Equity Bancshares, Inc. Reports First Quarter Results; Exhibiting Stability of Deposits and Continued Improvement in Asset Quality

来源: Nasdaq GlobeNewswire / 18 4月 2023 17:56:40 America/New_York

WICHITA, Kan., April 18, 2023 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $12.3 million and $0.77 earnings per diluted share for the quarter ended March 31, 2023.

“Equity positioned itself to capture deposits to ensure balance sheet stability by adhering to previously established risk management guidelines in our loan and investment portfolios. During the quarter, Equity experienced steady deposits and have used that stability as a catalyst to grow and increase relationships with commercial customers,” said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc. “Equity is positioned to take advantage of opportunities through the potential economic downturn. We have high levels of regulatory and tangible capital, excellent credit quality, and expertise in mergers and acquisitions. We will look to be the partner of choice in our footprint.”

Mr. Elliott continued, “As a strong community bank, we have a conservative risk management philosophy toward managing concentrations across industries and geographies. As a result, we have a diversified, stable deposit base due to the same granularity we exhibit in our loan portfolio. Our balance sheet risk remains attractive, exhibited by our loan to deposit ratio of 77.7%. We have not taken outsized risks or over leveraged the balance sheet to artificially boost earnings in the short term. We will continue to be a stable and reliable financial expert to our customers and grow our tangible book value through prudent capital management.”

Notable Items:

Total deposits increased $46.1 million during the quarter or 4.4% linked quarter annualized while the Loan to Deposit ratio held flat at 77.7% as compared to 78.1% as of December 31, 2022.
Cash and cash equivalents increased $145.9 million during the quarter growing as a percentage of Total Assets to 4.9% in the first quarter as compared to 2.1% linked quarter.
Equity repurchased $9.6 million of common stock representing 2.0% of shares outstanding as of the end of the first quarter.
The Company’s loan growth, excluding PPP and branch sales, was $19.1 million, or 2.4% linked quarter annualized including 6.4% annualized growth within the commercial and commercial real estate portfolios.
Book Value per Common Share increased $1.29 linked quarter to $27.03, while Tangible Book Value per Common Share increased $1.29 to $22.96.
The ratio of non-performing assets to total assets improved 4bps linked quarter to 0.3%, and the ratio of Classified Assets to Bank Regulatory Capital remained relatively constant at 10.1% from 10.0%.

Financial Results for the Quarter Ended March 31, 2023

Net income allocable to common stockholders was $12.3 million, or $0.77 per diluted share, for the three months ended March 31, 2023, as compared to $11.6 million, or $0.72 per diluted share, for the three months ended December 31, 2022. The increase during the quarter was primarily driven by an increase in non-interest income of $760 thousand and a decrease in income tax expense of $1.1 million.

Net Interest Income

Net interest income was $39.1 million for the three months ended March 31, 2023, as compared to $42.0 million for the three months ended December 31, 2022, a decrease of $2.9 million, or 6.9%. The yield on interest-earning assets increased 27 basis points to 4.94%. The cost of interest-bearing deposits increased by 68 basis points during the quarter, moving from 1.05% at December 31, 2022, to 1.73% at March 31, 2023.

During the quarter, the Company enhanced its overall liquidity position by adding on-balance sheet cash, resulting in a three basis point adverse impact to net interest margin due to the increase in average earning assets and negligible impact to net interest income.

Average interest-bearing deposits moved up slightly during the quarter as the Company experienced a continued compositional shift from noninterest-bearing deposits into interest bearing categories. At March 31, 2023, non-interest bearing deposits declined $85.2 million from December 31, 2022 and $243.1 million from March 31, 2022. The majority of the decline over the last 12 months has been related to average balance declines primarily associated with spending excess liquidity from pandemic governmental support programs.

Provision for Credit Losses

During the three months ended March 31, 2023, there was a net release of $366 thousand compared to a net release of $151 thousand in the previous quarter. The release of provision for the quarter is the result of continued positive credit trends without realization of meaningful losses. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayments rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. For the three months ended March 31, 2023, we had net charge-offs of $377 thousand as compared to $501 thousand for the three months ended December 31, 2022.

Non-Interest Income

Total non-interest income was $9.1 million for the three months ended March 31, 2023, as compared to $8.3 million for the three months ended December 31, 2022, or an increase of 9.1%, quarter-over-quarter. The $760 thousand increase was primarily due to increases in bank owned life insurance of $825 thousand and other non-interest income of $530 thousand primarily consisting of asset quality improvements on previously acquired loan relationships, partially offset by decreases in gain on acquisition and branch sales of $422.

Non-Interest Expense

Total non-interest expense for the quarter ended March 31, 2023, was $33.7 million as compared to $35.2 million for the quarter ended December 31, 2022. The $1.5 million change was primarily due to decreases in advertising and business development of $744 thousand, data processing of $418 thousand and other non-interest expense of $308 thousand, partially offset by an increase in salaries and employee benefits of $579 thousand.

Income Tax Expense

At March 31, 2023, the effective tax rate for the quarter was 17.0% as compared to an annual rate of 17.9% in 2022. The reduction as compared to 2022 is associated with an increase in tax benefits related to the implementation of tax planning initiatives and associated reductions in state income tax expense offset by a reduction to tax credits when taken as a percentage of pre-tax income.

Loans, Total Assets and Funding

Loans held for investment were $3.33 billion at March 31, 2023, increasing $19.1 million or 2.3% annualized, from December 31, 2022. Included in the annual growth, is $36.3 million within the commercial and industrial and commercial real estate portfolios, or 6.4%. Total assets were $5.16 billion as of March 31, 2023 increasing $172.7 million or 3.4% from December 31, 2022.

Total deposits were $4.29 billion at March 31, 2023, increasing 4.3% annualized compared to previous quarter end. Of this balance, non-interest bearing accounts comprise approximately 23.6%. Advances from the FHLB declined $27.6 million to $111.2 million during the quarter, while borrowings from the Federal Reserve’s Bank Term Funding Program increased to $140.0 million at March 31, 2023.

Asset Quality

As of March 31, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.4% as compared to December 31, 2022. Nonperforming assets were $17.1 million as of March 31, 2023, or 0.3% of total assets, compared to $18.2 million at December 31, 2022, or 0.4% of total assets. Non-accrual loans were $16.6 million at March 31, 2023, as compared to $17.6 million at December 31, 2022. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $59.9 million, or 10.1% of regulatory capital, up from $58.7 million, or 10.0% of regulatory capital as of December 31, 2022.

Capital

During the quarter, the Company realized expansion in both book and tangible capital, as well as book and tangible capital per share as dividends and costs incurred to repurchase shares were outpaced by earnings and partial recovery of the negative fair value mark on the investment portfolio.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.2%, the total capital to risk-weighted assets was 16.0% and the total leverage ratio was 9.6% at March 31, 2023. At December 31, 2022, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.3%, the total capital to risk-weighted assets ratio was 16.1% and the total leverage ratio was 9.6%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.4%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 10.8% at March 31, 2023. At December 31, 2022, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.8%.

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, Eric Newell, will hold a conference call and webcast to discuss first quarter results on Wednesday, April 19, 2023, 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 two hours following the close of the call until April 26, 2023, accessible 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,” “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 COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2023, 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.

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.
(913) 583-8004
jhanley@equitybank.com

Unaudited Financial Tables

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

TABLE 1. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
	As of and for the three months ended
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Interest and dividend income
Loans, including fees	$	48,381		$	46,149		$	41,555		$	36,849		$	36,306
Securities, taxable		5,947			5,946			5,792			5,584			5,391
Securities, nontaxable		669			678			687			678			655
Federal funds sold and other		1,126			651			514			513			300
Total interest and dividend income		56,123			53,424			48,548			43,624			42,652
Interest expense
Deposits		13,821			8,013			4,403			2,183			1,722
Federal funds purchased and retail repurchase agreements		195			82			71			46			33
Federal Home Loan Bank advances		1,018			1,500			409			176			9
Federal Reserve Bank borrowings		135			—			—			—			—
Subordinated debt		1,844			1,798			1,721			1,653			1,599
Total interest expense		17,013			11,393			6,604			4,058			3,363

Net interest income		39,110			42,031			41,944			39,566			39,289
Provision (reversal) for credit losses		(366	)		(151	)		(136	)		824			(412	)
Net interest income after provision (reversal) for credit losses		39,476			42,182			42,080			38,742			39,701
Non-interest income
Service charges and fees		2,545			2,705			2,788			2,617			2,522
Debit card income		2,554			2,557			2,682			2,810			2,628
Mortgage banking		88			116			310			428			562
Increase in value of bank-owned life insurance		1,583			758			754			736			865
Net gain on acquisition and branch sales		—			422			—			540			—
Net gains (losses) from securities transactions		32			14			(17	)		(32	)		40
Other		2,287			1,757			2,452			2,538			2,405
Total non-interest income		9,089			8,329			8,969			9,637			9,022
Non-interest expense
Salaries and employee benefits		16,692			16,113			15,442			15,383			15,068
Net occupancy and equipment		2,879			2,919			3,127			3,007			3,170
Data processing		3,916			4,334			4,138			3,642			3,769
Professional fees		1,384			1,404			1,265			1,111			1,171
Advertising and business development		1,159			1,903			1,191			972			976
Telecommunications		485			517			487			442			470
FDIC insurance		360			360			340			260			180
Courier and postage		458			533			436			489			423
Free nationwide ATM cost		525			510			551			541			501
Amortization of core deposit intangibles		918			924			957			1,111			1,050
Loan expense		117			262			174			207			185
Other real estate owned		119			388			188			14			(1	)
Merger expenses		—			68			115			88			323
Other		4,706			5,014			3,825			4,169			2,174
Total non-interest expense		33,718			35,249			32,236			31,436			29,459
Income (loss) before income tax		14,847			15,262			18,813			16,943			19,264
Provision for income taxes (benefit)		2,524			3,654			3,642			1,684			3,614
Net income (loss) and net income (loss) allocable to common stockholders	$	12,323		$	11,608		$	15,171		$	15,259		$	15,650
Basic earnings (loss) per share	$	0.78		$	0.73		$	0.94		$	0.95		$	0.94
Diluted earnings (loss) per share	$	0.77		$	0.72		$	0.93		$	0.94		$	0.93
Weighted average common shares		15,858,808			15,948,360			16,056,658			16,206,978			16,652,556
Weighted average diluted common shares		16,028,051			16,204,185			16,273,231			16,413,248			16,869,152

TABLE 2. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
ASSETS
Cash and due from banks	$	249,982		$	104,013		$	155,039		$	103,126		$	89,764
Federal funds sold		384			415			374			458			286
Cash and cash equivalents		250,366			104,428			155,413			103,584			90,050
Available-for-sale securities		1,183,247			1,184,390			1,198,962			1,288,180			1,352,894
Held-to-maturity securities		1,944			1,948			—			—			—
Loans held for sale		648			349			1,518			1,714			1,575
Loans, net of allowance for credit losses⁽¹⁾		3,285,515			3,265,701			3,208,524			3,175,208			3,194,987
Other real estate owned, net		4,171			4,409			10,412			12,969			9,897
Premises and equipment, net		104,789			101,492			100,566			101,212			103,168
Bank-owned life insurance		122,971			123,176			122,418			121,665			120,928
Federal Reserve Bank and Federal Home Loan Bank stock		33,359			21,695			24,428			21,479			19,890
Interest receivable		20,461			20,630			18,497			16,519			16,923
Goodwill		53,101			53,101			53,101			53,101			54,465
Core deposit intangibles, net		9,678			10,596			11,598			12,554			13,830
Other		86,466			89,736			94,978			93,971			100,016
Total assets	$	5,156,716		$	4,981,651		$	5,000,415		$	5,002,156		$	5,078,623
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	1,012,671		$	1,097,899		$	1,217,094		$	1,194,863		$	1,255,793
Total non-interest-bearing deposits		1,012,671			1,097,899			1,217,094			1,194,863			1,255,793
Demand, savings and money market		2,334,463			2,329,584			2,335,847			2,445,545			2,511,478
Time		939,799			814,324			673,670			651,363			612,399
Total interest-bearing deposits		3,274,262			3,143,908			3,009,517			3,096,908			3,123,877
Total deposits		4,286,933			4,241,807			4,226,611			4,291,771			4,379,670
Federal funds purchased and retail repurchase agreements		45,098			46,478			47,443			52,750			48,199
Federal Home Loan Bank advances and Federal Reserve Bank borrowings		251,222			138,864			186,001			80,000			50,000
Subordinated debt		96,522			96,392			96,263			96,135			96,010
Contractual obligations		19,372			15,218			15,562			15,813			17,307
Interest payable and other liabilities		32,446			32,834			32,729			37,572			35,422
Total liabilities		4,731,593			4,571,593			4,604,609			4,574,041			4,626,608
Commitments and contingent liabilities
Stockholders’ equity
Common stock		206			205			204			204			204
Additional paid-in capital		486,658			484,989			482,668			480,897			480,106
Retained earnings		150,810			140,095			130,114			116,576			102,632
Accumulated other comprehensive income (loss), net of tax		(101,238	)		(113,511	)		(120,918	)		(77,426	)		(50,012	)
Treasury stock		(111,313	)		(101,720	)		(96,262	)		(92,136	)		(80,915	)
Total stockholders’ equity		425,123			410,058			395,806			428,115			452,015
Total liabilities and stockholders’ equity	$	5,156,716		$	4,981,651		$	5,000,415		$	5,002,156		$	5,078,623

⁽¹⁾ Allowance for credit losses	$	45,103		$	45,847		$	46,499		$	48,238		$	47,590

TABLE 3. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)
	As of and for the three months ended
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Loans Held For Investment by Type
Commercial real estate	$	1,746,834		$	1,721,269		$	1,655,646		$	1,643,068		$	1,552,134
Commercial and industrial		605,576			594,862			607,722			578,899			629,181
Residential real estate		563,791			570,550			573,431			578,936			613,928
Agricultural real estate		202,274			199,189			200,415			197,938			198,844
Agricultural		106,169			120,003			115,048			124,753			150,077
Consumer		105,974			105,675			102,761			99,852			98,413
Total loans held-for-investment		3,330,618			3,311,548			3,255,023			3,223,446			3,242,577
Allowance for credit losses		(45,103	)		(45,847	)		(46,499	)		(48,238	)		(47,590	)
Net loans held for investment	$	3,285,515		$	3,265,701		$	3,208,524		$	3,175,208		$	3,194,987


Asset Quality Ratios
Allowance for credit losses on loans to total loans		1.35	%		1.38	%		1.43	%		1.50	%		1.47	%
Past due or nonaccrual loans to total loans		0.66	%		0.72	%		0.94	%		0.78	%		0.82	%
Nonperforming assets to total assets		0.33	%		0.37	%		0.59	%		0.74	%		0.74	%
Nonperforming assets to total loans plus other real estate owned		0.51	%		0.55	%		0.91	%		1.14	%		1.15	%
Classified assets to bank total regulatory capital		10.09	%		9.98	%		11.03	%		13.08	%		17.12	%


Selected Average Balance Sheet Data (QTD Average)
Investment securities	$	1,185,482		$	1,184,452		$	1,272,414		$	1,319,099		$	1,397,421
Total gross loans receivable		3,305,681			3,275,284			3,240,998			3,216,853			3,195,787
Interest-earning assets		4,611,019			4,538,177			4,602,568			4,675,967			4,715,389
Total assets		4,994,417			4,930,231			4,988,755			5,067,686			5,108,120
Interest-bearing deposits		3,235,557			3,032,902			3,081,245			3,112,300			3,163,777
Borrowings		247,932			299,191			221,514			238,062			160,094
Total interest-bearing liabilities		3,483,489			3,335,557			3,302,759			3,350,362			3,323,871
Total deposits		4,279,451			4,185,904			4,283,855			4,340,196			4,393,879
Total liabilities		4,573,918			4,531,959			4,552,564			4,630,204			4,615,521
Total stockholders’ equity		420,500			398,270			436,191			437,483			492,599
Tangible common equity*		356,053			332,820			369,746			368,505			422,418


Performance ratios
Return on average assets (ROAA) annualized		1.00	%		0.93	%		1.21	%		1.21	%		1.24	%
Return on average assets before income tax and provision for loan losses*		1.18	%		1.22	%		1.49	%		1.41	%		1.50	%
Return on average equity (ROAE) annualized		11.89	%		11.56	%		13.80	%		13.99	%		12.88	%
Return on average equity before income tax and provision for loan losses*		13.97	%		15.05	%		16.99	%		16.29	%		15.52	%
Return on average tangible common equity (ROATCE) annualized*		14.89	%		14.74	%		17.12	%		17.60	%		15.85	%
Yield on loans annualized		5.94	%		5.59	%		5.09	%		4.59	%		4.61	%
Cost of interest-bearing deposits annualized		1.73	%		1.05	%		0.57	%		0.28	%		0.22	%
Cost of total deposits annualized		1.31	%		0.76	%		0.41	%		0.20	%		0.16	%
Net interest margin annualized		3.44	%		3.67	%		3.62	%		3.39	%		3.38	%
Efficiency ratio*		70.00	%		70.47	%		63.07	%		64.38	%		60.36	%
Non-interest income / average assets		0.74	%		0.67	%		0.71	%		0.76	%		0.72	%
Non-interest expense / average assets		2.74	%		2.84	%		2.56	%		2.49	%		2.34	%


Capital Ratios
Tier 1 Leverage Ratio		9.60	%		9.61	%		9.46	%		9.11	%		9.07	%
Common Equity Tier 1 Capital Ratio		12.21	%		12.26	%		12.15	%		12.08	%		11.81	%
Tier 1 Risk Based Capital Ratio		12.83	%		12.88	%		12.77	%		12.71	%		12.43	%
Total Risk Based Capital Ratio		16.00	%		16.08	%		15.99	%		15.97	%		15.66	%
Total stockholders’ equity to total assets		8.24	%		8.23	%		7.92	%		8.56	%		8.90	%
Tangible common equity to tangible assets^*		7.09	%		7.02	%		6.68	%		7.32	%		7.63	%
Dividend payout ratio		10.49	%		14.01	%		10.78	%		8.61	%		8.58	%
Book value per common share	$	27.03		$	25.74		$	24.71		$	26.58		$	27.47
Tangible book value per common share^*	$	22.96		$	21.67		$	20.59		$	22.42		$	23.24
Tangible book value per diluted common share^*	$	22.83		$	21.35		$	20.33		$	22.17		$	22.95

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

TABLE 4. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)
	For the three months ended							For the three months ended
	March 31, 2023							March 31, 2022
	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	$	577,452	$	9,634		6.77	%	$	575,563	$	7,761		5.47	%
Commercial real estate		1,344,727		20,112		6.07	%		1,190,128		13,451		4.58	%
Real estate construction		404,016		6,695		6.72	%		342,536		3,299		3.91	%
Residential real estate		570,139		5,802		4.13	%		632,581		5,665		3.63	%
Agricultural real estate		202,901		3,114		6.22	%		202,145		2,663		5.34	%
Agricultural		100,251		1,478		5.98	%		149,676		2,316		6.28	%
Consumer		106,195		1,546		5.91	%		103,158		1,151		4.53	%
Total loans		3,305,681		48,381		5.94	%		3,195,787		36,306		4.61	%
Securities
Taxable securities		1,083,645		5,947		2.23	%		1,285,942		5,391		1.70	%
Nontaxable securities		101,837		669		2.67	%		111,479		655		2.38	%
Total securities		1,185,482		6,616		2.26	%		1,397,421		6,046		1.75	%
Federal funds sold and other		119,856		1,126		3.81	%		122,181		300		1.00	%
Total interest-earning assets	$	4,611,019		56,123		4.94	%	$	4,715,389		42,652		3.67	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,350,042		8,453		1.46	%	$	2,534,102		996		0.16	%
Time deposits		885,515		5,368		2.46	%		629,675		726		0.47	%
Total interest-bearing deposits		3,235,557		13,821		1.73	%		3,163,777		1,722		0.22	%
FHLB advances		89,078		1,018		4.64	%		9,943		9		0.38	%
Other borrowings		158,854		2,174		5.55	%		150,151		1,632		4.41	%
Total interest-bearing liabilities	$	3,483,489		17,013		1.98	%	$	3,323,871		3,363		0.41	%

Net interest income			$	39,110						$	39,289
Interest rate spread						2.96	%						3.26	%

Net interest margin ⁽²⁾						3.44	%						3.38	%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.

TABLE 5. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)
	For the three months ended							For the three months ended
	March 31, 2023							December 31, 2022
	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	$	577,452	$	9,634		6.77	%	$	594,221	$	9,264		6.19	%
Commercial real estate		1,344,727		20,112		6.07	%		1,327,438		19,127		5.72	%
Real estate construction		404,016		6,695		6.72	%		367,935		5,827		6.28	%
Residential real estate		570,139		5,802		4.13	%		576,357		5,667		3.90	%
Agricultural real estate		202,901		3,114		6.22	%		200,492		3,353		6.64	%
Agricultural		100,251		1,478		5.98	%		104,146		1,443		5.50	%
Consumer		106,195		1,546		5.91	%		104,695		1,468		5.57	%
Total loans		3,305,681		48,381		5.94	%		3,275,284		46,149		5.59	%
Securities
Taxable securities		1,083,645		5,947		2.23	%		1,083,986		5,946		2.18	%
Nontaxable securities		101,837		669		2.67	%		100,466		678		2.68	%
Total securities		1,185,482		6,616		2.26	%		1,184,452		6,624		2.22	%
Federal funds sold and other		119,856		1,126		3.81	%		78,441		651		3.29	%
Total interest-earning assets	$	4,611,019		56,123		4.94	%	$	4,538,177		53,424		4.67	%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,350,042		8,453		1.46	%	$	2,294,639		5,336		0.92	%
Time deposits		885,515		5,368		2.46	%		738,263		2,677		1.44	%
Total interest-bearing deposits		3,235,557		13,821		1.73	%		3,032,902		8,013		1.05	%
FHLB advances		89,078		1,018		4.64	%		155,964		1,500		3.82	%
Other borrowings		158,854		2,174		5.55	%		146,691		1,880		5.09	%
Total interest-bearing liabilities	$	3,483,489		17,013		1.98	%	$	3,335,557		11,393		1.36	%

Net interest income			$	39,110						$	42,031
Interest rate spread						2.96	%						3.31	%

Net interest margin ⁽²⁾						3.44	%						3.67	%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.

TABLE 6. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)
	As of and for the three months ended
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022

Total stockholders’ equity	$	425,123		$	410,058		$	395,806		$	428,115		$	452,015
Less: goodwill		53,101			53,101			53,101			53,101			54,465
Less: core deposit intangibles, net		9,678			10,596			11,598			12,554			13,830
Less: mortgage servicing rights, net		151			176			201			226			251
Less: naming rights, net		1,033			1,044			1,054			1,065			1,076
Tangible common equity	$	361,160		$	345,141		$	329,852		$	361,169		$	382,393
Common shares outstanding at period end		15,730,257			15,930,112			16,017,834			16,106,818			16,454,966
Diluted common shares outstanding at period end		15,822,536			16,163,253			16,225,591			16,289,635			16,662,779
Book value per common share	$	27.03		$	25.74		$	24.71		$	26.58		$	27.47
Tangible book value per common share	$	22.96		$	21.67		$	20.59		$	22.42		$	23.24
Tangible book value per diluted common share	$	22.83		$	21.35		$	20.33		$	22.17		$	22.95

Total assets	$	5,156,716		$	4,981,651		$	5,000,415		$	5,002,156		$	5,078,623
Less: goodwill		53,101			53,101			53,101			53,101			54,465
Less: core deposit intangibles, net		9,678			10,596			11,598			12,554			13,830
Less: mortgage servicing rights, net		151			176			201			226			251
Less: naming rights, net		1,033			1,044			1,054			1,065			1,076
Tangible assets	$	5,092,753		$	4,916,734		$	4,934,461		$	4,935,210		$	5,009,001
Total stockholders’ equity to total assets		8.24	%		8.23	%		7.92	%		8.56	%		8.90	%
Tangible common equity to tangible assets		7.09	%		7.02	%		6.68	%		7.32	%		7.63	%

Total average stockholders’ equity	$	420,500		$	398,270		$	436,191		$	437,483		$	492,599
Less: average intangible assets		64,447			65,450			66,445			68,978			70,181
Average tangible common equity	$	356,053		$	332,820		$	369,746		$	368,505		$	422,418
Net income (loss) allocable to common stockholders	$	12,323		$	11,608		$	15,171		$	15,259		$	15,650
Add: amortization of intangible assets		954			961			992			1,148			1,085
Less: tax effect of intangible assets amortization		200			202			208			241			228
Adjusted net income (loss) allocable to common stockholders	$	13,077		$	12,367		$	15,955		$	16,166		$	16,507
Return on total average stockholders’ equity (ROAE) annualized		11.89	%		11.56	%		13.80	%		13.99	%		12.88	%
Return on average tangible common equity (ROATCE) annualized		14.89	%		14.74	%		17.12	%		17.60	%		15.85	%

Non-interest expense	$	33,718		$	35,248		$	32,236		$	31,436		$	29,459
Less: loss on debt extinguishment		—			—			—			—			—
Less: merger expense		—			68			115			88			323
Adjusted non-interest expense	$	33,718		$	35,180		$	32,121		$	31,348		$	29,136
Net interest income	$	39,110		$	42,031		$	41,944		$	39,566		$	39,289
Non-interest income		9,089			8,330			8,969			9,637			9,022
Less: net gain on acquisition and branch sales		—			422			—			540			—
Less: net gains (losses) from securities transactions		32			14			(17	)		(32	)		40
Adjusted non-interest income	$	9,057		$	7,894		$	8,986		$	9,129		$	8,982
Net interest income plus adjusted non-interest income	$	48,167		$	49,925		$	50,930		$	48,695		$	48,271
Non-interest expense to net interest income plus non-interest income		69.96	%		69.99	%		63.32	%		63.89	%		60.98	%
Efficiency ratio		70.00	%		70.47	%		63.07	%		64.38	%		60.36	%
Net income (loss) allocable to common stockholders	$	12,323		$	11,608		$	15,171		$	15,259		$	15,650
Add: income tax provision		2,524			3,654			3,642			1,684			3,614
Add: provision (reversal) of credit losses		(366	)		(151	)		(136	)		824			(412	)
Pre-tax, pre-provision income	$	14,481		$	15,111		$	18,677		$	17,767		$	18,852
Total average assets	$	4,994,417		$	4,930,231		$	4,988,755		$	5,067,687		$	5,108,120
Total average stockholders’ equity	$	420,500		$	398,270		$	436,191		$	437,483		$	492,599
Return on average assets (ROAA) annualized		1.00	%		0.93	%		1.21	%		1.21	%		1.24	%
Adjusted return on average assets		1.18	%		1.22	%		1.49	%		1.41	%		1.50	%
Adjusted return on average equity		13.97	%		15.05	%		16.99	%		16.29	%		15.52	%

Equity Bancshares, Inc. Reports First Quarter Results; Exhibiting Stability of Deposits and Continued Improvement in Asset Quality

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