which they have agreed to vote in favor of the Merger Proposal and in favor of any other matter required to be approved by the stockholders of KBC to facilitate the transactions contemplated by the merger agreement. The parties to the voting agreement control approximately 74% of the outstanding shares of common stock of KBC and have agreed to vote such shares in favor of the Merger Proposal, which is sufficient to approve the Merger Proposal. For more information regarding the support agreements, see “The Merger Agreement—Director Support Agreements” and “The Merger Agreement—Voting Agreement.”

Opinion of KBC’s financial advisor (page 43 and Annex D)

In connection with the merger, KBC’s financial advisor, Sheshunoff & Co. Investment Banking, L.P. (which we refer to in this proxy statement/prospectus as “Sheshunoff”), delivered a written opinion, dated December 16, 2017, to the KBC Board as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of KBC common stock of the merger consideration in the merger. The full text of the opinion, which describes the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sheshunoff in preparing the opinion, is attached as Annex D to this document. The opinion was for the information of, and was directed to, the KBC Board (in its capacity as such) in connection with its consideration of the financial terms of the merger. The opinion did not address the underlying business decision of KBC to engage in the merger or enter into the merger agreement or constitute a recommendation to the KBC Board in connection with the merger, and it does not constitute a recommendation to any holder of KBC common stock or any stockholder of any other entity as to how to vote in connection with the merger or any other matter. For further information, please see the section entitled “The Merger—Opinion of KBC’s Financial Advisor” on page 43.



 

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KBC will hold the KBC special meeting on [    ], 2018 (page 36)

The KBC special meeting will be held at the First National Bank of Liberal main bank Boardroom located at 1700 North Lincoln Avenue, Liberal, Kansas, at 10:00 a.m. local time, on [        ], 2018. At the KBC special meeting, KBC stockholders will be asked to approve the Merger Proposal and, if necessary, to approve the Adjournment Proposal.

Only holders of record of KBC common stock at the close of business on [        ], 2018, the KBC record date, will be entitled to notice of and to vote at the KBC special meeting. Each share of KBC common stock is entitled to one vote on each proposal to be considered at the KBC special meeting. As of the KBC record date, there were [        ] shares of KBC common stock entitled to vote at the KBC special meeting. As of the KBC record date, the directors and executive officers of KBC and their affiliates beneficially owned and were entitled to vote, in the aggregate, [        ] shares of KBC common stock representing approximately [    ]% of the shares of KBC common stock outstanding on that date.

The Merger Proposal will be approved if at least a majority of the outstanding shares of KBC common stock are voted in favor of such proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy, fail to vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Merger Proposal, it will have the effect of a vote against the Merger Proposal.

The Adjournment Proposal will be approved if a majority shares entitled to vote on the subject matter and represented in person or by proxy at the KBC special meeting are voted in favor of the proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy, fail to vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Adjournment Proposal, it will have no effect on the proposal.

Material U.S. federal income tax consequences of the integrated mergers (page 78)

The obligation of Equity to complete the integrated mergers is conditioned on, among other things, the receipt by Equity of a tax opinion from Norton Rose Fulbright US LLP, dated as of the closing date of the integrated mergers, to the effect that, on the basis of facts, representations and assumptions described in such opinion, the integrated mergers shall together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

Assuming that the integrated mergers taken together qualify as a reorganization within the meaning of Section 368(a) of the Code, it is anticipated that a U.S. holder (as defined in the section titled “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 78) of KBC common stock who exchanges KBC common stock for a combination of Equity common stock and cash should recognize gain (but not loss) in the exchange equal to the lesser of the cash received by such holder and the amount, if any, by which the cash plus the fair market value of Equity common stock received by such holder exceeds the tax basis of such holder’s KBC common stock surrendered in exchange therefor (in each case excluding cash received in lieu of a fractional share of Equity common stock). Further, a U.S. holder of KBC common stock generally will recognize gain or loss with respect to cash received in lieu of fractional shares of Equity common stock that the U.S. holder would otherwise be entitled to receive.

For further information, please see “Material U.S. Federal Income Tax Consequences of the Integrated Mergers” beginning on page 78.



 

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The U.S. federal income tax consequences described above may not apply to all holders of KBC common stock. Your tax consequences will depend on your individual situation. Accordingly, you are strongly urged to consult your tax advisor for a full understanding of the particular tax consequences of the integrated mergers to you.

Interests of KBC directors and executive officers in the merger (page 52)

In considering the recommendation of the KBC Board with respect to the merger agreement, you should be aware that some of KBC’s directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of the KBC stockholders generally. Interests of directors and executive officers that may be different from or in addition to the interests of the KBC stockholders include:

 

    Indemnification and Insurance. Equity has agreed to indemnify the directors and officers of KBC against certain liabilities arising before the effective time of the merger and to provide certain “tail” insurance for the benefit of the directors and officers of KBC.

 

    Employee Benefit Plans. On or as soon as reasonably practicable following the merger, employees of KBC who continue on as employees of Equity will be entitled to participate in the Equity health and welfare benefit and similar plans on the same terms and conditions as employees of Equity. Subject to certain exceptions, these employees will receive credit for their years of service to KBC or FNB for participation, vesting and benefit accrual purposes.

 

    Employee Severance Benefits. Equity has agreed to provide certain severance benefits to KBC’s employees whose employment is terminated under the circumstances specified in the merger agreement.

 

    Employment Agreement. Equity Bank has entered into an employment agreement with Tina M. Call to be effective as of the effective time of the merger.

Certain of the above payments are transaction expenses borne by KBC stockholders. These interests are discussed in more detail in the section of this proxy statement/prospectus entitled “The Merger—Interests of KBC’s Directors and Executive Officers in the Merger” beginning on page 52. The KBC Board was aware of these interests and considered them, among other matters, in approving the merger agreement.

KBC stockholders are entitled to demand appraisal rights (page 53 and Annex E)

KBC stockholders have the right to demand an appraisal of their shares of KBC common stock and obtain payment in cash of the fair value of their shares of KBC common stock under K.S.A. § 17-6712 et. seq. In order for a KBC stockholder to perfect such KBC stockholder’s appraisal rights, such KBC stockholder must carefully follow the procedure set forth in the applicable provisions of the K.S.A. A copy of the applicable statutory provisions of the K.S.A. is included as Annex E to this proxy statement/prospectus and a summary of the provisions can be found under the section of this proxy statement/prospectus entitled “The Merger—Appraisal Rights in the Merger” beginning on page 53.

Conditions that must be satisfied or waived for the merger to occur (page 72)

Currently, KBC and Equity expect to complete the merger in the second calendar quarter of 2018. As more fully described in this proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. Each party’s obligations under the merger agreement are conditioned upon (1) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (2) the performance in all material respects by the other party of its obligations under the merger agreement, (3) approval of the merger agreement by KBC’s stockholders, (4) receipt of required regulatory and other third-party consents or approvals, (5) no action having been taken and the absence of any statute, rule, regulation or order prohibiting the consummation of the merger,



 

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(6) the receipt of required closing documents from the other party, (7) execution and delivery of an employment agreement for Tina M. Call, (8) the absence of any material adverse change with respect to the other party since September 30, 2017, and (9) the effectiveness of the registration statement of which this proxy statement/prospectus is a part.

KBC’s obligation to complete the merger is also subject to (1) the shares of Equity common stock to be issued pursuant to the merger agreement being approved for listing on Nasdaq and (2) Equity obtaining a three-year tail insurance coverage policy in accordance with the merger agreement.

Equity’s obligation to complete the merger is also subject to (1) receipt of releases from directors and certain officers of KBC, (2) the termination of certain employee benefit plans of KBC, (3) holders of not more than 5% of the outstanding shares of KBC common stock having duly exercised their dissenters’ rights under the K.S.A., (4) the KBC adjusted shareholders’ equity being at least $18,331,833, (5) receipt from KBC of a notice to the Internal Revenue Service (“IRS”) conforming to the requirements of Treasury Regulation Section 1.897-2(h)(2) and a Statement of Non-U.S. Real Property Holding Corporation Status Pursuant to Treasury Regulation Sections 1.1445-2(c)(3) and 1.897-2(h) and a Certificate of Non-Foreign Status, and (6) receipt of an opinion from Norton Rose Fulbright US LLP to the effect that the integrated mergers shall together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

Neither KBC nor Equity can be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

Termination of the merger agreement (page 74)

The merger agreement can be terminated at any time prior to completion of the merger in the following circumstances:

 

    by the mutual written consent of Equity and KBC;

 

    by either KBC or Equity (as long as the terminating party is not in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement) if the conditions precedent to such party’s obligations to close have not been met or waived by June 30, 2018; provided, however, that such date may be extended to such later date as agreed upon by KBC and Equity;

 

    by either Equity or KBC if any of the transactions contemplated by the merger agreement are disapproved by any federal or state governmental or regulatory agency or authority whose approval is required to complete such transactions or if any court of competent jurisdiction in the United States or other federal or state governmental body has issued an order, decree or ruling or taken any other action restraining, enjoining, invalidating or otherwise prohibiting the merger agreement or the transactions contemplated by the merger agreement and such disapproval, order, decree, ruling or other action is final and nonappealable; provided, however, that the party seeking to terminate the merger agreement pursuant to this provision is required to use its commercially reasonable efforts to contest, appeal and remove such order, decree, ruling or other action;

 

    by either Equity or KBC if there has been any material adverse change with respect to the other party;

 

   

subject to certain cure rights, by Equity or KBC, if there shall have been a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty shall cease to be true and correct) set forth in the merger agreement or any other agreement contemplated in the merger agreement on the part of the other party to the merger agreement, which breach or failure to be true and correct, either individually or in the aggregate with all other breaches (or inaccuracies of such representations and warranties), would constitute, if occurring or continuing on



 

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the Closing, the failure of a closing condition; provided, however, that the right to terminate the merger agreement under this provision shall not be available to a party if it is then in material breach of any of its representations, warranties, covenants or agreements set forth in the merger agreement;

 

    by Equity or KBC, if KBC does not receive the required stockholder approval at the KBC special meeting or any adjournment or postponement thereof; provided, however, that KBC may not terminate the merger agreement pursuant to this provision if KBC has breached in any material respect any of its obligations under the merger agreement, in each case in a manner that caused the failure to obtain the approval of the stockholders at the KBC special meeting, or at any adjournment or postponement thereof;

 

    by KBC prior to obtaining the approval of the KBC stockholders at the KBC special meeting, and subject to the terms and conditions set forth in the merger agreement, in order to accept an alternative acquisition proposal;

 

    by Equity if the KBC Board, prior to obtaining the approval of the KBC stockholders and in compliance with the procedures set forth in the merger agreement, approves, endorses or recommends an alternative acquisition proposal or enters into a definitive agreement with respect to an alternative acquisition proposal or modifies or amends its recommendation in a manner adverse to Equity or withdraws its recommendation;

 

    by Equity or KBC if the other party or its respective banking subsidiary enters into any formal or informal administrative action with any court, arbitrator, federal or state governmental agency or other authority or any such action is threatened by any such entity; or

 

    by KBC, within two business days of the calculation date, which will be the fifth business day before the closing of the merger or such other mutually agreed date, if both (i) the volume weighted average closing price of Equity common stock during the twenty trading day period ending on the close of business on the day prior to the calculation date is less than $27.592, and (ii) Equity’s common stock underperforms the KBW Nasdaq Regional Banking Index (KRX) by more than 20%; provided, however, that Equity has a right to cure by adjusting the exchange ratio or increasing the per share cash amount as provided in the merger agreement.

Termination fee (page 75)

If the merger agreement is terminated under certain circumstances, including circumstances involving an alternative acquisition proposal and changes in the recommendation of the KBC Board, KBC may be required to pay to Equity a termination fee equal to $1,500,000. This termination fee could discourage other companies from seeking to acquire or merge with KBC. Termination fees are discussed in more detail in the section of this proxy statement/prospectus entitled “The Merger Agreement—Termination Fee” beginning on page 75.

Regulatory approvals required for the merger (page 56)

Subject to the terms of the merger agreement, both KBC and Equity have agreed to cooperate with each other and use their commercially reasonable efforts to obtain all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement. These approvals include approvals from, among others, the Board of Governors of the Federal Reserve System (or the Federal Reserve Bank of Kansas City under delegated authority) (the “Federal Reserve”) and the Office of the State Bank Commissioner of Kansas (“OSBC”). Equity has submitted applications and notifications to obtain regulatory approvals from, or provide prior notice to, each required governmental authority.

Although neither KBC nor Equity knows of any reason why it cannot obtain these regulatory approvals in a timely manner, KBC and Equity cannot be certain when or if they will be obtained.



 

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The rights of KBC stockholders will change as a result of the merger (page 88)

The rights of KBC stockholders will change as a result of the merger due to differences in Equity’s and KBC’s governing documents. See “Comparison of Stockholders’ Rights” for a description of the material differences in stockholders’ rights under each of the Equity and KBC governing documents.

Risk factors (page 26)

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the factors described under the section of this proxy statement/prospectus entitled “Risk Factors” beginning on page 26.



 

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RECENT DEVELOPMENTS

Closing of Mergers with Cache Holdings, Inc. and Eastman National Bancshares, Inc.

On November 10, 2017, Equity completed its merger (which we refer to in this proxy statement/prospectus as the “Cache Merger”) with Cache Holdings, Inc., an Oklahoma corporation (which we refer to in this proxy statement/prospectus as “Cache”), pursuant to the terms of the Agreement and Plan of Reorganization, dated July 14, 2017, by and between Equity and Cache. As of September 30, 2017, Cache reported, on a consolidated basis, total assets of $329.92 million, total loans of $305.24 million, total deposits of $277.53 million and total shareholders’ equity of $36.26 million. Pursuant to the terms of the definitive agreement governing the Cache Merger, Equity issued approximately 1,195,952 shares of common stock and paid approximately $12,877,537 in cash to the existing shareholders of Cache.

Also on November 10, 2017, Equity completed its merger (which we refer to in this proxy statement/prospectus as the “Eastman Merger”) with Eastman National Bancshares, Inc., an Oklahoma corporation (which we refer to in this proxy statement/prospectus as “Eastman”), pursuant to the terms of the Agreement and Plan of Reorganization, dated July 14, 2017, by and among Equity, ENB Merger Sub, Inc., an Oklahoma corporation and wholly-owned subsidiary of Equity, and Eastman. As of September 30, 2017, Eastman reported, on a consolidated basis, total assets of $257.52 million, total loans of $182.74 million, total deposits of $219.85 million and total shareholders’ equity of $26.47 million. Pursuant to the terms of the definitive agreement governing the Eastman Merger, Equity issued approximately 1,179,793 shares of common stock and paid approximately $9,399,671 in cash to the existing shareholders of Eastman.

As of September 30, 2017, on a pro forma basis after giving effect to the Cache Merger and Eastman Merger, Equity had total assets of $3.01 billion, total loans of $1.99 billion, and total shareholders’ equity of $367.73 million. Additional information regarding the Cache Merger and Eastman Merger, including the full unaudited pro forma combined consolidated balance sheet as of September 30, 2017, and the unaudited pro forma combined consolidated statements of income for the nine months ended September 30, 2017, and the year ended December 31, 2016, including certain assumptions and adjustments described in the notes thereto, giving effect to the closing of the Cache Merger and Eastman Merger, may be found in Equity’s current report on Form 8-K filed with the SEC on February 7, 2018.

Adams Dairy Bancshares, Inc. Acquisition

On December 16, 2017, Equity entered into an Agreement and Plan of Reorganization (the “Adams Agreement”), by and among Equity, Abe Merger Sub, a Missouri corporation and a wholly-owned subsidiary of Equity, and Adams Dairy Bancshares, Inc., a Missouri corporation (“Adams”).

Subject to the terms and conditions set forth in the Adams Agreement, Abe Merger Sub, Inc. will merge with and into Adams (the “Adams Merger”), with Adams continuing as the surviving corporation and a wholly-owned subsidiary of Equity. Following the Adams Merger, Equity will cause Adams to merge with and into Equity, with Equity surviving (the “Second Step Adams Merger”). Following the Second Step Adams Merger, or at such later time as Equity may determine, Adams Dairy Bank, a Missouri state-chartered bank and wholly-owned subsidiary of Adams, will merge with and into Equity Bank, a Kansas state bank and wholly-owned subsidiary of Equity, with Equity Bank surviving.

Subject to the terms and conditions set forth in the Adams Agreement, at the effective time of the Adams Merger, each outstanding share of common stock, par value $0.01 per share, of Adams (“Adams Common Stock”) will be converted into the right to receive their proportionate share of the merger consideration. As of December 16, 2017, the merger consideration has an aggregate value of approximately $15,825,000 under the terms of the Adams Agreement and will be paid in a combination of Equity common stock and cash.



 

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Shareholders of Adams will have the right to receive (i) 0.4791 shares of Equity common stock, and (ii) $5.51, in cash, subject to adjustment, for each share of Adams common stock that they hold. The merger consideration is subject to downward adjustment based upon Adams’s consolidated capital, surplus and retained earnings accounts less all intangible assets, and adjusted to reflect certain merger costs and other specified items (“Adams Equity”), calculated prior to the closing.

The Adams Agreement contains customary representations and warranties from both Equity and Adams, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between the execution of the Adams Agreement and the closing of the Adams Merger, Adams’s obligation to recommend that its shareholders approve the Adams Agreement and the transactions contemplated thereby, and Adams’s non-solicitation obligations relating to alternative acquisition proposals.

Completion of the Adams Merger is subject to certain customary conditions, including, among others, (1) approval of the Adams Agreement by Adams’s shareholders, (2) receipt of required regulatory and other third-party consents or approvals, (3) the absence of any statute, rule, regulation, order, injunction or other action prohibiting the consummation of the Adams Merger, (4) the Registration Statement on Form S-4 (the “Adams Registration Statement”) becoming effective under the Securities Act, and (5) authorization for listing on the Nasdaq of the shares of Equity Class A common stock to be issued in the Adams Merger. Each party’s obligation to complete the Adams Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) performance in all material respects by the other party of its obligations under the Adams Agreement, (iii) the delivery of required closing documents by the other party, and (iv) receipt by Equity of an opinion from its counsel to the effect that the Adams Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. Equity’s obligation to complete the Adams Merger is also subject to (1) the Adams Equity, after adjusting for the items specified in the Adams Agreement, being at least $5,709,750 and (2) holders of not more than 5% of the outstanding shares of Adams Common Stock having duly exercised their dissenters’ rights.

The Adams Agreement provides certain termination rights for both Equity and Adams and further provides that upon termination of the Adams Agreement under certain circumstances, a termination fee of $850,000 will be payable by Adams to Equity. The Adams Agreement also provides that Adams may terminate the Adams Agreement if, subject to the terms of the Adams Agreement, both (i) the volume weighted average closing price of Equity’s Class A common stock during the twenty trading day period ending on the close of business on the day prior to the fifth business day preceding the closing date is less than $27.592 and (ii) the Equity Class A common stock underperforms the KBW Nasdaq Regional Banking Index (KRX) by more than 20% (the “Adams VWAP Termination Right”). If Adams exercises the Adams VWAP Termination Right, it would not receive any termination fee or any other amounts from Equity.

Additional information on Equity’s acquisition of Adams may be found in Equity’s reports filed with the SEC, including the Form 8-K filed with the SEC on December 18, 2017 and Form S-4 filed with the SEC on February 8, 2018.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EQUITY

The following table sets forth selected historical consolidated financial and other data (i) as of and for the nine months ended September 30, 2017 and 2016 and (ii) as of and for the years ended December 31, 2016, 2015 and 2014. Selected consolidated financial data as of and for the years ended December 31, 2016, 2015 and 2014 have been derived from Equity’s audited financial statements which are incorporated by reference in this proxy statement/prospectus. Selected financial data as of and for the nine months ended September 30, 2017 and 2016 have been derived from Equity’s unaudited financial statements incorporated by reference in this proxy statement/prospectus and have not been audited but, in the opinion of Equity’s management, contain all adjustments (consisting of only normal or recurring adjustments) necessary to present fairly Equity’s financial position and results of operations for such periods in accordance with GAAP. Equity’s historical results are not necessarily indicative of any future period. The performance, asset quality and capital ratios are unaudited and derived from Equity’s audited and unaudited financial statements as of and for the periods presented. Average balances have been calculated using daily averages, unless otherwise denoted.

The table does not take into account the completion on November 10, 2017 of Equity’s mergers with Cache and Eastman. Pro forma information giving effect to the closing of such mergers and historical financial statements of Cache and Eastman may be found in Equity’s Current Report on Form 8-K filed with the SEC on February 7, 2018. For more information on developments occurring subsequent to September 30, 2017, see “Recent Developments” beginning on page 18.

 

(Dollars in thousands, except per share data)                As of and for the nine months              
ended
September 30,
    As of and for the years ended
December 31,
 
    2017     2016     2016     2015     2014  

Statement of Income Data

         

Interest and dividend income

  $ 24,588     $ 14,250     $ 61,799     $ 53,028     $ 46,794  

Interest expense

    4,267       2,268       9,202       6,766       5,433  

Net interest income

    20,321       11,982       52,597       46,262       41,361  

Provision for loan losses

    727       104       2,119       3,047       1,200  

Net gain on acquisition

    —         —         —         682       —    

Net gain from securities transactions

    175       —         479       756       986  

Other non-interest income

    3,860       2,527       9,987       8,364       7,688  

Merger expense

    1,023       237       5,294       1,691       —    

Loss on debt extinguishment

    —         —         58       316       —    

Other non-interest expense

    15,365       10,497       41,723       36,568       35,645  

Income before income taxes

    7,241       3,671       13,869       14,442       13,190  

Provision for income taxes

    2,084       1,000       4,495       4,142       4,203  

Net income

    5,157       2,671       9,374       10,300       8,987  

Dividends and discount accretion on preferred stock

    —         —         (1     (177     (708

Net income allocable to common stockholders

    5,157       2,671       9,373       10,123       8,279  

Basic earnings per share

    0.42       0.32       1.09       1.55       1.31  

Diluted earnings per share

    0.41       0.32       1.07       1.54       1.30  

Balance Sheet Data (at period end)

         

Cash and cash equivalents

  $ 27,465     $ 21,847     $ 35,095     $ 56,829     $ 31,707  

Available-for-sale securities

    81,116       102,391       95,732       130,810       52,985  

Held-to-maturity securities

    528,944       349,915       465,709       310,539       261,017  

Loans held for sale

    4,283       3,071       4,830       3,504       897  

Gross loans held for investment

    1,540,761       956,070       1,383,605       960,355       725,876  


 

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(Dollars in thousands, except per share data)            As of and for the nine months
ended
September 30,
    As of and for the years ended
December 31,
 
     2017     2016     2016     2015     2014  

Allowance for loan losses

     7,969       6,080       6,432       5,506       5,963  

Loans held for investment, net of allowance for loan losses

     1,532,792       949,990       1,377,173       954,849       719,913  

Goodwill and core deposit intangibles, net

     70,063       19,419       63,589       19,679       19,237  

Other intangible assets

     1,290       25       23       29       —    

Total assets

     2,405,426       1,557,082       2,192,192       1,585,727       1,174,515  

Total deposits

     1,868,493       1,177,732       1,630,451       1,215,914       981,177  

Borrowings

     235,098       203,569       293,909       194,064       70,370  

Total liabilities

     2,113,591       1,395,834       1,934,228       1,418,494       1,056,786  

Total shareholders’ equity

     291,835       161,248       257,964       167,233       117,729  

Tangible common equity*

     220,482       141,804       194,352       131,153       82,133  

Performance ratios

          

Return on average assets (ROAA) annualized

     0.85     0.64     0.55     0.75     0.78

Return on average equity (ROAE) annualized

     7.08     6.65     5.55     8.19     7.30

Return on average tangible common equity (ROATCE) annualized*

     9.71     7.94     6.75     9.66     9.99

Yield on loans annualized

     5.30     4.72     4.98     5.31     5.63

Cost of interest-bearing deposits annualized

     0.82     0.66     0.65     0.55     0.49

Net interest margin annualized

     3.68     3.06     3.30     3.65     3.92

Efficiency ratio*

     63.54     72.35     66.67     66.94     72.67

Non-interest income / average assets annualized

     0.67     0.60     0.61     0.71     0.75

Non-interest expense / average assets annualized

     2.71     2.56     2.74     2.81     3.08

Capital Ratios

          

Tier 1 Leverage Ratio

     10.32     9.42     11.81     9.47     9.62

Common Equity Tier 1 Capital Ratio

     13.33     13.57     13.34     12.35     N/A  

Tier 1 Risk Based Capital Ratio

     14.15     14.45     14.25     13.85     13.16

Total Risk Based Capital Ratio

     14.62     15.02     14.67     14.35     13.86

Equity / Assets

     12.13     10.36     11.77     10.55     10.02

Tangible common equity to tangible assets*

     9.45     9.22     9.13     8.37     7.11

Book value per share

   $ 23.86     $ 19.62     $ 22.09     $ 18.37     $ 16.71  

Tangible book value per share*

   $ 18.03     $ 17.25     $ 16.64     $ 15.97     $ 13.54  

Tangible common book value per diluted share*

   $ 17.64     $ 16.95     $ 16.37     $ 15.74     $ 13.07  

 

* Indicates non-GAAP financial measure. Please refer to explanation below.


 

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Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in Equity’s selected historical consolidated financial and other data are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible common equity, return on average tangible common equity, efficiency ratio, tangible book value per share, and tangible common equity to tangible assets. Equity’s management uses the non-GAAP financial measures set forth below in its analysis of Equity’s performance.

 

    “Tangible common equity” is total shareholders’ equity less goodwill, other intangible assets and preferred stock.

 

    “Tangible book value per share” is defined as tangible common equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets.

 

    “Tangible common equity to tangible assets” is defined as the ratio of shareholders’ equity less goodwill, other intangible assets and preferred stock, divided by total assets less goodwill and other intangible assets.

 

    “Average tangible common equity” is defined as the average of Equity’s tangible common equity for the applicable period.

 

    “Return on average tangible common equity,” or ROATCE, is defined as net income available to common stockholders divided by average tangible common equity.

 

    “Efficiency ratio” is defined as noninterest expense not including loss on extinguishment of debt, divided by Equity’s operating revenue (which is equal to net interest income plus noninterest income) excluding gains and losses on sales of securities. This ratio measures Equity’s efficiency by the amount of revenue generated for each dollar spent.

Equity believes that these non-GAAP financial measures provide useful information to management and investors that is supplementary to Equity’s financial condition, results of operations and cash flows computed in accordance with GAAP. However, Equity acknowledge that its non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures.



 

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Non-GAAP Financial Measures

The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity, tangible book value per common share, and diluted tangible book value per common share and compares these values with book value per common share (dollars in thousands, except per share data):

 

     September 30,
2017
     September 30,
2016
     December 31,
2016
     December 31,
2015
     December 31,
2014
 

Total shareholders’ equity

   $ 291,835      $ 161,248      $ 257,964      $ 167,233      $ 117,729  

Less: preferred stock

     —          —          —          16,372        16,359  

Less: goodwill

     64,587        18,130        58,874        18,130        18,130  

Less: core deposit intangibles, net

     5,476        1,289        4,715        1,549        1,107  

Less: mortgage servicing asset, net

     19        25        23        29        —    

Less: naming rights, net

     1,271        —          —          —          —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible common equity

   $ 220,482      $ 141,804      $ 194,352      $ 131,153      $ 82,133  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Common shares outstanding at period end

     12,230,319        8,219,415        11,680,308        8,211,727        6,067,511  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted common shares outstanding at period end

     12,501,484        8,365,283        11,873,480        8,332,762        6,285,628  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Book value per common share

   $ 23.86      $ 19.62      $ 22.09      $ 18.37      $ 16.71  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible book value per common share

   $ 18.03      $ 17.25      $ 16.64      $ 15.97      $ 13.54  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Tangible book value per diluted common share

   $ 17.64      $ 16.95      $ 16.37      $ 15.74      $ 13.07  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


 

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The following table reconciles, as of the dates set forth below, total shareholders’ equity to tangible common equity and total assets to tangible assets (dollars in thousands):

 

     September 30,
2017
    September 30,
2016
    December 31,
2016
    December 31,
2015
    December 31,
2014
 

Total shareholders’ equity

   $ 291,835     $ 161,248     $ 257,964     $ 167,233     $ 117,729  

Less: preferred stock

     —         —         —         16,372       16,359  

Less: goodwill

     64,587       18,130       58,874       18,130       18,130  

Less: core deposit intangibles, net

     5,476       1,289       4,715       1,549       1,107  

Less: mortgage servicing asset, net

     19       25       23       29       —    

Less: naming rights, net

     1,271       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity

   $ 220,482     $ 141,804     $ 194,352     $ 131,153     $ 82,133  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 2,405,426     $ 1,557,082     $ 2,192,192     $ 1,585,727     $ 1,174,515  

Less: goodwill

     64,587       18,130       58,874       18,130       18,130  

Less: core deposit intangibles, net

     5,476       1,289       4,715       1,549       1,107  

Less: mortgage servicing asset, net

     19       25       23       29       —    

Less: naming rights, net

     1,271       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible assets

   $ 2,334,073     $ 1,537,638     $ 2,128,580     $ 1,566,019     $ 1,155,278  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity / assets

     12.13     10.36     11.77     10.55     10.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity to tangible assets

     9.45     9.22     9.13     8.37     7.11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table reconciles, as of the dates set forth below, total average shareholders’ equity to average tangible common equity and net income allocable to common stockholders to adjusted net income allocable to common stockholders (dollars in thousands):

 

     As of and for the nine months
ended September 30,
    As of and for the years
ended December 31,
 
           2017                 2016           2016     2015     2014  

Total average shareholders’ equity

   $ 289,007     $ 159,887     $ 168,823     $ 125,808     $ 123,181  

Less: average intangible assets and preferred stock

     71,465       23,116       25,883       19,165       37,924  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average tangible common equity

   $ 217,542     $ 136,771     $ 142,940     $ 106,643     $ 85,257  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income allocable to common stockholders

   $ 5,157     $ 2,671     $ 9,373     $ 10,123     $ 8,279  

Amortization of core deposit intangible

     256       88       419       275       363  

Less: Tax effect of core deposit intangible amortization

     90       31       147       96       127  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income allocable to common stockholders

   $ 5,323     $ 2,728     $ 9,645     $ 10,302     $ 8,515  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average equity (ROAE) annualized

     7.08     6.65     5.55     8.19     7.30
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average tangible common equity (ROATCE) annualized

     9.71     7.94     6.75     9.66     9.99
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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The following table reconciles, as of the dates set forth below, the efficiency ratio to the GAAP-based efficiency ratio (dollars in thousands):

 

     As of and for the nine months
ended September 30,
    As of and for the years
ended December 31,
 
           2017                 2016           2016     2015     2014  

Non-interest expense

   $ 16,388     $ 10,734     $ 47,075     $ 38,575     $ 35,645  

Less: merger expenses

     1,023       237       5,294       1,691       —    

Less: loss on debt extinguishment

     —         —         58       316       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest expense, excluding merger expenses and loss on debt extinguishment

   $ 15,365     $ 10,497     $ 41,723     $ 36,568     $ 35,645  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

   $ 20,321     $ 11,982     $ 52,597     $ 46,262     $ 41,361  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest income

   $ 4,035     $ 2,527     $ 10,466     $ 9,802     $ 8,674  

Less: net gain from securities transactions

     175       —         479       756       986  

Less: net gain on acquisition

     —         —         —         682       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest income, excluding net gains on security transactions and on acquisition

   $ 3,860     $ 2,527     $ 9,987     $ 8,364     $ 7,688  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-interest expense to net interest income plus non-interest income

     67.29     73.98     74.65     68.81     71.24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Efficiency Ratio

     63.54     72.35     66.67     66.94     72.67
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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RISK FACTORS

In addition to general investment risks and the other information contained in this proxy statement/prospectus, including the matters addressed under the section of this proxy statement/prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements,” beginning on page 33 and the matters discussed under the caption “Risk Factors” in the Annual Report on Form 10-K filed by Equity for the fiscal year ended December 31, 2016, as updated by subsequent Form 10-Q filings and other reports filed with the SEC, you should carefully consider the following risk factors in deciding how to vote for the proposals presented in this proxy statement/prospectus. You should also consider the other information in this proxy statement/prospectus.

Unless the context otherwise requires, references in this proxy statement/prospectus to “Equity” refer to Equity Bancshares, Inc., a Kansas corporation, and its affiliates, including Equity Bank.

Risks Relating to the Merger

The merger may not be completed.

Completion of the merger is subject to regulatory approval. Equity may not receive the required regulatory approvals. If Equity does not obtain the required regulatory approvals, the merger will not be completed. If such regulatory approvals are received, they may impose conditions that would result in certain closing conditions of the merger not being satisfied or may not be received timely.

The consummation of the merger is also subject to other conditions precedent described in the merger agreement. If a condition of either party is not satisfied, such party may be able to terminate the merger agreement and, in such case, the merger would not be consummated. If all of the conditions precedent in the merger agreement are not satisfied, the merger may not be completed.

The sum of KBC’s consolidated capital, surplus and retained earnings accounts less all intangible assets prior to the closing of the merger could be an amount that results in the reduction of the amount of the cash portion of the merger consideration that KBC stockholders would be entitled to receive.

The aggregate amount of the cash portion of the merger consideration that would be eligible for election by KBC stockholders in the merger will be reduced by $1.53 for each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303. As a result, the cash component of the merger consideration will be reduced and both the per share cash consideration and exchange ratio will be reduced. KBC’s adjusted shareholders’ equity will depend in part on the results of KBC’s business operations and the management of merger-related expenses by KBC prior to the closing of the merger. In particular, any actual losses or mark-to-market adjustments required by GAAP to KBC’s securities portfolio will increase the KBC Merger Costs and reduce the merger consideration. KBC’s securities portfolio is subject to volatile market forces beyond the control of KBC and losses or mark-to-market adjustments may be significant. If KBC’s earnings are less than it expects or if the KBC Merger Costs are greater than KBC expects, the KBC adjusted shareholders’ equity may be less than $29,293,303. Preparing for integration of the merger may have a negative impact on KBC’s results of operations, and the merger-related expenses for which KBC will be liable are difficult to predict. As of [        ], 2018, the most recent practicable date before the printing of this proxy statement/prospectus, KBC shareholders’ equity was $[        ] million. For a discussion of the possible downward adjustment to the cash component of the merger consideration, see “The Merger Agreement—Merger Consideration” beginning on page 57. Accordingly, at the time KBC stockholders vote with respect to the Merger Proposal, they will not know the exact value of the aggregate cash portion of the merger consideration they will be entitled to receive in the merger.

 

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Preparing for the merger may negatively impact KBC’s operating results and, as a result, the amount of the cash portion of the merger consideration that KBC stockholders would be entitled to receive.

KBC is taking various actions, as required by the merger agreement, to prepare for the merger and expects to continue to do so prior to the closing of the merger. These actions include participating in preparing regulatory filings for the merger, meeting with customers and employees to discuss the merger, and preparing for systems conversion related to the merger. These items may distract KBC’s management from pursuing the business strategy that KBC has historically employed. In addition, the merger agreement places certain restrictions on the ability of KBC to engage in certain transactions without KBC obtaining the consent of Equity prior to taking certain actions. Finally, KBC will be liable for certain merger-related expenses prior to the closing of the merger. Additional discussion of KBC’s covenants made in connection with the merger agreement are discussed more fully in “The Merger Agreement—Covenants and Agreements,” beginning on page 67. These factors may impact KBC’s profitability and these one-time expenses could result in KBC’s non-interest expenses being higher than historical levels prior to the consummation of the merger. Accordingly, the results of KBC’s operations prior to KBC’s entry into the merger agreement may not have any predictive value relating to, or be representative of, KBC’s operating results and profitability following its entry into the merger agreement. Lower profits and higher expenses may adversely affect KBC’s capital, surplus, and retained earnings prior to the consummation of the merger, which may limit how much cash, if any, will be paid to KBC’s stockholders as merger consideration.

KBC common stockholders may receive a form of merger consideration different from what they elect.

Although each KBC common stockholder may elect to receive the cash consideration, the stock consideration or mixed consideration in the merger, the aggregate amount of cash consideration will be fixed (assuming there is no downward adjustment) and equal $16,771,050. Accordingly, depending on the elections made by other KBC common stockholders, a KBC common stockholder might receive a portion of the merger consideration in the form such holder did not elect. See “The Merger Agreement—Merger Consideration.”

If a KBC common stockholder does not submit a properly completed and signed form of election to the exchange agent by the election deadline, then such holder will have no control over the type of merger consideration such holder may receive. Generally, in the event one form of merger consideration is undersubscribed, shares of KBC common stock for which no election has been validly made will be allocated to that form of merger consideration before shares of KBC common stock electing the oversubscribed form of merger consideration will be allocated the undersubscribed form of merger consideration pursuant to the proration and adjustment procedures set forth in the merger agreement. Accordingly, while electing one form of merger consideration will not guarantee a KBC common stockholder will receive that form of merger consideration for all of such holder’s shares of KBC common stock, in the event proration is necessary, electing shares will have a priority over “non-election” shares.

No fractional shares of Equity common stock will be issued in the merger, and KBC common stockholders will receive cash in lieu of any fractional shares of Equity common stock.

If you deliver shares of KBC common stock to make an election, you will not be able to sell those shares unless you revoke your election prior to the election deadline.

If you are a holder of KBC common stock and want to elect to receive the cash consideration, stock consideration or mixed consideration in the merger, you will have to deliver your stock certificate(s), if any, and a properly completed form of election by the election deadline. Following the delivery of a completed form of election, you will not be able to transfer such shares unless you revoke your election before the election deadline by providing written notice to the exchange agent. If you do not revoke your election before the election deadline, you will not be able to liquidate your investment in KBC common stock for any reason until you receive the merger consideration. In the time between the election deadline and the closing of the merger, the trading price of Equity common stock may decrease, and you might otherwise want to sell your shares of KBC common stock to gain access to cash, make other investments, or reduce the potential for a decrease in the value

 

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of your investment. The date that you will receive your merger consideration depends on the completion date of the merger, which is uncertain. The completion date of the merger might be later than expected due to events not within the control of Equity or KBC, such as delays in obtaining regulatory approvals.

Because the market price of Equity common stock will fluctuate, KBC stockholders cannot be certain of the market value of the merger consideration they will receive.

The market value of the stock consideration will vary from the closing price of Equity common stock on the date Equity and KBC announced the merger, on the date that this proxy statement/prospectus is mailed to KBC stockholders, on the date of the KBC special meeting and on the date the merger is completed and thereafter. Any change in the market price of Equity common stock prior to the completion of the merger will affect the market value of the equity component of the merger consideration that KBC stockholders will be entitled to elect to receive upon completion of the merger, and there will be no adjustment to the merger consideration for changes in the market price of shares of Equity common stock. Stock price changes may result from a variety of factors that are beyond the control of Equity, including, but not limited to, general market and economic conditions, changes in Equity’s business, operations and prospects and regulatory considerations.

Therefore, at the time of the KBC special meeting you will not know the precise market value of the merger consideration you will be entitled to receive at the effective time if you elect to receive Equity common stock for all or a portion of your shares of KBC common stock. The closing price of Equity common stock was $35.10 on Nasdaq on December 15, 2017, the last trading day before public announcement of the merger and the closing price of Equity common stock was $[     ] on Nasdaq on [     ], 2018, the latest practicable trading day before the printing of this proxy statement/prospectus. We urge you to obtain current market quotations for Equity common stock (trading symbol “EQBK”).

There are no current market quotations for KBC common stock because KBC is a privately owned corporation and its common stock is not traded on any established public trading market.

The market price of Equity common stock after the merger may be affected by factors different from those affecting the shares of KBC or Equity currently.

Upon completion of the merger, holders of KBC common stock will become holders of Equity common stock. Equity’s business differs in important respects from that of KBC, and, accordingly, the results of operations of the combined company and the market price of Equity common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Equity and KBC. For a discussion of the business of KBC and of some important factors to consider in connection with its business, see “Information About KBC” beginning on page 84.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger and the bank merger may be completed, Equity must obtain approvals from the Federal Reserve and the OSBC. Other approvals, waivers or consents from regulators may also be required. In determining whether to grant these approvals, waivers or consents, the regulators consider a variety of factors, including the regulatory standing of each party and the factors described under “The Merger—Regulatory Approvals Required for the Merger” beginning on page 55. An adverse development in either party’s regulatory standing or these factors could result in an inability to obtain approvals, waivers or consents, or delay their receipt. These regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on or limiting the revenues of the combined company following the merger and the bank merger, any of which might have an adverse effect on the combined company following the merger. See “The Merger—Regulatory Approvals Required for the Merger” beginning on page 55.

 

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Combining the two companies, including the retention of key employees, may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Equity and KBC have operated and, until the completion of the merger, will continue to operate, independently and may not begin the actual integration process. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Equity’s ability to successfully combine and integrate the businesses of Equity and KBC in a manner that permits growth opportunities and does not materially disrupt the existing customer relations nor result in decreased revenues due to loss of customers. It is possible that the integration process could result in the loss of key employees, the disruption of either company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. The loss of key employees could adversely affect Equity’s ability to successfully conduct its business, which could have an adverse effect on Equity’s financial results and the value of its common stock. If Equity experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. As with any merger of financial institutions, there also may be business disruptions that can cause Equity and/or KBC to lose customers or cause customers to remove their accounts from Equity and/or KBC and move their business to competing financial institutions. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on each of KBC and Equity during this transition period and for an undetermined period after completion of the merger on the combined company. In addition, the actual cost savings of the merger could be less than anticipated.

Certain of KBC’s directors and executive officers may have interests in the merger that may differ from the interests of KBC’s stockholders.

KBC’s stockholders should be aware that some of KBC’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of KBC’s stockholders generally. The KBC Board was aware of these interests and considered these interests, among other matters, when making its decision to approve the merger agreement, and in recommending that KBC’s stockholders vote in favor of approving the merger agreement.

These interests include the following:

 

    Indemnification and Insurance. Equity has agreed to indemnify the directors and officers of KBC against certain liabilities arising before the effective time of the merger and to provide certain “tail” insurance for the benefit of the directors and officers of KBC.

 

    Employee Benefit Plans. On or as soon as reasonably practicable following the merger, employees of KBC who continue on as employees of Equity will be entitled to participate in the Equity health and welfare benefit and similar plans on the same terms and conditions as employees of Equity. Subject to certain exceptions, these employees will receive credit for their years of service to KBC or FNB for participation, vesting and benefit accrual purposes.

 

    Employee Severance Benefits. Equity has agreed to provide certain severance benefits to KBC’s employees whose employment is terminated under the circumstances specified in the merger agreement.

 

    Employment Agreement. Equity Bank has entered into an employment agreement with Tina M. Call to be effective as of the effective time of the merger.

For a more complete description of these interests, see “The Merger—Interests of KBC’s Directors and Executive Officers in the Merger” beginning on page 52.

 

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Termination of the merger agreement could negatively impact both KBC and Equity.

If the merger agreement is terminated, there may be various consequences. For example, KBC’s or Equity’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Equity’s common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, KBC may be required to pay to Equity a termination fee of $1,500,000.

KBC and Equity will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on KBC or Equity. These uncertainties may impair KBC’s or Equity’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with KBC or Equity to seek to change existing business relationships with KBC or Equity. Retention of certain employees by KBC or Equity may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with KBC or Equity. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with KBC or Equity, KBC’s business or Equity’s business could be harmed. In addition, subject to certain exceptions, KBC and Equity have each agreed to operate its business in the ordinary course prior to Closing and agreed to certain restrictive covenants. See “The Merger Agreement—Covenants and Agreements” beginning on page 67 for a description of the restrictive covenants applicable to KBC and Equity.

If the merger is not completed, Equity and KBC will have incurred substantial expenses without realizing the expected benefits of the merger.

Each of Equity and KBC has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger. If the merger is not completed, Equity and KBC would have to recognize these expenses without realizing the expected benefits of the merger.

The merger agreement limits KBC’s ability to pursue acquisition proposals and requires KBC to pay a termination fee of $1,500,000 under limited circumstances, including circumstances relating to acquisition proposals for KBC.

The merger agreement prohibits KBC from initiating, soliciting or knowingly encouraging certain third-party acquisition proposals. See “The Merger Agreement—Agreement Not to Solicit Other Offers” beginning on page 71. The merger agreement also provides that KBC must pay a termination fee in the amount of $1,500,000 in the event that the merger agreement is terminated under certain circumstances, including a change of recommendation of the KBC Board in connection with a third-party acquisition proposal. These provisions might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of KBC from considering or proposing such an acquisition. See the section of this proxy statement/prospectus entitled “The Merger Agreement—Termination Fee” beginning on page 75.

The shares of Equity common stock to be received by KBC stockholders as a result of the merger will have different rights from the shares of KBC common stock.

Upon completion of the merger, KBC stockholders will become Equity stockholders and their rights as Equity stockholders will be governed by the K.S.A., Equity’s Second Amended and Restated Articles of

 

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Incorporation (which we refer to in this proxy statement/prospectus as the “Equity articles”) and Equity’s Amended and Restated Bylaws (which we refer to in this proxy statement/prospectus as the “Equity bylaws”). The rights associated with KBC common stock are different from the rights associated with Equity common stock. Please see “Comparison of Stockholders’ Rights” beginning on page 88 for a discussion of the different rights associated with Equity common stock.

Holders of KBC and Equity common stock will have a reduced ownership and voting interest after the merger and will exercise less influence over management.

Holders of KBC common stock and Equity common stock currently have the right to vote in the election of the board and on other matters affecting KBC and Equity, respectively. Upon the completion of the merger, each KBC stockholder who receives shares of Equity common stock will become a stockholder of Equity with a percentage ownership of Equity that is smaller than the stockholder’s percentage ownership of KBC. As of the date of this proxy statement/prospectus, it is currently expected that the former stockholders of KBC as a group will receive shares in the merger constituting approximately [    ]% of the outstanding shares of Equity common stock immediately after the merger and approximately [    ]% of the outstanding shares of Equity common stock after the merger and the Adams Merger. As a result, current holders of Equity common stock as a group will own approximately [    ]% of the outstanding shares of Equity common stock immediately after the merger and approximately [    ]% of the outstanding shares of Equity common stock after the merger and the Adams Merger. Because of this, KBC stockholders may have less influence on the management and policies of Equity than they now have on the management and policies of KBC and current Equity stockholders may have less influence than they now have on the management and policies of Equity.

The appraisal rights process is uncertain.

KBC stockholders may or may not be entitled to receive more than the amount provided for in the merger agreement for their shares of KBC common stock if they elect to exercise their appraisal rights with respect to the proposed merger, depending on the appraisal of the fair value of the KBC common stock pursuant to the appraisal procedures under the K.S.A. See “The Merger—Appraisal Rights in the Merger” beginning on page 53 and Annex E. For this reason, the amount of cash that you might be entitled to receive should you elect to exercise your appraisal rights with respect to the merger may be more or less than the value of the merger consideration to be paid pursuant to the merger agreement. In addition, it is a closing condition of the merger agreement that the holders of not more than 5% of the outstanding shares of KBC common stock shall have exercised their statutory appraisal rights under the K.S.A. The number of shares of KBC common stock that will exercise appraisal rights under the K.S.A. is not known and therefore we do not know whether this closing condition will be satisfied.

The opinion of KBC’s financial advisor received by the KBC Board prior to the signing of the merger agreement does not reflect changes in circumstances since the date of such opinion.

The opinion of KBC’s financial advisor received by the KBC Board was delivered on December 16, 2017. Changes in the operations and prospects of Equity or KBC, general market and economic conditions and other factors that may be beyond the control of Equity or KBC may significantly alter the value of KBC or the price of Equity common stock by the time the merger is completed. The opinion does not speak as of the date of this proxy statement/prospectus, the time the merger will be completed or as of any date other than the date of such opinion.

Litigation may be filed against KBC, Equity or their respective boards of directors or officers, which could prevent or delay the completion of the merger or result in the payment of damages following completion of the merger.

Lawsuits may be filed against KBC, Equity or their respective boards of directors or officers in connection with the merger, which could prevent or delay completion of the merger and result in substantial costs to KBC

 

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and Equity, including any costs associated with indemnification. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger is completed may adversely affect Equity’s business, financial condition, results of operations and cash flows following completion of the merger.

Equity’s historical and pro forma combined condensed consolidated financial information may not be representative of its results as a combined company.

The pro forma combined condensed consolidated financial information included and incorporated by reference in this proxy statement/prospectus is constructed from the consolidated historical financial statements of Equity, Cache and Eastman, and does not purport to be indicative of the future results of operations of the combined companies. Therefore, Equity’s pro forma combined condensed consolidated financial information included and incorporated by reference in this proxy statement/prospectus may not be representative of Equity’s results as a combined company. The pro forma combined condensed consolidated financial information included and incorporated by reference in this proxy statement/prospectus is also based in part on certain assumptions regarding the Cache Merger and Eastman Merger and the transactions relating thereto that Equity believes are reasonable. Equity cannot assure you, however, that its assumptions will prove to be accurate. Accordingly, the historical and pro forma combined condensed consolidated financial information included and incorporated by reference in this proxy statement/prospectus may not be indicative of what its results of operations and financial condition would have been had Equity been a consolidated entity during the periods presented, or what Equity’s results of operations and financial conditions will be in the future. The challenge of integrating previously independent businesses makes evaluating Equity’s business and its future financial prospects difficult. Equity’s potential for future business success and operating profitability must be considered in light of the risks, uncertainties, expenses and difficulties typically encountered by recently combined companies.

Future sales or the possibility of future sales of a substantial amount of Equity common stock may depress the price of shares of Equity common stock.

Future sales or the availability for sale of substantial amounts of Equity common stock in the public market, or the perception that these sales could occur, could adversely affect the prevailing market price of Equity common stock and could impair Equity’s ability to raise capital through future sales of equity securities.

Equity’s certificate of formation authorizes us to issue up to 45,000,000 shares of Class A common stock and up to 5,000,000 shares of Class B common stock. Immediately after the completion of this merger, Equity expects that approximately 15,246,511 shares of Class A common stock and no shares of Class B common stock will be outstanding, excluding the approximately 344,132 shares of Class A common stock expected to be issued in connection with Equity’s merger with Adams pursuant to that certain Agreement and Plan of Reorganization, dated December 16, 2017, by and among Equity, Adams and Abe Merger Sub, Inc. Sales of a substantial number of shares of Equity common stock, or the perception that such sales may occur, may adversely impact the price of Equity common stock.

Equity may issue shares of Equity common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans. If any such acquisition or investment is significant, the number of shares of Equity common stock, or the number or aggregate principal amount, as the case may be, of other securities that Equity may issue may in turn be substantial. Equity may also grant registration rights covering those shares of Equity common stock or other securities in connection with any such acquisitions and investments.

Equity cannot predict the size of future issuances of Equity common stock or the effect, if any, that future issuances and sales of Equity common stock will have on the market price of Equity common stock. Sales of substantial amounts of Equity common stock (including shares of Equity common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for Equity common stock and could impair Equity’s ability to raise capital through future sales of Equity securities.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information presented herein and in other documents filed with or furnished to the SEC, in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect Equity’s and KBC’s current views 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 and KBC’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s and KBC’s control. Accordingly, Equity and KBC caution 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 and KBC believe 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. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described in “Risk Factors” section of this proxy statement/prospectus.

There are or will be important factors that could cause Equity’s and KBC’s actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following:

 

    an economic downturn, especially one affecting Equity’s or KBC’s core market areas;

 

    the occurrence of various events that negatively impact the real estate market, since a significant portion of Equity’s and KBC’s loan portfolio is secured by real estate;

 

    difficult or unfavorable conditions in the market for financial products and services generally;

 

    interest rate fluctuations, which could have an adverse effect on Equity’s and KBC’s profitability;

 

    the effects of the Tax Cuts and Jobs Act of 2017;

 

    external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on Equity’s and KBC’s financial condition;

 

    continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than Equity and KBC;

 

    costs arising from the environmental risks associated with making loans secured by real estate;

 

    losses resulting from a decline in the credit quality of the assets that Equity and KBC hold;

 

    inadequacies in Equity’s and KBC’s allowance for loan losses, which could require Equity or KBC to take a charge to earnings and thereby adversely affect Equity’s or KBC’s financial condition;

 

    inaccuracies or changes in the appraised value of real estate securing the loans that Equity or KBC originate, which could lead to losses if the real estate collateral is later foreclosed upon and sold at a price lower than the appraised value;

 

    the costs of integrating the businesses Equity acquires, including the costs of integrating KBC or Adams, which may be greater than expected;

 

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    challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;

 

    a lack of liquidity resulting from decreased loan repayment rates, lower deposit balances, or other factors;

 

    restraints on the ability of banks to pay dividends to bank holding companies, which could limit liquidity;

 

    the loss of large loan and depositor relationships;

 

    limitations on Equity’s and KBC’s ability to lend and to mitigate the risks associated with Equity’s and KBC’s lending activities as a result of Equity’s and KBC’s size and capital position;

 

    additional regulatory requirements and restrictions on our business, which could impose additional costs;

 

    increased capital requirements imposed by banking regulators, which may require raising capital at a time when capital is not available on favorable terms or at all;

 

    a failure in the internal controls Equity and KBC have implemented to address the risks inherent to the business of banking;

 

    inaccuracies in assumptions about future events, which could result in material differences between financial projections and actual financial performance;

 

    the departure of key members of Equity or KBC management personnel or the inability to hire qualified management personnel;

 

    the disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, information technology systems;

 

    unauthorized access to nonpublic personal information of customers, which could expose Equity or KBC to litigation or reputational harm;

 

    disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of Equity’s or KBC’s critical processing functions;

 

    the occurrence of adverse weather or manmade events, which could negatively affect Equity’s and KBC’s core markets or disrupt Equity’s or KBC’s operations;

 

    an increase in FDIC deposit insurance assessments, which could adversely affect Equity’s and KBC’s earnings;

 

    an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; and

 

    other factors that are discussed in “Risk Factors.”

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this proxy statement/prospectus. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from what Equity and KBC anticipate. 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 and KBC do 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 to predict those events or how they may affect it. In addition, Equity and KBC cannot assess the impact of each factor on Equity’s and KBC’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

 

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forward-looking statements. All forward-looking statements, expressed or implied, included in this proxy statement/prospectus 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 and KBC or persons acting on Equity’s or KBC’s behalf may issue.

 

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THE KBC SPECIAL MEETING

This section contains information for KBC stockholders about the KBC special meeting that KBC has called to allow its stockholders to consider and vote on the Merger Proposal. KBC is mailing this proxy statement/prospectus to you, as a KBC stockholder, on or about [ ], 2018. This proxy statement/prospectus is accompanied by a notice of the KBC special meeting, a form of proxy card that the KBC Board is soliciting for use at the KBC special meeting and at any adjournments or postponements of the KBC special meeting and the form of election.

Date, Time and Place of the KBC Special Meeting

The KBC special meeting will be held at the First National Bank of Liberal main bank Boardroom located at 1700 North Lincoln Avenue, Liberal, Kansas, at 10:00 a.m. local time, on [            ], 2018. On or about [            ], 2018, KBC will commence mailing this document and the enclosed form of proxy card to its stockholders entitled to vote at the KBC special meeting.

Matters to Be Considered

At the KBC special meeting, you, as a KBC stockholder, will be asked to consider and vote upon the following matters:

 

    the Merger Proposal; and

 

    the Adjournment Proposal.

Completion of the merger is conditioned on, among other things, KBC stockholder approval of the Merger Proposal. No other business may be conducted at the KBC special meeting.

Recommendation of the KBC Board

On December 16, 2017, the KBC Board unanimously approved the merger agreement and the transactions contemplated thereby. Based on KBC’s reasons for the merger described in the section of this proxy statement/prospectus entitled “The Merger—KBC’s Reasons for the Merger; Recommendation of the KBC Board” beginning on page 42, the KBC Board believes that the merger is in the best interests of the KBC stockholders.

Accordingly, the KBC Board recommends that you vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

KBC Record Date and Quorum

The KBC Board has fixed the close of business on [            ], 2018 as the KBC record date for determining the holders of KBC common stock entitled to receive notice of and to vote at the KBC special meeting.

As of the KBC record date, there were [            ] shares of KBC common stock outstanding and entitled to notice of, and to vote at, the KBC special meeting or any adjournment thereof, and such outstanding shares of KBC common stock were held by approximately [            ] holders of record. Each share of KBC common stock entitles the holder to one vote at the KBC special meeting on each proposal to be considered at the KBC special meeting.

No business may be transacted at the KBC special meeting unless a quorum is present. The presence (in person or by proxy) of holders of at least a majority of the outstanding shares of KBC common stock entitled to be voted at the KBC special meeting constitutes a quorum for transacting business at the KBC special meeting. All shares of KBC common stock present in person or represented by proxy, including abstentions, if any, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the KBC special meeting.

 

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As of the KBC record date, the directors and executive officers of KBC and their affiliates beneficially owned and were entitled to vote, in the aggregate, [        ] shares of KBC common stock, representing approximately [    ]% of the shares of KBC common stock outstanding on that date. As of the KBC record date, Equity beneficially held no shares of KBC common stock.

Certain executive officers, directors, affiliates, founders and their family members, and holders of 5% or more of the voting equity securities of KBC have entered into a voting agreement with Equity, solely in their capacity as stockholders of KBC, pursuant to which they have agreed to vote in favor of the Merger Proposal and in favor of any other matter required to be approved by the stockholders of KBC to facilitate the transactions contemplated by the merger agreement. The parties to the voting agreement control approximately 74% of the outstanding shares of common stock of KBC and have agreed to vote such shares in favor of the Merger Proposal, which is sufficient to approve the Merger Proposal. For more information regarding the support agreements, see “The Merger Agreement—Director Support Agreements” and “The Merger Agreement—Voting Agreement.”

Required Vote; Treatment of Abstentions; Broker Non-Votes and Failure to Vote

Merger Proposal: The affirmative vote of the holders of at least a majority of the outstanding shares of KBC common stock is required to approve the Merger Proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or fail to vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Merger Proposal, it will have the effect of a vote against the proposal.

Adjournment Proposal: The affirmative vote of a majority of shares entitled to vote on the subject matter and represented in person or by proxy at the KBC special meeting is required to approve the Adjournment Proposal. If you mark “ABSTAIN” on your proxy card, fail to submit a proxy card or vote in person at the KBC special meeting or fail to instruct your bank or broker how to vote with respect to the Adjournment Proposal, it will have no effect on the proposal.

Voting on Proxies; Incomplete Proxies

A KBC stockholder of record as of the KBC record date may vote by proxy or in person at the KBC special meeting. We ask that you complete and return the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

KBC requests that KBC stockholders vote by completing and signing the accompanying proxy card and returning it to KBC as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of KBC common stock represented by it will be voted at the KBC special meeting in accordance with the instructions contained on the proxy card. If any proxy card is returned without indication as to how to vote, the shares of KBC common stock represented by the proxy card will be voted as recommended by the KBC Board.

Every KBC stockholder’s vote is important. Accordingly, each KBC stockholder should sign, date and return the enclosed proxy card whether or not you plan to attend the KBC special meeting in person. Sending in your proxy card will not prevent you from voting your shares personally at the meeting, since you may revoke your proxy at any time before it is voted.

Revocability of Proxies and Changes to a KBC Stockholder’s Vote

You have the power to change your vote at any time before your shares of KBC common stock are voted at the KBC special meeting by:

 

    attending and voting in person at the KBC special meeting;

 

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    giving notice of revocation of the proxy prior to the start of the KBC special meeting; or

 

    delivering to the Secretary of KBC at 1700 N Lincoln Avenue, Liberal, Kansas 67901-5210 (i) a written notice of revocation or (ii) a duly executed proxy card relating to the same shares, bearing a date later than the proxy card previously executed.

Attendance at the KBC special meeting will not in and of itself constitute a revocation of a proxy.

If you choose to send a completed proxy card bearing a later date than your original proxy card, the new proxy card must be received prior to the start of the KBC special meeting.

Solicitation of Proxies

In addition to solicitation by mail, KBC’s proxy solicitor and/or directors, officers, and employees of KBC may solicit proxies by personal interview, telephone, or electronic mail. KBC will bear the entire cost of soliciting proxies from you.

Attending the KBC Special Meeting

All KBC stockholders of record as of the KBC record date are invited to attend the KBC special meeting. Only KBC stockholders of record as of the KBC record date can vote in person at the KBC special meeting.

Assistance

If you need assistance in completing your proxy card, have questions regarding KBC’s special meeting or would like additional copies of this proxy statement/prospectus, please contact Tina Call at (620) 624-1971.

 

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KBC PROPOSALS

Proposal No. 1 Merger Proposal

KBC is asking its stockholders to approve the Merger Proposal. Holders of KBC common stock should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.

After careful consideration, the KBC Board, by a unanimous vote of all directors, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interest of KBC and the stockholders of KBC. See “The Merger— KBC’s Reasons for the Merger; Recommendation of the KBC Board” beginning on page 42 of this proxy statement/prospectus for a more detailed discussion of the KBC Board’s recommendation.

The KBC Board recommends a vote “FOR” the Merger Proposal.

Proposal No. 2 Adjournment Proposal

The KBC special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the KBC special meeting to approve the Merger Proposal.

If, at the KBC special meeting, the number of shares of KBC common stock present or represented and voting in favor of the Merger Proposal is insufficient to approve the Merger Proposal, KBC intends to move to adjourn the KBC special meeting in order to enable the KBC Board to solicit additional proxies for approval of the Merger Proposal. In that event, KBC will ask its stockholders to vote upon the Adjournment Proposal, but not the Merger Proposal.

In this proposal, KBC is asking its stockholders to authorize the holder of any proxy solicited by the KBC Board on a discretionary basis to vote in favor of adjourning the KBC special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from KBC stockholders who have previously voted.

The KBC Board recommends a vote “FOR” the Adjournment Proposal.

 

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THE MERGER

The following discussion contains certain information about the merger. The discussion is subject, and qualified in its entirety by reference, to the merger agreement attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. You are urged to read this entire proxy statement/prospectus carefully, including the merger agreement attached as Annex A, for a more complete understanding of the merger.

Terms of the Merger

Each of the board of directors of Equity (which we refer to in this proxy statement/prospectus as the “Equity Board”) and the KBC Board has unanimously approved the merger agreement. To consummate the merger, Merger Sub will merge with and into KBC, with KBC surviving the merger as a wholly-owned subsidiary of Equity. Immediately following, and in connection with the merger, Equity will cause KBC to merge with and into Equity, with Equity surviving the second merger. Immediately following the integrated mergers (or at such later time as Equity may determine in its sole discretion), Equity will cause FNB, a national association with its principal offices in Liberal, Kansas, and the banking subsidiary of KBC, to merge with and into Equity Bank, the banking subsidiary of Equity, with Equity Bank surviving the bank merger.

If the merger is completed, each share of KBC common stock (other than shares of KBC common stock held by KBC, Equity or any dissenting stockholder) will be converted into the right to receive their proportionate share of the merger consideration. The merger consideration has an aggregate value of approximately $45,084,038 under the terms of the merger agreement and will be paid in a combination of Equity common stock and cash. KBC common stockholder will have the right to elect whether to receive the per share cash consideration or the per share stock consideration with respect to each share held. The amount of cash and Equity common stock that the stockholders of KBC will receive is subject to proration in accordance with the terms of the merger agreement, which provides that in the aggregate, before making any possible adjustments to the merger consideration, the aggregate cash portion of the merger consideration will be approximately $16,771,050, or 37.2% of the total merger consideration, and the stock portion of the merger consideration will be approximately $28,312,988, or 62.8% of the total merger consideration. The merger consideration is subject to a possible downward adjustment of the cash consideration if the KBC adjusted shareholders’ equity prior to the closing of the merger is less than $29,293,303.

KBC’s stockholders are being asked to approve the Merger Proposal. See the section of this proxy statement/prospectus entitled “The Merger Agreement” beginning on page 57 for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

As a regular part of their duties over time, executive management and directors of KBC have considered various strategic alternatives to enhance and maximize stockholder value. These strategic alternatives have included continuing as an independent institution, acquiring other banks, adding bank branches and other financial service-related businesses, or a sale or merger of KBC.

Following June 2017 meetings and conversations which included KBC’s leadership, KBC’s counsel and Sheshunoff (which included discussions with Sheshunoff regarding the mergers and acquisitions environment and various potential strategic alternatives), Sheshunoff and KBC’s counsel were, in July 2017, directed by KBC to contact selected prospective bank partners regarding their interest in acquiring KBC.

As a result of contacts made by Sheshunoff and counsel, and after further consultation by KBC’s leadership with Sheshunoff, detailed discussions were had with two possible acquirers (one of which was Equity). Both of

 

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those prospective acquirers ultimately executed confidentiality agreements with KBC and had substantive conversations with one or more of (i) KBC’s executive management team, (ii) Sheshunoff or (iii) KBC’s counsel.

In September 2017, there was an introductory meeting between representatives of KBC and Equity, which was also attended by KBC’s counsel. Subsequently, on September 28, 2017, KBC and Equity executed a non-binding letter of intent and commenced more detailed due diligence.

The non-binding letter of intent contemplated the acquisition of KBC by Equity for a combination of stock and cash having a value of $46.0 million to be paid to KBC stockholders (based upon the assumption that Equity stock was worth $570.00 per share). The proposed consideration was to be payable 60% in Equity common stock and 40% in cash.

Prior to execution of the Equity letter of intent, the KBC Board convened a meeting also attended by counsel on September 14, 2017, at which time the KBC Board reviewed the proposed Equity letter of intent and then authorized KBC’s officers to pursue execution of the letter of intent, subject to satisfactory completion of Equity’s and KBC’s due diligence, the negotiation of a mutually-satisfactory merger agreement, an exclusivity period as provided in the letter of intent, and other conditions.

Equity had access to significant due diligence information in an electronic data room created by KBC, with the assistance of Sheshunoff, prior to execution of the letter of intent, but commenced more comprehensive due diligence upon the execution of the updated letter of intent immediately following the execution of the letter of intent.

On December 1, 2017, Equity presented KBC with an initial draft of the merger agreement. From December 1, 2017 through December 15, 2017 executive management of both KBC and Equity, and their respective legal counsel, continued to negotiate the merger agreement and all ancillary documents. Through the course of due diligence and negotiations, executive management of KBC and Equity agreed to a transaction structure that provided KBC stockholders a purchase price of approximately $45.1 million, payable with 820,904 shares of Equity common stock in addition to approximately $16.8 million in cash, subject to a possible downward adjustment of the cash consideration based on KBC’s adjusted shareholders’ equity prior to the closing of the merger. The result was an approximate mix of 63% stock and 37% cash.

On December 16, 2017, the KBC Board met with executive management, its legal counsel, and representatives of Sheshunoff. At that meeting, members of KBC’s executive management team reported on the process undertaken, and which had resulted in the proposed merger and the proposed final version of the merger agreement and all ancillary documents. KBC’s counsel summarized for the KBC Board its obligations as a board of directors in considering the merger proposal, the terms and conditions of the proposed merger agreement and the ancillary documents. Also, at that meeting, Sheshunoff reviewed the financial aspects of the proposed merger and rendered to the KBC Board an opinion to the effect that, as of such date and subject to the procedures followed, assumptions made, matters considered, and qualifications and limitations on the review undertaken by Sheshunoff as set forth in its opinion, the merger consideration in the merger was fair, from a financial point of view, to the holders of KBC common stock.

At the conclusion of these presentations, the directors discussed the proposed transactions, directed questions regarding the proposed transactions to Sheshunoff and legal counsel, and considered the proposal. Based upon the KBC Board’s review and discussion of the merger agreement, and other relevant factors (described below in “KBC’s Reasons for the Merger; Recommendation of the KBC Board”), the KBC Board, by unanimous vote of all directors, authorized and approved the execution of the merger agreement with Equity, and authorized Mr. Winger to execute the merger agreement on behalf of KBC.

 

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KBC’s Reasons for the Merger; Recommendation of the KBC Board

The KBC Board has unanimously approved the merger agreement and unanimously recommends that the KBC stockholders vote “FOR” approval of the KBC Merger Proposal.

In reaching its decision to approve the merger agreement and to recommend its approval to KBC stockholders, the KBC Board evaluated the merger and the merger agreement in consultation with its executive management, Sheshunoff, KBC’s outside financial advisor, and KBC’s legal counsel. In arriving at its recommendation, the KBC Board considered a number of factors, including the following:

 

    the KBC Board’s familiarity with and review of information concerning the business, results of operations, financial condition, competitive position and future prospects of KBC;

 

    the value of the consideration to be received by KBC’s stockholders relative to the book value and earnings per share of KBC’s common stock, including particularly the relationship between the consideration and KBC’s tangible book value;

 

    the financial terms of recent business combinations in the financial services industry and a comparison of the multiples of selected combinations with the terms of the proposed transaction with Equity;

 

    the current and prospective environment in which KBC operates, including overall local and regional economic conditions, the competitive environment for banks and other financial institutions, the increased regulatory burdens on financial institutions and the trend toward consolidation in the banking industry;

 

    the results that KBC could expect to achieve operating independently, and the likely risks and benefits to stockholders of that course of action, as compared with the value of the merger consideration;

 

    the opportunities and prospects of KBC for future organic growth and/or future growth through acquisitions;

 

    the resources required to keep pace with technology and cybersecurity risks;

 

    the age of KBC’s majority stockholders and their inability to continue to be actively involved in the management of KBC and FNB at some future point;

 

    that a merger with a larger bank holding company could provide the opportunity to realize economies of scale, increase efficiencies of operations and enhance customer products and services;

 

    the belief of the KBC Board that Equity emphasizes many of the same values embraced by KBC in the conduct of its business, such as, excellent customer service, employee development and delivering value to stockholders;

 

    the prospects for continued growth and enhanced performance of the combined company;

 

    the financial presentation, dated December 16, 2017, of Sheshunoff and the opinion, dated December 16, 2017, of Sheshunoff to the KBC Board as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of KBC common stock of the merger consideration in the merger, as more fully described below under “Opinion of KBC’s Financial Advisor,” beginning on page 43);

 

    that stockholders of KBC will receive approximately 63% of the merger consideration in shares of Equity common stock, which are publicly traded on Nasdaq, contrasted with the absence of a public market for KBC common stock;

 

    the historical performance of Equity;

 

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    the anticipated likelihood of Equity to receive the requisite regulatory approvals in a timely manner;

 

    the belief that the proposed merger enables leadership of KBC to maintain meaningful influence in the direction of the newly combined company;

 

    the potential effect of the merger on KBC’s employees, including the prospects for continued employment and the severance, retention and other benefits agreed to be provided by Equity to KBC’s employees; and

 

    the terms and conditions of the merger agreement, including the parties’ respective representations, warranties, covenants and other agreements, the conditions to closing and the limitations on KBC’s ability to pursue other merger opportunities.

The KBC Board also considered the risks and potential negative factors outlined below, but concluded that the anticipated benefits of combining with Equity were likely to outweigh substantially these risks and factors. The risk factors included:

 

    the lack of control of the KBC Board and KBC stockholders over the future operations and strategy of the combined company;

 

    the requirement that KBC conduct its business in the ordinary course and the other restrictions on the conduct of KBC’s business before completion of the merger, which could delay or prevent KBC from undertaking business opportunities that may arise before completion of the merger;

 

    the fact that certain benefits of the merger are reliant on the successful operation of Equity in the future, as opposed to selling KBC entirely for cash, which would deliver all value to KBC stockholders upon closing of such a sale;

 

    the limited liquidity of Equity common stock, even though it is quoted on Nasdaq; and

 

    that under the merger agreement KBC may not solicit competing proposals for the acquisition of KBC.

The reasons set out above for the merger are not intended to be exhaustive but is believed to include all material factors considered by the KBC Board in approving the merger. In reaching its determination, the KBC Board did not assign any relative or specific weights to different factors, and individual directors may have given different weights to different factors. The KBC Board conducted an overall analysis of the factors described above as a whole. Based on the reasons stated, the KBC Board believed that the merger was in the best interest of KBC’s stockholders and unanimously approved the merger agreement and the merger.

Opinion of KBC’s Financial Advisor

KBC retained Sheshunoff to provide an opinion as to the fairness from a financial viewpoint to KBC’s stockholders of the merger consideration to be received by the stockholders of KBC. As part of its investment banking business, Sheshunoff is regularly engaged in the valuation of securities in connection with mergers and acquisitions and valuations for estate, corporation and other purposes. KBC retained Sheshunoff based upon its experience as a financial advisor in mergers and acquisitions of financial institutions and its knowledge of financial institutions.

On December 16, 2017, Sheshunoff rendered its fairness opinion to the KBC Board that, as of such date, the merger consideration was fair, from a financial point of view, to the stockholders of KBC. The full text of the fairness opinion which sets forth, among other things, assumptions made, procedures followed, matters considered, and limitations on the review undertaken, is attached as Annex D to this proxy statement/prospectus. You are urged to read Sheshunoff’s fairness opinion carefully and in its entirety. The fairness opinion is addressed to the KBC Board and does not constitute a recommendation to any stockholder of KBC as to how he or she should vote at the KBC special meeting.

 

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In connection with the fairness opinion, Sheshunoff:

 

    reviewed the latest draft of the merger agreement;

 

    discussed the terms of the merger agreement with the management of KBC and KBC’s legal counsel;

 

    conducted conversations with management of KBC regarding recent and projected financial performance of KBC;

 

    evaluated the financial condition of KBC based upon a review of regulatory reports for the five-year period ended December 31, 2016 and interim period through September 30, 2017, and internally-prepared financial reports for KBC for the interim period through October 31, 2017;

 

    compared KBC’s recent operating results with those of certain other banks in the Midwest Region of the United States as defined by S&P Global Market Intelligence and in Kansas that have recently been acquired;

 

    compared the pricing multiples for KBC in the merger to recent acquisitions of banks in the Midwest Region of the United States as defined by S&P Global Market Intelligence and in Kansas with similar characteristics to KBC;

 

    analyzed the present value of the after-tax cash flows based on projections on a stand-alone basis approved by KBC through the five-year period ending October 31, 2022;

 

    reviewed the potential pro forma impact of the merger on the combined company’s results and certain financial performance measures of KBC and Equity;

 

    discussed certain matters regarding Equity’s regulatory standing, financial performance, and business prospects with Equity’s executives and representatives;

 

    reviewed certain internal and publicly available information regarding Equity that Sheshunoff deemed relevant;

 

    compared Equity’s recent operating results and pricing multiples with those of certain other publicly traded banks in the Midwest Region that Sheshunoff deemed relevant;

 

    reviewed available stock analyst research reports concerning Equity;

 

    compared the historical stock price data and trading volume of Equity to certain relevant indices; and

 

    performed such other analyses deemed appropriate.

For the purposes of this opinion, Sheshunoff assumed and relied upon, without independent verification, the accuracy and completeness of the information provided to it by KBC in conjunction with this opinion. Sheshunoff assumed that any projections provided by or approved by KBC were reasonably prepared on a basis reflecting the best currently available estimates and judgments of KBC’s management. Sheshunoff assumed such forecasts and projections will be realized in the amounts and at times contemplated thereby.

Sheshunoff did not make an independent evaluation of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets or liabilities) of KBC or Equity nor was Sheshunoff furnished with any such appraisal. Sheshunoff assumed that any off-balance-sheet activities of KBC or Equity will not materially and adversely impact the future financial position or results of operation of Equity after the merger. Sheshunoff is not an expert in the evaluation of loan portfolios for the purposes of assessing the adequacy of the allowance for loan and lease losses and assumed that such allowances for KBC and Equity are, respectively, adequate to cover such losses.

Sheshunoff assumed that the merger agreement, as provided to Sheshunoff, will be without any amendment or waiver of, or delay in the fulfillment of, any terms or conditions set for in the terms provided to Sheshunoff or

 

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any subsequent development that would have a material adverse effect on KBC or Equity and thereby on the results of its analyses. Sheshunoff assumed that any and all regulatory approvals, if required, will be received in a timely fashion and without any conditions or requirements that could adversely affect the operations or financial condition of Equity after the completion of the merger.

The fairness opinion is necessarily based on economic, market, regulatory, and other conditions as in effect on, and the information made available to Sheshunoff as of December 16, 2017.

In rendering the fairness opinion, Sheshunoff performed a variety of financial analyses. The preparation of an opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Consequently, the fairness opinion is not readily susceptible to partial analysis or summary description. Moreover, the evaluation of fairness, from a financial point of view, of the merger consideration is to some extent subjective, based on the experience and judgment of Sheshunoff, and not merely the result of mathematical analysis of financial data. Sheshunoff did not attribute particular weight to any analysis or factor considered by it. Accordingly, notwithstanding the separate factors summarized below, Sheshunoff believes that its analyses must be considered as a whole and that selecting portions of its analyses and of the factors considered, without considering all analyses and factors, could create an incomplete view of the evaluation process underlying its opinion. The ranges of valuations resulting from any particular analysis described below should not be taken to be Sheshunoff’s view of the actual value of KBC, Equity or the combined entity.

In performing its analyses, Sheshunoff made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond the control of KBC or Equity. The analyses performed by Sheshunoff are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. In addition, Sheshunoff’s analyses should not be viewed as determinative of the opinion of the board of directors or the management of KBC with respect to the value of KBC or Equity or to the fairness of the merger consideration.

The following is a summary of the analyses performed by Sheshunoff in connection with its opinion. The discussion utilizes financial information concerning KBC and Equity as of September 30, 2017 that is believed to be reliable, accurate, and complete; however, Sheshunoff cannot guarantee the reliability, accuracy, or completeness of any such publicly available information.

Pursuant to the merger agreement, Equity has agreed to exchange approximately $45.1 million in cash and common stock for all of the outstanding shares of KBC common stock. The consideration will consist of approximately $28.3 million in Equity common stock and $16.8 million in cash. The number of shares of Equity common stock to be issued will be 820,904, which is based on a price of $34.49 per share of Equity common stock. The value and the composition of the total merger consideration may be adjusted pursuant to the terms of the merger agreement and the aggregate amount stated above is based upon various assumptions including closing date and transaction expense amounts. The merger consideration reflects a number of one-time deal related charges for KBC which are estimated to be approximately $4.3 million on a pre-tax basis and were considered in the determination of the amount of the minimum equity required to be provided at closing pursuant to the merger agreement.

KBC Discounted Cash Flow Analysis. Using discounted cash flow analysis, Sheshunoff estimated the present value of the future after-tax cash flow streams that KBC could produce on a stand-alone basis through October 31, 2022 under various circumstances, assuming that it performed in accordance with the projections provided by KBC’s management.

Sheshunoff estimated the terminal value for KBC at the end of October 31, 2022 by (1) multiplying the final period projected earnings by one plus the assumed annual long-term growth rate of the earnings of KBC of 4.0% (or 1.04) and (2) dividing this product by the difference between the required rates of return shown below and the assumed annual long-term growth rate of earnings of 4.0% in (1) above. Sheshunoff discounted the annual cash flow streams (defined as all earnings in excess of that which is required to maintain a tangible common equity to

 

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tangible asset ratio of 8.0%) and the terminal values using discount rates ranging from 12.0%, 13.0% and 14.0%. The discount rate range was chosen to reflect different assumptions regarding the required rates of return of KBC and the inherent risk surrounding the underlying projections. This discounted cash flow analysis indicated a range of values per share of $398.87 to $499.92 as shown in the table below compared to the estimated merger consideration of $558.69 per share (net to KBC stockholders).

 

            Discount Rate         
     14.0%      13.0%      12.0%  

Present value (in thousands)

   $ 32,187      $ 35,802      $ 40,342  

Present value (per share)

   $ 398.87      $ 443.67      $ 499.92  

Analysis of Selected Transactions. Sheshunoff performed an analysis of premiums paid in selected recently announced acquisitions of banking organizations with comparable characteristics to KBC. Two sets of transactions were selected to ensure a thorough analysis.

The first set of comparable transactions consisted of a group of selected transactions for banks and thrifts in the United States for which pricing data was available, with the following characteristics: targets with headquarters in the Midwest with total assets between $100 million and $500 million that were announced since January 1, 2016, reporting a return on average assets above 0.0%, and a non-performing assets to total assets ratio of less than 2%. These comparable transactions consisted of 25 mergers and acquisitions of banks and thrifts with total assets ranging between $102.1 million and $398.3 million that were announced between February 5, 2016 and December 4, 2017. The analysis yielded multiples of the purchase prices in these transactions as summarized below:

 

     Price/
Book
(x)
   Price/ Tg
Book
(x)
  

Price/

8% Tg

Book

(x)

   Price/
LTM*
Earnings
(x)
   Price/
Assets
(%)
   Price/
Deposits
(%)
   Premium/
Deposits
(%)

Maximum

   2.26    2.40    2.71    41.1    24.5    33.8    16.0

Minimum

   0.56    0.57    0.61    5.2    4.1    4.5    (3.4)

Median

   1.41    1.41    1.54    18.3    13.7    18.3    5.0

KBC**

   1.43    1.43    1.56    17.5    14.7    16.5    5.0

 

* Last-twelve-months
** KBC pricing multiples based on estimated net value to stockholders using October 31, 2017 financials

The transaction value multiples exceed or are in-line with the medians of the Midwest regional comparable group on a price to book, price to tangible book, price to 8% tangible book, price to LTM earnings, price to assets, and premium to deposits basis.

The second set of comparable transactions consisted of a group of selected transactions for banks and thrifts headquartered in Kansas for which pricing data was available that were announced since January 1, 2015. These comparable transactions consisted of 13 mergers and acquisitions of banks and thrifts with total assets ranging between $8.1 million and $866.4 million that were announced between February 24, 2015 and June 26, 2017. The analysis yielded multiples of the purchase prices in these transactions as summarized below:

 

     Price/
Book
(x)
   Price/ Tg
Book
(x)
  

Price/ 8%
Tg

Book

(x)

   Price/
LTM*
Earnings
(x)
   Price/
Assets
(%)
   Price/
Deposits
(%)
   Premium/
Deposits
(%)

Maximum

   2.15    2.40    1.92    55.8    24.3    30.6    8.8

Minimum

   0.18    0.26    0.33    7.2    1.9    2.1    (6.0)

Median

   1.15    1.15    1.21    19.1    12.4    15.1    2.1

KBC**

   1.43    1.43    1.56    17.5    14.7    16.5    5.0

 

* Last-twelve-months
** KBC pricing multiples based on estimated net value to stockholders using October 31, 2017 financials

 

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The transaction value multiples exceed the medians of the Kansas comparable groups on a price to book, price to tangible book, price to 8% tangible book, price to assets, price to deposits, and premium to deposits basis by a comfortable margin. The transaction value as a multiple of LTM earnings trails the comparable group median due in part to the higher ROAA of KBC at 0.82% compared to the median of the comparable group at 0.52%.

Contribution Analysis. Sheshunoff reviewed the relative contributions of KBC and Equity to the combined company based on regulatory data as of September 30, 2017 for KBC and Equity as well as certain internal data at October 31, 2017 for KBC. Sheshunoff compared the pro forma ownership interest (which excludes the cash component of the merger) of KBC and Equity of 6.3% and 93.7%, respectively, to: (1) total assets of 11.3% and 88.7%, respectively; (2) total loans of 9.9% and 90.1%, respectively; (3) total deposits of 12.8% and 87.2%, respectively; (4) LTM net-interest income of 11.2% and 88.8%, respectively; (5) LTM non-interest income of 7.3% and 92.7%, respectively; (6) LTM non-interest expenses of 9.4% and 90.6%, respectively; (7) LTM earnings of 13.3% and 86.7%, respectively; and (8) total tangible common equity of 12.5% and 87.5%, respectively. The contribution analysis shows that the ownership of KBC stockholders in the combined company is less than the contribution of the components listed due largely to the considerable amount of cash consideration in the merger. The contributions are shown in the following table.

 

($000)**    Assets      %     Loans      %            Deposits      %  

Equity

   $ 2,406,830        88.7   $ 1,540,761        90.1      $ 1,869,848        87.2

KBC

   $ 306,315        11.3   $ 169,948        9.9      $ 274,006        12.8
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 

Combined Company

   $ 2,713,145        100.0   $ 1,710,709        100.0      $ 2,143,854        100.0
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 
     LTM Net
Interest
Income
     %     LTM Non-
Interest
Income
     %            LTM Non-
Interest
Expenses
     %  

Equity

   $ 77,073        88.8   $ 13,873        92.7      $ 63,473        90.6

KBC

   $ 9,761        11.2   $ 1,088        7.3      $ 6,586        9.4
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 

Combined Company

   $ 86,834        100.0   $ 14,961        100.0      $ 70,059        100.0
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 
     LTM
Earnings
     %     Shares      %            Common Tg.
Equity
     %  

Equity

   $ 16,792        86.7     12,230,319        93.7      $ 220,482        87.5

KBC

   $ 2,582        13.3     820,904        6.3     *      $ 31,455        12.5
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 

Combined Company

   $ 19,374        100.0     13,051,223        100.0      $ 251,937        100.0
  

 

 

    

 

 

   

 

 

    

 

 

      

 

 

    

 

 

 

 

* Merger consideration is 62.8% stock; 100% stock would be 9.7%
** Equity data as of 9/30/17; KBC assets, deposits, earnings, and tangible equity are as of 10/31/17 LTM defined as last twelve months

Pro Forma Financial Impact. Sheshunoff analyzed the pro forma impact of the merger on estimated earnings per share, book value per share and tangible book value per share for the twelve-month periods ending 2018 through 2022 based on the projections provided by KBC’s management for KBC on a stand-alone basis assuming pre-tax cost savings of $2.5 million phased in by 2018 (the end of the first year after completion of the merger).

The analysis indicated pro forma consolidated earnings per share accretion of $1.14 per share, or 2.8%, in year one and accretion of $6.57 per share, or 12.8%, by year five compared to estimated earnings per share for KBC on a stand-alone basis. The earnings accretion is greatly affected by the cash consideration to be received, so for comparative purposes for pro forma earnings per share, the merger was treated as an all-stock transaction. The implied book value (including the cash portion of the merger consideration without adjustment) per share

 

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accretion in the merger was $74.69 per share, or 18.1%, in year one and the implied book value accretion was $92.11 per share, or 17.5%, by year five. Book value per share is significantly accretive on a stand-alone basis when considering the market value of the stock received which trades at a significant premium to book value. Because Equity does not have a history of paying dividends (preferring instead to use excess earnings for continued growth), the analysis indicated pro forma dividends per share dilution of $16.29 per share, or 100%, in year one and dilution of $20.56 per share, or 100%, in year five compared to estimated dividends per share for KBC on a stand-alone basis. The analysis of whether the merger consideration is accretive or dilutive to KBC based on the above measures and the amounts of such accretion or dilution is sensitive to the composition of the merger consideration and the accounting assumptions to be made by Equity.

Comparable Company Analysis. Sheshunoff compared the operating and market results of Equity to the results of other publicly traded banking companies. The comparable publicly traded companies in the Midwest Region of the United States were selected primarily on the basis of location and total asset size. Equity was compared to banks with total assets between $900 million and $5 billion that were headquartered in Kansas, Illinois, Iowa, Kentucky, Missouri, Nebraska, or Oklahoma. The data for the following table is based on GAAP financial information as of September 30, 2017 provided by S&P Global Market Intelligence. Some of the ratios presented are proprietary to S&P Global Market Intelligence and may not strictly conform to the common industry determination.

 

     Equity     Peer Group Median

Return on Average Assets

     0.75   1.02%

Return on Average Equity

     6.45   8.87%

Net Interest Margin

     3.86   3.65%

Efficiency Ratio

     59.3   59.7%

Tangible Equity to Tangible Asset Ratio

     9.45   9.33%

Loan Loss Reserves to Loans Ratio

     0.52   1.05%

Ratio of Non-performing Assets to Total Assets

     1.78   0.94%

Risk Based Capital Ratio

     14.6   13.6%

Equity’s performance as measured by its return on average assets and return on average equity were below the peer group. Equity’s net interest margin was stronger than its peers with its efficiency ratio being in-line with its peers. Equity’s tangible capital level was slightly higher than its peers, while its asset quality, as measured by its ratio of non-performing assets to total assets, was weaker than the peer group median. Its ratio of loan loss reserves to loans was lower than the median peer group level, while its Risk Based Capital Ratio was slightly higher than the peer group median. Given the overall growth that Equity has experienced in recent years and continues to experience, it could be expected that earnings might lag peers who are generally growing at a slower rate. Due to merger accounting standards related to the treatment of loan loss reserves of acquired institutions, it could be expected that loan loss reserves to loans might be lower than peers who are experiencing less growth through acquisition.

Sheshunoff compared Equity’s trading results to its peers. The results are summarized in the following table. The data for the following table is based on publicly available GAAP financial information and market data as of December 12, 2017 provided by S&P Global Market Intelligence.

 

     Equity     Peer Group Median  

Market Price as a Multiple of Stated Book Value

     1.43     1.54

Market Price as a Multiple of Stated Tangible Book Value

     1.89     1.73

Price as a Multiple of LTM Earnings

     25.0     17.4

Market Price as a Percent of Assets

     17.3     17.1

Dividend Yield

     0.0     1.73

Dividend Payout

     0.0     32.5

 

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Equity’s price-to-book multiples as measured by its market price as a multiple of stated book value was lower than the peer group median while its market price as a multiple of stated tangible book value was higher than the comparable peer group median. Equity’s price-to-earnings multiple, as shown by the price as a multiple of LTM earnings through September 30, 2017, was higher compared to its peers. Equity’s market price to assets ratio was slightly higher than that of its peers. Equity’s dividend yield and dividend payout ratio were both lower than its peers as of September 30, 2017.

Sheshunoff compared selected stock market results of Equity to the KBW Nasdaq Bank index and the SNL Midwest Bank index for all publicly traded banks over the past three-month, one-year, and three-year periods. Equity’s stock has underperformed the KBW Nasdaq Bank and SNL Midwest Bank indices over the three-month and one-year periods while outperforming each of them over the three-year period.

No company or transaction used in the comparable company and comparable transaction analysis is identical to KBC, Equity, or Equity as the surviving corporation in the merger. Accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operational characteristics of KBC and Equity and other factors that could affect the public trading value of the companies to which they are being compared. Mathematical analysis (such as determining the average or median) is not in and of itself a meaningful method of using comparable transaction data or comparable company data.

Pursuant to its engagement letter with KBC, Sheshunoff will receive a fee of $25,000 for the fairness opinion that is not contingent on the closing of the merger and additional fees that are contingent upon consummation of the merger. In addition, KBC agreed to reimburse Sheshunoff for its reasonable out-of-pocket expenses. KBC also agreed to indemnify and hold harmless Sheshunoff and its officers and employees against certain liabilities in connection with its services under the engagement letter, except for liabilities resulting from the negligence, violation of law or regulation, or bad faith of Sheshunoff or any matter for which Sheshunoff may have strict liability.

The fairness opinion is directed only to the question of whether the merger consideration is fair from a financial perspective to the stockholders of KBC and does not constitute a recommendation to any KBC’s stockholder to vote in favor of the merger. No limitations were imposed on Sheshunoff regarding the scope of its investigation or otherwise by KBC.

Based on the results of the various analyses described above, Sheshunoff concluded that the merger consideration to be paid by Equity pursuant to the merger agreement is fair to the stockholders of KBC, from a financial point of view.

Certain KBC Unaudited Prospective Financial Information

KBC does not as a matter of course publicly disclose forecasts or internal projections as to future performance, revenues, earnings, financial condition or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates and the inherent difficulty of accurately predicting financial performance for future periods. In connection with the proposed merger, however, KBC’s financial advisor, for purposes of performing the financial analyses described above under “The Merger—Opinion of KBC’s Financial Advisor,” used certain unaudited prospective financial information with respect to KBC on a stand-alone, pre-merger basis (which Equity and KBC refer to in this proxy statement/prospectus as the “projections”). KBC has included in this proxy statement/prospectus certain limited unaudited prospective financial information for KBC to give KBC’s stockholders access to certain nonpublic information provided to the KBC Board and its financial advisor, for purposes of considering and evaluating the merger.

The projections were not prepared with a view toward public disclosure, and the inclusion of the projections in this proxy statement/prospectus should not be regarded as an indication that Equity, KBC or any recipient of

 

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the projections considered, or now considers, them to be necessarily predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on as such. This information was prepared solely for internal use by KBC and Sheshunoff and is subjective in many respects. While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to KBC’s business, all of which are difficult to predict and many of which are beyond KBC’s control.

The projections also reflect assumptions as to certain business decisions that are subject to change. The projections reflect subjective judgment in many respects and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. As such, the projections constitute forward-looking information and are subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted in such prospective information, including, but not limited to, KBC’s performance, industry performance, general business and economic conditions, customer requirements, competition, adverse changes in applicable laws, and regulations or rules. For other factors that could cause the actual results to differ, please see the “Risk Factors” section and “Cautionary Statement Regarding Forward-Looking Statements” in this proxy statement/prospectus.

None of Equity, KBC or their respective affiliates assumes any responsibility for the accuracy, completeness or validity of the projections. The projections were not prepared with a view toward complying with the guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of financial information. Neither KBC’s current independent registered public accounting firm nor any other independent accountants have compiled, examined or performed any procedures with respect to the projections included below, or expressed any opinion or any other form of assurance on such information or its achievability.

Furthermore, the projections do not take into account any circumstances or events occurring after the date they were prepared, including the transactions contemplated by the merger agreement. Additionally, the projections do not take into account the effect of any possible failure of the merger to occur. None of Equity, KBC nor any of their financial advisors nor any of their affiliates intends to, and each of them disclaims any obligation to, update, revise or correct the projections if they are or become inaccurate (even in the short term). The inclusion of the projections herein should not be deemed an admission or representation by Equity or KBC that they are viewed by Equity or KBC as material information of Equity or KBC, respectively, particularly in light of the inherent risks and uncertainties associated with such forecasts. The projections included below are not being included to influence your decision whether to vote in favor of the Merger Proposal or any other proposal to be considered at the KBC special meeting, but is being provided solely because it was made available to and considered by KBC’s financial advisor and the KBC Board in connection with the merger.

KBC Projections

The following table illustrates the projections calculated by Sheshunoff in its financial analysis of KBC on a stand-alone basis. The below table assumes annual asset growth of 6.50% in years one through five (4% long term (i.e., terminal value)), annual ROAA of 0.95% and payment of up to 100% of income in “optimum dividends” as long as 8% tg capital is maintained.

 

     As of and for the year ended,  

(Dollars in thousands, except per share

amounts)

   October 31,
2017
     October 31,
2018
     October 31,
2019
     October 31,
2020
     October 31,
2021
 

Total assets

   $ 310,180      $ 330,342      $ 351,814      $ 374,682      $ 399,036  

Net income

     2,582        3,042        3,240        3,451        3,675  

Optimum dividends

     —          3,042        3,240        3,451        3,207  

 

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Equity’s Reasons for the Merger

After careful consideration, the Equity board of directors (which we refer to in this proxy statement/prospectus as the “Equity Board”), at a meeting held on December 14, 2017, unanimously determined that the merger agreement and the issuance of the Equity common stock is in the best interests of Equity and its stockholders. Accordingly, the Equity Board approved the merger agreement.

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Equity Board consulted with Equity’s management and legal and financial advisors and, in reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Equity Board considered a number of factors, including the following material factors:

 

    each of Equity’s, KBC’s, and the combined company’s business, operations, financial condition, asset quality, earnings, and prospects. In reviewing these factors, the Equity Board considered its view that KBC’s financial condition and asset quality are sound, that KBC’s business and operations complement those of Equity, and that the merger and the other transactions contemplated by the merger agreement would result in a combined company with a larger market presence and more diversified loan portfolio as well as a more attractive funding base, including core deposit funding, than Equity on a standalone basis. The Equity Board further considered that KBC’s earnings and prospects, and the synergies potentially available in the proposed merger, create the opportunity for the combined company to have superior future earnings and prospects compared to Equity’s earnings and prospects on a standalone basis. In particular, the Equity Board considered the following:

 

    the strategic rationale for the merger, given its potential for enhancing the Equity banking franchise;

 

    potential growth opportunities through the expansion into new and attractive markets, including southwest Kansas;

 

    the complementary nature of the cultures of the two companies, which management believes should facilitate integration and implementation of the transaction;

 

    the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its larger size, asset base, capital, and footprint;

 

    the anticipated pro forma impact of the merger on the combined company, including the expected positive impact on financial metrics including earnings, funding sources, and capital;

 

    its understanding of the current and prospective environment in which Equity and KBC operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, the competitive environment for financial institutions generally, and the likely effect of these factors on Equity both with and without the merger;

 

    its review and discussions with Equity’s management concerning the due diligence examination of KBC’s business;

 

    Equity management’s expectation that Equity will retain its capital position and asset quality upon completion of the transaction;

 

    the expectation of annual cost savings resulting from the transaction, enhancing efficiencies;

 

    the terms of the merger agreement, including the expected tax treatment and deal protection and termination fee provisions, which it reviewed with Equity’s management and legal advisor; and

 

    Equity’s past record of integrating acquisitions and of realizing projected financial goals and benefits of acquisitions.

 

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The Equity Board also considered the potential risks related to the merger but concluded that the anticipated benefits of the merger were likely to outweigh these risks. These potential risks include:

 

    the possibility of encountering difficulties in achieving anticipated cost synergies and savings in the amounts estimated or in the time frame contemplated;

 

    the possibility of encountering difficulties in successfully integrating KBC’s business, operations, and workforce with those of Equity;

 

    certain anticipated merger related costs;

 

    the diversion of management attention and resources from the operation of Equity’s business towards the completion of the merger;

 

    the regulatory and other approvals required in connection with the merger and the bank merger and the risk that such regulatory approvals will not be received in a timely manner or may impose unacceptable conditions; and

 

    the merger’s effect on Equity’s regulatory capital levels.

The foregoing discussion of the factors considered by the Equity Board is not intended to be exhaustive, but, rather, includes the material factors considered by the Equity Board. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Equity Board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Equity Board considered all of these factors as a whole and overall considered the factors to be favorable to, and to support, its determination. It should be noted that this explanation of the Equity Board’s reasoning and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 33.

Interests of KBC’s Directors and Executive Officers in the Merger

In considering the recommendation of the KBC Board that KBC stockholders vote in favor of the Merger Proposal, KBC stockholders should be aware that KBC’s directors and executive officers may have interests in the merger that differ from, or are in addition to, their interests as stockholders of KBC. The KBC Board was aware of these interests and took them into account in its decision to approve the merger agreement and the merger. Such interests include the following items.

Indemnification and Insurance. Equity has agreed to indemnify the directors and officers of KBC against certain liabilities arising before the effective time of the merger. Equity has also agreed to purchase a three-year “tail” prepaid policy, on the same terms as KBC’s existing directors’ and officers’ liability insurance, for the current directors and officers of KBC, subject to a cap on the cost of such policy equal to 200% of KBC’s current annual premium (which is approximately $23,356).

Employee Benefit Plans. On or as soon as reasonably practicable following the merger, employees of KBC who continue on as employees of Equity will be entitled to participate in the Equity health and welfare benefit and similar plans on the same terms and conditions as employees of Equity. Subject to certain exceptions, these employees will receive credit for their years of service to KBC or FNB for participation, vesting and benefit accrual purposes.

Employee Severance Benefits. Equity has agreed to provide certain severance benefits to KBC’s employees whose employment is terminated under the circumstances specified in the merger agreement.

Employment Agreement. Equity Bank has entered into an employment agreement with Tina M. Call to be effective as of the effective time of the merger.

 

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Public Trading Markets

Equity common stock is listed for trading on Nasdaq under the symbol “EQBK.” Following the merger, shares of Equity common stock will continue to be traded on Nasdaq under the symbol “EQBK.” Under the merger agreement, Equity will cause the shares of Equity common stock to be issued in the merger to be approved for listing on Nasdaq, subject to notice of issuance, and the merger agreement provides that neither Equity nor KBC will be required to complete the merger if such shares are not authorized for listing on Nasdaq, subject to notice of issuance.

Equity’s Dividend Policy

Equity has not historically declared or paid cash dividends on its common stock and it does not expect to pay dividends on Equity’s common stock for the foreseeable future. Instead, Equity anticipates that all of its future earnings will be retained to support its operations and to finance the growth and development of Equity’s business. In addition, the payment of dividends by bank holding companies is generally subject to legal and regulatory limitations. For further information, see “Comparative Market Prices and Dividends” beginning on page 99.

Restrictions on Resale of Equity Common Stock

The shares of Equity common stock to be issued in connection with the merger will be registered under the Securities Act, and will be freely transferable, except for shares issued to any stockholder who may be deemed to be an “affiliate” of Equity for purposes of Rule 144 under the Securities Act. Persons who may be deemed to be affiliates of Equity include individuals or entities that control, are controlled by, or are under common control with Equity and may include the executive officers, directors and significant stockholders of Equity.

Appraisal Rights in the Merger

Introductory Information

General. Dissenters’ rights with respect to KBC common stock are governed by the K.S.A. KBC stockholders have the right to dissent from the merger and to obtain payment of the “fair value” of their shares in cash (as specified in the K.S.A.) in the event the merger is consummated. Strict compliance with the dissent procedures is required to exercise and perfect dissenters’ rights under the K.S.A. Subject to the terms of the merger agreement, the KBC Board could elect to terminate the merger agreement even if it is approved by KBC’s stockholders, thus cancelling dissenters’ rights.

KBC urges any KBC stockholder who contemplates exercising his right to dissent to read carefully the provisions of K.S.A. § 17-6712 et. seq., which are attached to this proxy statement/prospectus as Annex E. The statute describes the steps that each KBC stockholder must take to exercise his right to dissent. Each KBC stockholder who wishes to dissent should read both the summary and the full text of the law. KBC cannot give any KBC stockholder legal advice. To completely understand this law, each KBC stockholder may want, and KBC encourages any KBC stockholder seeking to dissent, to consult with his legal advisor. Any KBC stockholder who wishes to dissent should not send in a signed proxy unless he marks his proxy to vote against the Merger Proposal or such stockholder will lose the right to dissent.

Address for Notices. Send or deliver any written notice or demand concerning any KBC stockholder’s exercise of his dissenters’ rights to Kansas Bank Corporation, 1700 N Lincoln Avenue, Liberal, Kansas 67901, Attention: Tina Call, Telephone: (620) 624-1971.

Act Carefully. KBC urges any KBC stockholder who wishes to dissent to act carefully. KBC cannot and does not accept the risk of late or undelivered notices or demands. A dissenting KBC stockholder may call KBC at (620) 624-1971 and ask for Tina Call, to receive confirmation that his notice or demand has been received. If his notice or demand is not timely received by KBC, then such stockholder will not be entitled to exercise his dissenters’ rights. KBC’s stockholders bear the risk of non-delivery and of untimely delivery.

 

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If any KBC stockholder intends to dissent, or thinks that dissenting might be in his best interests, such stockholder should read Annex E carefully.

Summary of K.S.A. § 17-6712 et. seq. – Dissenters’ Rights

The following is a summary of K.S.A. § 17-6712 et. seq. and the procedures that a KBC stockholder must follow to dissent from the merger agreement and to perfect his appraisal rights and receive cash rather than the merger consideration (including Equity common stock), if the merger agreement is approved and the merger is completed. This summary is qualified in its entirety by reference to K.S.A. § 17-6712 et. seq., which is reprinted in full as part of Annex E to this proxy statement/prospectus. Annex E should be reviewed carefully by any stockholder who wishes to perfect his dissenters’ rights. Failure to strictly comply with the procedures set forth in K.S.A. § 17-6712 et. seq. will, by law, result in the loss of dissenters’ rights. It may be prudent for a person considering whether to dissent to obtain professional counsel.

If the merger is completed, any KBC stockholder who has properly perfected his statutory dissenters’ rights in accordance with K.S.A. § 17-6712 et. seq. has the right to obtain, in cash, payment of the fair value of such stockholder’s shares of KBC common stock. The appraised fair value may be more or less than the value of the merger consideration to be received in the merger.

Under K.S.A. § 17-6712 et. seq., each KBC stockholder who demands an appraisal in connection with the merger and who complies with the various procedural requirements of K.S.A. § 17-6712 et. seq. is entitled to “appraisal rights,” pursuant to which the KBC stockholder will receive the fair value of his shares of KBC common stock in cash. The value as determined by a Kansas court may be more or less than the value such stockholder is entitled to under the merger agreement.

To exercise and perfect appraisal rights under K.S.A. § 17-6712 et. seq., a KBC stockholder must do all of the following:

 

    deliver to KBC, before a stockholder vote is taken to approve the Merger Proposal at the KBC special meeting, a written demand for appraisal of such stockholder’s shares of KBC common stock, which must reasonably inform KBC of the stockholder’s identity and that the stockholder intends thereby to demand the appraisal of the stockholder’s shares of KBC common stock. Neither a proxy nor vote against the Merger Proposal will satisfy the requirement of such written demand;

 

    not vote in favor of the Merger Proposal (note that a vote, in person or by proxy, against the Merger Proposal will not satisfy the statutory requirement that a stockholder make a written demand for an appraisal of his shares) or consent in writing to the merger; and

 

    continue to hold his shares of KBC common stock through the effective time of the merger.

If a KBC stockholder does not vote against the Merger Proposal, it will not constitute a waiver of his appraisal rights under the K.S.A., if such stockholder submits to KBC a written demand for appraisal before the vote on the Merger Proposal is taken at the KBC special meeting. Conversely, voting against the Merger Proposal will not, by itself, be sufficient to satisfy a KBC stockholder’s obligations if he dissents and wants to exercise his appraisal rights. Any holder of shares of KBC common stock must follow the procedures set forth in K.S.A. § 17-6712 et. seq. to exercise his appraisal rights.

Each outstanding share of KBC common stock as to which a legally sufficient written demand in accordance with K.S.A. § 17-6712 et. seq. has been made and that did not vote in favor of approval of the Merger Proposal retains all other rights of a KBC stockholder until those rights are cancelled by consummation of the merger. However, after the effective time of the merger, no dissenting stockholder who has demanded appraisal rights shall be entitled to vote the stock for any purpose or to receive payment of dividends (except dividends

 

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payable to stockholders of record prior to the effective time of the merger), unless no petition for an appraisal is filed within the time specified by K.S.A. § 17-6712 or such dissenting stockholder delivers to Equity, as the surviving corporation in the merger, a written withdrawal of such dissenting stockholder’s demand for an appraisal and an acceptance of the merger within 60 days after the effective date of the merger (unless Equity agrees in writing to accept such dissenting stockholder’s written withdrawal after such 60-day period).

If the Merger Proposal is approved at the KBC special meeting, within 10 days after the effective date of the merger, Equity will notify the dissenting stockholders who have complied with the provisions of K.S.A. § 17-6712 et. seq. that the merger has become effective. Within 120 days after the effective date of the merger, Equity will send to such dissenting stockholders, upon written request, a statement setting forth the aggregate number of shares not voted in favor of the merger agreement and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The written statement will be mailed to the dissenting stockholder within 10 days after the written request is received by Equity or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later.

Within 120 days after the effective date of the merger, either Equity or a KBC stockholder who has complied with the provisions of K.S.A.§ 17-67-12 et. seq. and who is otherwise entitled to appraisal rights may commence an appraisal proceeding by filing a petition in the district court demanding a determination of the value of the shares of all dissenting stockholders; however, at any time within 60 days after the effective date of the merger, any dissenting stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such dissenting stockholder’s demand for appraisal and accept the terms offered in the merger agreement. Payment will be made to dissenting stockholders with uncertificated shares promptly, and to those with certificated shares upon surrender of the certificates representing the shares of KBC common stock.

The shares for which a dissenting stockholder has properly exercised and perfected appraisal rights and followed the required procedures in the K.S.A. will not be converted into, or represent, the right to receive Equity common stock and cash as provided under the merger agreement. None of these shares will, after the effective time of the merger, be entitled to vote for any purpose or receive any dividends or other distributions. If, however, the holder of such shares fails to properly perfect, effectively withdraws, waives or loses, or otherwise becomes ineligible to exercise appraisal rights under the K.S.A., then at that time shares held by such holder will be converted into Equity common stock and cash as provided in the merger agreement.

The foregoing discussion does not purport to be a complete statement of the procedures for exercising and perfecting appraisal rights under the K.S.A. and is qualified in its entirety by reference to the full text of K.S.A. § 17-6712 et. seq., a copy of which is attached as Annex E to this proxy statement/prospectus.

If any KBC stockholder intends to dissent, or if such stockholder believes that dissenting might be in his best interest, such stockholder should read Annex E carefully.

Regulatory Approvals Required for the Merger

The completion of the merger and the bank merger are subject to prior receipt of certain approvals and consents required to be obtained from applicable governmental and regulatory authorities. These approvals include approvals from, among others, the Federal Reserve and the OSBC. Subject to the terms of the merger agreement, both KBC and Equity have agreed to cooperate with each other and use their commercially reasonable efforts to obtain all regulatory approvals necessary or advisable to complete the transactions contemplated by the merger agreement.

On January 19, 2018, Equity filed the required application with the Federal Reserve Bank of Kansas City to request the Federal Reserve’s approval under the Bank Holding Company Act of 1956, as amended (“BHC Act”).

 

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In addition, the bank merger of FNB with and into Equity Bank requires the approval of the Federal Reserve and the OSBC. On January 19, 2018, Equity Bank filed the required application with the Federal Reserve Bank of Kansas City and the OSBC. Although neither KBC nor Equity knows of any reason why it cannot obtain these regulatory approvals in a timely manner, KBC and Equity cannot be certain when or if they will be obtained.

The U.S. Department of Justice has between 15 and 30 days following approval by the Federal Reserve to challenge the approval on antitrust grounds. While Equity and KBC do not know of any reason that the Department of Justice would challenge regulatory approval by the Federal Reserve and believe that the likelihood of such action is remote, there can be no assurance that the Department of Justice will not initiate such a proceeding, or if such a proceeding is initiated, as to the result of any such challenge.

The approval of any notice or application merely implies satisfaction of regulatory criteria for approval, and does not include review of the merger from the standpoint of the adequacy of the consideration to be received by, or fairness to, stockholders. Regulatory approval does not constitute an endorsement or recommendation of the proposed transaction.

Equity and KBC are not aware of any material governmental approvals or actions that are required prior to the parties’ completion of the merger other than those described in this proxy statement/prospectus. If any additional governmental approvals or actions are required, the parties presently intend to seek those approvals or actions. However, the parties cannot assure you that any of these additional approvals or actions will be obtained.

 

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THE MERGER AGREEMENT

The following describes certain aspects of the merger, including certain material provisions of the merger agreement. The following description of the merger agreement is subject to, and qualified in its entirety by reference to, the merger agreement, which is attached to this proxy statement/prospectus as Annex A and is incorporated by reference into this proxy statement/prospectus. We urge you to read the merger agreement carefully and in its entirety, as it is the legal document governing the merger.

Structure of the Merger

Each of Equity’s and KBC’s respective boards of directors has unanimously approved the merger agreement. Under the merger agreement, Merger Sub will merge with and into KBC, with KBC surviving the merger as a wholly-owned subsidiary of Equity. Immediately following, and in connection with, the merger, Equity will cause KBC to merge with and into Equity, with Equity surviving the second merger. Immediately following the integrated mergers (or at such later time as Equity may determine in its sole discretion), Equity will cause FNB to merge with and into Equity Bank, with Equity Bank surviving the merger.

Merger Consideration

At the effective time, each share of KBC common stock issued and outstanding immediately prior to the effective time (other than shares of KBC common stock held by KBC, Equity or any dissenting stockholder) will be converted into the right to receive, at the election of the holders of such shares of KBC common stock, either the per share cash consideration or the per share stock consideration, subject to the procedures applicable to oversubscription and undersubscription for cash consideration.

The amount of cash and stock that the stockholders of KBC will receive is subject to proration and adjustment in accordance with the terms of the merger agreement, which provides that in the aggregate, before making any possible downward adjustment to the merger consideration, the aggregate cash consideration will be approximately $16,771,050, or 37.2% of the total merger consideration, and the aggregate stock consideration will be approximately $28,312,988, or 62.8% of the total merger consideration. As described in more detail below, the aggregate amount of cash consideration will be fixed unless the amount of the KBC adjusted shareholders’ equity is less than $29,293,303, in which case the cash consideration with be reduced by $1.53 for each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303.

KBC common stockholders will make their election on a share-by-share basis. When making an election, KBC common stockholders may specify different elections with respect to different shares of KBC common stock held by them (for example, a KBC common stockholder with 100 shares of KBC common stock could make a cash election with respect to 50 shares and a stock election with respect to the other 50 shares). The maximum number of shares of KBC common stock that may elect to receive the per share cash consideration is 30,018 shares and the maximum number of shares of KBC common stock that may elect to receive the per share stock consideration is 50,678 shares. Accordingly, depending on the elections made by other KBC common stockholders, a KBC common stockholder might receive a portion of the merger consideration in a form such holder did not elect.

Calculation of Merger Consideration

The steps by which merger agreement determines the amount of the cash consideration and the stock consideration allocated to KBC common stockholders can be summarized as follows:

1)    First, the total merger consideration is calculated. The total merger consideration is equal to the sum of the total stock consideration and the total cash consideration. The agreed value of the total stock consideration pursuant to the merger agreement is $28,312,988 and was fixed at the signing of the merger agreement. The total

 

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cash consideration is $16,771,050 and is subject to a downward adjustment if the KBC adjusted shareholders’ equity is less than $29,293,303 and is described below in more detail. Assuming that there is no downward adjustment to the total cash consideration, the total merger consideration will be $45,084,038.

2)    Second, after the total merger consideration is calculated, the per share consideration is calculated to determine both the per share cash amount to be paid to shares that elect to receive the per share cash consideration and the exchange ratio for shares that elect to receive the per share stock consideration. The per share consideration is equal to the total merger consideration of $45,084,038 (assuming no downward adjustment) divided by number of the shares of KBC common stock outstanding immediately prior to the effective time except for certain cancelled shares (which we refer in this proxy statement/prospectus as the “per share consideration”). Assuming there is no downward adjustment and that the number of shares of KBC common stock outstanding remains 80,696 shares, then the per share consideration will be $558.69; however, as of January 31, 2018, KBC expects that there will be a downward adjustment as described in more detail below.

3)    Finally, after computing the per share consideration, the amount of cash to be paid to shares that elect to receive the per share cash consideration and the exchange ratio for shares that elect to receive the per share stock consideration can be determined. For shares that KBC common stockholders have elected the per share cash consideration they will receive an amount equal to the per share consideration in cash, which assuming that there is no downward adjustment based on the amount of the KBC adjusted shareholders’ equity, will be $558.69. For shares that KBC common stockholders have elected the per share stock consideration they will receive a number of shares equal to the per share consideration divided by the agreed Equity stock price of $34.49 (which we refer to in this proxy statement/prospectus as the “exchange ratio”). Assuming there is no downward adjustment to the cash consideration, the exchange ratio will be approximately 16.20 per share of KBC common stock that elects to receive the per share stock consideration.

The foregoing description of the procedures used to calculated the merger consideration is a summary only and does not discuss all of the steps involved. For a complete discussion of this calculation, please review the terms of the merger agreement included in this proxy statement/prospectus as Annex A.

Cash Consideration

The merger agreement provides that each share of KBC common stock for which a valid cash election has been made will be converted into the right to receive, subject to proration and adjustment as described below, an amount in cash equal to the per share consideration, which is expected to be $558.69; provided, that there is no downward adjustment based on the KBC adjusted shareholders’ equity. The amount of cash paid for each shares of KBC common stock will be determined pursuant to the terms of the merger agreement as summarized in the paragraph above under the heading “Calculation of Merger Consideration.”

The aggregate amount of the cash consideration is fixed at a maximum of $16,771,050 and is subject to a downward adjustment if the KBC adjusted shareholders’ equity is less than $29,293,303. Assuming that there is no downward adjustment, the maximum number of shares of KBC common stock that may elect to receive the cash consideration is approximately 30,018 shares and all other shares will receive the stock consideration in accordance with the proration and adjustment procedures described below under the heading “Proration and Allocation of Merger Consideration.”

Stock Consideration

The merger agreement provides that each share of KBC common stock for which a valid stock election has been made will be converted into the right to receive, subject to proration and adjustment as described below, the number of shares of Equity common stock equal to the quotient of the per share consideration divided by the agreed Equity stock price of $34.49. Assuming there is no downward adjustment to the cash consideration, the exchange ratio will be approximately 16.20 per share of KBC common stock that elects to receive the per share stock consideration. The closing price of Equity common stock was of $35.10 for on Nasdaq on December 15,

 

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2017, the last trading day before public announcement of the merger and the closing price of Equity common stock was $[        ] on Nasdaq on [            ], 2018, the latest practicable trading day before the printing of this proxy statement/prospectus. The market value of Equity’s common stock may be more or less than the $34.49 per share price used to calculate the exchange ratio pursuant to the terms of the merger agreement. We urge you to obtain current market quotations for Equity common stock (trading symbol “EQBK”).

The aggregate amount of the stock consideration is fixed at an agreed value of $28,312,988, which was determined at the signing of the merger agreement. While only the cash consideration will be directly reduced if there is a downward adjustment of the merger consideration, the merger agreement provides that the per share consideration attributable to shares that elect to receive the stock consideration and cash consideration will be the same. As a result, if there is a downward adjustment to the amount of the cash consideration, the exchange ratio will be proportionately reduced as well.

Assuming that there is no downward adjustment, the maximum number of shares of KBC common stock that may elect to receive the per share stock consideration is approximately 50,678 shares and all other shares will receive the per share cash consideration in accordance with the proration and adjustment procedures described below.

If, between the date of the merger agreement and the effective time, the outstanding shares of Equity common stock increase, decrease, change into or are exchanged for a different number or kind of shares or securities as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization (but not as a result of another merger transaction or other issuances by Equity), then the exchange ratio calculated pursuant to the merger agreement will be appropriately and proportionately adjusted.

Equity will not issue any fractional shares of Equity common stock in the merger. KBC stockholders who would otherwise be entitled to a fraction of a share of Equity common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent), determined by multiplying the fractional share by $34.49.

Non-Election Shares

The merger agreement provides that each share of KBC common stock, other than shares for which a valid election of either cash consideration or stock consideration has been effectively made, will be treated as a “non-election share” and will be converted to the right to receive such stock consideration or cash consideration as determined in accordance with the proration and allocation provisions described below.

Downward Adjustment

The cash component of the merger consideration may be subject to a downward adjustment based upon the KBC adjusted shareholders’ equity. If the KBC adjusted shareholders’ equity is less than $29,293,303 on the calculation date, which will be the fifth business day before the closing of the merger unless otherwise agreed by the parties, then the aggregate cash consideration will be reduced by $1.53 for each dollar that the KBC adjusted shareholders’ equity is less than $29,293,303. As a result, both the per share cash consideration and exchange ratio will be reduced. In the event that the KBC adjusted shareholders’ equity is less than $18,331,833 and Equity proceeds with the merger, then the holders of KBC common stock will not receive any cash consideration. As of [            ], 2018, the most recent practicable date before the printing of this proxy statement/prospectus, KBC adjusted shareholders’ equity would have been an estimated $[        ] million.

The KBC Merger Costs are the costs and expenses that KBC will incur in connection with the merger that are not reflected in KBC’s shareholders’ equity as of the calculation date, which will be the fifth business day before the closing of the merger or such other mutually agreed date. The KBC Merger Costs will be subtracted

 

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from KBC’s shareholders’ equity as of the calculation date to calculate the KBC adjusted shareholders’ equity. The KBC Merger Costs is defined in the merger agreement and it includes, among other costs and expenses:

 

    contract termination costs, including employment related agreements and obligations;

 

    all transaction costs and legal, accounting and financial advisory fees of KBC associated with the merger;

 

    the payment of severance, stay-pay, certain bonuses and change-in-control payments to employees of KBC;

 

    certain tax obligations; and

 

    any unrealized gains or any unrealized losses (as the case may be) in KBC’s securities portfolio due to mark-to-market adjustments required by generally accepted accounting principles, or GAAP.

The following table presents the effect of the estimated KBC Merger Costs on the per share consideration to be received by the KBC stockholders. If KBC’s adjusted shareholders’ equity is less than $29,293,303, then both the cash consideration payable and exchange ratio will be reduced. As of January 31, 2018, the most recent practicable date before the initial filing of this proxy statement/prospectus, KBC estimates that the KBC Merger Costs would be approximately $2,800,000 on an after-tax basis. The table also presents up to $1,000,000 of additional KBC Merger Costs in increments of $250,000. For a discussion of the risks and assumptions associated with the estimates and forecasts included in this table, see “Risk Factors—Risks Relating to the Merger—The sum of KBC’s consolidated capital, surplus and retained earnings accounts less all intangible assets prior to the closing of the merger could be an amount that results in the reduction of the amount of the cash portion of the merger consideration that KBC stockholders would be entitled to receive.”

 

Estimated KBC
shareholders’
equity on the
calculation

date(1)

   Estimated
KBC Merger
Costs(2)
     Estimated KBC
adjusted
shareholders’
equity
     Reduction in
aggregate
consideration
     Total stock
consideration
     Total cash
consideration
     Cash
consideration
payable to cash
election shares
     Exchange
Ratio for
stock
election
shares
 

$33,773,000

   $ 2,800,000      $ 30,973,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,050,000      $ 30,723,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,300,000      $ 30,473,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,550,000      $ 30,223,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

$33,773,000

   $ 3,800,000      $ 29,973,000      $ —        $ 28,312,988      $ 16,771,050      $ 558.69        16.20  

 

(1) This number reflects the KBC shareholders’ equity at September 30, 2017 of approximately $31,992,000, plus KBC’s estimated earnings from October 1, 2017 through the anticipated calculation date of approximately $1,781,000. The calculation date is the fifth business day before the closing of the merger. The closing of the merger is expected to occur in the second quarter of 2018. The estimated earnings of KBC are based on the financial and operating forecast provided by KBC’s management.
(2) Reflects KBC’s estimate of $2,800,000 on an after-tax basis as of January 31, 2018 of the KBC Merger Costs and additional KBC Merger Costs in increments of $250,000.

Proration and Allocation of Merger Consideration

The max cash shares number will be determined by dividing the cash component of the merger consideration (i.e., $16,771,050) by the per share consideration, which has a maximum of $558.69 assuming there is no downward adjustment. All other shares of KBC common stock (other than shares of KBC common stock held by KBC, Equity or any dissenting stockholder) will be converted into the right to receive the stock consideration.

 

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Within ten business days after the effective time, Equity will cause the exchange agent to effect the allocation among KBC common stockholders of rights to receive the cash consideration and the stock consideration as described below.

If Cash Consideration is Oversubscribed: Shares of Equity common stock may be issued to KBC common stockholders who make cash elections if the aggregate number of shares of KBC common stock with respect to which cash elections have been made, including for this purpose dissenting shares (which we refer to as the “cash election number”) exceeds the max cash shares number. If the cash consideration is oversubscribed, then:

 

    a KBC common stockholder who made a stock election, no election or an invalid election will receive the stock consideration for each share of KBC common stock as to which such holder made a stock election, no election or an invalid election;

 

    a KBC common stockholder who made a cash election will receive:

 

    the cash consideration for a number of shares of KBC common stock equal to the product obtained by multiplying (1) the number of shares of KBC common stock for which such holder has made a cash election by (2) a fraction, the numerator of which is the max cash shares number and the denominator of which is the total number of shares for which KBC common stockholders made a cash election; and

 

    the stock consideration for the remaining shares of KBC common stock for which the KBC common stockholder made a cash election.

If Cash Consideration is Undersubscribed: Cash may be issued to KBC common stockholders who make stock elections if the number of cash election shares is less than the max cash shares number (the amount by which the number of cash election shares is less than the max cash shares number is referred to as the “shortfall number”).

If the number of shares of KBC common stock that elected to receive the cash consideration is undersubscribed, then all KBC common stockholders who make a cash election will receive the cash consideration for all shares of KBC common stock as to which they made a cash election. KBC common stockholders who make a stock election, no election or an invalid election will receive cash and/or KBC common stock based in part on whether the shortfall number is less or greater than the number of non-election shares, as follows:

Scenario 1: If the shortfall number is less than or equal to the number of non-election shares, then:

 

    a KBC common stockholder who made a stock election will receive the stock consideration for each share of KBC common stock as to which such holder made a stock election; and

 

    a KBC common stockholder who made no election or who did not make a valid election with respect to any of such holder’s shares of KBC common stock will receive:

 

    the cash consideration with respect to such holder’s non-election shares equal to the product obtained by multiplying (1) the number of such non-election shares by (2) a fraction, the numerator of which is the shortfall number and the denominator of which is the total number of non-election shares; and

 

    the stock consideration for the remaining number of such holder’s non-election shares.

 

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Scenario 2: If the shortfall number exceeds the number of non-election shares, then:

 

    a KBC common stockholder who made no election or who has not made a valid election will receive the cash consideration for each share of KBC common stock for which he or she made no election or did not make a valid election; and

 

    a KBC common stockholder who made a stock election will receive:

 

    the cash consideration with respect to the number of shares of KBC common stock equal to the product obtained by multiplying (1) the number of shares of KBC common stock with respect to which such holder made a stock election by (2) a fraction, (x) the numerator of which is equal to the amount by which the shortfall number exceeds the number of non-election shares and (y) the denominator of which is equal to the total number of shares for which KBC common stockholders made a stock election; and

 

    the stock consideration with respect to the remaining shares of KBC common stock as to which such holder made a stock election.

Fractional Shares

Equity will not issue any fractional shares of Equity common stock in the merger. KBC stockholders who would otherwise be entitled to a fraction of a share of Equity common stock upon the completion of the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent), determined by multiplying the fractional share by $34.49.

Governing Documents; Directors and Officers; Governance Matters

At completion of the integrated mergers, the Equity articles and the Equity bylaws, as in effect immediately before the effective time, will be the articles of incorporation and bylaws of the surviving corporation, Equity, until thereafter changed or amended as provided by law.

The directors and officers, respectively, of Equity at the effective time will remain the directors and officers of the surviving corporation and will hold office from the effective time until their respective successors are duly elected or appointed and qualified in the manner provided in the articles of incorporation and bylaws of the surviving corporation or as otherwise provided by law.

Closing and Effective Time

The merger will be completed only if all conditions to the merger discussed in this proxy statement/prospectus and set forth in the merger agreement are either satisfied or waived. See “—Conditions to Complete the Merger.” Following satisfaction or waiver of all the conditions to the merger, on a date mutually acceptable to Equity and KBC within thirty (30) days, the parties will execute such documents and instruments as may be necessary or appropriate in order to effect the merger and the other transactions contemplated by the merger agreement.

The merger and other transactions contemplated by the merger agreement will become effective on the date and at the time specified in the certificate of merger, reflecting the merger, filed with the Secretary of State of the State of Kansas in accordance with the K.S.A. It currently is anticipated that the completion of the merger will occur in the second calendar quarter of 2018, subject to the receipt of regulatory approvals and the satisfaction of other closing conditions set forth in the merger agreement, but neither KBC nor Equity can guarantee when or if the merger will be completed.

Conversion of Shares; Election as to Form of Consideration; Exchange of Certificates

The conversion of KBC common stock into the right to receive the merger consideration will occur automatically at the effective time. From and after the effective time and the completion of the allocation

 

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procedures described above, upon proper surrender of shares of KBC common stock and delivery of a duly executed form of election or letter of transmittal, the exchange agent will exchange shares of KBC common stock for the applicable merger consideration and cash in lieu of fractional shares, in each case, without interest. Until surrendered in accordance with the provisions of the merger agreement, each share of KBC common stock shall be deemed at any time after the effective time to represent only the right to receive, upon surrender, the applicable merger consideration and any cash in lieu of fractional shares.

Form of Election

The merger agreement provides that KBC common stockholders will be provided with a form of election and other customary transmittal materials. The form of election will allow each holder of KBC common stock to specify (i) the number of shares of KBC common stock owned by such holder with respect to which such holder desires to receive the per share cash consideration and (ii) the number of shares of KBC common stock owned by such holder with respect to which such holder desires to receive the per share stock consideration.

Equity will initially make available and mail the form of election at least twenty (20) business days prior to the anticipated election deadline to holders of record as of the business day prior to such mailing date. Following the mailing date, Equity will use all reasonable efforts to make available as promptly as possible a form of election to any stockholder who requests a form of election prior to the election deadline. The election deadline will be 5:00 p.m. local time (in the city in which the principal office of the exchange agent is located) on the date which Equity and KBC agree is as near as practicable to two business days before the closing date of the transaction.

To make a valid election, a KBC common stockholder must submit to the exchange agent a properly completed and signed form of election (including duly executed transmittal materials included in the form of election). The form of election must also be accompanied by any certificates representing all certificated shares of KBC common stock to which such form of election relates (or by an appropriate customary guarantee of delivery of such certificates, as set forth in such form of election, from a member of any registered national securities exchange or a commercial bank or trust company in the United States).

A KBC common stockholder may, at any time prior to the election deadline, change or revoke an election by written notice to the exchange agent received by the exchange agent prior to the election deadline accompanied by a properly completed and signed revised form of election, or by withdrawing his or her shares of KBC common stock previously deposited with the exchange agent. If any election is not properly made with respect to any shares of KBC common stock, such election will be deemed to be not in effect, and the shares of KBC common stock covered by such election will be deemed to be non-election shares, unless a proper election is subsequently timely made.

Letter of Transmittal

As promptly as practicable, but no later than ten (10) days after the effective time, and subject to the receipt by the exchange agent of a list of KBC’s stockholders in a format that is reasonably acceptable to the exchange agent, Equity will cause the exchange agent to mail to each holder of record of KBC common stock (i) a letter of transmittal and (ii) instructions for use in surrendering each certificate representing shares of KBC common stock in exchange for the merger consideration, any cash in lieu of a fractional share and any dividends or distributions to which such holder is entitled pursuant to the terms of the merger agreement.

KBC’s stockholders will be entitled to receive their respective merger consideration only after receipt by the exchange agent of a properly completed letter of transmittal including delivery of certificates representing shares of KBC common stock. No interest will be paid on the merger consideration.

If a certificate for KBC common stock has been lost, stolen or destroyed, the exchange agent will issue the merger consideration upon receipt of (i) an affidavit of that fact by the claimant and (ii) if required by Equity or the exchange agent, the posting of a bond in an amount as Equity may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate.

 

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After completion of the merger, there will be no further transfers on the stock transfer books of KBC of shares of KBC common stock that were issued and outstanding immediately prior to the effective time.

Withholding

Equity and the exchange agent, as the case may be, will be entitled to deduct and withhold, if necessary, from any consideration otherwise payable pursuant to the merger agreement to any person such amounts as Equity or the exchange agent, as the case may be, is required to deduct and withhold under the Code, or any provision of state, local or foreign tax law, with respect to the making of such payment. To the extent that amounts are so withheld by Equity or the exchange agent, as the case may be, and remitted to the appropriate governmental entity, such withheld amounts will be treated for all purposes of the merger agreement as having been paid to such person in respect of which such deduction and withholding was made by Equity or the exchange agent, as the case may be.

Dividends and Distributions

No dividends or other distributions with respect to Equity common stock will be paid to the holder of any unsurrendered certificates of KBC common stock with respect to the shares of Equity common stock represented thereby, until the holder of the KBC common stock surrenders the certificates representing the shares of KBC common stock in accordance with the terms of the merger agreement. Following surrender of any such certificate in accordance with the terms of the merger agreement, the record holder thereof will be entitled to receive any such dividends or other distributions, without any interest, which had previously become payable with respect to the whole shares of Equity common stock which the shares of KBC common stock represented by such certificate have been converted into the right to receive under the merger agreement.

Representations and Warranties

The merger agreement and this summary of the representations and warranties in this section are included to provide you with information regarding the terms of the merger agreement. Factual disclosures about Equity and KBC contained in this proxy statement/prospectus or in the public reports of Equity filed with the SEC may supplement, update or modify the factual disclosures about Equity and KBC contained in the merger agreement. The merger agreement contains representations and warranties of Equity and KBC that may be subject to limitations, qualifications or exceptions agreed upon by the parties, including being qualified by confidential disclosures, and may be subject to a contractual standard of materiality that differs from the materiality standard that applies to reports and documents filed with the SEC. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement. The representations and warranties, other provisions of the merger agreement or any description of these provisions should not be read alone, but instead should be read only in conjunction with the information provided elsewhere in this proxy statement/prospectus, the documents incorporated by reference into this proxy statement/prospectus and the other reports, statements and filings that Equity publicly files with the SEC. See “Where You Can Find More Information.”

The merger agreement contains customary representations and warranties of each of Equity and KBC relating to their respective businesses. The representations and warranties in the merger agreement do not survive the effective time.

The merger agreement contains representations and warranties made by KBC relating to a number of matters, including the following:

 

    corporate matters, including due organization and qualification and subsidiaries;

 

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    authority relative to execution and delivery of the merger agreement;

 

    capitalization;

 

    compliance with laws; and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;

 

    financial statements;

 

    the absence of undisclosed liabilities;

 

    legal proceedings;

 

    consents and approvals, required governmental and other regulatory filings in connection with the merger;

 

    title to assets;

 

    the absence of certain changes or events;

 

    certain contracts;

 

    certain tax matters;

 

    insurance matters;

 

    the absence of any material adverse change;

 

    intellectual property;

 

    related party transactions;

 

    indebtedness of KBC;

 

    condition of assets;

 

    environmental matters;

 

    regulatory compliance;

 

    absence of certain business practices;

 

    books and records;

 

    forms of instruments;

 

    fiduciary responsibilities;

 

    guaranties;

 

    voting agreements and stockholders’ agreements;

 

    employment matters;

 

    employee benefits;

 

    certain obligations to employees;

 

    interest rate risk management;

 

    internal controls;

 

    compliance with the various specified statutes, rules and regulations;

 

    certain matters concerning the trading of KBC’s securities;

 

    the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents;

 

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    intercompany agreements;

 

    the nature of the representations in the merger agreement;

 

    inapplicability of takeover statutes; and

 

    receipt by the KBC Board of an opinion from KBC’s financial advisor.

The merger agreement contains representations and warranties made by Equity relating to a more limited number of matters, including the following:

 

    corporate matters, including due organization and qualification and subsidiaries;

 

    authority relative to execution and delivery of the merger agreement;

 

    capitalization;

 

    filings with the SEC, certain compliance matters and financial statements;

 

    compliance with laws; and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger;

 

    the absence of undisclosed liabilities;

 

    legal proceedings;

 

    consents and approvals, required governmental and other regulatory filings in connection with the merger;

 

    regulatory compliance;

 

    the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents;

 

    the absence of certain changes or events;

 

    disclosure controls and procedures;

 

    allowance for loan losses;

 

    certain tax matters;

 

    sufficient funds to pay the cash component of the merger consideration;

 

    the nature of the representations in the merger agreement; and

 

    receipt by the Equity Board of an opinion from Equity’s financial advisor.

Certain representations and warranties of Equity and KBC are qualified as to “materiality” or “material adverse change.” For purposes of the merger agreement, a “material adverse change,” means, with respect to either Equity or KBC, any material adverse change in the business, results of operations, condition (financial or otherwise), assets, properties, liabilities (absolute, accrued, contingent or otherwise) or reserves of such party and its subsidiaries, taken as a whole, has occurred, but excluding any change with respect to, or effect on, such party resulting from or in connection with any of the following, by itself or by themselves, either alone or in combination, to constitute or contribute to: (i) any changes in laws or interpretations thereof that are generally applicable to the banking or savings industries; (ii) changes in GAAP that are generally applicable to the banking or savings industries; (iii) expenses incurred in connection with the transactions contemplated by the merger agreement; (iv) changes in global, national or regional political conditions or general economic or market conditions in the United States or the State of Kansas, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates, and price levels or trading volumes in the United States or foreign securities markets affecting other companies in the financial services industry; (v) general changes in the credit markets or general downgrades in the credit markets; (vi) actions or omissions of a party taken as required

 

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by the merger agreement or with the prior informed written consent of the other party or parties in contemplation of the transactions contemplated by the merger agreement; (vii) any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism; or (viii) any change resulting from the announcement or pendency of any of the transactions contemplated by the merger agreement; provided, that, in the case of clauses (i) through (vii), such party is not affected to a greater extent than other persons, bank holding companies or insured depository institutions in the industry in which such party operates.

Covenants and Agreements

Conduct of Businesses Prior to the Completion of the Merger

KBC has agreed that, prior to the effective time, it will, and will cause its subsidiaries to, unless otherwise permitted in writing by Equity:

 

    operate (including, without limitation, the making of, or agreeing to make, any loans or other extensions of credit) only in the ordinary course of business and consistent with past practices and prudent banking principles;

 

    except as required by prudent business practices, use commercially reasonable efforts to preserve its business organization intact and to retain its present directors, officers, employees, key personnel and customers, depositors and goodwill and to maintain all assets owned, leased or used by it (whether under its control or the control of others), in good operating condition and repair, ordinary wear and tear excepted;

 

    perform all of its obligations under any material contracts, leases and documents relating to or affecting its assets, properties and business, except such obligations as KBC or any of its subsidiaries may in good faith reasonably dispute;

 

    except as required by prudent business practices, use all commercially reasonable efforts to maintain in full force and effect all insurance policies now in effect or renewals thereof and give all notices and present all claims under all insurance policies in due and timely fashion;

 

    timely file, subject to extensions, all reports required to be filed with any governmental entity and observe and conform, in all material respects, to all applicable laws, except those being contested in good faith by appropriate proceedings;

 

    timely file, subject to extensions, all tax returns required to be filed by it and timely pay all taxes that become due and payable, except those being contested in good faith by appropriate proceedings;

 

    promptly notify Equity of any tax proceeding or claim pending or threatened against or with respect to KBC or any of its subsidiaries;

 

    withhold from each payment made to each of its employees, independent contractors, creditors and other third parties the amount of all taxes required to be withheld therefrom and pay the same to the proper governmental entity when due;

 

    account for all transactions and prepare all financial statements in accordance with GAAP;

 

    promptly classify and charge off loans and make appropriate adjustments to loss reserves in accordance with the instructions to the Reports of Condition and Income (“Call Report”) and the Uniform Retail Credit Classification and Account Management Policy;

 

   

maintain the allowance for loan losses account in accordance with GAAP and in an amount reasonably estimated to be adequate in all material respects to provide for all losses, net of recoveries relating to loans previously charged off, on all outstanding loans and in compliance with applicable regulatory requirements, and not reduce the amount of FNB’s allowance for loan losses; provided that such allowance for loan losses shall be an amount not less than 1.06% of aggregate loans (excluding loans held for sale) and shall include the estimated cost of carrying and disposing of non-performing loans

 

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and other real estate owned including any specific reserve required for the ownership or sale of such other real estate owned;

 

    pay or accrue all costs, expenses and other charges to be incurred in connection with the merger, including, but not limited to, all legal fees, accounting fees, consulting fees and brokerage fees, prior to the calculation date, which will be the fifth business day before the closing of the merger; and

 

    ensure that all accruals for taxes are accounted for in the ordinary course of business, consistent with past practices and in accordance with GAAP; and

 

    obtain the minimum vote, and require no greater than the minimum vote, of the capital stock of KBC required by any voting trusts, voting agreements, stockholders’ agreements or similar arrangements in order to approve the termination thereof.

Additionally, prior to the effective time, subject to specified exceptions, KBC will not, and will not permit any of its subsidiaries to, without the prior written consent of Equity, undertake the following actions:

 

    take or fail to take any action that would cause the representations and warranties made by KBC in the merger agreement to be inaccurate at the time of the closing of the merger or preclude KBC from making such representations and warranties at the time of the closing of the merger;

 

    merge into, consolidate with or sell its assets to any other person or entity, change or amend KBC’s or any of its subsidiaries’ articles of incorporation or bylaws, increase the number of shares of KBC common stock or any of its subsidiaries’ stock outstanding or increase the amount of the FNB’s surplus (as calculated in accordance with the instructions to the Call Report);

 

    except as explicitly permitted under the merger agreement or in accordance with applicable law or pursuant to a contract existing as of the date of the merger agreement, engage in any transaction with any affiliated person or allow such persons to acquire any assets from KBC or any of its subsidiaries, except (i) in the form of wages, salaries, fees for services, reimbursement of expenses and benefits already granted or accrued under KBC’s employee benefit plans currently in effect, or (ii) any deposit (in any amount) made by an officer, director or employee;

 

    declare, set aside or pay any dividends or make any other distribution to its stockholders (including any share dividend, dividends in kind or other distribution) whether in cash, shares or other property;

 

    obligate itself to purchase, retire or redeem any of its capital shares or other securities;

 

    discharge or satisfy any lien or pay any obligation or liability, whether absolute or contingent, due or to become due, except in the ordinary course of business consistent with past practices and except for liabilities incurred in connection with the transactions contemplated by the merger agreement;

 

    issue, reserve for issuance, grant, sell or authorize the issuance of any shares of its capital stock or other securities or subscriptions, options, warrants, calls, rights or commitments of any kind relating to the issuance thereto;

 

    accelerate the vesting of pension or other benefits in favor of employees of KBC or any of its subsidiaries except according to a KBC employee benefit plan or as otherwise contemplated by the merger agreement or as required by applicable law;

 

    acquire any capital stock or other equity securities or acquire any equity or ownership interest in any bank, corporation, partnership or other entity (except (i) through settlement of indebtedness, foreclosure or the exercise of creditors’ remedies or (ii) in a fiduciary capacity, the ownership of which does not expose it to any liability from the business, operations or liabilities of such person);

 

    mortgage, pledge or subject to lien any of its property, business or assets, tangible or intangible, except (i) certain permitted encumbrances, (ii) pledges of assets to secure public funds deposits and (iii) pledged of assets to secure Federal Home Loan Bank borrowings;

 

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    except as permitted under the merger agreement, sell, transfer, lease to others or otherwise dispose of any of its assets, or cancel or compromise any debt or claim, or waive or release any right or claim of a market value in excess of $1,000;

 

    make any change in the rate or timing of payment of compensation, commission, bonus or other direct or indirect remuneration payable, or pay or agree or orally promise to pay, conditionally or otherwise, any bonus, extra compensation, pension or severance or vacation pay, to or for the benefit of any of its stockholders, directors, officers, employees or agents, other than periodic increases in compensation consistent with past practices, and bonuses, commissions and incentives consistent with past and normal practices to its employees and officers;

 

    enter into any employment or consulting contract (other than as contemplated by the terms of a KBC employee benefit plan or the merger agreement) or other agreement with any current or proposed director, officer or employee or adopt, amend any employment agreement, amend in any material respect or terminate any pension, employee welfare, retirement, stock purchase, stock option, phantom stock, stock appreciation rights, termination, severance, income protection, golden parachute, savings or profit-sharing plan (including trust agreements and insurance contracts embodying such plans), any deferred compensation, or collective bargaining agreement, any group insurance contract or any other incentive, welfare or employee benefit plan or agreement for the benefit of its directors, employees or former employees, except as required by applicable law or by the merger agreement;

 

    make any capital expenditures or capital additions or betterments, except for such capital expenditures or capital additions that are set forth in writing in the budget provided to Equity or that are necessary to prevent substantial deterioration of the condition of a property or that do not exceed $10,000 in the aggregate;

 

    sell or dispose of, or otherwise divest itself of the ownership, possession, custody or control, of any corporate books or records of any nature that, in accordance with sound business practice, normally are retained for a period of time after their use, creation or receipt, except at the end of the normal retention period;

 

    make any, or acquiesce with any material change in any (i) credit underwriting standards or practices, including loan loss reserves, (ii) asset liability management techniques, (iii) accounting methods, principles or material practices, except as required by changes in GAAP as concurred in by KBC’s independent auditors, or as required by any applicable federal or state governmental or regulatory agency or authority having or claiming jurisdiction over Equity, KBC or their respective subsidiaries or the transactions contemplated by the merger agreement or (iv) tax election, change in taxable year, accounting methods for tax purposes, amendment of a tax return, restriction on any assessment period relating to taxes, settlement of any tax claim or assessment relating to KBC or any of its subsidiaries, “closing agreement” within the meaning of Section 7121 of the Code (or any similar provision of state, local or foreign law) or surrender any claim to a tax refund;

 

    purchase any investment securities, other than purchases of obligations of the United States Treasury (or any agency thereof) with a duration of four (4) years or less and an AA rating by at least one nationally recognized ratings agency;

 

    renew, extend the maturity of, or alter any of the terms of any loan classified by KBC as “special mention,” “substandard,” or “impaired” or other words of similar import;

 

    make, commit to make, renew, extend the maturity of, or alter any of the material terms of any loan in excess of $1,000,000, provided that Equity will be deemed to have given its consent to do so unless Equity objects to such transaction no later than 48 hours (weekends and bank holidays excluded) after actual receipt by Equity of all material information relating to the making, renewal or alteration of that loan; or

 

    enter into any acquisitions or leases of real property, including new leases and lease extensions.

 

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Regulatory Matters

Equity and Merger Sub have agreed to promptly file or cause to be filed (and KBC has agreed to cooperate with Equity and Merger Sub in connection with such filings), within 30 days of the date of the merger agreement, applications for all regulatory approvals required to be obtained by them in connection with the merger agreement and the transactions contemplated thereby. KBC has agreed to promptly file or cause to be filed applications for all regulatory approvals required to be obtained by it in connection with the merger agreement and the transactions contemplated thereby, and to use its commercially reasonable efforts to obtain all such regulatory approvals and any other approvals from third parties at the earliest practicable time.

Employee Matters

Equity has agreed to consult with the Chief Executive Officer of KBC with respect to the termination of any employees of KBC in connection with the Closing. Subject to the terms of the merger agreement, employees of KBC whose employment is terminated in connection with the merger will be eligible to receive certain severance payments under specified circumstances.

Subject to the right of subsequent amendment, modification, replacement or termination in the sole discretion of Equity, each continuing employee will be entitled, as an employee of Equity or its subsidiaries, to participate in the employee benefit plans of Equity provided to similarly situated employees of Equity or its subsidiaries, if such continuing employee will be eligible and, if required by the terms of such plans, selected for participation therein under the terms thereof and makes any required contributions. The provisions of the merger agreement are not intended to give any continuing employee any rights or privileges superior to those of other similarly situated employees of Equity or its subsidiaries or to provide duplication of similar benefits but, subject to that qualification, Equity will, for purposes of vesting and any age or period of service requirements for commencement of participation with respect to any employee benefit plans in which a continuing employee may participate (excluding any defined benefit pension plan), credit each continuing employee with his or her term of service with KBC or any of its subsidiaries to the extent such service was recognized under the analogous employee benefit plan of KBC or any of its subsidiaries.

Director and Officer Indemnification and Insurance

The merger agreement provides that after the completion of the merger, Equity and the surviving corporation will indemnify the directors, officers, employees and agents of KBC to the extent that such person would have been entitled to indemnification under the certificate of incorporation, bylaws or any existing indemnification agreements of KBC prior to the merger.

Prior to Closing, Equity and Equity Bank will obtain, at the expense of Equity, a three (3)-year tail insurance coverage policy relating to the policies of directors’ and officers’ liability insurance currently maintained by KBC and FNB as of the date of the merger agreement with respect to claims arising from facts or events that occurred on or prior to the effective time (including the transactions contemplated by the merger agreement) as currently maintained by KBC, on terms no less advantageous than those contained in KBC’s existing directors’ and officers’ and company’s liability insurance policy; provided, however, Equity is not obligated to expend, on an annual basis, an amount in excess of 200% of the current annual premium paid as of the date of the merger agreement by KBC for such insurance.

Stockholder Meeting and Recommendation of KBC’s Board of Directors

KBC has agreed to (i) duly call, give notice of, convene and hold the KBC special meeting of its stockholders as soon as practicable after the registration statement of which this proxy statement/prospectus is a part becomes effective with the SEC for the purpose of approving the Merger Proposal; (ii) require no greater than the minimum vote of the capital stock of KBC required by applicable law in order to approve the Merger

 

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Proposal; (iii) include in this proxy statement/prospectus the recommendation of the KBC Board that the KBC stockholders vote in favor of the approval of the Merger Proposal; and (iv) cause this proxy statement/prospectus to be mailed to the KBC stockholders as soon as practicable after it becomes effective with the SEC, and use its commercially reasonable efforts to obtain the approval of the Merger Proposal.

Agreement Not to Solicit Other Offers

KBC has agreed that it will not, and will cause its subsidiaries not to, and will cause KBC’s and its subsidiaries’ respective officers, directors, employees, affiliates, agents and representatives not to, directly or indirectly, (i) initiate or solicit or knowingly encourage any inquiries with respect to, or the making of, any acquisition proposal or (ii) except as otherwise permitted by the merger agreement, (A) engage in negotiations or discussions with or provide any information or data to, any person relating to an acquisition proposal, (B) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal or (C) execute or enter into any letter of intent, agreement in principle, merger agreement, acquisition agreement or other similar agreement relating to any acquisition proposal.

KBC further agreed that it will, and will cause each of its officers, directors, employees, affiliates, agents and representatives to, (i) immediately cease any solicitations, discussions or negotiations with any person (other than Equity) conducted prior to the signing of the merger agreement with respect to any acquisition proposal and promptly request return or destruction of confidential information related thereto, (ii) not terminate, waive, amend, release or modify any provision of any confidentiality or standstill agreement relating to any acquisition proposal to which it or any of its officers, directors, employees, affiliates, agents and representatives is a party and (iii) use its commercially reasonable efforts to enforce any confidentiality or similar agreement relating to any acquisition proposal. Notwithstanding the foregoing, at any time prior to obtaining the approval of the its stockholders, in the event that KBC receives a bona fide acquisition proposal that complies with the terms of the merger agreement, KBC and the KBC Board may participate in discussions or negotiations with, or furnish any information to, any person making such acquisition proposal and its agents and representatives or potential sources of debt financing that need to be involved in such discussion if the KBC Board determines in good faith, after consultation with its counsel and financial advisor, that such person is reasonably likely to submit to KBC a proposal deemed to be superior to Equity’s proposal (as determined in accordance with the terms of the merger agreement) and that failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties.

In connection with the receipt and negotiation of any acquisition proposal by KBC, KBC is required to comply with the terms, conditions and procedures set forth in the merger agreement, which require, among other things, KBC to enter into a confidentiality agreement with the person making an acquisition proposal, providing certain notices and information to Equity and allowing Equity to make counteroffers that KBC will consider in good faith.

The KBC Board may, at any time prior to obtaining the approval of KBC’s stockholders, (i) approve, endorse or recommend a proposal deemed to be superior to Equity’s proposal (as determined in accordance with the terms of the merger agreement) or enter into a definitive agreement with respect to such superior proposal or (ii) modify or amend in a manner adverse to Equity or withdraw its recommendation in favor of approval of the merger agreement, provided that (x) prior to such change in recommendation, the KBC Board will determine, in good faith (after consultation with its counsel), that the failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law and (y) such change in recommendation is in connection with a superior proposal or an intervening event and such superior proposal has been made and has not been withdrawn and continues to be a superior proposal after taking into account any action taken by Equity.

 

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Conditions to Complete the Merger

KBC’s obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:

 

    subject to certain materiality and material adverse change exceptions, each of the representations and warranties of Equity set forth in the merger agreement will be true and correct in all respects at and as of the date of the merger agreement and at and as of the closing date as though made at and as of the closing date (unless any such representation or warranty is made only as of a specific date, in which case as of such specific date);

 

    Equity and Merger Sub have, or have caused to be, performed or observed, in all material respects, all obligations and agreements required to be performed or observed by Equity and Merger Sub under the merger agreement on or prior to the closing date;

 

    the Merger Proposal having been approved by the requisite vote of its stockholders;

 

    KBC and Equity having received approvals, acquiescences or consents of the transactions contemplated by the merger agreement from all necessary governmental entities and certain third parties and all applicable waiting periods having expired. Further, the approvals and the transactions contemplated by the merger agreement not having been contested or threatened to be contested by any federal or state governmental entity or by any other third party by formal proceedings;

 

    no action having been taken, and no statute, rule, regulation or order being promulgated, enacted, entered, enforced or deemed applicable to the merger agreement or the transactions contemplated thereby by any federal, state or foreign government or governmental entity or by any court, including the entry of a preliminary or permanent injunction, which, if successful, would (i) make the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby illegal, invalid or unenforceable, (ii) impose material limits on the ability of any party to the merger agreement to complete the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby, or (iii) if the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby are completed, subject KBC or any officer, director, stockholder or employee of KBC to criminal or civil liability. Further, no action or proceeding before any court or governmental entity, by any government or governmental entity or by any other person is threatened, instituted or pending that would reasonably be expected to result in any of the consequences described above;

 

    KBC will have received all documents required to be received from Equity on or prior to the closing date all in form and substance reasonably satisfactory to KBC;

 

    there having been no material adverse change with respect to Equity since September 30, 2017;

 

    the registration statement of which this proxy statement/prospectus is a part, including any amendments or supplements thereto, will be effective under the Securities Act and no stop order suspending the effectiveness of the registration statement will be in effect or proceedings for such purpose pending before or threatened by the SEC. All state securities permits or approvals required by applicable state securities laws to consummate the transactions contemplated by the merger agreement will have been received and remain in effect;

 

    the shares of Equity common stock to be issued pursuant to the merger agreement will have been approved for listing on Nasdaq;

 

    Equity will have procured a tail insurance coverage policy relating to the policies of directors’ and officers’ liability insurance in accordance with the terms and subject to the conditions the merger agreement; and

 

    Equity having delivered a fully executed employment agreement in with respect to Tina M. Call, dated as of the date of the closing of the merger.

 

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Equity’s obligations to complete the merger are subject to the satisfaction or waiver of the following conditions:

 

    subject to certain materiality and material adverse change exceptions, each of the representations and warranties of Equity set forth in the merger agreement will be true and correct in all respects at and as of the date of the merger agreement and at and as of the closing date as though made at and as of the closing date (unless any such representation or warranty is made only as of a specific date, in which case as of such specific date);

 

    KBC has, or has caused to be, performed or observed, in all material respects, all obligations and agreements required to be performed or observed by KBC under the merger agreement on or prior to the closing date;

 

    the Merger Proposal having been approved by the requisite vote of KBC’s stockholders;

 

    Equity having received approvals, acquiescences or consents of the transactions contemplated by the merger agreement from all necessary governmental entities and certain the third parties, and all applicable waiting periods having expired. Further, the approvals and the transactions contemplated thereby not having been contested or threatened to be contested by any federal or state governmental entity or by any other third party by formal proceedings;

 

    no action having been taken, and no statute, rule, regulation or order being promulgated, enacted, entered, enforced or deemed applicable to the merger agreement or the transactions contemplated thereby by any federal, state or foreign government or governmental entity or by any court, including the entry of a preliminary or permanent injunction, which, if successful, would (i) make the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby illegal, invalid or unenforceable, (ii) require the divestiture of a material portion of the assets of Equity or its subsidiaries, or (iii) impose material limits on the ability of any party to the merger agreement to complete the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby, or (iv) if the merger agreement or any other agreement contemplated thereby, or the transactions contemplated thereby are completed, subject Equity or any officer, director, stockholder or employee of Equity to criminal or civil liability. Further, no action or proceeding before any court or governmental entity, by any government or governmental entity or by any other person is threatened, instituted or pending that would reasonably be expected to result in any of the consequences described above;

 

    Equity having received from each of the directors of KBC an instrument dated as of the closing date releasing KBC, its subsidiaries and each of its affiliates, successors and assigns, from any and all claims of such directors (except to certain matters described therein), and Equity having received from each of the specified officers of KBC an instrument dated as of the closing date releasing KBC, its subsidiaries and each of its affiliates, successors and assigns, from any and all claims of such officers;

 

    there will have been no material adverse change to KBC since September 30, 2017;

 

    Equity having received evidence reasonably satisfactory to Equity that, as of the effective time, all employee benefit plans of KBC (other than such plans Equity elects not to terminate) have been terminated in accordance with the terms of such employee benefit plans of KBC, the Code, the Employee Retirement Income Security Act of 1974, as amended (which we refer to in this proxy statement/prospectus as “ERISA”), and all other applicable laws on a basis satisfactory to Equity in its reasonable discretion and that, to the extent required by the employee benefit plans of or applicable law, affected participants have been notified of such terminations and/or integrations;

 

    Equity having received a fully executed employment agreement with respect to Tina M. Call, dated as of the date of the closing of the merger;

 

   

the registration statement of which this proxy statement/prospectus is a part, including any amendments or supplements thereto, will be effective under the Securities Act and no stop order

 

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suspending the effectiveness of the registration statement will be in effect or proceedings for such purpose pending before or threatened by the SEC, and all state securities permits or approvals required by applicable state securities laws to consummate the transactions contemplated by the merger agreement will have been received and remain in effect;

 

    holders of not more than 5% of the outstanding shares of KBC common stock having duly exercised their appraisal rights under the K.S.A.;

 

    Equity will have received all documents required to be received from KBC on or prior to the closing date, all in form and substance reasonably satisfactory to Equity;

 

    KBC’s adjusted shareholders’ equity shall be equal to or greater than $12,522,253;

 

    Equity will have received from KBC certain tax documents in form and substance satisfactory to Equity, dated as of the closing date and executed by KBC; and

 

    Equity shall have received an opinion of Norton Rose Fulbright US LLP, in form and substance reasonably satisfactory to Equity, dated as of the closing date and based on facts, representations and assumptions described in such opinion, to the effect that the integrated mergers shall together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a)(1)(A) of the Code.

Neither KBC nor Equity can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party, or that the merger will be completed.

Termination of the Merger Agreement

The merger agreement can be terminated at any time prior to completion of the merger in the following circumstances:

 

    by the mutual written consent of Equity and KBC;

 

    by either KBC or Equity (as long as the terminating party is not in material breach of any representation, warranty, covenant or other agreement contained therein) if the conditions precedent to such party’s obligations to close have not been met or waived by June 30, 2018; provided, however, that such date may be extended to such later date as agreed upon by KBC and Equity;

 

    by either Equity or KBC if any of the transactions contemplated by the merger agreement are disapproved by any federal or state governmental or regulatory agency or authority whose approval is required to complete such transactions or if any court of competent jurisdiction in the United States or other federal or state governmental body has issued an order, decree or ruling or taken any other action restraining, enjoining, invalidating or otherwise prohibiting the merger agreement or the transactions contemplated by the merger agreement and such disapproval, order, decree, ruling or other action is final and nonappealable; provided, however, that the party seeking to terminate merger agreement pursuant to this provisions is required to use its commercially reasonable efforts to contest, appeal and remove such order, decree, ruling or other action but such obligation will not apply to KBC’s termination right in the event of disapproval by any federal or state governmental or regulatory agency;

 

    by either Equity or KBC if there has been any material adverse change with respect to the other party;

 

   

subject to certain cure rights, by Equity or KBC, if there will have been a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty will cease to be true and correct) set forth in the merger agreement on the part of the other party to the merger agreement or any other agreement contemplated thereby, which breach

 

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or failure to be true and correct, either individually or in the aggregate with all other breaches (or failures of such representations and warranties to be true and correct), would constitute, if occurring or continuing on the Closing, the failure of a closing condition; provided, however, that the right to terminate merger agreement under this provision will not be available to a party if it is then in material breach of any of its representations, warranties, covenants or agreements set forth in merger agreement;

 

    by Equity or KBC, if KBC does not receive the required stockholder approval at the KBC special meeting or any adjournment or postponement thereof; provided, however, that KBC may not terminate the merger agreement pursuant to the corresponding provision in the merger agreement if KBC has breached in any material respect any of its obligations under the merger agreement in a manner that caused the failure to obtain the approval of the stockholders at the KBC special meeting, or at any adjournment or postponement thereof;

 

    by KBC prior to obtaining the approval of the KBC stockholders at the KBC special meeting, and subject to the terms and conditions set forth in merger agreement, in order to accept an alternative acquisition proposal;

 

    by Equity if the KBC Board, prior to obtaining the approval of the KBC stockholders and in compliance with the procedures set forth in merger agreement, approves, endorses or recommends an alternative acquisition proposal or enters into a definitive agreement with respect to an alternative acquisition proposal or modifies or amends its recommendation in a manner adverse to Equity or withdraws its recommendation;

 

    by Equity or KBC if the other party or its respective banking subsidiary enter into any formal or informal administrative action with any court, arbitrator, federal or state governmental agency or other authority or any such action is threatened by any such entity; or

 

    by KBC, within two business days of the calculation date, which will be the fifth business day before the closing of the merger, if both (i) the volume weighted average closing price of Equity common stock during the twenty trading day period ending on the close of business on the calculation date is less than $27.592 and (ii) Equity’s common stock underperforms the KBW Nasdaq Regional Banking Index (KRX) by more than 20%; provided, however, that Equity has a right to cure by adjusting the exchange ratio or increasing the per share cash amount as provided in the merger agreement.

Effect of Termination

If the merger agreement is terminated, then neither Equity nor KBC will have any further liability or obligation under the merger agreement; provided, however, that (i) no such termination will relieve any party of any liability or damages resulting from any willful breach of the merger agreement or actual fraud; (ii) provisions of the merger agreement concerning termination fees and certain other specified provisions will survive any such termination; and (iii) the confidentiality agreement between Equity and KBC will survive any such termination in accordance with its terms.

Termination Fee

KBC will pay Equity a termination fee if the merger agreement is terminated under the following circumstances:

 

   

by Equity or KBC if the Merger Proposal is not approved by the required vote of stockholders of KBC, provided that KBC will not have the right to terminate for failure to achieve the required vote of stockholders if KBC has breached any of its obligations under the merger agreement in a manner that

 

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caused such failure to obtain approval, then KBC will pay to Equity, by wire transfer of same day funds, a termination fee equal to $1,500,000, within two (2) business days;

 

    by KBC prior to obtaining the approval of the KBC stockholders at the KBC special meeting, and subject to the terms and conditions set forth in merger agreement, in order to accept an acquisition proposal, then KBC will pay to Equity, by wire transfer of same day funds, a termination fee equal to $1,500,000, within two (2) business days;

 

    by Equity if the KBC Board, prior to obtaining the approval of the KBC stockholders and in compliance with the procedures set forth in the merger agreement, approves, endorses or recommends an acquisition proposal or enters into a definitive agreement with respect to an acquisition proposal or modifies or amends its recommendation in a manner adverse to Equity or withdraws its recommendation, then KBC will pay to Equity, by wire transfer of same day funds, a termination fee equal to $1,500,000, within two (2) business days of receipt of such written notice of termination from Equity; and

 

    if prior to the termination of the merger agreement, a bona fide acquisition proposal will have been made known to senior management of KBC, the KBC Board or directly to KBC’s stockholders generally or any person will have publicly announced (and not withdrawn) an acquisition proposal with respect to KBC and prior to the date that is twelve (12) months after the date of such termination, KBC enters into a definitive agreement or consummates a transaction with respect to an acquisition proposal (whether or not the same acquisition proposal as that referred to above), then KBC will, on the earlier of the date it enters into such definitive agreement and the date of consummation of such transaction, pay Equity, by wire transfer of same day funds, a termination fee equal to $1,500,000; provided, however, that solely for the purposes of the termination provision, the certain thresholds amounts for an acquisition proposal will be increased from 15% to 50%.

If KBC fails to pay in a timely manner any termination fee due to Equity, then KBC (i) will pay to Equity the reasonable costs and expenses of Equity (including its reasonable attorneys’ fees and expenses) incurred or accrued in connection Equity’s efforts to obtain payment of any amounts due to Equity and (ii) will pay all interest accrued on any amount due to Equity, which will accrue at the prime lending rate prevailing during such period as published in The Wall Street Journal. Any interest payable hereunder will be calculated on a daily basis from the date such amounts were required to be paid until (but excluding) the date of actual payment, and on the basis of a 360-day year.

Expenses and Fees

Except (i) with respect to costs and expenses of printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger, which will be borne equally by Equity and KBC, (ii) as otherwise provided in the termination provision, all fees and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such fees or expenses, whether or not the merger is consummated.

Amendment, Waiver and Extension of the Merger Agreement

Subject to compliance with applicable law, the merger agreement may be amended, modified or supplemented only by an instrument in writing executed by each of the parties to the merger agreement. At any time prior to the Closing, the parties may (i) extend the time for the performance of any of the obligations or other acts of the other parties to the merger agreement, (ii) waive any inaccuracies in the representations and warranties contained in the merger agreement or in any document, certificate or writing delivered pursuant to the merger agreement, or (iii) waive compliance with any of the agreements, covenants or conditions contained in the merger agreement, in each case, in accordance with the terms of the merger agreement.

 

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KBC Director Support Agreements

In connection with entering into the merger agreement, each of the directors of KBC have entered into a Director Support Agreement with Equity (which we refer to in this proxy statement/prospectus as the “KBC director support agreements”) pursuant to which they agree to refrain from harming the goodwill of Equity, KBC or any of their respective subsidiaries and their respective customer, client and vendor relationships. Each director also agreed to certain additional restrictive covenants. A copy of the form of the KBC director support agreements is included in this proxy statement/prospectus as Annex B.

KBC Voting Agreement

In connection with entering into the merger agreement, Equity entered into a Voting Agreement with KBC, Brad S. Elliott, as proxy, and certain stockholders of KBC (which we refer to in this proxy statement/prospectus as the “KBC voting agreement”). The stockholders that are party to the KBC voting agreement beneficially own in the aggregate approximately 74% of the outstanding shares of KBC common stock, which is sufficient to approve the Merger Proposal. The KBC voting agreement requires, among other things, that the stockholders party thereto vote all of their shares of KBC common stock in favor of the merger and the other transactions contemplated by the merger agreement and against alternative transactions and generally prohibits them from transferring their shares of KBC common stock prior to the termination of the KBC voting agreement. The KBC voting agreement will terminate upon the earlier of the termination of the merger agreement in accordance with its terms or the completion of the transactions contemplated by the merger agreement. A copy of the form of the KBC voting agreement is included in this proxy statement/prospectus as Annex C.

 

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ACCOUNTING TREATMENT

The accounting principles applicable to this transaction as described in FASB ASC 805 provide transactions that represent business combinations are to be accounted for under the acquisition method. The acquisition method requires all of the following steps: (1) identifying the acquirer; (2) determining the acquisition date; (3) recognizing and measuring the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; and (4) recognizing and measuring goodwill or a gain from a bargain purchase.

The appropriate accounting treatment for this transaction is as a business combination under the acquisition method. On the acquisition date, as defined by ASC 805, Equity (the acquirer) will record at fair value the identifiable assets acquired and liabilities assumed, any noncontrolling interest, and goodwill (or a gain from a bargain purchase). The results of operations for the combined company will be reported prospectively subsequent to the acquisition date.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE INTEGRATED MERGERS

The following discussion addresses the material U.S. federal income tax consequences of the integrated mergers to U.S. holders (as defined below) of KBC common stock. This discussion is based on the Code, Treasury regulations, administrative rulings and judicial decisions, all as in effect as of the effective date of this proxy statement/prospectus and all of which are subject to change (possibly with retroactive effect) and to differing interpretations. Accordingly, the U.S. federal income tax consequences of the integrated mergers to holders of KBC common stock could differ from those described below.

This discussion applies only to U.S. holders that hold their KBC common stock, and will hold the Equity common stock received in exchange for their KBC common stock, as a capital asset within the meaning of Section 1221 of the Code (generally assets held for investment). Further, this discussion does not address all aspects of U.S. federal taxation that may be relevant to a particular U.S. holder in light of such holder’s personal circumstances or to a U.S. holder that is subject to special treatment under U.S. federal income tax laws, including, without limitation:

 

    financial institutions or mutual funds,

 

    tax-exempt organizations,

 

    insurance companies,

 

    dealers in securities or foreign currency,

 

    traders in securities who elect to apply a mark-to-market method of accounting,

 

    partnerships and other pass-through entities and investors in such entities,

 

    controlled foreign corporations or passive foreign investment companies,

 

    regulated investment companies and real estate investment trusts,

 

    broker-dealers,

 

    holders liable for the alternative minimum tax,

 

    holders that have a functional currency other than the U.S. dollar,

 

    holders who received, or have a right to receive, their KBC common stock through the exercise of employee stock options, through a tax-qualified retirement plan, deferred stock award or otherwise as compensation,

 

    holders who hold KBC common stock as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment, and

 

    U.S. expatriates or certain former citizens or long-term residents of the United States.

 

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In addition, this discussion does not address any state, local or foreign tax consequences of the integrated mergers, or any tax consequences of the integrated mergers under any U.S. federal tax laws other than those pertaining to income tax.

For purposes of this discussion, a U.S. holder is a beneficial owner of KBC common stock who is, for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or any other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States or any state thereof or the District of Columbia; (iii) an estate that is subject to U.S. federal income tax on its income regardless of its source; or (iv) a trust (A) if a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) that was in existence on August 20, 1996, and has made a valid election to be treated as a United States person for U.S. federal income tax purposes. Holders of KBC common stock who are not U.S. holders may have different tax consequences than those described below and are urged to consult their own tax advisors regarding the tax treatment of the integrated mergers under United States and non-United States tax laws.

If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of KBC common stock, the U.S. federal income tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. Equity and KBC urge such partners and partnerships to consult their own tax advisors regarding the particular tax consequences of the integrated mergers to them.

Determining the actual U.S. federal income tax consequences of the integrated mergers to a U.S. holder may be complex and will depend, in part, on the holder’s particular circumstances. Equity and KBC urge each U.S. holder of KBC common stock to consult his or her tax advisor with respect to the particular tax consequences of the integrated mergers to such holder.

U.S. Federal Income Tax Consequences of the Integrated Mergers Generally

The obligations of Equity to complete the integrated mergers are conditioned on, among other things, the receipt by Equity of a tax opinion from Norton Rose Fulbright US LLP, dated as of the closing date of the integrated mergers, to the effect that, on the basis of facts, representations and assumptions described in such opinion, the integrated mergers shall together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

This opinion will be subject to customary qualifications and assumptions, including assumptions regarding the absence of changes in existing facts and the completion of the integrated mergers strictly in accordance with the merger agreement and the registration statement. In rendering its opinion, Norton Rose Fulbright US LLP will rely upon representations and covenants, including those contained in certificates of officers of Equity and KBC. If any of the assumptions, representations or covenants upon which this opinion is based are incorrect or inaccurate in any way, this opinion and the U.S. federal income tax consequences of the integrated mergers could be adversely affected. The opinion represents Norton Rose Fulbright US LLP’s best legal judgment, but does not bind the courts and does not preclude the IRS from adopting a position contrary to the ones expressed in the opinion. Additionally, the IRS has not issued (and is not expected to issue) any ruling as to the qualification of the integrated mergers as a reorganization under Section 368(a) of the Code. Accordingly, there can be no assurance that the IRS will not assert, and a court will not sustain, a position contrary to the position addressed below or in the opinion of Norton Rose Fulbright US LLP. The following discussion regarding the U.S. federal income tax consequences of the integrated mergers assumes that the integrated mergers shall together be treated as an integrated transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.

Exchange for Equity Common Stock and Cash. A U.S. holder who receives both Equity common stock and cash in the exchange for such holder’s KBC common stock will recognize gain (but not loss) equal to the lesser

 

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of: (1) the amount by which the sum of the fair market value of the Equity common stock and cash received by such holder of KBC common stock exceeds such holder’s adjusted tax basis in its KBC common stock; and (2) the amount of cash received by such holder of KBC common stock (in each case excluding cash received in lieu of a fractional share of Equity common stock, the U.S. federal income tax treatment of which is discussed below). Except to the extent any cash received is treated as a dividend as discussed below, any gain recognized by the U.S. holder generally will be long-term capital gain if, as of the effective date of the integrated mergers, such holder’s holding period with respect to the KBC common stock surrendered exceeds one year.

If KBC common stock was acquired by a U.S. holder at different times or different prices, such holder should consult the holder’s tax advisor regarding the manner in which gain or loss should be determined for each identifiable block of KBC common stock surrendered in the exchange.

The aggregate tax basis of the shares of Equity common stock received (including any fractional share of Equity common stock deemed received and redeemed for cash as described below) by a U.S. holder will be equal to such holder’s aggregate tax basis in the shares of KBC common stock surrendered in exchange for the shares of Equity common stock reduced by the amount of tax basis allocated to any fractional share deemed received and redeemed, and then increased by any taxable gain recognized in the integrated mergers by such holder (excluding any gain recognized as a result of cash received in lieu of a fractional share of Equity common stock) regardless of whether such gain is classified as capital gain or dividend income, and minus any cash received (other than cash received in lieu of a fractional share of Equity common stock) by such holder in the integrated mergers. The holding period for shares of Equity common stock received in the integrated mergers (including any fractional share of Equity common stock deemed received and redeemed for cash as described below) by a U.S. holder will include such holder’s holding period for the KBC common stock surrendered in exchange for the Equity common stock. If KBC common stock was purchased or acquired by a U.S. holder on different dates or at different prices, such holder should consult such holder’s tax advisor for purposes of determining the basis and holding period of the Equity common stock received in the integrated mergers.

Cash Received in Lieu of a Fractional Share. A U.S. holder who receives cash in lieu of a fractional share of Equity common stock will be treated as having received the fractional share in the integrated mergers and then as having exchanged the fractional share for cash in redemption by Equity. As a result and except to the extent that the cash received is treated as a dividend as discussed below, the U.S. holder will generally recognize gain or loss equal to the difference between the amount of cash received and such holder’s tax basis allocable to the fractional share. The gain or loss will be capital gain or loss and will be long-term capital gain or loss if the U.S. holder has held the fractional share exchanged (including the holding period for the KBC common stock exchanged therefor) for more than one year as of the effective date of the integrated mergers. The deductibility of capital losses is subject to limitations.

Potential Characterization of Gain as a Dividend. In general, the determination of whether gain recognized by a U.S. holder in the exchange will be treated as capital gain or as a dividend will depend on whether, and to what extent, the integrated mergers reduces such holder’s deemed percentage ownership of Equity common stock. For purposes of this determination, the U.S. holder will be treated as if such holder first exchanged such holder’s KBC common stock solely for Equity common stock and then Equity immediately redeemed a portion of such holder’s Equity common stock in the exchange for cash received in the integrated mergers by such holder. The gain recognized by the U.S. holder in the exchange followed by a deemed redemption will be capital gain if, with respect to such holder, the deemed redemption is “substantially disproportionate” or “not essentially equivalent to a dividend.”

In general, the deemed redemption will be “substantially disproportionate” with respect to a U.S. holder if the percentage described in clause (2) below is less than 80% of the percentage described in clause (1) below. In general, such determination requires a comparison of (1) the percentage of outstanding voting stock of Equity that the U.S. holder is deemed actually and constructively to have owned immediately before the deemed redemption by Equity and (2) the percentage of outstanding voting stock of Equity actually and constructively

 

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owned by such holder immediately after the deemed redemption by Equity. In applying the foregoing test, the U.S. holder may, under constructive ownership rules, be deemed to own stock in addition to stock actually owned by such holder, including stock owned by certain other persons and stock subject to an option held by such holder or by certain other persons. Because the constructive ownership rules are complex, each U.S. holder should consult such holder’s tax advisor as to the applicability of these rules. Whether the deemed redemption is “not essentially equivalent to a dividend” with respect to a U.S. holder will depend on such holder’s particular circumstances. In order for the deemed redemption to be “not essentially equivalent to a dividend,” the reduction must result in a “meaningful reduction” in the U.S. holder’s deemed percentage ownership of Equity common stock. The IRS has indicated that a minority stockholder in a publicly traded corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is considered to have a meaningful reduction if that stockholder has any reduction in his or her percentage stock ownership under the foregoing analysis.

These rules are complex and dependent upon the specific facts of a particular U.S. holder. Consequently, Equity and KBC urge each U.S. holder that may be subject to these rules to consult such holder’s tax advisor as to the application of these rules to the particular facts relevant to such holder.

Dissenters. Upon the proper exercise of dissenters’ rights, a U.S. holder will exchange all of the shares of KBC common stock actually owned by such holder solely for cash and will recognize gain or loss equal to the difference between the amount of cash received, and such holder’s tax basis in the shares of KBC common stock surrendered. The gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period with respect to the KBC common stock surrendered is more than one year. The deductibility of capital losses is subject to limitations. In some cases, if the U.S. holder owns shares of Equity common stock actually or constructively after the integrated mergers, the cash received could be treated as a dividend, in which case such holder may recognize dividend income up to the amount of cash received. Because the possibility of dividend treatment depends upon each U.S. holder’s particular circumstances, including the application of constructive ownership rules, U.S. holders of KBC common stock are urged to consult their tax advisors regarding the application of the foregoing rules to their particular circumstances

Medicare Tax. If a U.S. holder that is an individual has modified gross income for the taxable year over a certain threshold (between $125,000 and $250,000 depending upon the individual’s U.S. federal income tax filing status), such an individual is subject to a 3.8% tax (the “Medicare Tax”) on the lesser of: (i) his or her “net investment income” for the relevant taxable year; or (ii) the excess of his or her modified gross income for the taxable year over his or her applicable threshold (between $125,000 and $250,000 depending upon the individual’s U.S. federal income tax filing status). In the case of an estate or trust, the Medicare Tax will be imposed on the lesser of: (i) undistributed net investment income, or (ii) the excess of its adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins for the relevant taxable year. Net investment income generally would include any capital gain incurred in connection with the integrated mergers (including gain treated as dividend income), as well as other items of interest, dividends, capital gains, and rental or royalty income.

Information Reporting and Backup Withholding

Payments of cash to a U.S. holder pursuant to the integrated mergers may under certain circumstances be subject to information reporting and backup withholding. Generally, backup withholding will not apply if a U.S. holder:

 

    furnishes a correct taxpayer identification number to the exchange agent and certifies that such holder is not subject to backup withholding on the substitute Form W-9 or successor form included in the letter of transmittal received and otherwise complies with applicable requirements of the backup withholding rules; or

 

    is otherwise exempt from backup withholding.

 

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Any amounts withheld under the backup withholding rules are not an additional tax and will generally be allowed as a refund or credit against a U.S. holder’s U.S. federal income tax liability, provided such holder furnishes the required information to the IRS.

Reporting Requirements

A U.S. holder who receives shares of Equity common stock upon completion of the integrated mergers and who is considered a “significant holder” will be required to retain records pertaining to the integrated mergers and to file with such holder’s U.S. federal income tax return for the year in which the integrated mergers takes place a statement setting forth certain facts relating to the integrated mergers. For this purpose, a U.S. holder is a significant holder if the person owns at least 1% by vote or value of KBC’s outstanding shares or has a tax basis of $1,000,000 or more in such holder’s KBC common stock and securities. Such statement must include the U.S. holder’s tax basis in and fair market value of such holder’s KBC common stock and securities surrendered in the integrated mergers.

Tax Treatment of Entities

No gain or loss should be recognized by Equity or KBC for U.S. federal income tax purposes as a result of the integrated mergers.

Tax Legislation

On December 22, 2017, Public Law No. 115-97 was enacted, commonly referred to as the Tax Cuts and Jobs Act, effective for tax years beginning after December 31, 2017. Neither Equity nor KBC anticipate that the Tax Cuts and Jobs Act will affect the U.S. federal income tax treatment of the integrated mergers described above. Equity and KBC urge holders of KBC common stock to consult their own tax advisors regarding the any impact that the Tax Cuts and Jobs Act may have on them.

This discussion of certain material U.S. federal income tax consequences is for general information only and is not tax advice. Equity and KBC urge holders of KBC common stock to consult their tax advisors with respect to the application of U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the U.S. federal estate or gift tax rules, and under the laws of any applicable state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

 

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KBC SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERSHIP

The following table sets forth certain information regarding the beneficial ownership of KBC common stock as of the record date by (i) each director, the chief executive officer, the chief financial officer and the next other most-highly compensated executive officer of KBC, (ii) each person who is known by KBC to own beneficially 5% or more of the KBC common stock, and (iii) all directors and executive officers as a group. Unless otherwise indicated, based on information furnished by such stockholders, management of KBC believes that each person has sole voting and dispositive power over the shares indicated as owned by such person. Other than the directors and entities affiliated with such directors set forth in the table below, no person is known to us to be the beneficial owner of more than five percent of our outstanding common stock.

 

     Shares Beneficially Owned  

Name of Beneficial Owner

   Number      Percentage(1)  

Directors and Named Executive Officers

     

Tina M. Call

     1,410        1.7

Scarlett Diseker

     0        *  

Sue A. Dowd(2)

     1,919        2.4

Jana Jantzen

     0        *  

John C. Lewis(3)

     6,434        8.0

M. Brant Peterson(4)

     2,970        3.7

M. Brian Peterson(5)

     5,857        7.3

Melvin Winger(6)

     10,712        13.3

Mona Winger(7)

     30,371        37.6

Melva Jo Winger-de Rondon(8)

     2,279        2.8
  

 

 

    

 

 

 

Directors and executive officers as a group (10 persons)

     61,592        76.3

 

* Indicates less than 1%
(1) The percentages are based on 80,696 shares of KBC common stock outstanding.
(2) Includes (i) 274 shares held by Ms. Dowd individually, (ii) 1,000 shares held by Ms. Dowd’s individual retirement account, and (iii) 645 shares held by Lewis Grandchildren’s Trust.
(3) Includes (i) 5,434 shares held by John C. Lewis Revocable Trust and (ii) 1,000 shares held by John C. Lewis Family Farms LP.
(4) Includes (i) 500 shares held by Mr. Peterson individually, (ii) 1,342 shares held jointly by Mr. Peterson and his spouse and (iii) 1,128 shares held by Mr. Peterson as custodian for his children.
(5) Includes (i) 4,540 shares held jointly by Mr. Peterson and his spouse and (ii) 1,317 shares held by Mr. Peterson as custodian for his children.
(6) Includes (i) 8,212 shares held by Mr. Winger individually and (ii) 2,500 shares held by Revocable Trust of Melvin Winger.
(7) Shares held by Revocable Trust of Mona Winger.
(8) Includes (i) 500 shares held by Ms. Winger-de Rondon individually, (ii) 1,293 shares held jointly by Ms. Winger-de Rondon and her spouse and (iii) 486 shares held by Ms. Winger-de Rondon as custodian for her child.

 

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INFORMATION ABOUT KBC

KBC is a Kansas corporation that owns all of the outstanding shares of common stock of FNB, a national association with operational headquarters in Liberal, Kansas. FNB offers consumer and commercial banking services to customers in the southwest Kansas counties of Seward and Stevens.

KBC’s principal executive offices are located at 1700 N Lincoln Avenue, Liberal, Kansas 67901, and its telephone number at that location is (620) 624-1971. Additional information about KBC and FNB can be requested from KBC. See “Where You Can Find More Information,” beginning on page 101.

Information About KBC’s Business

General.    KBC was incorporated as a Kansas corporation in 1972 to serve as a bank holding company for FNB. KBC does not, as an entity, engage in separate business activities of a material nature apart from the activities it performs for FNB. Its primary activities are to provide assistance in the management and coordination of FNB’s financial resources. KBC’s principal asset is the outstanding common stock of FNB. KBC derives its revenues primarily from the operations of FNB in the form of dividends received from FNB.

As a bank holding company, KBC is subject to supervision and regulation by the Federal Reserve, in accordance with the requirements set forth in the BHC Act and by the rules and regulations issued by the Federal Reserve.

FNB is a national association and its primary regulator is the Office of the Comptroller of the Currency. FNB’s branch offices include four locations in the town of Liberal, Kansas, and one location in Hugoton, Kansas.

As of September 30, 2017, KBC had consolidated total assets of $311.0 million, total loans held for investment of $170.0 million ($168 million net of allowances), total deposits of $274.0 million and total shareholders’ equity of $31.99 million. KBC does not file reports with the SEC.

Products and Services.    FNB is a traditional commercial bank offering a variety of banking services to consumer and commercial customers in the southwest Kansas counties of Seward and Stevens. FNB offers a range of lending services, including commercial loans to small and mid-sized businesses that are located in or conduct a substantial portion of their business in Seward County and Stevens County and consumer loans to individuals. Real estate loans offered by FNB are primarily secured by first real estate mortgages on the subject collateral. Commercial loans offered include loans to small and mid-sized businesses for the purpose of purchasing equipment, inventory, and facilities or for working capital. Consumer loans offered by FNB include loans for the purpose of purchasing automobiles and other personal expenses.

FNB offers depository services and various checking account services. FNB also offers safe deposit boxes, debit card services, credit cards, wire transfer services, cashier’s checks, telephone banking, internet banking, direct deposit and automatic transfers between accounts.

Competition.    The table below lists FNB’s deposit market share as of June 30, 2017 (the most recent date as of which the relevant data is available from the FDIC), for the Seward County and Stevens County, Kansas banking markets served by FNB.

 

Market Area    Market Rank    Branch Count    Deposits In Market
(in thousands)
     Market Share (%)  

Seward County, Kansas

   1    4    $ 251,346        56.93

Stevens County, Kansas

   2    1    $ 36,034        8.16

Each activity in which FNB is engaged involves competition with other banks, as well as with nonbanking financial institutions and nonfinancial enterprises. In addition to competing with other commercial banks within

 

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and outside its primary service area, FNB competes with other financial institutions engaged in the business of making loans or accepting deposits, such as savings and loan associations, credit unions, industrial loan associations, insurance companies, small loan companies, financial companies, mortgage companies, real estate investment trusts, certain governmental agencies, credit card organizations and other enterprises. Banks and other financial institutions with which FNB competes may have capital resources and legal loan limits substantially higher than those maintained by FNB.

Employees.    As of September 30, 2017, FNB had 54 full-time employees, none of whom are covered by a collective bargaining agreement, and no part-time employees.

Information About KBC’s Properties

KBC’s wholly-owned subsidiary FNB owns two locations and leases two locations in Liberal, Kansas; and owns one location in Hugoton, Kansas. KBC believes that its facilities are suitable and adequate for its purposes.

Legal Proceedings

Various legal claims arise from time to time in the normal course of business which, in the opinion of FNB’s management, will have no material effect on KBC’s consolidated financial statements.

 

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DESCRIPTION OF CAPITAL STOCK OF EQUITY

As a result of the merger, KBC stockholders who receive shares of Equity common stock in the merger will become stockholders of Equity. Your rights as a stockholder of Equity will be governed by Kansas law and the Equity articles and the Equity bylaws. The following briefly summarizes the material terms of Equity common stock. This discussion does not purport to be a complete description of these rights and may not contain all of the information regarding Equity’s capital stock that is important to you. These rights can be determined in full only by reference to federal and state banking laws and regulations, the K.S.A. and the Equity articles and Equity bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part, and applicable law, which you are urged to read. Copies of Equity’s governing documents have been filed with the SEC. To find out where copies of these documents can be obtained, as well as the copies of KBC’s governing documents, see “Where You Can Find More Information.”

Overview

Equity’s authorized capital stock consists of 50,000,000 shares of common stock, par value of $0.01 per share, of which 45,000,000 are designated as Equity common stock and 5,000,000 are designated as Class B common stock, and 10,000,000 shares of preferred stock. As of the date of this proxy statement/prospectus, no shares of preferred stock are outstanding.

As of February 8, 2018, there were 14,605,607 shares of Equity common stock issued and outstanding and no shares of Equity’s Class B common stock issued and outstanding. All issued and outstanding shares at that date were, and the shares of Equity common stock to be issued upon completion of this offering will be, fully paid and nonassessable. Immediately following the completion of the merger, Equity expects to have approximately 15,246,511 shares of Equity common stock outstanding, excluding the 344,132 shares of Equity common stock expected to be issued in connection with the Adams Merger, and no shares of Class B common stock outstanding. Also, as of [    ], options to purchase [        ] shares of Equity common stock held by Equity’s employees, officers and directors under Equity’s Amended and Restated 2013 Stock Incentive Plan were outstanding.

Equity Common Stock

 

  Class A common stock

Voting Rights. Each holder of Equity common stock is entitled to one vote for each share of Equity common stock held on all matters to be voted on by Equity’s stockholders. Holders of Equity common stock elect Equity Board members and act on other matters as are required to be presented to them under Kansas law or as are otherwise presented to them by the Equity Board. Each holder of Equity common stock is entitled to one vote per share and does not have any right to cumulate votes in the election of directors. If Equity issues preferred stock, holders of Equity’s preferred stock may also possess voting rights. When a quorum is present at any meeting, the vote of the holders of a majority of Equity common stock present in person or by proxy will decide any matter before such meeting, unless the matter is one requiring a different vote by applicable law or the Equity articles.

Dividends. To the extent permitted under the K.S.A. and subject to the rights of holders of any outstanding shares of Equity’s preferred stock, holders of Equity common stock are entitled to participate ratably on a per share basis with holders of Equity’s Class B common stock in the payment of dividends, when, as and if declared thereon by the Equity Board. For a discussion of Equity’s dividend policy and dividend history, see “Equity Dividend Policy.” If Equity issues preferred stock, the holders of the preferred stock may have a priority over the holders of Equity’s common stock with respect to dividends.

Liquidation Rights. Subject to the provisions of any outstanding series of preferred stock and after payment of all of Equity’s debts and other liabilities, the holders of Equity common stock are entitled to participate ratably on a per share basis in all distributions to the holders of Equity’s common stock in any liquidation, dissolution or winding up of Equity.

 

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Preemptive Rights; Other. Holders of Equity common stock are not entitled to preemptive rights with respect to any shares that may be issued. The Equity common stock is not entitled to the benefits of any redemption or sinking fund provision.

Class B common stock

Voting Rights. The holders of Class B common stock have no voting rights except as may be provided for under Kansas law.

Dividends. To the extent permitted under the K.S.A. and subject to the rights of holders of any outstanding shares of Equity’s preferred stock, holders of Equity’s Class B common stock are entitled to participate ratably on a per share basis with holders of Equity common stock in the payment of dividends, when, as and if declared thereon by the Equity Board. For a discussion of Equity’s dividend policy and dividend history, see “Equity Dividend Policy.” If Equity issues preferred stock, the holders of the preferred stock may have a priority over the holders of Equity’s common stock with respect to dividends.

Liquidation Rights. Subject to the provisions of any outstanding series of preferred stock and after payment of all of Equity’s debts and other liabilities, the holders of Equity’s Class B common stock are entitled to participate ratably on a per share basis in all distributions to the holders of Equity’s common stock in any liquidation, dissolution or winding up of Equity.

Preemptive Rights; Other. Holders of Equity’s Class B common stock are not entitled to preemptive rights with respect to any shares that may be issued. The Class B common stock is not entitled to the benefits of any redemption or sinking fund provision.

Preferred Stock

Upon authorization of the Equity Board, Equity may issue shares of one or more series of Equity’s preferred stock from time to time. The Equity Board may, without any action by holders of common stock and subject to the provisions of any outstanding series of preferred stock, adopt resolutions to designate and establish a new series of preferred stock. Upon establishing such a series of preferred stock, the board will determine the number of shares of preferred stock of that series that may be issued and the rights and preferences of that series of preferred stock. The rights of any series of preferred stock may include, among others, any:

 

    general or special voting rights;

 

    preferential liquidation or preemptive rights;

 

    preferential cumulative or noncumulative dividend rights;

 

    redemption or put rights; and

 

    conversion or exchange rights.

Equity may issue shares of, or rights to purchase shares of, one or more series of Equity’s preferred stock that have been or may be designated from time to time, the terms of which might:

 

    adversely affect voting or other rights evidenced by, or amounts otherwise payable with respect to, Equity’s common stock or other series of preferred stock;

 

    discourage an unsolicited proposal to acquire Equity; or

 

    facilitate a particular business combination involving Equity.

Any of these actions could have an anti-takeover effect and discourage a transaction that some or a majority of Equity’s stockholders might believe to be in their best interests or in which Equity’s stockholders might receive a premium for their stock over Equity’s then market price.

 

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COMPARISON OF STOCKHOLDERS’ RIGHTS

If the merger is completed, holders of KBC common stock will be entitled to receive shares of Equity common stock in exchange for their shares of KBC common stock. Equity and KBC are organized under the laws of the states of Kansas. The following is a summary of the material differences between (1) the current rights of KBC stockholders under the K.S.A., the KBC articles of incorporation (the “KBC articles”) and the KBC bylaws and (2) the current rights of Equity stockholders under the K.S.A., the Equity articles and the Equity bylaws.

Equity and KBC believe that this summary describes the material differences between the rights of the holders of Equity common stock as of the date of this proxy statement/prospectus and the rights of the holders of KBC common stock as of the date of this proxy statement/prospectus; however, it does not purport to be a complete description of those differences. Copies of Equity’s governing documents have been filed with the SEC. Copies of the KBC articles and the KBC bylaws are available upon written request from KBC. To find out where copies of these documents can be obtained, see “Where You Can Find More Information.”

 

Equity

 

KBC

AUTHORIZED CAPITAL STOCK
The Equity articles authorize it to issue up to (i) 50,000,000 shares of common stock, par value $0.01 per share, of which 45,000,000 shall be designated as Equity common stock and 5,000,000 shall be designated as Class B common stock, and (ii) 10,000,000 shares of preferred stock.   The KBC articles authorize KBC to issue up to 1,000,000 share of common stock, par value $20.00, and up to 10,000 share of 6.5% non-voting convertible preferred stock, par value $1,000.
PREEMPTIVE RIGHTS
Holders of Equity common stock are not entitled to preemptive rights with respect to any shares that may be issued.   Holders of KBC common stock are not entitled to preemptive rights with respect to any shares that may be issued.
VOTING LIMITATIONS
The Equity articles expressly elect for Equity to be governed by Sections 17-1286 et. seq. of the K.S.A. Under Section 17-1286 et. seq., control shares (shares that would have voting power with respect to shares of Equity that would entitle that person immediately after acquisition of the shares to exercise 20% or more of all the voting power in the election of directors) acquired in a control share acquisition have voting rights only to the extent they are granted by resolution approved by the Equity stockholders, with certain exceptions as provided in Sections 17-1286 et. seq. To be approved under Section 17-1294 of the K.S.A., such resolution must be approved by (i) the affirmative vote of a majority of all outstanding shares entitled to vote in the election of directors by class if required by the terms of the shares, and (ii) the affirmative vote of a majority of all outstanding shares entitled to vote in the election of directors by class if required by the terms of the shares, excluding all interested shares (generally defined as all shares owned by the acquiring person or group,   KBC is not subject to Sections 17-1286 et seq. of the K.S.A.

 

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Equity

 

KBC

Equity’s directors who are also its employees, and Equity’s officers). Under certain circumstances, Equity has redemption rights with respect to shares acquired in a control share acquisition. In addition, Equity stockholders have appraisal rights under certain circumstances if the control shares acquired in a control share acquisition are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of all voting power.

 

The Equity articles expressly prohibit cumulative voting of shares, except as otherwise required by law and subject to the provisions of the Equity preferred stock. Holders of shares of Class B common stock shall have no right to vote on matters which are voted upon by the Equity stockholders.

 
SIZE OF BOARD OF DIRECTORS
The Equity articles currently provide that the Equity Board will consist of no less than three directors and no more than 25 directors, and, subject to the rights of the holders of any preferred stock then outstanding, the specific number of directors between three and 25 shall be authorized from time to time by, and only by, resolution duly adopted by a majority of the total number of directors then constituting the entire board. The Equity Board currently has 15 members.   The KBC articles provide that the number of directors shall be fixed by the KBC Board, and that the number of directors may be varied from time to time, as determined by the KBC Board. The KBC Board currently has six members.
CLASSES OF DIRECTORS
The Equity Board is divided into three classes, with each class of directors serving for successive three-year terms so that each year the term of only one class of directors expires. The current classification and terms of the board consists of Class III directors whose term will expire in 2020, Class I directors whose term will expire in 2019 and Class II directors whose term will expire in 2018.   The KBC Board is not divided into classes.
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any preferred stock then outstanding, (i) any Equity director or the entire Equity Board may be removed from office at any time by the affirmative vote of the holders of record of outstanding shares representing at least 66 2/3% of the voting power of all the shares of capital stock of Equity then entitled to vote generally in the election of directors, voting together as a single class, and (ii) to the extent permitted by law, any director may be removed from office at any time, but only for cause, by the affirmative vote of a majority of the entire Equity Board.   Under Kansas law, any KBC director or the entire KBC Board may be removed, with or without cause, by the holders of a majority of the KBC common stock then entitled to vote at an election of directors, except that, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect that director if then cumulatively voted at an election of the entire board of directors.

 

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Equity

 

KBC

FILLING VACANCIES ON THE BOARD OF DIRECTORS
Subject to the rights of the holders of any preferred stock then outstanding, any vacancy occurring on the Equity Board for any reason, including any vacancy created by reason of an increase in the number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and the term of any director elected to fill a vacancy shall expire upon the expiration of the term of office of the class of directors in which such vacancy occurred. If there are no directors in office, then an election of directors may be held in the manner provided by applicable law.   The KBC bylaws provide that any vacancy occurring on the KBC Board may be filled by the affirmative vote of a majority of the directors remaining in office, although less than a quorum. Any director so chosen will hold office for the unexpired term and until such director’s successor shall be elected and qualified, or until such director’s earlier death, resignation or removal.
SPECIAL MEETING OF STOCKHOLDERS
Except as otherwise required by law and subject to the right of holders of preferred stock then outstanding, special meetings of stockholders may be called by the president of Equity or by or at the direction of a majority of the Equity Board, and shall be called by the chairman of the Equity Board, the president or the secretary upon the written request of the holders of not less than 20% of all outstanding shares of capital stock of Equity entitled to vote at such special meeting. The business transacted at a special meeting of stockholders shall be limited to that stated in the notice of such meeting or in a duly executed waiver thereof.  

The K.S.A. provides that special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the articles of incorporation or by the bylaws of the corporation.

 

The KBC bylaws provide that special meetings of the stockholders may be called by the President or by KBC Board, and must be called by the President at the request of the holders of not less than 20% of all the outstanding shares of the corporation entitled to vote at the meeting.

QUORUM
Under the Equity bylaws, except as otherwise required by law or the Equity articles, one-half of the stock issued and outstanding and entitled to vote at any meeting, represented in person or by proxy, shall constitute a quorum at all meetings of stockholders for the transaction of business. If a quorum fails to attend any meeting, the stockholders entitled to vote at any meeting, present in person or represented by proxy, may adjourn the meeting from time to time.   The presence of a majority of the outstanding shares of KBC common stock entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of the KBC stockholders.
NOTICE OF STOCKHOLDER MEETINGS
The Equity bylaws provide that written notice of each meeting of stockholders stating the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, must be delivered or given to each stockholder entitled to vote at such meeting not less than 10 days nor more than 60 days before the date of the meeting. If a stockholders’ meeting is adjourned for   Written or printed notice stating the place, day and hour of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than thirty days before the date of the meeting; provided, however, that however, if the purpose of the meeting is to vote on a merger, a consolidation, or the sale, lease or exchange of all, or substantially all, of

 

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more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

If mailed, notice shall be deemed to have been given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the Equity records. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express and exclusive purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened.

 

An affidavit of the secretary or assistant secretary or of the transfer agent of Equity that notice has been given shall be prima facie evidence of the facts stated therein in the absence of fraud.

  KBC’s property and assets, written notice must be delivered or given at least 20 days before the date of the, either personally or by mail, by or at the direction of the President, or the Secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice is deemed to be delivered when deposited in the United States mail, addressed to the stockholder at the stockholder’s address as it appears on the stock transfer books of KBC with postage thereon prepaid.
ADVANCE NOTICE OF STOCKHOLDER PROPOSALS

The Equity bylaws establish an advance notice procedure with regard to nominations of directors and other business proposals to be brought before Equity’s annual meeting by a stockholder of record of Equity.

 

Except as may otherwise be require by applicable law or regulation, or be expressly authorized by the entire Equity Board, a stockholder may make a nomination or nominations for directors of Equity at an annual meeting of stockholders or may bring up any other matter for consideration and action by the stockholders at an annual meeting of stockholders, only if the following provisions shall have been satisfied:

 

(1) such stockholder must be a stockholder of record on the record date for such annual meeting, must continue to be a stockholder of record at the time of such meeting and must be entitled to vote on such matter so presented;

 

(2) such stockholder must deliver or cause to be delivered a written notice to the Equity secretary. The notice must be received by the secretary no less than 120 days prior to the day corresponding to the date on which Equity released its proxy statement in connection with the previous year’s annual meeting; provided, however, that if the date of the annual meeting has been changed by more than 30 days from the date of the previous year’s annual meeting, such notice must be received by the secretary a reasonable time prior to the time at which notice of such meeting

  No nominations procedures are set forth in the KBC bylaws.

 

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is delivered to the stockholders. The notice shall specify (i) the name and address of the stockholder as they appear on the books of Equity, (ii) the class and number of shares of Equity which are beneficially owned by the stockholder, (iii) any material interest of the stockholder in the proposed business described in then notice, (iv) if such business is a nomination for director, each nomination sought to be made, together with the reasons for each nomination, a description of the qualifications and business or professional experience of each proposed nominee and a statement signed by each nominee indicating his or her willingness to serve if elected, and disclosing the information about such stockholder that would be required by the Exchange Act, and the rules and regulations promulgated thereunder, to be disclosed in the proxy materials for the meeting involved if such stockholder were a nominee of Equity for election as one of its directors, (v) if such business is other than a nomination for director, the nature of the business, the reasons why it is sought to be raised and submitted for a vote of the stockholders and if and why it is deemed by such stockholder to be beneficial to Equity, and (vi) if so requested by Equity, all other information that would be required to be filed with the SEC if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Exchange Act;

 

(3) notwithstanding satisfaction of provisions (1) and (2) above, the proposed business described in the notice may be deemed not to be properly brought before the meeting if, pursuant to state law or any rule or regulation of the SEC, it was offered as a stockholder proposal and was omitted, or had it been so offered, it could have been omitted, from the notice of, and proxy material for, the meeting (or any supplement thereto) authorized by the Equity Board; and

 

(4) in the event such notice is timely given pursuant to provision (2) and the business described therein is not disqualified pursuant to provision (3), such business may be presented by, and only by, the stockholder who shall have given the notice required by provision (1) or a representative of such stockholder.

 

If the above provisions shall not have been satisfied, any nomination sought to be made or other business sought to be presented by such stockholder for consideration and action by the stockholders at such a meeting shall be deemed not properly brought before the meeting, shall be ruled by the chairman of the Equity Board to be out of order and shall not be presented or acted upon at the meeting.

 

 

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ANTI-TAKEOVER PROVISIONS AND OTHER STOCKHOLDER PROTECTIONS

Sections 17-12,100 et. seq. of the K.S.A. restrict certain business combinations between Equity and an interested stockholder for three years following the date that such stockholder became an interested stockholder. An interested stockholder is any person, other than Equity and any direct or indirect majority-owned subsidiary of Equity, that is the owner of 15% or more of the outstanding voting stock of Equity, or an affiliate or associate of Equity and was the owner of 15% or more of the outstanding voting stock of Equity at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder and the affiliates and associates of such person. Certain other persons are excluded from the definition of interested stockholder as provided in Section 17-12,100 of the K.S.A.

 

The restrictions in Sections 17-12,100 et. seq. of the K.S.A. do not apply if (i) prior to such date the Equity Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of Equity outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (iii) on or after such date the business combination is approved by the Equity Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

 

Although a Kansas corporation may elect not to be governed by Sections 17-12,100 et. seq. of the K.S.A., Equity has expressly elected to be governed by Sections 17-12,100 et. seq. of the K.S.A.

 

For a discussion of Sections 17-1286 et. seq. of the K.S.A., which are also anti-takeover provisions, see “Voting Limitations” above.

  Section 17-6427 of the K.S.A. restricts certain business combinations between certain corporations and interested stockholders. KBC is not governed by these provisions because KBC does not have a class of voting stock that is listed on a national securities exchange or held of record by 2,000 or more stockholders. Neither the KBC articles nor the KBC bylaws include restrictions similar to those of Section 17-6427 of the K.S.A.

 

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LIMITATION OF PERSONAL LIABILITY OF OFFICERS AND DIRECTORS
The Equity articles provide that no Equity director shall be liable to Equity or its stockholders for monetary damages for a breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the K.S.A. as presently in effect or as the same may be amended. Any repeal or modification of the provision limiting personal liability of directors shall not adversely affect any right or protection of an Equity director existing at the time of such repeal or modification.   The KBC articles provide that no KBC director shall be ·held personally liable to KBC or its stockholders for a breach of fiduciary duty as a director except for liability (i) for any breach of a director’s duty of loyalty to KBC or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) under the provisions of Section 17-6424 of the K.S.A and its amendments (relating to liability for the payment of certain unlawful dividends or unlawful stock purchases or redemptions); or (iv) for any transaction from which a director derived an improper personal benefit.
INDEMNIFICATION OF DIRECTORS AND OFFICERS AND INSURANCE

In addition to and without limiting the rights to indemnification and advancement of expenses specifically provided for in the Equity bylaws, Equity shall indemnify and advance expenses to each person who is or was an officer or director of Equity, or who is or was serving at the request of Equity as a director, officer, employee, partner, trustee or agent of any other enterprise, to the fullest extent permitted by the laws of the State of Kansas as then in effect.

 

The Equity bylaws provide that Equity shall indemnify each person who has been or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of Equity), by reason of the fact that such person is or was an officer or director of Equity or is or was serving at the request of Equity as a director, officer, employee, partner, trustee or agent of any other enterprise, against all liabilities and expenses, including, without limitation, judgments, amounts paid in settlement, attorneys’ fees, excise taxes under ERISA, or penalties, fines and other expenses actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of Equity and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; provided, however, that Equity shall not be required to indemnify or advance expenses to any person in connection with an action, suit or proceeding initiated by such person (other than an action, suit or proceeding initiated by

 

KBC must indemnify any director or officer of KBC who was, is or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director or officer of KBC, or is or was serving at the request of KBC as a director, officer, employee, trustee, partner or agent of another corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise to the fullest extent permitted by the K.S.A.

 

The right of indemnification is a contract right and includes the right to be paid by KBC for expenses incurred in defending any proceeding in advance of its final disposition to the fullest extent permitted under the K.S.A.

 

The right of indemnification contained in the KBC articles are not exclusive of any other right to indemnification that any person has or later acquires under any statute, bylaw, agreement, contract, resolutions of the KBC Board or stockholders, or otherwise.

 

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such person to enforce his right to indemnification and advancement of expenses pursuant to this section) unless the initiation of such action, suit or proceeding was authorized in advance by the Equity Board.  

Equity shall indemnify each person who has been or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of Equity to procure a judgment in its favor by reason of the fact that the person is or was a director or officer of Equity or is or was serving at the request of Equity as a director, officer, employee, partner, trustee or agent of any other enterprise, against all liabilities and expenses, including, without limitation, amounts paid in settlement, attorneys’ fees and other expenses actually and reasonably incurred by such person in connection with such action or suit, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of Equity, except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to Equity unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses that the court shall deem proper.

 

Indemnification of a person referred to in the above paragraphs is mandatory if such person has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the above paragraphs, or in defense of any claim, issue or matter therein. For all other situations, and unless indemnification is ordered by a court, any indemnification by Equity shall be made only as authorized in the specific case upon a determination that indemnification of the person is proper in the circumstances because the person has met the applicable standard of conduct set forth in the above paragraphs. Such determination shall be made (i) by the Equity Board by a majority vote of a quorum consisting of directors who were not parties to such action or proceeding, or (ii) if such a quorum is not attainable, or even if attainable, should a quorum of disinterested directors so direct, by independent legal counsel in a written opinion, or (iii) by the Equity stockholders. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or under a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that such

 

 

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person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of Equity and, with respect to any criminal action or proceeding, had reasonable cause to believe his conduct was unlawful.

 

Expenses actually and reasonably incurred by a person entitled to indemnification under the Equity bylaws shall be paid by Equity in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by Equity. The Equity Board may, in each individual case, impose any additional terms and conditions as they shall deem appropriate. The indemnification and advancement of expenses provided by, or granted pursuant to, the Equity bylaws shall continue as to any person who has ceased to hold any position with Equity or any other enterprise, and shall inure to the benefit of the heirs, executors, administrators and estate of such person.

 

Upon resolution passed by the Equity Board, Equity may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of Equity or is or was serving at the request of Equity as a director, officer, employee, partner, trustee or agent of any other enterprise, against any liability asserted against him and incurred by him in such capacity, or arising out of his status as such, whether or not Equity would have the power to indemnify him against such liability under the Equity bylaws.

 

Notwithstanding any other provision of the Equity bylaws, in no event shall Equity indemnify any person against liabilities, penalties or expenses incurred in connection with an administrative proceeding or action instituted by a bank regulatory agency, which proceeding or action results in a final order assessing civil money penalties or requiring affirmative action by such person or persons in the form of payments to Equity or any other enterprise.

 
AMENDMENTS TO ORGANIZATIONAL DOCUMENTS
Equity reserves the right to amend, alter, change or repeal any provision contained in the Equity articles in the manner now or hereafter prescribed in the Equity articles and by the laws of the state of Kansas, and all rights conferred upon stockholders in the Equity articles are granted subject to such reservation. Notwithstanding the above provision or any other   Under the K.S.A., the KBC articles may be amended in the event that the KBC Board recommends such amendment and a majority of the outstanding shares of KBC stock entitled to vote on such amendment vote in favor of it.

 

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provisions of the Equity articles or bylaws, the affirmative vote of the holders of at least 66 2/3% of the voting power of all of the shares of the then outstanding voting stock of Equity, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, Articles VI (Action by Stockholders), VII (Number, Classification and Election of Directors; Vacancies), VIII (Removal of Directors), IX (Indemnification of Officers and Directors), XI (Control Share Acquisitions), XII (Business Combinations with Interested Stockholders), XIII (Amendment of Bylaws) or XIV (Amendment of Articles) of the Equity articles.

 

The Equity Board is authorized to make, amend, alter or repeal the Equity bylaws, subject to the power of the stockholders as described below to make, amend, alter or repeal the Equity bylaws. Notwithstanding the foregoing or any other provisions of the Equity articles or bylaws, the affirmative vote of at least 66 2/3% of the voting power of all the shares of the then outstanding voting stock of Equity, voting together as a single class, shall be required to amend, alter or repeal, or adopt any provisions inconsistent with, Articles II (Meetings of Stockholders), III (Directors), VIII (Indemnification of Directors, Officers, Employees & Agents) or IX (Amendments) of the Equity bylaws.

 

 

The KBC articles provide that the right to alter, amend or repeal the KBC bylaws is vested concurrently in KBC’s stockholders and its board of directors, but that the authority of the KBC Board to amend the KBC bylaws remains subject to the superior authority of KBC’s stockholders.

 

The KBC bylaws provide that they may be altered, amended or repealed and new bylaws may be adopted by the KBC Board at any regular or special meeting of the KBC Board.

ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS
Under the Equity articles, any action required or permitted to be taken by the stockholders of Equity must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing by such stockholders.  

Under the K.S.A., unless otherwise provided in the articles of incorporation, any action required by the K.S.A. to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in this state, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

 

Under the KBC bylaws, any action required to be taken at a meeting of the stockholders, may be taken

 

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  without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof.
STOCKHOLDER RIGHTS PLAN
Equity does not have a stockholder rights plan in effect.   KBC does not have a stockholder rights plan in effect.

 

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COMPARATIVE MARKET PRICES AND DIVIDENDS

Equity

Equity common stock is listed on Nasdaq under the symbol “EQBK.” As of [        ], 2018, the latest practicable date prior to the printing of this proxy statement/prospectus, there were approximately [        ] holders of record of Equity common stock. As of such date, approximately [        ] shares of Equity common stock were outstanding.

The following table shows the high and low sales prices per share of Equity common stock as reported on Nasdaq on (i) December 15, 2017, the last full trading day preceding the public announcement that Equity and KBC had entered into the merger agreement, (ii) [        ], 2018, the latest practicable trading day before the printing of this proxy statement/prospectus and (iii) the periods indicated therein.

 

     Equity common stock  
     High      Low  

December 15, 2017(1)

   $ 35.17      $ 34.00  

[            ], 2018(2)

   $ [            $ [        

Quarter Ended

     

March 31, 2016

   $ 24.10      $ 19.72  

June 30, 2016

   $ 23.94      $ 19.81  

September 30, 2016

   $ 25.94      $ 21.02  

December 31, 2016

   $ 38.03      $ 23.94  

March 31, 2017

   $ 35.24      $ 29.82  

June 30, 2017

   $ 33.11      $ 29.13  

September 30, 2017

   $ 36.60      $ 30.67  

December 31, 2017

   $ 35.60      $ 35.00  

March 31, 2018 (through [ ], 2018)

   $ [            $ [        

 

(1) The last full trading day preceding the public announcement of the entry into the merger agreement.
(2) The latest practicable date prior to the printing of this proxy statement/prospectus.

The foregoing table may not provide meaningful information to KBC stockholders in determining whether to approve the Merger Proposal. Each of Equity and KBC stockholders are advised to obtain current market quotations for Equity common stock. The market price of Equity common stock will fluctuate between the date of this proxy statement/prospectus and the date of completion of the merger. No assurance can be given concerning the market price of Equity common stock before or after the closing date of the merger. Changes in the market price of Equity common stock prior to the closing of the merger will affect the market value of the merger consideration that KBC stockholders will be entitled to receive upon completion of the merger. See the section of this proxy statement/prospectus entitled “Risk Factors” beginning on page 26.

Equity Dividend Policy

Equity has not historically declared or paid cash dividends on Equity’s common stock and does not expect to pay dividends on Equity’s common stock for the foreseeable future. Instead, Equity anticipates that all of Equity’s future earnings will be retained to support Equity’s operations and to finance the growth and development of Equity’s business. Any future determination to pay dividends on Equity’s common stock will be made by the Equity Board and will depend on a number of factors, including:

 

    Equity’s historical and projected financial condition, liquidity and results of operations;

 

    Equity’s capital levels and requirements;

 

    statutory and regulatory prohibitions and other limitations;

 

    any contractual restriction on Equity’s ability to pay cash dividends, including pursuant to the terms of any of Equity’s credit agreements or other borrowing arrangements;

 

    Equity’s business strategy;

 

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    tax considerations;

 

    any acquisitions or potential acquisitions that Equity may examine;

 

    general economic conditions; and

 

    other factors deemed relevant by the Equity Board.

Equity is not obligated to pay dividends on its common stock.

As a Kansas corporation, Equity is subject to certain restrictions on dividends under the K.S.A. Generally, a Kansas corporation may pay dividends to its stockholders out of its surplus or, if there is no surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year, or both. In addition, if the capital of a Kansas corporation is diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, the directors of such corporation cannot declare and pay out of such net profits any dividends upon any shares of any classes of its capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. Equity is also subject to certain restrictions on the payment of cash dividends as a result of banking laws, regulations and policies.

Since Equity is a bank holding company and does not engage directly in business activities of a material nature, Equity’s ability to pay dividends to its stockholders depends, in large part, upon Equity’s receipt of dividends from Equity Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies. The present and future dividend policy of Equity Bank is subject to the discretion of its board of directors. Equity Bank is not obligated to pay dividends.

KBC

KBC is a privately held corporation and its common stock is not traded on any established public trading market. As of the KBC record date, there were approximately [        ] holders of record of KBC common stock. As of such date, [        ] shares of KBC common stock were outstanding and [        ] shares of KBC common stock were held as treasury stock.

There have been limited transfers of KBC’s common stock over time, including transfers between related parties (as gifts or to trusts or estates). Because of limited trading, the values attributed to KBC’s stock in other transaction may not be representative of the actual or fair value of KBC’s common stock. KBC is not obligated to register its common stock or, upon any registration, to create a market for its stock.

KBC’s stockholders are entitled to receive dividends out of legally available funds as and when declared by the KBC Board, in its sole discretion. As a Kansas corporation, KBC is subject to certain restrictions on dividends under the K.S.A. Generally, a Kansas corporation may pay dividends to its stockholders out of its surplus or, if there is no surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding fiscal year, or both. In addition, if the capital of a Kansas corporation is diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, the directors of such corporation cannot declare and pay out of such net profits any dividends upon any shares of any classes of its capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets is repaired. KBC is also subject to certain restrictions on the payment of cash dividends as a result of banking laws, regulations and policies.

Since KBC is a bank holding company and does not engage directly in business activities of a material nature, KBC’s ability to pay dividends to its stockholders depends, in large part, upon KBC’s receipt of dividends from FNB, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies. The present and future dividend policy of FNB is subject to the discretion of its board of directors. FNB is not obligated to pay dividends.

 

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LEGAL MATTERS

The validity of the Equity common stock offered by this prospectus will be passed upon for Equity by Wise & Reber, L.C., McPherson, Kansas. Certain legal matters in connection with this offering will be passed upon for Equity by Norton Rose Fulbright US LLP, Dallas, Texas.

EXPERTS

Equity

The consolidated financial statements of Equity Bancshares, Inc. as of December 31, 2016 and 2015, and for each of the three years in the period ended December 31, 2016, incorporated by reference in this proxy statement/prospectus have been audited by Crowe Chizek LLP, an independent registered public accounting firm, as stated in their report, which is incorporated by reference herein. Such consolidated financial statements have been so incorporated in reliance given on the authority of said firm as experts in accounting and auditing.

Eastman National Bancshares, Inc.

The consolidated financial statements of Eastman National Bancshares, Inc. and its subsidiaries as of December 31, 2016 and December 31, 2015, and for each of the two years in the period ended December 31, 2016, included in this proxy statement/prospectus have been audited by Erwin & Company, an independent registered public accounting firm, as stated in their report, which is incorporated by reference herein. Such consolidated financial statements have been so incorporated in reliance given on the authority of said firm as experts in accounting and auditing.

Cache Holdings, Inc.

The consolidated financial statements of Cache and its subsidiaries as of December 31, 2016 and December 31, 2015, and for each of the two years in the period ended December 31, 2016, included in this proxy statement/prospectus have been audited by Sewell & Taylor LLP, an independent public accounting firm, as stated in their report, which is incorporated by reference herein. Such consolidated financial statements have been so incorporated in reliance given on the authority of said firm as experts in accounting and auditing.

Community First Bancshares, Inc.

The consolidated financial statements of Community First Bancshares, Inc. as of December 31, 2015 and December 31, 2014 and for each of the two years in the period ended December 31, 2015, incorporated by reference in this proxy statement/prospectus have been audited by Erwin & Company, an independent registered public accounting firm, as stated in their report, which is incorporated by reference herein. Such consolidated financial statements have been so incorporated in reliance given on the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

Equity has filed with the SEC a registration statement on Form S-4 under the Securities Act to register the shares of Equity common stock that KBC stockholders will be entitled to receive in connection with the merger if the merger is completed. This proxy statement/prospectus is a part of that registration statement. The registration statement, including the attached annexes, exhibits and schedules, contains additional relevant information about Equity and Equity common stock.

 

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Equity also files annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy any of the materials Equity files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that contains reports, proxy and information statements and other information about issuers who file electronically with the SEC. The address of that site is http://www.sec.gov. General information about Equity, including Equity’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through Equity’s website at investor.equitybank.com as soon as reasonably practicable after Equity files them with, or furnishes them to, the SEC. Information on Equity’s website is not incorporated into this proxy statement/prospectus or Equity’s other securities filings and is not a part of these filings.

Set forth below are additional documents which are incorporated by reference and contain important information about Equity and its financial condition.

This document incorporates by reference the following documents that have previously been filed with the SEC by Equity (Commission File No. 001-37624):

 

    Annual Report on Form 10-K for the year ended December 31, 2016 (including specific portions of Equity’s definitive Proxy Statement for the 2016 Annual Meeting of Stockholders incorporated therein by reference);

 

    Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017; and

 

    Equity’s Forms 8-K filed on December 27, 2016, January 26, 2017, March 15, 2017, March 16, 2017, May 2, 2017, May 23, 2017, July 17, 2017, July 20, 2017, October 10, 2017, October 19, 2017, November 13, 2017, December 18, 2017, and February 7, 2018, but only to the extent that items therein were “filed” with the SEC, rather than “furnished.”

A description of Equity’s capital stock can be found herein under “Description of Capital Stock of Equity.”

Information about Equity can also be found in additional documents that Equity may file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy statement/prospectus and the date of KBC’s special meeting (other than the portions of those documents not deemed to be filed). These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as proxy statements.

You can obtain any of the documents referred to above through Equity or from the SEC through the SEC’s website at the address described above. Documents incorporated by reference are available from Equity without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference as an exhibit in this proxy statement/prospectus. You can obtain documents incorporated by reference into this proxy statement/prospectus by requesting them in writing or by telephone from Equity at the following address:

Equity Bancshares, Inc.

7701 East Kellogg Drive, Suite 300

Wichita, Kansas 67207

Attn: Investor Relations

Telephone: (316) 612-6000

 

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KBC is a private company and accordingly does not file reports or other information with the SEC. If you would like to request documents from KBC, please send a request in writing or by telephone to KBC at the following address:

Kansas Bank Corporation

1700 N Lincoln Avenue

Liberal, Kansas 67901

Attention: Tina Call

Telephone: (620) 624-1971

If you would like to request documents, please do so by [            ], 2018 to receive them before the KBC special meeting. If you request any incorporated documents from Equity, then Equity will mail them to you by first-class mail, or another equally prompt means, within one business day after Equity receives your request.

Equity has supplied all information contained in or incorporated by reference into this proxy statement/prospectus relating to Equity, and KBC has supplied all information contained in this proxy statement/prospectus relating to KBC.

Neither Equity nor KBC has authorized anyone to give any information or make any representation about the merger, the Equity share issuance or their companies that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that have been incorporated by reference into this proxy statement/prospectus. Therefore, if anyone does give you information of this sort, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this proxy statement/prospectus or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this proxy statement/prospectus does not extend to you. The information contained herein speaks only as of the date of this proxy statement/prospectus unless the information specifically indicates that another date applies.

 

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Annex A

AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

EQUITY BANCSHARES, INC.,

OZ MERGER SUB, INC.

AND

KANSAS BANK CORPORATION

Dated as of December 16, 2017

 


Table of Contents

TABLE OF CONTENTS

 

     Page  

ARTICLE I            THE MERGER

     A-2  
 

Section 1.01

    

Merger of Merger Sub with and into KBC

     A-2  
 

Section 1.02

    

Effects of the Merger

     A-2  
 

Section 1.03

    

Articles of Incorporation and Bylaws

     A-2  
 

Section 1.04

    

Directors and Officers

     A-2  
 

Section 1.05

    

Effect on Capital Stock

     A-2  
 

Section 1.06

    

Adjusted Equity

     A-4  
 

Section 1.07

    

Proration

     A-5  
 

Section 1.08

    

Election Procedures

     A-6  
 

Section 1.09

    

Exchange Procedures

     A-7  
 

Section 1.10

    

Tax Treatment

     A-8  
 

Section 1.11

    

Modification of Structure

     A-8  
 

Section 1.12

    

Dissenting Shareholders

     A-8  
 

Section 1.13

    

Second Step Merger

     A-9  
 

Section 1.14

    

Bank Merger

     A-9  

ARTICLE II          THE CLOSING AND THE CLOSING DATE

     A-10  
 

Section 2.01

    

Time and Place of the Closing and Closing Date

     A-10  
 

Section 2.02

    

Actions to be Taken at the Closing by KBC

     A-10  
 

Section 2.03

    

Actions to be Taken at the Closing by EQBK

     A-11  

ARTICLE III         REPRESENTATIONS AND WARRANTIES OF KBC

     A-12  
 

Section 3.01

    

Organization and Qualification

     A-13  
 

Section 3.02

    

Authority; Execution and Delivery

     A-13  
 

Section 3.03

    

Capitalization

     A-14  
 

Section 3.04

    

Compliance with Laws, Permits and Instruments

     A-14  
 

Section 3.05

    

Financial Statements

     A-15  
 

Section 3.06

    

Undisclosed Liabilities

     A-16  
 

Section 3.07

    

Litigation

     A-16  
 

Section 3.08

    

Consents and Approvals

     A-16  
 

Section 3.09

    

Title to Assets

     A-16  
 

Section 3.10

    

Absence of Certain Changes or Events

     A-17  
 

Section 3.11

    

Leases, Contracts and Agreements

     A-18  
 

Section 3.12

    

Taxes

     A-20  
 

Section 3.13

    

Insuran