Equity Bancshares, Inc. Reports First-Quarter Net Income of $15.1 million and $1.02 Earnings Per Diluted Share

Company experienced 7.6% of annualized loan growth not including Paycheck Protection Program; originated $233 million of new Paycheck Protection Program loans

WICHITA, Kan., April 20, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported net income of $15.1 million and $1.02 per diluted share, including $0.65 of core earnings per diluted share the first quarter ended March 31, 2021.

Core earnings of $0.65 per diluted share for the quarter were driven by non-Paycheck Protection Program (“PPP”) loan growth of $43.7 million, representing growth of 1.9%, or 7.6% annualized growth from December 31, 2020. Further driving results this quarter was the recognition of origination fee income from the successful forgiveness of PPP loans by the SBA; improved operating performance with many of our fee-based initiatives such as wealth management and trust business lines, and debit card and commercial credit card interchange income. Expense control remained a focus with non-interest expenses, excluding merger related expenses, down from the linked-and-comparable-quarters in 2020.

“I’m very proud of the collaboration and entrepreneurial spirit of our Equity teams. Our lending, operations, and customer service teams have worked together to create innovative processes and efficiencies that benefit our customers” said Brad S. Elliott, Chairman and CEO of Equity. “Our teams have worked to onboard new core deposit customers, and we have seen sustained increases in usage of our digital products, including online banking, mobile deposit, and bill pay – while continuing to service customers from fully opened lobbies. Entrepreneurial spirit is one of our core values, and we believe business, commercial, and retail customers continue to choose Equity Bank for our approach.”

“Throughout our footprint, our Equity Bank teams worked incredibly hard on behalf of our customers to secure PPP funds and help our customers maintain their businesses and livelihoods,” said Mr. Elliott. “A community bank prioritizes its customers and delivers dependable, innovative and round the clock service when our customers need it. We’ve remained open, ready and available to our customers to serve loan and business growth needs in all facets.”

In the quarter ended March 31, 2021, Equity originated $233.6 million in total PPP loans, and Equity’s total outstanding PPP loans were $414.1 million at the end of the quarter. The Company’s customers successfully had $99.7 million of PPP loans forgiven during the quarter, resulting in the recognition of fee income totaling $2.3 million in the three-month period ended March 31, 2021. At March 31, 2021, the total unrecognized fee income associated with PPP loans was $12.7 million. Through two rounds of PPP, Equity originated more than $610 million in PPP loans.

The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank. Equity completed the data system conversion of Almena State Bank on January 16, 2021, following the acquisition of Almena State Bank branches from the Federal Deposit Insurance Corporation (“FDIC”) in October 2020. Results also reflect Equity customers’ obtaining forgiveness of Paycheck Protection Program (“PPP”) loans from the Small Business Administration (“SBA”) totaling $102.8 million resulting in a recognition of $3.8 million of fee income.

Notable Items:

  • The Company authorized a second stock repurchase program in the third quarter of 2020 totaling 800,000 shares. During the quarter ended March 31, 2021, the Company repurchased 233,012 shares at a weighted average cost of $25.35 per share, totaling $5.9 million. At the end of the quarter, capacity of 253,757 shares remained under the current repurchase program.
  • The Company adopted ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at January 1, 2021. Upon implementation, the Company recognized a day one after tax $12.4 million reduction in stockholders’ equity and transferred $11.8 million of purchase credit impaired (“PCI”) marks to the allowance for credit losses (“ACL”) as purchase credit deteriorated (“PCD”) reserves. On implementation, the allowance for credit losses, including reserve on unfunded commitments, increased to $62.1 million from $33.7 million at December 31, 2020.
  • During the quarter ended March 31, 2021, there was a release of reserve for credit losses of $5.8 million as compared to a $1.0 million provision for loan losses in the quarter ended December 31, 2020.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.80 billion at March 31, 2021, as compared to total loans held for investment of $2.59 billion at December 31, 2020.
  • Total deposits of $3.63 billion at March 31, 2021, as compared to $3.45 billion at December 31, 2020.  Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $3.05 billion at March 31, 2021, relative to $2.82 billion at December 31, 2020. Included in this signature deposit growth was a $180.7 million increase in non-interest-bearing deposits, from $791.6 million at December 31, 2020, to $972.4 million at March 31, 2021.
  • Total assets were $4.20 billion at March 31, 2021, as compared to $4.01 billion at December 31, 2020.

Financial Results for the Quarter Ended March 31, 2021

Net income allocable to common stockholders was $15.1 million, or $1.02 per diluted share, for the three months ended March 31, 2021, as compared to $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, an increase of $2.6 million. This increase was attributable to a release of reserve for credit losses of $5.8 million during the quarter as compared to a provision for loan losses of $1.0 million during the fourth quarter of 2020. This $6.8 million provision improvement as well as the decrease in non-interest expense of $3.6 million and increase in non-interest income, exclusive of gain on acquisition, of $435 thousand were partially offset by a $3.8 million decrease in net interest income, a $2.2 million increase in provision for income taxes and a $2.2 million reduction in gain on acquisition.

Net Interest Income

Net interest income was $31.8 million for the three months ended March 31, 2021, as compared to $35.6 million for the three months ended December 31, 2020, a decrease of $3.8 million, or 10.7%. The decrease in net interest income was primarily driven by a 63-basis point decrease in average rate earned on interest-earning assets, to 3.73% for the quarter ended March 31, 2021, from 4.36% for the quarter ended December 31, 2020.   The decline in yield on earning assets was driven, in part, by the success of our forgiveness program with regard to the first round of PPP funding during the fourth quarter of 2020 resulting in a comparative reduction in interest income of $651 thousand; the success of the special assets team in processing program assets in the fourth quarter of 2020 resulting in a comparable decline of $1.1 million; and a reduction in loan fee recognition. The cost of interest-bearing liabilities declined to 0.58% or seven basis points for the quarter ended March 31, 2021 from 0.65% in the quarter ended December 31, 2020. The cost of interest-bearing deposits declined by seven basis points to 0.36% for the three months ended March 31, 2021 from 0.43% in the previous quarter primarily attributed to the reduction in the cost of time deposits, that slipped to 16 basis points between the quarters.

Provision for Credit Losses

During the three months ended March 31, 2021, there was a reversal of $5.8 million in the allowance for credit losses recognized through the provision for credit losses as compared to a $1.0 million provision for loan losses for the three months ended December 31, 2020. For the three months ended March 31, 2021, we had net charge-offs of $65 thousand as compared to $1.4 million for the three months ended December 31, 2020. The reversal is attributed primarily to improved economic inputs into the CECL model and, to a lesser extent, an improvement in historical loss experience and associated impact on the allowance for credit losses.

Non-Interest Income

Total non-interest income was $6.7 million for the three months ended March 31, 2021, as compared to $8.5 million for the three months ended December 31, 2020, or $6.4 million excluding the $2.1 million net gain on the purchase and assumption of Almena State Bank. Other non-interest income was $1.3 million, an increase of $439 thousand, or 51.5%, from the quarter ended December 31, 2020. The largest contributor was a $197 thousand increase from derivative transactions. The first quarter increase in value of bank-owned life insurance was $601 thousand, as compared to $489 thousand during the fourth quarter of 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended March 31, 2021, was $24.9 million as compared to $28.5 million for the quarter ended December 31, 2020. The $3.6 million reduction is attributed to $1.6 million less in other real estate owned expense and a $1.3 million decline in salaries and employee benefits. The most significant contributor to the decrease in other real estate owned expense was a $947 thousand valuation adjustment during the fourth quarter of 2020 on two facilities that were closed in May 2020.

Asset Quality

As of March 31, 2021, Equity’s allowance for credit losses, plus reserve for unfunded commitments, to total loans was 2.02%, as compared to 1.30% at December 31, 2020. Total reserves to total loans were approximately 2.30% as of March 31, 2021, as compared to 2.12% at December 31, 2020. Nonperforming assets were $70.1 million as of March 31, 2021, or 1.67% of total assets. Nonperforming assets were $54.6 million at December 31, 2020, or 1.36% of total assets. Total other real estate owned declined to $10.6 million at March 31, 2021 from $11.7 million in the linked quarter. The increase of non-performing assets is attributed to the Company’s adoption of ASC 326 on January 1, 2021, and consequently transferring $11.8 million of PCI loan marks to PCD which is included in the ACL. The PCI marks, primarily attributed to acquired loans associated with Almena State Bank, previously reduced the amortized cost basis of the acquired loans before the January 1, 2021 CECL implementation.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.5%, the total capital to risk-weighted assets was 17.0% and the total leverage ratio was 8.7% at March 31, 2021. At December 31, 2020, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%. The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.4%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 9.6% at March 31, 2021. At December 31, 2020, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.

Non-GAAP Financial Measures

In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its total revenue; in other words, for every dollar of total revenue recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Return on average assets before income tax provision, provision for loan losses and goodwill impairment is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates the “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.

Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2021 first quarter results on Wednesday, April 21, 2021, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Wednesday, April 21, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 9542529.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until April 28, 2021, accessible at (855) 859-2056 with conference ID no. 9542529 at investor.equitybank.com.

About Equity Bancshares, Inc.

Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NASDAQ Global Select Market under the symbol “EQBK.” Learn more at www.equitybank.com.

Special Note Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2021, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, such as COVID-19, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.

Investor Contact:

Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.com        

Media Contact:

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

Unaudited Financial Tables

  • Table 1. Quarterly Consolidated Statements of Operations
  • Table 2. Consolidated Balance Sheets
  • Table 3. Selected Financial Highlights
  • Table 4. Quarter-to-Date Net Interest Income Analysis
  • Table 5. Quarter-Over-Quarter Net Interest Income Analysis
  • Table 6. Non-GAAP Financial Measures

TABLE 1. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    March 31,
2021
    December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
 
Interest and dividend income                                        
Loans, including fees   $ 31,001     $ 35,383     $ 32,278     $ 32,627     $ 34,376  
Securities, taxable     3,799       3,408       3,476       4,017       4,620  
Securities, nontaxable     724       913       923       880       966  
Federal funds sold and other     288       285       405       409       595  
Total interest and dividend income     35,812       39,989       37,082       37,933       40,557  
Interest expense                                        
Deposits     2,410       2,755       3,064       3,899       6,864  
Federal funds purchased and retail repurchase agreements     22       25       25       24       31  
Federal Home Loan Bank advances     65       94       471       552       1,175  
Federal Reserve Bank discount window                       6        
Bank stock loan                       306       109  
Subordinated debentures     1,556       1,556       1,415       255       283  
Total interest expense     4,053       4,430       4,975       5,042       8,462  
                                         
Net interest income     31,759       35,559       32,107       32,891       32,095  
Provision for credit losses     (5,756 )     1,000       815       12,500       9,940  
Net interest income after provision for credit losses     37,515       34,559       31,292       20,391       22,155  
Non-interest income                                        
Service charges and fees     1,596       1,759       1,706       1,365       2,026  
Debit card income     2,350       2,401       2,491       2,201       2,043  
Mortgage banking     935       855       877       831       590  
Increase in value of bank-owned life insurance     601       489       489       481       482  
Net gain on acquisition     (78 )     2,145                    
Net gains (losses) from securities transactions     17       (1 )           4       8  
Other     1,291       852       922       850       157  
Total non-interest income     6,712       8,500       6,485       5,732       5,306  
Non-interest expense                                        
Salaries and employee benefits     12,722       14,053       13,877       12,695       13,504  
Net occupancy and equipment     2,368       2,206       2,224       2,119       2,235  
Data processing     2,663       2,748       2,817       2,763       2,663  
Professional fees     1,073       1,095       877       943       1,367  
Advertising and business development     682       801       598       403       696  
Telecommunications     580       510       486       390       487  
FDIC insurance     415       797       360       414       517  
Courier and postage     369       338       366       353       384  
Free nationwide ATM cost     472       423       439       327       420  
Amortization of core deposit intangibles     1,034       1,044       1,030       974       802  
Loan expense     238       161       107       287       234  
Other real estate owned     5       1,600       133       269       308  
Merger expenses     152       299                    
Goodwill impairment                 104,831              
Other     2,108       2,385       2,690       2,000       2,141  
Total non-interest expense     24,881       28,460       130,835       23,937       25,758  
Income (loss) before income tax     19,346       14,599       (93,058 )     2,186       1,703  
Provision for income taxes (benefit)     4,271       2,111       (2,653 )     497       445  
Net income (loss) and net income (loss) allocable to common stockholders   $ 15,075     $ 12,488     $ (90,405 )   $ 1,689     $ 1,258  
Basic earnings (loss) per share   $ 1.04     $ 0.85     $ (6.01 )   $ 0.11     $ 0.08  
Diluted earnings (loss) per share   $ 1.02     $ 0.84     $ (6.01 )   $ 0.11     $ 0.08  
Weighted average common shares     14,464,291       14,760,810       15,040,407       15,209,483       15,387,697  
Weighted average diluted common shares     14,734,083       14,934,058       15,040,407       15,304,009       15,595,024  

TABLE 2. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)

    March 31,
2021
    December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
 
ASSETS                                        
Cash and due from banks   $ 136,190     $ 280,150     $ 65,534     $ 178,045     $ 141,989  
Federal funds sold     498       548       305       245       263  
Cash and cash equivalents     136,688       280,698       65,839       178,290       142,252  
Interest-bearing time deposits in other banks     249       249       499       2,248       2,498  
Available-for-sale securities     998,100       871,827       798,576       177,228       187,812  
Held-to-maturity securities(1)                       662,522       721,992  
Loans held for sale     8,609       12,394       9,053       4,802       6,494  
Loans, net of allowance for credit losses(2)     2,740,215       2,557,987       2,691,626       2,772,256       2,485,208  
Other real estate owned, net     10,559       11,733       8,727       7,374       5,870  
Premises and equipment, net     90,322       89,412       86,087       87,055       84,732  
Bank-owned life insurance     102,645       77,044       76,555       76,066       75,585  
Federal Reserve Bank and Federal Home Loan Bank stock     15,174       16,415       32,545       31,832       31,662  
Interest receivable     16,655       15,831       18,110       19,598       15,549  
Goodwill     31,601       31,601       31,601       136,432       136,432  
Core deposit intangibles, net     15,023       16,057       17,101       18,131       19,105  
Other     30,344       32,108       29,252       31,435       28,641  
Total assets   $ 4,196,184     $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832  
LIABILITIES AND STOCKHOLDERS’ EQUITY                                        
Deposits                                        
Demand   $ 972,364     $ 791,639     $ 693,967     $ 756,613     $ 508,441  
Total non-interest-bearing deposits     972,364       791,639       693,967       756,613       508,441  
Savings, NOW and money market     2,074,261       2,029,097       1,816,307       1,800,132       1,668,145  
Time     587,905       626,854       623,344       690,522       783,811  
Total interest-bearing deposits     2,662,166       2,655,951       2,439,651       2,490,654       2,451,956  
Total deposits     3,634,530       3,447,590       3,133,618       3,247,267       2,960,397  
Federal funds purchased and retail repurchase agreements     40,339       36,029       46,295       51,557       37,113  
Federal Home Loan Bank advances     9,926       10,144       167,862       344,900       389,620  
Bank stock loan                             40,000  
Subordinated debentures     87,788       87,684       87,537       55,575       14,638  
Contractual obligations     4,856       5,189       5,478       5,571       5,781  
Interest payable and other liabilities     20,930       19,071       22,609       20,633       18,932  
Total liabilities     3,798,369       3,605,707       3,463,399       3,725,503       3,466,481  
Commitments and contingent liabilities                                        
Stockholders’ equity                                        
Common stock     175       174       174       174       174  
Additional paid-in capital     387,939       386,820       386,017       384,955       383,850  
Retained earnings     53,459       50,787       38,299       128,704       127,015  
Accumulated other comprehensive income (loss)     12,019       19,781       21,074       3,390       3,769  
Employee stock loans           (43 )     (43 )     (43 )     (43 )
Treasury stock     (55,777 )     (49,870 )     (43,349 )     (37,414 )     (37,414 )
Total stockholders’ equity     397,815       407,649       402,172       479,766       477,351  
Total liabilities and stockholders’ equity   $ 4,196,184     $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832  
                                         
(1) Fair market value of held-to-maturity securities   $     $     $     $ 689,206     $ 750,900  
(2) Allowance for credit losses     55,525       33,709       34,087       34,078       21,915  

TABLE 3. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2021     2020     2020     2020     2020  
Loans Held-For-Investment by Type                                        
Commercial real estate   $ 1,218,545     $ 1,188,696     $ 1,188,329     $ 1,191,336     $ 1,200,762  
Commercial and industrial     820,728       734,495       857,244       883,355       542,571  
Residential real estate     438,503       381,958       402,242       442,486       480,603  
Agricultural real estate     134,944       133,693       127,349       129,080       130,795  
Consumer     89,256       58,532       67,465       71,037       64,799  
Agricultural     93,764       94,322       83,084       89,040       87,593  
Total loans held-for-investment     2,795,740       2,591,696       2,725,713       2,806,334       2,507,123  
Allowance for credit losses     (55,525 )     (33,709 )     (34,087 )     (34,078 )     (21,915 )
Net loans held-for-investment   $ 2,740,215     $ 2,557,987     $ 2,691,626     $ 2,772,256     $ 2,485,208  
                                         
                                         
Asset Quality Ratios                                        
Allowance for credit losses on loans and
unfunded commitments to total loans
    2.02 %     1.30 %     1.25 %     1.21 %     0.87 %
Past due or nonaccrual loans to total loans     2.58 %     1.99 %     2.12 %     1.88 %     2.47 %
Nonperforming assets to total assets     1.67 %     1.36 %     1.55 %     1.37 %     1.22 %
Nonperforming assets to total loans plus other
real estate owned
    2.50 %     2.10 %     2.19 %     2.05 %     1.92 %
Classified assets to bank total regulatory capital     26.45 %     25.50 %     18.35 %     20.81 %     19.50 %
                                         
                                         
Selected Average Balance Sheet Data (QTD Average)                                        
Investment securities   $ 947,453     $ 814,114     $ 802,525     $ 877,308     $ 907,910  
Total gross loans receivable     2,736,918       2,692,223       2,758,680       2,806,865       2,525,344  
Interest-earning assets     3,891,140       3,647,730       3,679,168       3,786,629       3,519,267  
Total assets     4,143,752       3,910,628       4,041,187       4,159,336       3,888,205  
Interest-bearing deposits     2,690,159       2,551,219       2,430,407       2,487,187       2,531,508  
Borrowings     139,360       172,730       377,158       384,727       355,303  
Total interest-bearing liabilities     2,829,519       2,723,949       2,807,565       2,871,914       2,886,811  
Total deposits     3,577,625       2,960,791       3,145,810       3,257,631       3,021,181  
Total liabilities     3,748,114       3,501,056       3,558,099       3,675,731       3,405,638  
Total stockholders' equity     395,638       409,572       483,088       483,605       482,567  
Tangible common equity*     347,262       355,025       329,039       327,411       325,470  
                                         
                                         
Performance ratios                                        
Return on average assets (ROAA) annualized     1.48 %     1.27 %     (8.90 )%     0.16 %     0.13 %
Return on average assets before income tax,
provision for loan losses and goodwill
impairment*
    1.33 %     1.59 %     1.24 %     1.42 %     1.20 %
Return on average equity (ROAE) annualized     15.45 %     12.13 %     (74.45 )%     1.40 %     1.05 %
Return on average equity before income tax,
provision for loan losses and goodwill
impairment*
    13.93 %     15.15 %     10.37 %     12.21 %     9.70 %
Return on average tangible common equity
(ROATCE) annualized*
    18.57 %     14.93 %     (108.31 )%     3.03 %     2.35 %
Return on average tangible common equity
adjusted for goodwill impairment*
    18.57 %     14.93 %     12.01 %     3.03 %     2.35 %
Yield on loans annualized     4.59 %     5.23 %     4.65 %     4.68 %     5.47 %
Cost of interest-bearing deposits annualized     0.36 %     0.43 %     0.50 %     0.63 %     1.09 %
Cost of total deposits annualized     0.27 %     0.37 %     0.39 %     0.48 %     0.91 %
Net interest margin annualized     3.31 %     3.88 %     3.47 %     3.49 %     3.67 %
Efficiency ratio*     64.18 %     67.19 %     67.38 %     61.98 %     68.88 %
Non-interest income / average assets     0.66 %     0.86 %     0.64 %     0.55 %     0.55 %
Non-interest expense / average assets     2.44 %     2.90 %     12.88 %     2.31 %     2.66 %
                                         
                                         
Capital Ratios                                        
Tier 1 Leverage Ratio     8.73 %     9.30 %     8.76 %     8.52 %     9.02 %
Common Equity Tier 1 Capital Ratio     12.52 %     12.82 %     12.76 %     12.02 %     11.67 %
Tier 1 Risk Based Capital Ratio     13.07 %     13.37 %     13.32 %     12.57 %     12.20 %
Total Risk Based Capital Ratio     17.02 %     17.35 %     17.35 %     15.33 %     13.00 %
Total stockholders' equity to total assets     9.48 %     10.16 %     10.40 %     11.41 %     12.10 %
Tangible common equity to tangible assets*     8.44 %     9.05 %     9.23 %     8.00 %     8.47 %
Book value per common share   $ 27.66     $ 28.04     $ 27.08     $ 31.53     $ 31.41  
Tangible book value per common share*   $ 24.34     $ 24.68     $ 23.72     $ 21.29     $ 21.10  
Tangible book value per diluted common share*   $ 23.87     $ 24.32     $ 23.57     $ 21.13     $ 20.96  

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 6. Non-GAAP Financial Measures

TABLE 4. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

  For the three months ended     For the three months ended  
  March 31, 2021     March 31, 2020  
  Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/Rate(3)(4)
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/Rate(3)(4)
 
Interest-earning assets                                              
Loans (1)                                              
Commercial and industrial $ 803,012     $ 9,234       4.66 %   $ 555,927     $ 7,881       5.70 %
Commercial real estate   971,825       11,441       4.77 %     913,065       12,942       5.70 %
Real estate construction   255,677       2,178       3.45 %     267,388       3,575       5.38 %
Residential real estate   394,329       4,452       4.58 %     496,186       5,302       4.30 %
Agricultural real estate   140,875       1,696       4.88 %     137,664       2,091       6.11 %
Consumer   76,413       963       5.11 %     67,160       1,275       7.64 %
Agricultural   94,787       1,037       4.44 %     87,954       1,310       5.99 %
Total loans   2,736,918       31,001       4.59 %     2,525,344       34,376       5.47 %
Securities                                              
Taxable securities   839,349       3,799       1.84 %     774,653       4,620       2.40 %
Nontaxable securities   108,104       724       2.72 %     133,257       966       2.92 %
Total securities   947,453       4,523       1.94 %     907,910       5,586       2.47 %
Federal funds sold and other   206,769       288       0.56 %     86,013       595       2.78 %
Total interest-earning assets $ 3,891,140       35,812       3.73 %   $ 3,519,267       40,557       4.64 %
Interest-bearing liabilities                                              
Savings, NOW and money market deposits $ 2,079,057       971       0.19 %   $ 1,724,774       3,125       0.73 %
Time deposits   611,102       1,439       0.96 %     806,734       3,739       1.86 %
Total interest-bearing deposits   2,690,159       2,410       0.36 %     2,531,508       6,864       1.09 %
FHLB advances   10,013       65       2.63 %     295,677       1,175       1.60 %
Other borrowings   129,347       1,578       4.95 %     59,626       423       2.85 %
Total interest-bearing liabilities $ 2,829,519       4,053       0.58 %   $ 2,886,811       8,462       1.18 %
                                               
Net interest income         $ 31,759                     $ 32,095          
Interest rate spread                   3.15 %                     3.46 %
                                               
Net interest margin (2)                   3.31 %                     3.67 %
                                               
(1) Average loan balances include nonaccrual loans.  
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.  
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.  

TABLE 5. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

  For the three months ended     For the three months ended  
  March 31, 2021     December 31, 2020  
  Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/Rate(3)(4)
    Average
Outstanding
Balance
    Interest
Income/
Expense
    Average
Yield/Rate(3)(4)
 
Interest-earning assets                                              
Loans (1)                                              
Commercial and industrial $ 803,012     $ 9,234       4.66 %   $ 782,433     $ 10,943       5.56 %
Commercial real estate   971,825       11,441       4.77 %     980,686       12,647       5.13 %
Real estate construction   255,677       2,178       3.45 %     216,714       2,301       4.22 %
Residential real estate   394,329       4,452       4.58 %     406,450       5,005       4.90 %
Agricultural real estate   140,875       1,696       4.88 %     135,337       2,244       6.60 %
Consumer   76,413       963       5.11 %     78,430       1,080       5.48 %
Agricultural   94,787       1,037       4.44 %     92,173       1,163       5.02 %
Total loans   2,736,918       31,001       4.59 %     2,692,223       35,383       5.23 %
Securities                                              
Taxable securities   839,349       3,799       1.84 %     698,985       3,408       1.94 %
Nontaxable securities   108,104       724       2.72 %     115,129       913       3.15 %
Total securities   947,453       4,523       1.94 %     814,114       4,321       2.11 %
Federal funds sold and other   206,769       288       0.56 %     141,393       285       0.80 %
Total interest-earning assets $ 3,891,140       35,812       3.73 %   $ 3,647,730       39,989       4.36 %
Interest-bearing liabilities                                              
Savings, NOW and money market deposits $ 2,079,057       971       0.19 %   $ 1,915,280       970       0.20 %
Time deposits   611,102       1,439       0.96 %     635,939       1,785       1.12 %
Total interest-bearing deposits   2,690,159       2,410       0.36 %     2,551,219       2,755       0.43 %
FHLB advances   10,013       65       2.63 %     39,245       94       0.95 %
Other borrowings   129,347       1,578       4.95 %     133,485       1,581       4.71 %
Total interest-bearing liabilities $ 2,829,519       4,053       0.58 %   $ 2,723,949       4,430       0.65 %
                                               
Net interest income         $ 31,759                     $ 35,559          
Interest rate spread                   3.15 %                     3.71 %
                                               
Net interest margin (2)                   3.31 %                     3.88 %
                                               
(1) Average loan balances include nonaccrual loans.  
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.  
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.  

TABLE 6. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2021     2020     2020     2020     2020  
                                         
Income before income taxes   $ 19,346     $ 14,599     $ (93,058 )   $ 2,186     $ 1,703  
Add: goodwill impairment                 104,831              
Less: tax effect     4,271       2,111       2,652       497       445  
Adjusted income   $ 15,075     $ 12,488     $ 9,121     $ 1,689     $ 1,258  
Weighted average common shares outstanding     14,464,291       14,760,810       15,040,407       15,209,483       15,387,697  
Effect of weighted average dilutive shares assuming positive net income     269,792       173,248       82,804       94,526       207,327  
Weighted average diluted shares     14,734,083       14,934,058       15,123,211       15,304,009       15,595,024  
Diluted earnings per share adjusted for goodwill impairment   $ 1.02     $ 0.84     $ 0.60     $ 0.11     $ 0.08  
                                         
Total stockholders' equity   $ 397,815     $ 407,649     $ 402,172     $ 479,766     $ 477,351  
Less: goodwill     31,601       31,601       31,601       136,432       136,432  
Less: core deposit intangibles, net     15,023       16,057       17,101       18,131       19,105  
Less: mortgage servicing asset, net                 1       2       4  
Less: naming rights, net     1,119       1,130       1,141       1,152       1,163  
Tangible common equity   $ 350,072     $ 358,861     $ 352,328     $ 324,049     $ 320,647  
Common shares issued at period end     14,383,913       14,540,556       14,853,487       15,218,301       15,198,986  
Diluted common shares outstanding at period end     14,668,287       14,756,378       14,945,282       15,333,977       15,297,319  
Book value per common share   $ 27.66     $ 28.04     $ 27.08     $ 31.53     $ 31.41  
Tangible book value per common share   $ 24.34     $ 24.68     $ 23.72     $ 21.29     $ 21.10  
Tangible book value per diluted common share   $ 23.87     $ 24.32     $ 23.57     $ 21.13     $ 20.96  
                                         
Total assets   $ 4,196,184     $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832  
Less: goodwill     31,601       31,601       31,601       136,432       136,432  
Less: core deposit intangibles, net     15,023       16,057       17,101       18,131       19,105  
Less: mortgage servicing asset, net                 1       2       4  
Less: naming rights, net     1,119       1,130       1,141       1,152       1,163  
Tangible assets   $ 4,148,441     $ 3,964,568     $ 3,815,727     $ 4,049,552     $ 3,787,128  
Total stockholders' equity to total assets     9.48 %     10.16 %     10.40 %     11.41 %     12.10 %
Tangible common equity to tangible assets     8.44 %     9.05 %     9.23 %     8.00 %     8.47 %
                                         
Total average stockholders' equity   $ 395,638     $ 409,572     $ 483,088     $ 483,605     $ 482,567  
Less: average intangible assets     48,376       54,547       154,049       156,194       157,097  
Average tangible common equity   $ 347,262     $ 355,025     $ 329,039     $ 327,411     $ 325,470  
Net income (loss) allocable to common stockholders   $ 15,075     $ 12,488     $ (90,405 )   $ 1,689     $ 1,258  
Add: goodwill impairment                 104,831              
Less: tax effect of goodwill impairment                 5,305              
Adjusted net income (loss) plus goodwill impairment     15,075       12,488       9,121       1,689       1,258  
Amortization of intangible assets     1,045       1,055       1,043       986       814  
Less: tax effect of intangible assets amortization     219       222       234       207       171  
Adjusted net income (loss) allocable to common stockholders   $ 15,901     $ 13,321     $ 9,930     $ 2,468     $ 1,901  
Return on total average stockholders' equity (ROAE) annualized     15.45 %     12.13 %     (74.45 )%     1.40 %     1.05 %
Return on average tangible common equity (ROATCE) annualized     18.57 %     14.93 %     (108.31 )%     3.03 %     2.35 %
Adjusted return on average tangible common equity     18.57 %     14.93 %     12.01 %     3.03 %     2.35 %
                                         
                                         
                                         
Non-interest expense   $ 24,881     $ 28,460     $ 130,835     $ 23,937     $ 25,758  
Less: merger expense     152       299                    
Less: goodwill impairment                 104,831              
Non-interest expense, excluding merger expense and goodwill impairment   $ 24,729     $ 28,161     $ 26,004     $ 23,937     $ 25,758  
Net interest income   $ 31,759     $ 35,559     $ 32,107     $ 32,891     $ 32,095  
Non-interest income     6,712       8,500       6,485       5,732       5,306  
Less: net gain on acquisition     (78 )     2,145                    
Less: net gains (losses) from securities transactions     17       (1 )           4       8  
Non-interest income, excluding gains (losses) from securities transactions   $ 6,773     $ 6,356     $ 6,485     $ 5,728     $ 5,298  
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions   $ 38,532     $ 41,915     $ 38,592     $ 38,619     $ 37,393  
Non-interest expense to net interest income plus non-interest income     64.67 %     64.60 %     339.02 %     61.98 %     68.87 %
Efficiency ratio     64.18 %     67.19 %     67.38 %     61.98 %     68.88 %
Net income (loss) allocable to common stockholders   $ 15,075     $ 12,488     $ (90,405 )   $ 1,689     $ 1,258  
Add: income tax provision     4,271       2,111       (2,653 )     497       445  
Add: provision for loan losses     (5,756 )     1,000       815       12,500       9,940  
Add: goodwill impairment                 104,831              
Adjusted net income   $ 13,590     $ 15,599     $ 12,588     $ 14,686     $ 11,643  
Total average assets   $ 4,143,752     $ 3,910,628     $ 4,041,187     $ 4,159,336     $ 3,888,205  
Total average stockholders' equity   $ 395,638     $ 409,572     $ 483,088     $ 483,605     $ 482,567  
Return on average assets (ROAA) annualized     1.48 %     1.27 %     (8.90 )%     0.16 %     0.13 %
Adjusted return on average assets     1.33 %     1.59 %     1.24 %     1.42 %     1.20 %
Adjusted return on average equity     13.93 %     15.15 %     10.37 %     12.21 %     9.70 %

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Source: Equity Bancshares, Inc.