Equity Bancshares, Inc. Fourth Quarter Results Include Net Interest Margin Expansion and Close of Common Equity Capital Raise

Reports Net Interest Margin of 4.17%, Closes the Quarter with a Tangible Common Equity Ratio of 9.95%

Equity Bancshares, Inc. (NYSE:EQBK), ("Equity", "the Company," "we," "us," "our"), the Wichita-based holding company of Equity Bank, reported net income of $17.0 million or $1.04 earnings per diluted share for the quarter ended December 31, 2024.

"Our Company had an excellent year as we realized expansion of our footprint, our balance sheet and our ownership group," said Brad S. Elliott, Chairman and CEO of Equity. "Our team remains committed to generating value for our customers, our employees and our shareholders and enters 2025 positioned to execute."

"During the quarter, we were able to successfully bolster our capital through a common stock raise," Mr. Elliott continued. "The additive equity positions our Company to be opportunistic in delivering on our two-prong growth strategy of organic production and strategic acquisition. We continue to be optimistic about opportunities to deploy these in the markets in which we operate."

Notable Items:

• The Company realized earnings per diluted share of $1.04. Margin for the quarter was 4.17% positively impacted by non-recurring nonaccrual reversals and prepayment fees of approximately $1.5 million. Excluding these non-recurring items, margin for the quarter was 4.04% an increase of 17 basis points as compared to the previous quarter.
• The Company realized book value per share expansion of $1.07 per share, or 3.2%. Tangible book value per share improved $1.69 per share, or 6.0%. Book value per share excluding AOCI increased $1.61, or 4.5%. Tangible common equity to tangible assets closed the period at 9.95%.
• The Company completed a common stock capital raise, issuing 2,067,240 shares at a price of $44.50 per share. After expense capital impact totaled $87.0 million.
• Deposit balances, excluding brokered, increased $211.2 million driven by seasonal inflows on municipality relationships. Full year growth in deposits, excluding brokered, was $304.2 million, or 7.3%.
• Loan balances closed the period at $3.5 billion, reflecting full year growth of $167.9 million, or 5.0%. The loan-to-deposit ratio closed the period at 80.0%.
• Realized opposing asset quality trends as nonaccrual loans declined from $31.3 million to $27.1, or 0.77% of total loans while classified assets increased to $73.5 million or 12.10% of bank regulatory capital. Reserves as a percentage of loans increased to 1.24%.
• The Company announced a $0.15 dividend on outstanding common shares as of December 31, 2024. Our repurchase program remains active, though no shares were purchased during the quarter.

The Company is also pleased to announce the return of Greg Kossover to the executive management team. Mr. Kossover will be returning to the team in February and will lead our Capital Markets division while also retaining his role as a director of the Company and Equity Bank.

"Greg's expertise, strategic vision, and commitment to excellence will be instrumental as we continue to drive growth and deliver exceptional value to our shareholders," said Rick Sems, Equity Bank President & CEO. "We look forward to the positive impact Greg will undoubtedly have as we move forward together."

Financial Results for the Quarter Ended December 31, 2024

Net income allocable to common stockholders was $17.0 million, or $1.04 per diluted share. Excluding merger expenses and gains or losses on security transactions, net income was $20.3 million, or $1.31 per diluted share in the previous quarter. The drivers of the periodic change are discussed in detail in the following sections.

Net Interest Income

Net interest income was $49.5 million for the period, as compared to $46.0 million for previous quarter. Adjusting the stated number for non-recurring nonaccrual reversals and excess prepayment fee realization of $1.5 million, net interest income was $48.0 for the quarter. The periodic increase primarily was driven by downward re-pricing of liabilities which outpaced the downward re-pricing of assets in an environment that saw multiple interest rate cuts by the FOMC. For the quarter, cost of interest bearing liabilities were 2.80% for the quarter down 31 basis points from 3.11% while yield on interest earning assets was 6.32% up 2 basis points from 6.30%. Excluding the previously discussed non-recurring items, yield on interest earning assets would have been 6.20%.

Total earning assets declined slightly during the quarter as higher loan balances were offset by declining cash and security positions as excess cash flows were used to payoff debt and brokered funding versus reinvestment.

Provision for Credit Losses

During the quarter, there was a provision of $98 thousand compared to a provision of $1.2 million in the previous quarter. The level of provision was primarily attributable to charge-offs during the quarter offset by declining loan balances. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayment rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. During the quarter, we realized net charge-offs of $322 thousand as compared to $1.6 million for the previous quarter.

Non-Interest Income

Total non-interest income was $8.8 million for the quarter, as compared to $9.3 million linked quarter. Excluding the $831 thousand gain on acquisition from linked quarter results, non-interest income was up $330 thousand.

Non-Interest Expense

Total non-interest expense for the quarter was $37.8 million as compared to $30.3 million for the previous quarter. Prior quarter results included $8.5 million in benefit from a borrower's repurchase of our preferred equity interest offset by a $742 thousand write-down on a previous bank location and $618 thousand in merger expense. Adjusting for these items, non-interest expense in the prior quarter would have been $37.4 million.

Income Tax Expense

The effective tax rate for the quarter ending, December 31, 2024, was 16.7% which remains consistent with the 16.7% reported for the prior quarter. The year-to-date effective tax rate is 20.0% as compared to 21.2% at September 30, 2024. The decrease in the year-to-date tax rate is associated with a decrease in the impact of tax rate reconciling items recognized as a percent of pre-tax book income, reductions in the effective state tax rate to align with state tax filings, and excess tax benefits related to stock compensation recognized in the quarter.

Loans, Total Assets and Funding

Loans held for investment were $3.5 billion at December 31, 2024, decreasing $100.1 million during the quarter. Total assets were $5.3 billion as of the end of the period, decreasing $23.2 million during the quarter.

Total deposits were $4.4 billion at December 31, 2024, increasing $11.9 million from the previous quarter end. Of the total deposit balance, non-interest-bearing accounts comprise approximately 21.8%. Total Federal Home Loan Bank borrowings were $178.1 million as of the end of the quarter, down $117.9 million from previous quarter end.

Asset Quality

As of December 31, 2024, Equity's allowance for credit losses to total loans was 1.2% up 3 basis points as compared to previous quarter end. Nonperforming assets were $34.7 million as of December 31, 2024, or 0.7% of total assets, compared to $32.4 million at September 30, 2024, or 0.6% of total assets. The increase was driven by one Main Street Lending Program loan which was foreclosed and is held in Other Real Estate Owned at its gross balance. Reducing this to reflect only the Bank's portion (5%) would result in ending non-performing assets of $31.0 million. Non-accrual loans were $27.1 million at December 31, 2024, as compared to $31.3 million at September 30, 2024. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $73.5 million, or 12.1% of regulatory capital, up from $48.9 million, or 8.3% of regulatory capital as of September 30, 2024.

Capital

Quarter over quarter, book capital increased $88.9 million to $592.9 million and tangible capital increased $90.0 million to $523.9 million. Tangible book value per share closed the quarter at $30.07, increasing 6.0% compared to prior quarter. The increase in capital is primarily due to completion of a common stock capital raise in December through which the Company issued 2,067,240 shares at a price of $44.50. After accounting for costs to issue, the raise added $87.0 million in common equity capital. The remaining change to book and tangible capital during the quarter was attributable to earnings offset by an increase in unrealized losses reflected in AOCI.

The Company's ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the total capital to risk-weighted assets was 18.1% and the total leverage ratio was 11.7% at December 31, 2024. At September 30, 2024, the Company's common equity tier 1 capital to risk-weighted assets ratio was 11.4%, the total capital to risk-weighted assets ratio was 14.8% and the total leverage ratio was 9.6%.

Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 14.1%, total capital to risk-weighted assets was 15.3% and the total leverage ratio was 10.9% at December 31, 2024. At September 30, 2024, Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 13.0%, the ratio of total capital to risk-weighted assets was 14.1% and the total leverage ratio was 10.4%.

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 a common comparable metric used by banks to understand the expense structure relative to 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 and provision for loan losses 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 "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 6 in the following press release tables.

Conference Call and Webcast

Equity's Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Chris Navratil, will hold a conference call and webcast to discuss fourth quarter results on Thursday, January 23, 2025, at 10 a.m. eastern time or 9 a.m. central time.

A live webcast of the call will be available on the Company's website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.

A replay of the call and webcast will be available following the close of the call 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 NYSE National, Inc. 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," "positioned," "forecast," "goal," "target," "would" and "outlook," or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity's control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity's expectations include competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Equity's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2024, 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, except as required by law. New risks and uncertainties arise from time to time and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity's behalf may issue.

Unaudited Financial Tables

• Table 1. Consolidated Statements of Income
• Table 2. Quarterly Consolidated Statements of Income
• 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