0001564590-22-018285 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2022	Apr. 29, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Trading Symbol	EQBK
Entity Registrant Name	EQUITY BANCSHARES INC
Entity Central Index Key	0001227500
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Class A Common Stock, Shares Outstanding		16,276,395
Entity File Number	001-37624
Entity Tax Identification Number	72-1532188
Entity Address, Address Line One	7701 East Kellogg Drive
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Wichita
Entity Address, State or Province	KS
Entity Address, Postal Zip Code	67207
City Area Code	316
Local Phone Number	612.6000
Entity Interactive Data Current	Yes
Title of 12(b) Security	Class A, Common Stock, par value $0.01 per share
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	KS
Document Quarterly Report	true
Document Transition Report	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 89,764	$ 259,131
Federal funds sold	286	823
Cash and cash equivalents	90,050	259,954
Available-for-sale securities	1,352,894	1,327,442
Loans held for sale	1,575	4,214
Loans, net of allowance for credit losses of $47,590 and $48,365	3,194,987	3,107,262
Other real estate owned, net	9,897	9,523
Premises and equipment, net	103,168	104,038
Bank-owned life insurance	120,928	120,787
Federal Reserve Bank and Federal Home Loan Bank stock	19,890	17,510
Interest receivable	16,923	18,048
Goodwill	54,465	54,465
Core deposit intangibles, net	13,830	14,879
Other	100,016	99,509
Total assets	5,078,623	5,137,631
Deposits
Demand	1,255,793	1,244,117
Total non-interest-bearing deposits	1,255,793	1,244,117
Savings, NOW and money market	2,511,478	2,522,289
Time	612,399	653,598
Total interest-bearing deposits	3,123,877	3,175,887
Total deposits	4,379,670	4,420,004
Federal funds purchased and retail repurchase agreements	48,199	56,006
Federal Home Loan Bank advances	50,000
Subordinated debt	96,010	95,885
Contractual obligations	17,307	17,692
Interest payable and other liabilities	35,422	47,413
Total liabilities	4,626,608	4,637,000
Commitments and contingent liabilities
Stockholders' equity
Common stock	204	203
Additional paid-in capital	480,106	478,862
Retained earnings	102,632	88,324
Accumulated other comprehensive income (loss), net of tax	(50,012)	1,776
Treasury stock	(80,915)	(68,534)
Total stockholders’ equity	452,015	500,631
Total liabilities and stockholders’ equity	$ 5,078,623	$ 5,137,631

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Loans, allowance for credit losses	$ 47,590	$ 48,365	$ 55,525	$ 33,709

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
Consolidated Statements of Income - USD ($) $ in Thousands	Mar. 31, 2022	Mar. 31, 2021
Interest and dividend income
Loans, including fees	$ 36,306	$ 31,001
Securities, taxable	5,391	3,799
Securities, nontaxable	655	724
Federal funds sold and other	300	288
Total interest and dividend income	42,652	35,812
Interest expense
Deposits	1,722	2,410
Federal funds purchased and retail repurchase agreements	33	22
Federal Home Loan Bank advances	9	65
Subordinated debt	1,599	1,556
Total interest expense	3,363	4,053
Net interest income	39,289	31,759
Provision (reversal) for credit losses	(412)	(5,756)
Net interest income after provision (reversal) for credit losses	39,701	37,515
Non-interest income
Increase in value of bank-owned life insurance	865	601
Net gain on acquisition		(78)
Other	2,405	1,291
Total non-interest income	9,022	6,712
Net gain from securities transactions	40	17
Non-interest expense
Salaries and employee benefits	15,068	12,722
Net occupancy and equipment	3,170	2,368
Data processing	3,769	2,663
Professional fees	1,171	1,073
Advertising and business development	976	682
Telecommunications	470	580
FDIC insurance	180	415
Courier and postage	423	369
Free nationwide ATM cost	501	472
Amortization of core deposit intangibles	1,050	1,034
Loan expense	185	238
Other real estate owned	(1)	5
Merger expenses	323	152
Other	2,174	2,108
Total non-interest expense	29,459	24,881
Income (loss) before income taxes	19,264	19,346
Provision (benefit) for income taxes	3,614	4,271
Net income (loss) and net income (loss) allocable to common stockholders	$ 15,650	$ 15,075
Basic earnings (loss) per share	$ 0.94	$ 1.04
Diluted earnings (loss) per share	$ 0.93	$ 1.02
Service Charges and Fees [Member]
Non-interest income
Non-interest income	$ 2,522	$ 1,596
Debit Card Income [Member]
Non-interest income
Non-interest income	2,628	2,350
Mortgage Banking [Member]
Non-interest income
Non-interest income	$ 562	$ 935

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 15,650	$ 15,075
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period on available-for-sale securities	(69,339)	(10,369)
Less: reclassification for net gains included in net income	(79)
Unrealized holding gains (losses) arising during the period on cash flow hedges	598
Total other comprehensive income (loss)	(68,820)	(10,369)
Tax effect	17,032	2,607
Other comprehensive income (loss), net of tax	(51,788)	(7,762)
Comprehensive income (loss)	$ (36,138)	$ 7,313

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Employee Stock Loans [Member]	Treasury Stock [Member]
Beginning balance at Dec. 31, 2020	$ 407,649	$ 174	$ 386,820	$ 50,787	$ 19,781	$ (43)	$ (49,870)
Beginning balance, shares at Dec. 31, 2020		14,540,556
Implementation of ASU 2016-13, current expected credit losses \| ASU 2016-13 [Member]	(12,403)			(12,403)
Net income	15,075			15,075
Other comprehensive income (loss), net of tax effects	(7,762)				(7,762)
Stock-based compensation	712		712
Common stock issued upon exercise of stock options	167		167
Common stock issued upon exercise of stock options, shares		11,483
Common stock issued under stock-based incentive plan		$ 1	(1)
Common stock issued under stock-based incentive plan, shares		47,265
Common stock issued under employee stock purchase plan	241		241
Common stock issued under employee stock purchase plan, share		17,621
Repayment on employee stock loans	43					43
Treasury stock purchases	(5,907)						(5,907)
Treasury stock purchases, shares		(233,012)
Ending balance at Mar. 31, 2021	397,815	$ 175	387,939	53,459	12,019		(55,777)
Ending balance, shares at Mar. 31, 2021		14,383,913
Beginning balance at Dec. 31, 2020	407,649	$ 174	386,820	50,787	19,781	$ (43)	(49,870)
Beginning balance, shares at Dec. 31, 2020		14,540,556
Ending balance at Dec. 31, 2021	500,631	$ 203	478,862	88,324	1,776		(68,534)
Ending balance, shares at Dec. 31, 2021		16,760,115
Net income	15,650			15,650
Other comprehensive income (loss), net of tax effects	(51,788)				(51,788)
Cash dividends - common stock, $0.08 per share	(1,318)			(1,318)
Dividend equivalents - restricted stock units, $0.08 per share	(24)			(24)
Stock-based compensation	804		804
Common stock issued upon exercise of stock options	50		50
Common stock issued upon exercise of stock options, shares		3,500
Common stock issued under stock-based incentive plan		$ 1	(1)
Common stock issued under stock-based incentive plan, shares		(61,460)
Common stock issued under employee stock purchase plan	391		391
Common stock issued under employee stock purchase plan, share		14,274
Treasury stock purchases	(12,381)						(12,381)
Treasury stock purchases, shares		(384,383)
Ending balance at Mar. 31, 2022	$ 452,015	$ 204	$ 480,106	$ 102,632	$ (50,012)		$ (80,915)
Ending balance, shares at Mar. 31, 2022		16,454,966

Consolidated Statements of Stockholders' Equity (Parenthetical)	3 Months Ended
	Mar. 31, 2022 $ / shares
Statement Of Stockholders Equity [Abstract]
Cash dividends declared per common share	$ 0.08
Restricted stock units dividend declared per share	$ 0.08

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net income	$ 15,650,000	$ 15,075,000
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation	804,000	712,000
Depreciation	1,172,000	1,011,000
Amortization of operating lease right-of-use asset	175,000	100,000
Amortization of cloud computing implementation costs	47,000	30,000
Provision (reversal) for credit losses	(412,000)	(5,756,000)
Net amortization (accretion) of purchase valuation adjustments	(1,430,000)	(361,000)
Amortization (accretion) of premiums and discounts on securities	1,926,000	2,261,000
Amortization of intangible assets	1,085,000	1,045,000
Deferred income taxes	(226,000)	1,687,000
Federal Home Loan Bank stock dividends	(18,000)	(2,000)
Loss (gain) on sales and valuation adjustments on other real estate owned	(172,000)	(171,000)
Net loss (gain) on sales and settlements of securities	(79,000)
Change in unrealized (gains) losses on equity securities	39,000	(17,000)
Loss (gain) on disposal of premises and equipment	(43,000)	(8,000)
Loss (gain) on sales of foreclosed assets	(49,000)	9,000
Loss (gain) on sales of loans	(463,000)	(793,000)
Originations of loans held for sale	(16,193,000)	(27,907,000)
Proceeds from the sale of loans held for sale	19,295,000	32,485,000
Increase in the value of bank-owned life insurance	(865,000)	(601,000)
Change in fair value of derivatives recognized in earnings	(810,000)	(350,000)
Gain on acquisition		78,000
Payments on operating lease payable	(205,000)	(123,000)
Net change in:
Interest receivable	1,125,000	(824,000)
Other assets	(101,000)	7,553,000
Interest payable and other liabilities	(12,448,000)	(1,407,000)
Net cash provided by (used in) operating activities	7,804,000	23,726,000
Cash flows (to) from investing activities
Purchases of available-for-sale securities	(153,850,000)	(242,563,000)
Proceeds from sales, calls, pay-downs and maturities of available-for-sale securities	57,134,000	103,660,000
Net change in loans	(85,273,000)	(100,306,000)
Purchase of mortgage loans		(89,450,000)
Purchase of government guaranteed loans	(2,293,000)	0
Purchase of premises and equipment	(309,000)	(1,921,000)
Proceeds from sale of premises and equipment	50,000	8,000
Proceeds from sale of foreclosed assets	20,063,000	37,000
Net redemptions (purchases) of Federal Home Loan Bank and Federal Reserve Bank stock	(2,362,000)	1,243,000
Net redemptions (purchases) of correspondent and miscellaneous other stock		(68,000)
Proceeds from sale of other real estate owned	205,000	1,402,000
Purchase of bank-owned life insurance		(25,000,000)
Proceeds from bank-owned life insurance death benefits	723,000
Net cash provided by (used in) investing activities	(165,912,000)	(352,958,000)
Cash flows (to) from financing activities
Net increase (decrease) in deposits	(40,311,000)	186,931,000
Net change in federal funds purchased and retail repurchase agreements	(7,807,000)	4,310,000
Net borrowings (repayments) on Federal Home Loan Bank line of credit	20,000,000
Proceeds from Federal Home Loan Bank term advances	122,128,000
Principal repayments on Federal Home Loan Bank term advances	(92,128,000)	(214,000)
Proceeds from Federal Reserve Bank discount window	1,000,000	1,000,000
Principal payments on Federal Reserve Bank discount window	(1,000,000)	(1,000,000)
Principal payments on employee stock loans		43,000
Proceeds from the exercise of employee stock options	50,000	167,000
Proceeds from employee stock purchase plan	391,000	241,000
Debt issuance cost		(16,000)
Purchase of treasury stock	(12,381,000)	(5,907,000)
Net change in contractual obligations	(385,000)	(333,000)
Dividends paid on common stock	(1,353,000)
Net cash provided by (used in) financing activities	(11,796,000)	185,222,000
Net change in cash and cash equivalents	(169,904,000)	(144,010,000)
Cash and cash equivalents, beginning of period	259,954,000	280,698,000
Ending cash and cash equivalents	90,050,000	136,688,000
Supplemental cash flow information:
Interest paid	4,739,000	3,035,000
Income taxes paid, net of refunds	82,000
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans	555,000	60,000
Other repossessed assets acquired in settlement of loans	$ 20,000	$ 59,000

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements include the accounts of Equity Bancshares, Inc., its wholly-owned subsidiaries, EBAC, LLC and Equity Bank and Equity Bank’s wholly-owned subsidiaries, EBHQ, LLC and SA Holdings, Inc. These entities are collectively referred to as the “Company”. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial information. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2022. Operating results for the three months ended March 31, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Reclassifications

Some items in prior financial statements were reclassified to conform to the current presentation. Management determined the items reclassified are immaterial to the consolidated financial statements taken as a whole and did not result in a change in equity or net income for the periods reported.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The transactions primarily include contract modifications; hedging relationships; and sale or transfer of debt securities classified as held-to-maturity. The guidance was effective immediately for the Company and the amendments may be applied prospectively through December 31, 2022. The Company’s contracts issued prior to December 31, 2021, are primarily LIBOR tenures that will continue to be published until June 30, 2023, and the Company has reviewed the respective fallback language of these contracts and believes that the language is operational. The Company will continually evaluate these contracts until the indexes are no longer published; however, the financial impact on our financial condition, results of operations and cash flows will depend on the population of contracts that are still outstanding on the date the underlying indexes are no longer published.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). ASU 2021-01 clarify that certain optional expedients and exceptions that are noted in Topic 848 apply to derivatives that are affected by the discounting transition. Certain provisions, if elected by the Company, apply to derivative instruments that use an interest rate for managing, discounting or contract price alignment that is modified as a result of reference rate reform. The guidance was effective immediately for the Company and the amendments may be applied prospectively through December 31, 2022. The Company’s contracts issued prior to December 31, 2021, are primarily LIBOR tenures that will continue to be published until June 30, 2023, and the Company has reviewed the respective fallback language of these contracts and believes that the language is operational. The Company will continually evaluate these contracts until the indexes are no longer published; however, the financial impact on the Company’s financial condition, results of operations and cash flows will depend on the population of contracts that are still outstanding on the date the underlying indexes are no longer published.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging – Portfolio Layer Method. ASU 2022-01 expands the current last-of-layer method to allow multiple hedged layers of a single closed portfolio; expands the scope of the portfolio layer method to include nonprepayable financial assets; addresses the types of hedging instruments that are

eligible in a single-layer hedge; provided additional guidance on the accounting for and disclosure of hedging basis adjustments; and provided guidance on how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. The guidance will be effective for the Company in fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This guidance requires a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. The Company is currently evaluating the guidance but does not expect it will have a material financial impact on its financial condition, results of operations and cash flows.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326), Trouble Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for loan restructurings by creditor when a borrower is experiencing financial difficulty. Creditors will be required to apply the refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. Additionally, ASU 2022-02 requires that public business entities disclose gross write offs by year of origination for financing receivables and net investment in leases within the scope of Financial Instruments – Credit Losses – Measured at Amortized Cost of the Accounting Standards Codification. The guidance is effective for the Company for fiscal years beginning after December 31, 2022, including interim periods within those fiscal years. The Company is permitted to apply the guidance prospectively or through a modified retrospective method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Since the Company had adopted ASU 2016-13 effective January 1, 2021, the Company is permitted to early adopt the guidance in totality or individually for the topics covered in this update. The Company will not be early adopting this guidance and does not expect the guidance to have a material financial impact on our financial condition, results of operations and cash flows, but will impact the Company’s future loan disclosures.

SECURITIES

3 Months Ended

Mar. 31, 2022

Investments Debt And Equity Securities [Abstract]

SECURITIES

NOTE 2 – SECURITIES

The amortized cost and fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are listed below.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
March 31, 2022
Available-for-sale securities
U.S. Government-sponsored entities	$	123,724	$	—	$	(8,489	)	$	—	$	115,235
U.S. Treasury securities		257,151		—		(13,895	)		—		243,256
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		625,214		896		(29,595	)		—		596,515
Private label residential mortgage-backed securities		207,043		—		(10,761	)		—		196,282
Corporate		56,576		322		(559	)		—		56,339
Small Business Administration loan pools		15,708		—		(435	)		—		15,273
State and political subdivisions		134,469		877		(5,352	)		—		129,994
	$	1,419,885	$	2,095	$	(69,086	)	$	—	$	1,352,894

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
December 31, 2021
Available-for-sale securities
U.S. Government-sponsored entities	$	124,898	$	13	$	(1,504	)	$	—	$	123,407
U.S. Treasury securities		157,289		—		(1,687	)		—		155,602
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		661,584		10,215		(6,912	)		—		664,887
Private label residential mortgage-backed securities		173,717		—		(2,029	)		—		171,688
Corporate		52,555		1,437		(215	)		—		53,777
Small Business Administration loan pools		16,568		13		(106	)		—		16,475
State and political subdivisions		138,404		3,618		(416	)		—		141,606
	$	1,325,015	$	15,296	$	(12,869	)	$	—	$	1,327,442

The fair value and amortized cost of debt securities at March 31, 2022, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	Available-for-Sale
	Amortized Cost		Fair Value
Within one year	$	6,325	$	6,363
One to five years		235,854		227,053
Five to ten years		263,257		248,913
After ten years		82,192		77,768
Mortgage-backed securities		832,257		792,797
Total debt securities	$	1,419,885	$	1,352,894

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately $844,630 at March 31, 2022, and $892,182 at December 31, 2021.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2022, and December 31, 2021.

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2022
Available-for-sale securities
U.S. Government-sponsored entities	$	115,235	$	(8,489	)	$	—	$	—		$	115,235	$	(8,489	)
U.S. Treasury securities		243,256		(13,895	)		—		—			243,256		(13,895	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		433,989		(19,841	)		97,065		(9,754	)		531,054		(29,595	)
Private label residential mortgage-backed securities		191,560		(10,490	)		4,722		(271	)		196,282		(10,761	)
Corporate		26,441		(559	)		—		—			26,441		(559	)
Small Business Administration loan pools		6,431		(374	)		8,842		(61	)		15,273		(435	)
State and political subdivisions		61,392		(5,352	)		—		—			61,392		(5,352	)
Total temporarily impaired securities	$	1,078,304	$	(59,000	)	$	110,629	$	(10,086	)	$	1,188,933	$	(69,086	)
December 31, 2021
Available-for-sale securities
U.S. Government-sponsored entities	$	117,618	$	(1,504	)	$	—	$	—		$	117,618	$	(1,504	)
U.S. Treasury securities		155,601		(1,687	)		—		—			155,601		(1,687	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		378,057		(6,860	)		2,868		(52	)		380,925		(6,912	)
Private label residential mortgage-backed securities		159,381		(1,978	)		2,208		(51	)		161,589		(2,029	)
Corporate		4,785		(215	)		—		—			4,785		(215	)
Small Business Administration loan pools		15,459		(106	)		—		—			15,459		(106	)
State and political subdivisions		28,443		(416	)		—		—			28,443		(416	)
Total temporarily impaired securities	$	859,344	$	(12,766	)	$	5,076	$	(103	)	$	864,420