Equity Bancshares, Inc. Reports Fourth Quarter Results

Nachrichtenquelle: globenewswire
25.01.2021, 23:31  |  125   |   |   

Equity successfully acquired assets and deposits of Almena State Bank, originates $282.1 million of Main Street Lending Program loans through its continued support programs during the pandemic 
and adds $3.93 tangible book value per share in 2020

WICHITA, Kan., Jan. 25, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the fourth quarter ended December 31, 2020.

Equity reported net income of $12.5 million, or $0.84, per diluted share in the quarter ended December 31, 2020, and a net loss of $75.0 million or $4.97 per share for the year ended December 31, 2020. When excluding the $104.8 million goodwill impairment recognized in the quarter ended September 30, 2020, adjusted net income totaled $23.9 million, or $1.57 per diluted share, for the year ended December 31, 2020. The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank, acquired on October 23, 2020, from the Federal Deposit Insurance Corporation (“FDIC”) and the success of Equity’s customers in 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.

“No one could have imagined the challenges that our employees, customers and communities faced in 2020 due to the pandemic. The perseverance exhibited in collaborating with our customers through a period of great uncertainty showed the integrity, entrepreneurship and accountability of the Equity team. I am honored to be a part of a team that worked tirelessly for customers when they needed us, and in turn, our customers were able to support our communities in a time of need,” said Brad Elliott, Chairman and CEO of Equity.

“In a year that was dominated by events outside of Equity’s control, we took steps to fundamentally grow our franchise and position the Company for long-term stability and growth. We provided $24.3 million of reserves for potential loan losses, raised $75.0 million of proactive capital through a subordinated debt offering and grew tangible book value $3.93 per share, from $20.75 at December 31, 2019, to $24.68 at December 31, 2020, which is the highest level we have recorded as a publicly traded company.”

Notable Items:

  • Tangible book value per common share was $24.68 at December 31, 2020, as compared to $20.75 at December 31, 2019, representing an increase of 18.9% or $3.93 per share. The Company authorized a second stock repurchase program in October 2020, totaling 800,000 shares. During the quarter ended December 31, 2020, the Company repurchased 313,231 shares at a weighted average cost of $20.82, totaling $6.5 million.
  • The Company was anticipating adopting ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at December 31, 2020, effective January 1, 2020. On December 27, 2020, the President signed into law the 2021 Fiscal Year Omnibus Appropriations Bill, which included an option to delay adoption of ASU 2016-13 to January 1, 2022. The Company, after conferring with its advisors, will adopt CECL on January 1, 2021, and will not take the option to further delay adoption.
  • During the year ended December 31, 2020, Equity originated $282.1 million of loans through the Main Street Lending Program (“MSLP”). The MSLP program ended at December 31, 2020. Pursuant to the MSLP terms, 95% of the total originations were sold to a special purpose vehicle of the Federal Reserve Bank of Boston.
  • Of the $559.3 million of 2020 PPP loans originated, the Company’s customers have successfully had $102.8 million of PPP loans forgiven, resulting in the recognition of fee income totaling $3.8 million and $6.1 million in the three- and twelve-month periods ended December 31, 2020. At December 31, 2020, $253.7 million loans remain from the 2020 PPP with an unrecognized $4.5 million of fee income.
  • The Company completed the purchase of assets and assumption of deposit liabilities from the FDIC, as the receiver of Almena State Bank. Consequently, the Company recognized a bargain purchase gain of $2.1 million and $299 thousand of merger related expense in the quarter ended December 31, 2020.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.59 billion at December 31, 2020, as compared to total loans held for investment of $2.56 billion at December 31, 2019.
  • Total deposits of $3.45 billion at December 31, 2020, as compared to $3.06 billion at December 31, 2019.  Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $2.82 billion at December 31, 2020, relative to $2.23 billion at December 31, 2019.
  • Total assets were $4.01 billion at December 31, 2020, as compared to $3.95 billion at December 31, 2019.

Financial Results for the Quarter Ended December 31, 2020

Net income allocable to common stockholders was $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, as compared to the net loss allocable to common stockholders of $90.4 million, or $6.01 per diluted share, for the three months ended September 30, 2020, an increase of $102.9 million. This increase was primarily attributable to the goodwill impairment charge of $104.8 million taken during the quarter ended September 30, 2020, and a $2.1 million acquisition gain from the Almena State Bank transaction during the quarter ended December 31, 2020.   Net income, excluding the gain on acquisition and merger expense, was $10.1 million for the quarter ended December 31, 2020, or $0.67 per diluted share. Net income, excluding the goodwill impairment and using an assumed 22.5% effective tax rate for the quarter ended September 30, 2020, totaled $9.1 million, or $0.60 per diluted share.

Net Interest Income

Net interest income was $35.6 million for the three months ended December 31, 2020, as compared to $32.1 million for the three months ended September 30, 2020, an increase of $3.5 million, or 10.8%. The increase in net interest income was driven by the recognition of fee income from PPP loan forgiveness by the SBA, totaling $3.8 million in the three months ended December 31, 2020, compared to $1.3 million in the three months ended September 30, 2020. As a result of the PPP loan forgiveness, net interest margin increased 41 basis points to 3.88% for the three months ended December 31, 2020 from 3.47% for the three months ended September 30, 2020. The yield on earning assets improved 35 basis points to 4.36% for the quarter ended December 31, 2020 from 4.01% from the previous quarter. The cost of interest-bearing liabilities declined to 0.65% or five basis points for the quarter ended December 31, 2020 from 0.70% in the quarter ended September 30, 2020. The cost of interest-bearing deposits declined seven basis points to 0.43% for the three months ended December 31, 2020 from 0.50% in the previous quarter primarily attributed to the decline in the cost of time deposits, which declined 23 basis points between the quarters. The cost of other borrowings increased to 4.71% in the three months ended December 31, 2020 from 4.45% from the quarter ended September 30, 2020, mainly due to the entire $75.0 million of subordinated debt at 7.0% not being on the balance sheet for the entire third quarter.

Provision for Loan Losses

The provision for loan losses was $1.0 million for the three months ended December 31, 2020, as compared to $815 thousand for the three months ended September 30, 2020. For the three months ended December 31, 2020, we had net charge-offs of $1.4 million as compared to $806 thousand for three months ended September 30, 2020.

Non-Interest Income

Total non-interest income was $8.5 million for the three months ended December 31, 2020, or $6.4 million with the net gain on the purchase and assumption of Almena State Bank excluded, as compared to the $6.5 million reported for the three months ended September 30, 2020. Service charges and fees were $1.8 million representing an increase of $53 thousand, or 3.1%, from the quarter ended September 30, 2020. Debit card income totaled $2.4 million in the quarter ended December 31, 2020, decreasing $90 thousand, or 3.6%, from the quarter ended September 30, 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2020 was $28.5 million, or $28.2 million with merger expense excluded. When the goodwill impairment charge of $104.8 million is excluded from the previous quarter, pro-forma non-interest expense totaled $26.0 million for the quarter ended September 30, 2020. The $2.5 million increase is primarily attributed to a $1.5 million increase in other real estate owned expense and a $437 thousand increase in FDIC insurance assessments. The most significant contributor to the increase in other real estate owned expense was a $947 thousand valuation adjustment on two facilities that were closed in May 2020.

Asset Quality

As of December 31, 2020, Equity’s allowance for loan losses to total loans was 1.30%, as compared to 0.48% at December 31, 2019. Total reserves, including purchase discounts, to total loans were approximately 2.12% as of December 31, 2020, as compared to 0.85% at December 31, 2019. Nonperforming assets were $53.6 million as of December 31, 2020, or 1.34% of total assets. Nonperforming assets were $46.9 million at December 31, 2019, or 1.19% of total assets.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.8%, the total capital to risk-weighted assets was 17.4% and the total leverage ratio was 9.3% at December 31, 2020. At December 31, 2019, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.6%, the total capital to risk-weighted assets ratio was 12.6% and the total leverage ratio was 9.0%. The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.5%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 10.1% at December 31, 2020. At December 31, 2019, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the ratio of total capital to risk-weighted assets was 12.5% and the total leverage ratio was 8.9%.

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 we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. 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 we believe it can be used 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 fourth quarter 2020 results on Tuesday, January 26, 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. On Tuesday, January 26, 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. 6781789.

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

A replay of the call and webcast will be available two hours following the close of the call until February 2, 2021, accessible at (855) 859-2056 with conference ID no. 6781789 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 10, 2020, 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. Consolidated Statements of Operations
  • Table 2. Quarterly Consolidated Statements of Operations
  • Table 3. Consolidated Balance Sheets
  • Table 4. Selected Financial Highlights
  • Table 5. Year-to-Date Net Interest Income Analysis
  • Table 6. Quarter-to-Date Net Interest Income Analysis
  • Table 7. Quarter-Over-Quarter Net Interest Income Analysis
  • Table 8. Non-GAAP Financial Measures


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

    Three months ended
December 31,
    Year ended
December 31,
 
    2020     2019     2020     2019  
Interest and dividend income                                
Loans, including fees   $ 35,383     $ 36,687     $ 134,664     $ 149,298  
Securities, taxable     3,408       4,615       15,521       19,339  
Securities, nontaxable     913       1,037       3,682       4,180  
Federal funds sold and other     285       645       1,694       2,682  
Total interest and dividend income     39,989       42,984       155,561       175,499  
Interest expense                                
Deposits     2,755       8,533       16,582       40,914  
Federal funds purchased and retail repurchase agreements     25       39       105       155  
Federal Home Loan Bank advances     94       1,564       2,292       6,667  
Federal Reserve Bank discount window                 6        
Bank stock loan           147       415       654  
Subordinated debt     1,556       296       3,509       1,251  
Total interest expense     4,430       10,579       22,909       49,641  
                                 
Net interest income     35,559       32,405       132,652       125,858  
Provision for loan losses     1,000       1,055       24,255       18,354  
Net interest income after provision for loan losses     34,559       31,350       108,397       107,504  
Non-interest income                                
Service charges and fees     1,759       2,241       6,856       8,672  
Debit card income     2,401       2,101       9,136       8,230  
Mortgage banking     855       769       3,153       2,468  
Increase in value of bank-owned life insurance     489       504       1,941       1,998  
Net gain on acquisition     2,145             2,145        
Net gains (losses) from securities transactions     (1 )     (3 )     11       14  
Other     852       1,029       2,781       3,606  
Total non-interest income     8,500       6,641       26,023       24,988  
Non-interest expense                                
Salaries and employee benefits     14,053       11,918       54,129       52,122  
Net occupancy and equipment     2,206       2,342       8,784       8,674  
Data processing     2,748       2,688       10,991       10,124  
Professional fees     1,095       1,359       4,282       4,734  
Advertising and business development     801       901       2,498       3,075  
Telecommunications     510       486       1,873       2,079  
FDIC insurance     797       109       2,088       1,228  
Courier and postage     338       328       1,441       1,348  
Free nationwide ATM cost     423       440       1,609       1,680  
Amortization of core deposit intangibles     1,044       820       3,850       3,168  
Loan expense     161       267       789       875  
Other real estate owned     1,600       381       2,310       707  
Merger expenses     299             299       915  
Goodwill impairment                 104,831        
Other     2,385       2,807       9,216       8,906  
Total non-interest expense     28,460       24,846       208,990       99,635  
Income (loss) before income tax     14,599       13,145       (74,570 )     32,857  
Provision for income taxes     2,111       3,131       400       7,278  
Net income (loss) and net income (loss) allocable to common stockholders   $ 12,488     $ 10,014     $ (74,970 )   $ 25,579  
Basic earnings (loss) per share   $ 0.85     $ 0.65     $ (4.97 )   $ 1.64  
Diluted earnings (loss) per share   $ 0.84     $ 0.64     $ (4.97 )   $ 1.61  
Weighted average common shares     14,760,810       15,442,841       15,098,512       15,619,891  
Weighted average diluted common shares     14,934,058       15,684,673       15,098,512       15,843,139  

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
 
Interest and dividend income                                        
Loans, including fees   $ 35,383     $ 32,278     $ 32,627     $ 34,376     $ 36,687  
Securities, taxable     3,408       3,476       4,017       4,620       4,615  
Securities, nontaxable     913       923       880       966       1,037  
Federal funds sold and other     285       405       409       595       645  
Total interest and dividend income     39,989       37,082       37,933       40,557       42,984  
Interest expense                                        
Deposits     2,755       3,064       3,899       6,864       8,533  
Federal funds purchased and retail repurchase agreements     25       25       24       31       39  
Federal Home Loan Bank advances     94       471       552       1,175       1,564  
Federal Reserve Bank discount window                 6              
Bank stock loan                 306       109       147  
Subordinated debentures     1,556       1,415       255       283       296  
Total interest expense     4,430       4,975       5,042       8,462       10,579  
                                         
Net interest income     35,559       32,107       32,891       32,095       32,405  
Provision for loan losses     1,000       815       12,500       9,940       1,055  
Net interest income after provision for loan losses     34,559       31,292       20,391       22,155       31,350  
Non-interest income                                        
Service charges and fees     1,759       1,706       1,365       2,026       2,241  
Debit card income     2,401       2,491       2,201       2,043       2,101  
Mortgage banking     855       877       831       590       769  
Increase in value of bank-owned life insurance     489       489       481       482       504  
Net gain on acquisition     2,145                          
Net gains (losses) from securities transactions     (1 )           4       8       (3 )
Other     852       922       850       157       1,029  
Total non-interest income     8,500       6,485       5,732       5,306       6,641  
Non-interest expense                                        
Salaries and employee benefits     14,053       13,877       12,695       13,504       11,918  
Net occupancy and equipment     2,206       2,224       2,119       2,235       2,342  
Data processing     2,748       2,817       2,763       2,663       2,688  
Professional fees     1,095       877       943       1,367       1,359  
Advertising and business development     801       598       403       696       901  
Telecommunications     510       486       390       487       486  
FDIC insurance     797       360       414       517       109  
Courier and postage     338       366       353       384       328  
Free nationwide ATM cost     423       439       327       420       440  
Amortization of core deposit intangibles     1,044       1,030       974       802       820  
Loan expense     161       107       287       234       267  
Other real estate owned     1,600       133       269       308       381  
Merger expenses     299                          
Goodwill impairment           104,831                    
Other     2,385       2,690       2,000       2,141       2,807  
Total non-interest expense     28,460       130,835       23,937       25,758       24,846  
Income (loss) before income tax     14,599       (93,058 )     2,186       1,703       13,145  
Provision for income taxes (benefit)     2,111       (2,653 )     497       445       3,131  
Net income (loss) and net income (loss) allocable to common stockholders   $ 12,488     $ (90,405 )   $ 1,689     $ 1,258     $ 10,014  
Basic earnings (loss) per share   $ 0.85     $ (6.01 )   $ 0.11     $ 0.08     $ 0.65  
Diluted earnings (loss) per share   $ 0.84     $ (6.01 )   $ 0.11     $ 0.08     $ 0.64  
Weighted average common shares     14,760,810       15,040,407       15,209,483       15,387,697       15,442,841  
Weighted average diluted common shares     14,934,058       15,040,407       15,304,009       15,595,024       15,684,673  

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

    December 31,
2020
    September 30,
2020
    June 30,
2020
    March 31,
2020
    December 31,
2019
 
ASSETS                                        
Cash and due from banks   $ 280,150     $ 65,534     $ 178,045     $ 141,989     $ 88,973  
Federal funds sold     548       305       245       263       318  
Cash and cash equivalents     280,698       65,839       178,290       142,252       89,291  
Interest-bearing time deposits in other banks     249       499       2,248       2,498       2,498  
Available-for-sale securities     871,827       798,576       177,228       187,812       142,067  
Held-to-maturity securities(1)                 662,522       721,992       769,059  
Loans held for sale     12,394       9,053       4,802       6,494       5,933  
Loans, net of allowance for loan losses(2)     2,557,987       2,691,626       2,772,256       2,485,208       2,544,420  
Other real estate owned, net     11,733       8,727       7,374       5,870       8,293  
Premises and equipment, net     89,412       86,087       87,055       84,732       84,478  
Bank-owned life insurance     77,044       76,555       76,066       75,585       75,103  
Federal Reserve Bank and Federal Home Loan Bank stock     16,415       32,545       31,832       31,662       31,137  
Interest receivable     15,831       18,110       19,598       15,549       15,738  
Goodwill     31,601       31,601       136,432       136,432       136,432  
Core deposit intangibles, net     16,057       17,101       18,131       19,105       19,907  
Other     32,108       29,252       31,435       28,641       25,222  
Total assets   $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832     $ 3,949,578  
LIABILITIES AND STOCKHOLDERS’ EQUITY                                        
Deposits                                        
Demand   $ 791,639     $ 693,967     $ 756,613     $ 508,441     $ 481,298  
Total non-interest-bearing deposits     791,639       693,967       756,613       508,441       481,298  
Savings, NOW and money market     2,029,097       1,816,307       1,800,132       1,668,145       1,749,048  
Time     626,854       623,344       690,522       783,811       833,170  
Total interest-bearing deposits     2,655,951       2,439,651       2,490,654       2,451,956       2,582,218  
Total deposits     3,447,590       3,133,618       3,247,267       2,960,397       3,063,516  
Federal funds purchased and retail repurchase agreements     36,029       46,295       51,557       37,113       35,708  
Federal Home Loan Bank advances     10,144       167,862       344,900       389,620       324,373  
Bank stock loan                       40,000       8,990  
Subordinated debentures     87,684       87,537       55,575       14,638       14,561  
Contractual obligations     5,189       5,478       5,571       5,781       5,836  
Interest payable and other liabilities     19,071       22,609       20,633       18,932       18,534  
Total liabilities     3,605,707       3,463,399       3,725,503       3,466,481       3,471,518  
Commitments and contingent liabilities                                        
Stockholders’ equity                                        
Common stock     174       174       174       174       174  
Additional paid-in capital     386,820       386,017       384,955       383,850       382,731  
Retained earnings     50,787       38,299       128,704       127,015       125,757  
Accumulated other comprehensive income (loss)     19,781       21,074       3,390       3,769       (3 )
Employee stock loans     (43 )     (43 )     (43 )     (43 )     (77 )
Treasury stock     (49,870 )     (43,349 )     (37,414 )     (37,414 )     (30,522 )
Total stockholders’ equity     407,649       402,172       479,766       477,351       478,060  
Total liabilities and stockholders’ equity   $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832     $ 3,949,578  
                                         
(1) Fair market value of held-to-maturity securities   $     $     $ 689,206     $ 750,900     $ 783,911  
(2) Allowance for loan losses     33,709       34,087       34,078       21,915       12,232  

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2020     2020     2020     2020     2019  
Loans Held-For-Investment by Type                                        
Commercial real estate   $ 1,188,696     $ 1,188,329     $ 1,191,336     $ 1,200,762     $ 1,158,022  
Commercial and industrial     734,495       857,244       883,355       542,571       592,052  
Residential real estate     382,026       402,242       442,486       480,603       503,439  
Agricultural real estate     133,693       127,349       129,080       130,795       141,868  
Consumer     58,464       67,465       71,037       64,799       68,378  
Agricultural     94,322       83,084       89,040       87,593       92,893  
Total loans held-for-investment     2,591,696       2,725,713       2,806,334       2,507,123       2,556,652  
Allowance for loan losses     (33,709 )     (34,087 )     (34,078 )     (21,915 )     (12,232 )
Net loans held-for-investment   $ 2,557,987     $ 2,691,626     $ 2,772,256     $ 2,485,208     $ 2,544,420  
                                         
                                         
Asset Quality Ratios                                        
Allowance for loan losses to total loans     1.30 %     1.25 %     1.21 %     0.87 %     0.48 %
Past due or nonaccrual loans to total loans     2.11 %     2.12 %     1.88 %     2.47 %     1.66 %
Nonperforming assets to total assets     1.34 %     1.55 %     1.37 %     1.22 %     1.19 %
Nonperforming assets to total loans plus other real estate owned     2.06 %     2.19 %     2.05 %     1.92 %     1.83 %
Classified assets to bank total regulatory capital     25.50 %     18.35 %     20.81 %     19.50 %     21.24 %
                                         
                                         
Selected Average Balance Sheet Data (QTD Average)                                        
Investment securities   $ 814,114     $ 802,525     $ 877,308     $ 907,910     $ 911,923  
Total gross loans receivable     2,692,223       2,758,680       2,806,865       2,525,344       2,568,301  
Interest-earning assets     3,647,730       3,679,168       3,786,629       3,519,267       3,563,642  
Total assets     3,910,628       4,041,187       4,159,336       3,888,205       3,932,909  
Interest-bearing deposits     2,551,219       2,430,407       2,487,187       2,531,508       2,563,519  
Borrowings     172,730       377,158       384,727       355,303       377,561  
Total interest-bearing liabilities     2,723,949       2,807,565       2,871,914       2,886,811       2,941,080  
Total deposits     2,960,791       3,145,810       3,257,631       3,021,181       3,055,275  
Total liabilities     3,501,055       3,558,100       3,675,731       3,405,638       3,459,347  
Total stockholders' equity     409,572       483,088       483,605       482,567       473,562  
Tangible common equity*     355,025       329,039       327,411       325,470       315,569  
                                         
                                         
Performance ratios                                        
Return on average assets (ROAA) annualized     1.27 %     (8.90 )%     0.16 %     0.13 %     1.01 %
Return on average assets before income tax,
provision for loan losses and goodwill
impairment*
    1.59 %     1.24 %     1.42 %     1.20 %     1.43 %
Return on average equity (ROAE) annualized     12.13 %     (74.45 )%     1.40 %     1.05 %     8.39 %
Return on average equity before income tax,
provision for loan losses and goodwill
impairment*
    15.15 %     10.37 %     12.21 %     9.70 %     11.90 %
Return on average tangible common equity
(ROATCE) annualized*
    14.93 %     (108.31 )%     3.03 %     2.35 %     13.42 %
Return on average tangible common equity
adjusted for goodwill impairment*
    14.93 %     12.02 %     3.03 %     2.35 %     13.42 %
Yield on loans annualized     5.23 %     4.65 %     4.68 %     5.47 %     5.67 %
Cost of interest-bearing deposits annualized     0.43 %     0.50 %     0.63 %     1.09 %     1.32 %
Cost of total deposits annualized     0.37 %     0.39 %     0.48 %     0.91 %     1.11 %
Net interest margin annualized     3.88 %     3.47 %     3.49 %     3.67 %     3.61 %
Efficiency ratio*     67.19 %     67.38 %     61.98 %     68.88 %     63.63 %
Non-interest income / average assets     0.86 %     0.64 %     0.55 %     0.55 %     0.67 %
Non-interest expense / average assets     2.90 %     12.88 %     2.31 %     2.66 %     2.51 %
                                         
                                         
Capital Ratios                                        
Tier 1 Leverage Ratio     9.30 %     8.76 %     8.52 %     9.02 %     9.02 %
Common Equity Tier 1 Capital Ratio     12.82 %     12.76 %     12.02 %     11.67 %     11.63 %
Tier 1 Risk Based Capital Ratio     13.38 %     13.32 %     12.57 %     12.20 %     12.15 %
Total Risk Based Capital Ratio     17.36 %     17.35 %     15.33 %     13.00 %     12.59 %
Total stockholders' equity to total assets     10.16 %     10.40 %     11.41 %     12.10 %     12.10 %
Tangible common equity to tangible assets*     9.05 %     9.23 %     8.00 %     8.47 %     8.45 %
Book value per common share   $ 28.04     $ 27.08     $ 31.53     $ 31.41     $ 30.95  
Tangible book value per common share*   $ 24.68     $ 23.72     $ 21.29     $ 21.10     $ 20.75  
Tangible book value per diluted common share*   $ 24.32     $ 23.57     $ 21.13     $ 20.96     $ 20.39  

* 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 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

  For the year ended     For the year ended  
  December 31, 2020     December 31, 2019  
  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 $ 763,971     $ 35,601       4.66 %   $ 567,215     $ 34,225       6.03 %
Commercial real estate   952,083       50,667       5.32 %     1,012,146       57,316       5.66 %
Real estate construction   238,015       10,947       4.60 %     212,658       13,776       6.48 %
Residential real estate   449,789       19,894       4.42 %     519,119       24,338       4.69 %
Agricultural real estate   133,813       8,008       5.98 %     140,365       8,496       6.05 %
Consumer   70,064       4,603       6.57 %     70,390       5,563       7.90 %
Agricultural   88,206       4,944       5.61 %     85,747       5,584       6.51 %
Total loans   2,695,941       134,664       5.00 %     2,607,640       149,298       5.73 %
Securities                                              
Taxable securities   727,452       15,521       2.13 %     777,802       19,339       2.49 %
Nontaxable securities   122,783       3,682       3.00 %     142,816       4,180       2.93 %
Total securities   850,235       19,203       2.26 %     920,618       23,519       2.55 %
Federal funds sold and other   112,053       1,694       1.51 %     83,887       2,682       3.20 %
Total interest-earning assets $ 3,658,229       155,561       4.25 %   $ 3,612,145       175,499       4.86 %
Interest-bearing liabilities                                              
Savings, NOW and money market deposits $ 1,795,108       5,893       0.33 %   $ 1,699,952       21,008       1.24 %
Time deposits   704,921       10,689       1.52 %     967,803       19,906       2.06 %
Total interest-bearing deposits   2,500,029       16,582       0.66 %     2,667,755       40,914       1.53 %
FHLB advances   213,155       2,292       1.08 %     277,328       6,667       2.40 %
Other borrowings   109,064       4,035       3.70 %     69,270       2,060       2.97 %
Total interest-bearing liabilities $ 2,822,248       22,909       0.81 %   $ 3,014,353       49,641       1.65 %
                                               
Net interest income         $ 132,652                     $ 125,858          
Interest rate spread                   3.44 %                     3.21 %
                                               
Net interest margin (2)                   3.63 %                     3.48 %
                                               
(1) Average loan balances include nonaccrual loans.  
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.  
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.  
(4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.  

TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

  For the three months ended     For the three months ended  
  December 31, 2020     December 31, 2019  
  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 $ 782,433     $ 10,943       5.56 %   $ 568,868     $ 8,657       6.04 %
Commercial real estate   980,686       12,647       5.13 %     942,447       13,966       5.88 %
Real estate construction   216,714       2,301       4.22 %     236,447       3,308       5.55 %
Residential real estate   406,450       5,005       4.90 %     522,113       5,815       4.42 %
Agricultural real estate   135,337       2,244       6.60 %     144,824       2,236       6.13 %
Consumer   78,430       1,080       5.48 %     69,980       1,385       7.85 %
Agricultural   92,173       1,163       5.02 %     83,622       1,320       6.26 %
Total loans   2,692,223       35,383       5.23 %     2,568,301       36,687       5.67 %
Securities                                              
Taxable securities   698,985       3,408       1.94 %     768,867       4,615       2.38 %
Nontaxable securities   115,129       913       3.15 %     143,056       1,037       2.88 %
Total securities   814,114       4,321       2.11 %     911,923       5,652       2.46 %
Federal funds sold and other   141,393       285       0.80 %     83,418       645       3.07 %
Total interest-earning assets $ 3,647,730       39,989       4.36 %   $ 3,563,642       42,984       4.79 %
Interest-bearing liabilities                                              
Savings, NOW and money market deposits $ 1,915,280       970       0.20 %   $ 1,683,157       4,094       0.97 %
Time deposits   635,939       1,785       1.12 %     880,362       4,438       2.00 %
Total interest-bearing deposits   2,551,219       2,755       0.43 %     2,563,519       8,533       1.32 %
FHLB advances   39,245       94       0.95 %     310,592       1,564       2.00 %
Other borrowings   133,485       1,581       4.71 %     66,969       482       2.86 %
Total interest-bearing liabilities $ 2,723,949       4,430       0.65 %   $ 2,941,080       10,579       1.43 %
                                               
Net interest income         $ 35,559                     $ 32,405          
Interest rate spread                   3.71 %                     3.36 %
                                               
Net interest margin (2)                   3.88 %                     3.61 %
                                               
(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 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

  For the three months ended     For the three months ended  
  December 31, 2020     September 30, 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 $ 782,433     $ 10,943       5.56 %   $ 848,096     $ 8,400       3.94 %
Commercial real estate   980,686       12,647       5.13 %     979,775       12,886       5.23 %
Real estate construction   216,714       2,301       4.22 %     214,775       2,233       4.14 %
Residential real estate   406,450       5,005       4.90 %     429,965       4,733       4.38 %
Agricultural real estate   135,337       2,244       6.60 %     131,725       1,718       5.19 %
Consumer   78,430       1,080       5.48 %     69,485       1,104       6.32 %
Agricultural   92,173       1,163       5.02 %     84,859       1,204       5.65 %
Total loans   2,692,223       35,383       5.23 %     2,758,680       32,278       4.65 %
Securities                                              
Taxable securities   698,985       3,408       1.94 %     683,630       3,476       2.02 %
Nontaxable securities   115,129       913       3.15 %     118,895       923       3.09 %
Total securities   814,114       4,321       2.11 %     802,525       4,399       2.18 %
Federal funds sold and other   141,393       285       0.80 %     117,963       405       1.36 %
Total interest-earning assets $ 3,647,730       39,989       4.36 %   $ 3,679,168       37,082       4.01 %
Interest-bearing liabilities                                              
Savings, NOW and money market deposits $ 1,915,280       970       0.20 %   $ 1,784,891       875       0.19 %
Time deposits   635,939       1,785       1.12 %     645,516       2,189       1.35 %
Total interest-bearing deposits   2,551,219       2,755       0.43 %     2,430,407       3,064       0.50 %
FHLB advances   39,245       94       0.95 %     248,437       471       0.75 %
Other borrowings   133,485       1,581       4.71 %     128,721       1,440       4.45 %
Total interest-bearing liabilities $ 2,723,949       4,430       0.65 %   $ 2,807,565       4,975       0.70 %
                                               
Net interest income         $ 35,559                     $ 32,107          
Interest rate spread                   3.71 %                     3.31 %
                                               
Net interest margin (2)                   3.88 %                     3.47 %
                                               
(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 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

    As of and for the three months ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2020     2020     2020     2020     2019  
                                         
Income before income taxes   $ 14,599     $ (93,058 )   $ 2,186     $ 1,703     $ 13,145  
Add: goodwill impairment           104,831                    
Less: tax effect     2,111       2,652       497       445       3,131  
Adjusted income   $ 12,488     $ 9,121     $ 1,689     $ 1,258     $ 10,014  
Weighted average common shares outstanding     14,760,810       15,040,407       15,209,483       15,387,697       15,442,841  
Effect of weighted average dilutive shares assuming positive net income     173,248       82,804       94,526       207,327       241,832  
Weighted average diluted shares     14,934,058       15,123,211       15,304,009       15,595,024       15,684,673  
Diluted earnings per share adjusted for goodwill impairment   $ 0.84     $ 0.60     $ 0.11     $ 0.08     $ 0.64  
                                         
Total stockholders' equity   $ 407,649     $ 402,172     $ 479,766     $ 477,351     $ 478,060  
Less: goodwill     31,601       31,601       136,432       136,432       136,432  
Less: core deposit intangibles, net     16,057       17,101       18,131       19,105       19,907  
Less: mortgage servicing asset, net           1       2       4       5  
Less: naming rights, net     1,130       1,141       1,152       1,163       1,174  
Tangible common equity   $ 358,861     $ 352,328     $ 324,049     $ 320,647     $ 320,542  
Common shares issued at period end     14,540,556       14,853,487       15,218,301       15,198,986       15,444,434  
Diluted common shares outstanding at period end     14,756,378       14,945,282       15,333,977       15,297,319       15,719,810  
Book value per common share   $ 28.04     $ 27.08     $ 31.53     $ 31.41     $ 30.95  
Tangible book value per common share   $ 24.68     $ 23.72     $ 21.29     $ 21.10     $ 20.75  
Tangible book value per diluted common share   $ 24.32     $ 23.57     $ 21.13     $ 20.96     $ 20.39  
                                         
Total assets   $ 4,013,356     $ 3,865,571     $ 4,205,269     $ 3,943,832     $ 3,949,578  
Less: goodwill     31,601       31,601       136,432       136,432       136,432  
Less: core deposit intangibles, net     16,057       17,101       18,131       19,105       19,907  
Less: mortgage servicing asset, net           1       2       4       5  
Less: naming rights, net     1,130       1,141       1,152       1,163       1,174  
Tangible assets   $ 3,964,568     $ 3,815,727     $ 4,049,552     $ 3,787,128     $ 3,792,060  
Total stockholders' equity to total assets     10.16 %     10.40 %     11.41 %     12.10 %     12.10 %
Tangible common equity to tangible assets     9.05 %     9.23 %     8.00 %     8.47 %     8.45 %
                                         
Total average stockholders' equity   $ 409,572     $ 483,088     $ 483,605     $ 482,567     $ 473,562  
Less: average intangible assets     54,547       154,049       156,194       157,097       157,993  
Average tangible common equity   $ 355,025     $ 329,039     $ 327,411     $ 325,470     $ 315,569  
Net income (loss) allocable to common stockholders   $ 12,488     $ (90,405 )   $ 1,689     $ 1,258     $ 10,014  
Add: goodwill impairment   $     $ 104,831     $     $     $  
Less: tax effect of goodwill impairment   $     $ 5,305     $     $     $  
Adjusted net income (loss) plus goodwill impairment   $ 12,488     $ 9,121     $ 1,689     $ 1,258     $ 10,014  
Amortization of intangible assets     1,055       1,043       986       814       833  
Less: tax effect of intangible assets amortization     222       234       207       171       175  
Adjusted net income (loss) allocable to common stockholders   $ 13,321     $ 9,930     $ 2,468     $ 1,901     $ 10,672  
Return on total average stockholders' equity (ROAE) annualized     12.13 %     (74.45 )%     1.40 %     1.05 %     8.39 %
Return on average tangible common equity (ROATCE) annualized     14.93 %     (108.31 )%     3.03 %     2.35 %     13.42 %
Adjusted return on average tangible common equity     14.93 %     12.01 %     3.03 %     2.35 %     13.42 %
                                         
                                         
                                         
Non-interest expense   $ 28,460     $ 130,835     $ 23,937     $ 25,758     $ 24,846  
Less: merger expense     299                          
Less: goodwill impairment           104,831                    
Non-interest expense, excluding goodwill impairment   $ 28,161     $ 26,004     $ 23,937     $ 25,758     $ 24,846  
Net interest income   $ 35,559     $ 32,107     $ 32,891     $ 32,095     $ 32,405  
Non-interest income     8,500       6,485       5,732       5,306       6,641  
Less: net gain on acquisition     2,145                          
Less: net gains (losses) from securities transactions     (1 )           4       8       (3 )
Non-interest income, excluding gains (losses) from securities transactions   $ 6,356     $ 6,485     $ 5,728     $ 5,298     $ 6,644  
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions   $ 41,915     $ 38,592     $ 38,619     $ 37,393     $ 39,049  
Non-interest expense to net interest income plus non-interest income     64.60 %     339.02 %     61.98 %     68.87 %     63.63 %
Efficiency ratio     67.19 %     67.38 %     61.98 %     68.88 %     63.63 %
Net income (loss) allocable to common stockholders   $ 12,488     $ (90,405 )   $ 1,689     $ 1,258     $ 10,014  
Add: income tax provision     2,111       (2,653 )     497       445       3,131  
Add: provision for loan losses     1,000       815       12,500       9,940       1,055  
Add: goodwill impairment           104,831                    
Adjusted net income   $ 15,599     $ 12,588     $ 14,686     $ 11,643     $ 14,200  
Total average assets   $ 3,910,628     $ 4,041,187     $ 4,159,336     $ 3,888,205     $ 3,932,909  
Total average stockholders' equity   $ 409,572     $ 483,088     $ 483,605     $ 482,567     $ 473,562  
Return on average assets (ROAA) annualized     1.27 %     (8.90 )%     0.16 %     0.13 %     1.01 %
Adjusted return on average assets     1.59 %     1.24 %     1.42 %     1.20 %     1.43 %
Adjusted return on average equity     15.15 %     10.37 %     12.21 %     9.70 %     11.90 %



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Equity Bancshares, Inc. Reports Fourth Quarter Results Equity successfully acquired assets and deposits of Almena State Bank, originates $282.1 million of Main Street Lending Program loans through its continued support programs during the pandemic and adds $3.93 tangible book value per share in 2020 …

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