Financial Data and Key Metrics Changes - The company reported a record net income of $57.7 million for 2022, with a record revenue of $197.8 million, indicating strong franchise performance [44] - Core EPS for the quarter was calculated at $0.70 per diluted share [5] - Net interest income totaled $42 million in the fourth quarter, slightly increasing from $41.9 million in the linked quarter, with net interest margin rising 5 basis points to 3.67% [54][56] - Noninterest income, excluding a gain on branch sale, was $7.9 million, down $1.1 million from the previous quarter [76] Business Line Data and Key Metrics Changes - Loan growth in the quarter, excluding PPP and branch sales, was $56.8 million or 6.9% annualized, with commercial and commercial real estate portfolios growing at 9.25% annualized [11] - The yield on the loan portfolio increased by 50 basis points to 5.59%, while the cost of interest-bearing deposits rose by 45 basis points to 105 basis points [82] - Nonperforming assets declined by $11.5 million to $18 million, with nonaccrual loans finishing the quarter at 0.53% of total loans [49][78] Market Data and Key Metrics Changes - Unemployment rates in the company's two largest markets were reported at less than 3% at year-end, indicating a strong local economy [50] - The company noted that the Midwest economy remains strong, with no significant economic trends of concern observed in its markets [6][10] Company Strategy and Development Direction - The company is focusing on operational efficiencies and building deeper relationships with customers to drive loan growth while being prudent with capital [39][75] - Management is optimistic about the future, emphasizing the importance of maintaining a strong credit quality and exploring partnerships with other banks [15][63] Management's Comments on Operating Environment and Future Outlook - Management acknowledged rising rates, inflation, and economic uncertainty as ongoing concerns but noted that consumer liquidity levels and employment have not yet returned to historically normal levels [79] - The company expects loan growth of around 7% to 8% year-over-year, with a cautious approach to new loan origination [60][69] Other Important Information - The company plans to increase advertising expenses in 2023 to support deposit acquisition efforts [14] - The Texas ratio has improved significantly, declining from a high of 14% to 3% at year-end, indicating better asset quality [51] Q&A Session Summary Question: What are the constraints on loan growth for 2023? - Management indicated that while there are many lending opportunities, they are being moderate in loan origination to ensure alignment with interest rate expectations [16][17] Question: How do deposit betas impact margin outlook? - The company is using a terminal beta of 40% in budgeting for 2023, and continued rate hikes may not significantly alter that assumption [110] Question: What is the outlook for credit quality and provisioning? - Management expects a provision of around 20 basis points on average loans but noted that current credit quality may allow for a lower provision [69]

Q4'22 Outlook FY'23 Outlook = Focus on continued balance sheet strength and security while continuing to pursue growth. 19 Non-GAAP Financial Measures (Unaudited) ROATCE and Efficiency Ratio 23 (Dollars in thousands, except per share data) Add: income tax provision Total average assets 0.82% 5.87% EQUITY BANCSHARES, INC. Retum on average assets (ROAA) annualized PTPP ROAA PTPP ROAE (16) (2,125) 5 8,325 _ $ $ investor.equitybank.com | --- | --- | --- | --- | --- | --- | --- | --- | |--------------------|---- ...

Part I Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed interim consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes on key accounting areas - The financial statements are prepared in accordance with **United States Generally Accepted Accounting Principles (GAAP)** for interim financial information and guidance from the **Securities and Exchange Commission (SEC)**[34](index=34&type=chunk) - Management's preparation of consolidated financial statements requires **estimates and assumptions**, and actual results could differ from these estimates[34](index=34&type=chunk) - Operating results for the nine months ended September 30, 2022, are not necessarily indicative of the results expected for the full year ending December 31, 2022, or any other period[34](index=34&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$5.00 billion**, driven by reduced cash and securities, while stockholders' equity significantly declined due to comprehensive loss Total Assets | Date | Amount ($ thousands) | | :--- | :--- | | Sep 30, 2022 | 5,000,415 | | Dec 31, 2021 | 5,137,631 | | **Change** | **(137,216)** | | **% Change** | **(2.67%)** | Key Asset Changes (Sep 30, 2022 vs Dec 31, 2021) | Asset Category | Dec 31, 2021 ($ thousands) | Sep 30, 2022 ($ thousands) | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 259,954 | 155,413 | (104,541) | | Available-for-sale securities | 1,327,442 | 1,198,962 | (128,480) | | Loans, net | 3,107,262 | 3,208,524 | 101,262 | Total Stockholders' Equity | Date | Amount ($ thousands) | | :--- | :--- | | Sep 30, 2022 | 395,806 | | Dec 31, 2021 | 500,631 | | **Change** | **(104,825)** | | **% Change** | **(20.94%)** | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income increased for both the three and nine months ended September 30, 2022, driven by higher net interest and non-interest income, despite increased non-interest expenses Net Income (Three Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | 15,171 | 11,773 | 3,398 | 28.86% | Net Income (Nine Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income | 46,080 | 42,014 | 4,066 | 9.68% | Key Income/Expense Changes (Three Months Ended Sep 30, 2022 vs 2021) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Total interest and dividend income | 48,548 | 42,446 | 6,102 | | Total interest expense | 6,604 | 3,471 | 3,133 | | Net interest income | 41,944 | 38,975 | 2,969 | | Total non-interest income | 8,969 | 7,831 | 1,138 | | Total non-interest expense | 32,236 | 30,689 | 1,547 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income significantly decreased to a loss for both periods, primarily due to substantial unrealized holding losses on available-for-sale securities Comprehensive Income (Loss) (Three Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Comprehensive Income (Loss) | (28,321) | 7,798 | (36,119) | Comprehensive Income (Loss) (Nine Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | | :--- | :--- | :--- | :--- | | Comprehensive Income (Loss) | (76,614) | 31,708 | (108,322) | - Unrealized holding gains (losses) on available-for-sale securities, net of tax, were **$(43,492) thousand** for the three months ended September 30, 2022, compared to **$(3,975) thousand** in the prior year, and **$(122,694) thousand** for the nine months ended September 30, 2022, compared to **$(10,306) thousand** in the prior year[21](index=21&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased by **$104.8 million**, primarily due to significant other comprehensive losses and treasury stock purchases Total Stockholders' Equity | Date | Amount ($ thousands) | | :--- | :--- | | Sep 30, 2022 | 395,806 | | Jan 1, 2022 | 500,631 | | **Change** | **(104,825)** | | **% Change** | **(20.94%)** | - Key changes in stockholders' equity for the nine months ended September 30, 2022, included net income of **$46,080 thousand**, other comprehensive loss of **$(122,694) thousand**, cash dividends of **$(4,208) thousand**, and treasury stock purchases of **$(27,728) thousand**[26](index=26&type=chunk) - Accumulated other comprehensive income (loss), net of tax effects, shifted from a gain of **$1,776 thousand** at January 1, 2022, to a loss of **$(120,918) thousand** at September 30, 2022[26](index=26&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased, investing activities used less cash, and financing activities shifted to a smaller net inflow, resulting in a net decrease in cash and cash equivalents Net Cash Provided by (Used in) Operating Activities (Nine Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | 57,696 | 79,635 | (21,939) | (27.55%) | Net Cash Provided by (Used in) Investing Activities (Nine Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Investing Activities | (166,620) | (414,493) | 247,873 | (59.80%) | Net Cash Provided by (Used in) Financing Activities (Nine Months Ended Sep 30) | Metric | Sep 30, 2022 ($ thousands) | Sep 30, 2021 ($ thousands) | Change ($ thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Financing Activities | 4,383 | 196,478 | (192,095) | (97.77%) | [Condensed Notes to Interim Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed notes to the interim consolidated financial statements, covering significant accounting policies, investments, loans, derivatives, lease obligations, borrowings, regulatory matters, earnings per share, fair value measurements, commitments, legal proceedings, revenue recognition, and business combinations/branch sales - The financial statements are prepared in accordance with **GAAP** for interim financial information and **SEC** guidance, relying on management estimates and assumptions[34](index=34&type=chunk) - Operating results for the nine months ended September 30, 2022, are not necessarily indicative of the full year or other periods[34](index=34&type=chunk) - The Company is evaluating new FASB ASUs (2022-01, 2022-02, 2022-03) but does not expect a **material financial impact**, though some will affect future disclosures[39](index=39&type=chunk)[40

Exhibit 99.2 Third Quarter 2022 Earnings Presentation 10/19/2022 Forward Looking Statements This presentation 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 the management of Equity Bancshares, Inc. ("Equity", "we", "us", "our, "company") with respect to, among other things, future events and Equity's financial p ...

Equity Bancshares, Inc. (NYSE:EQBK) Q3 2022 Earnings Conference Call October 19, 2022 10:00 AM ET Company Participants Chris Navratil - SVP, Finance Brad Elliott - Founder, Chairman & CEO Eric Newell - EVP & CFO Gregory Kossover - EVP, COO & Director John Creech - EVP & Chief Credit Officer Conference Call Participants Jeffrey Rulis - D.A. Davidson & Co. Terence McEvoy - Stephens Damon DelMonte - KBW Andrew Liesch - Piper Sandler & Co. Operator Welcome to the Third Quarter 2022 Equity Bancshares Earnings Co ...

[PART I FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20Financial%20Information) This section presents the unaudited interim consolidated financial information for Equity Bancshares, Inc. [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed interim consolidated financial statements of Equity Bancshares, Inc. for the period ended June 30, 2022, including balance sheets, income statements, comprehensive income, stockholders' equity, and cash flows, along with detailed notes on significant accounting policies, securities, loans, derivatives, lease obligations, borrowings, stockholders' equity, regulatory matters, earnings per share, fair value measurements, commitments, credit risk, legal matters, revenue recognition, and business combinations/branch sales [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:-------|:----------------------------------------|:--------------------------------| | Total Assets | 5,002,156 | 5,137,631 | | Total Liabilities | 4,574,041 | 4,637,000 | | Total Stockholders' Equity | 428,115 | 500,631 | - Total assets decreased by **$135.475 million** from December 31, 2021, to June 30, 2022. Total liabilities decreased by **$62.959 million**, and total stockholders' equity decreased by **$72.516 million**[15](index=15&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over specific reporting periods | Metric | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Total Interest and Dividend Income | 43,624 | 38,318 | 86,276 | 74,130 | | Total Interest Expense | 4,058 | 3,688 | 7,421 | 7,741 | | Net Interest Income | 39,566 | 34,630 | 78,855 | 66,389 | | Provision (reversal) for credit losses | 824 | (1,657) | 412 | (7,413) | | Total Non-Interest Income | 9,637 | 9,100 | 18,659 | 15,812 | | Total Non-Interest Expense | 31,436 | 25,806 | 60,895 | 50,687 | | Net Income | 15,259 | 15,166 | 30,909 | 30,241 | | Basic Earnings Per Share | 0.95 | 1.06 | 1.88 | 2.10 | | Diluted Earnings Per Share | 0.94 | 1.03 | 1.86 | 2.06 | - Net income for the three months ended June 30, 2022, increased slightly to **$15.259 million** from **$15.166 million** in the prior year. For the six months, net income increased to **$30.909 million** from **$30.241 million**[17](index=17&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, reflecting changes in equity from non-owner sources | Metric | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Net Income | 15,259 | 15,166 | 30,909 | 30,241 | | Other Comprehensive Income (Loss), net of tax | (27,414) | 1,431 | (79,202) | (6,331) | | Comprehensive Income (Loss) | (12,155) | 16,597 | (48,293) | 23,910 | - Comprehensive income experienced a significant shift from positive in 2021 to negative in 2022, primarily due to large unrealized holding losses on available-for-sale securities[20](index=20&type=chunk) [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement outlines changes in the company's equity accounts, including retained earnings and other comprehensive income | Metric | June 30, 2022 ($ thousands) | June 30, 2021 ($ thousands) | |:-------|:----------------------------|:----------------------------| | Total Stockholders' Equity | 428,115 | 412,995 | | Retained Earnings | 116,576 | 68,625 | | Accumulated Other Comprehensive Income (Loss), net of tax | (77,426) | 13,450 | | Treasury Stock | (92,136) | (58,650) | - Stockholders' equity increased year-over-year, driven by retained earnings, but was significantly impacted by accumulated other comprehensive losses in 2022[22](index=22&type=chunk)[25](index=25&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities | Metric | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-------|:---------------------------------------------|:---------------------------------------------| | Net cash provided by (used in) operating activities | 43,136 | 47,236 | | Net cash provided by (used in) investing activities | (173,115) | (430,235) | | Net cash provided by (used in) financing activities | (26,391) | 241,622 | | Net change in cash and cash equivalents | (156,370) | (141,377) | | Ending cash and cash equivalents | 103,584 | 139,321 | - The company experienced a net decrease in cash and cash equivalents for the six months ended June 30, 2022, primarily due to significant cash used in investing and financing activities, partially offset by operating activities[29](index=29&type=chunk)[30](index=30&type=chunk) [Condensed Notes to Interim Consolidated Financial Statements](index=13&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the interim consolidated financial statements [NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the basis of financial statement preparation and outlines key accounting policies - The interim consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC guidance, reflecting all necessary adjustments for fair presentation. Operating results for the six months ended June 30, 2022, are not necessarily indicative of the full year[33](index=33&type=chunk) - The company is evaluating recent accounting pronouncements (ASU 2022-01, ASU 2022-02, ASU 2022-03) but does not expect a material financial impact on its condition, results of operations, or cash flows, though future loan disclosures will be affected by ASU 2022-02[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 2 – SECURITIES](index=14&type=section&id=NOTE%202%20%E2%80%93%20SECURITIES) This note details the company's investment securities portfolio, including fair value and unrealized gains/losses | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:-------|:----------------------------|:--------------------------------| | Amortized Cost | 1,390,533 | 1,325,015 | | Fair Value | 1,288,180 | 1,327,442 | | Gross Unrealized Gains | 355 | 15,296 | | Gross Unrealized Losses | (102,708) | (12,869) | - As of June 30, 2022, the company held **514** available-for-sale securities in an unrealized loss position, primarily due to changes in interest rates. Management does not intend to sell these securities and expects fair value to recover as they approach maturity[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=17&type=section&id=NOTE%203%20%E2%80%93%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note provides a breakdown of the loan portfolio and the allowance for expected credit losses | Loan Category | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:--------------|:----------------------------|:--------------------------------| | Commercial real estate | 1,643,068 | 1,486,148 | | Commercial and industrial | 578,899 | 567,497 | | Residential real estate | 578,936 | 638,087 | | Agricultural real estate | 197,938 | 198,330 | | Agricultural | 124,753 | 166,975 | | Consumer | 99,852 | 98,590 | | Total Loans | 3,223,446 | 3,155,627 | | Allowance for Credit Losses | (48,238) | (48,365) | | Net Loans | 3,175,208 | 3,107,262 | - Total loans increased to **$3.22 billion** at June 30, 2022, from **$3.16 billion** at December 31, 2021, with commercial real estate showing significant growth. The allowance for credit losses remained stable[59](index=59&type=chunk) | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:-------|:----------------------------|:--------------------------------| | Total Nonaccrual Loans | 28,885 | 39,225 | | Total Troubled Debt Restructurings (TDRs) | 18,192 | 10,799 | | Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures | 1,518 | 2,223 | - Nonaccrual loans decreased from **$39.2 million** to **$28.9 million**, while Troubled Debt Restructurings (TDRs) increased from **$10.8 million** to **$18.2 million**. The allowance for off-balance-sheet credit exposures decreased from **$2.2 million** to **$1.5 million**[67](index=67&type=chunk)[69](index=69&type=chunk)[84](index=84&type=chunk)[89](index=89&type=chunk) [NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS](index=26&type=section&id=NOTE%204%20%E2%80%93%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) This note describes the company's use of derivative instruments for risk management and their fair values - The Company uses interest rate swaps to manage interest rate risk, designating them as fair value hedges for commercial real estate loans and cash flow hedges for subordinated notes and adjustable-rate loans. Stand-alone derivatives are also used to offset economic impacts of fixed-rate loans[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[95](index=95&type=chunk) | Derivative Type | Notional Amount (June 30, 2022, $ thousands) | Derivative Assets (June 30, 2022, $ thousands) | Derivative Liabilities (June 30, 2022, $ thousands) | |:----------------|:---------------------------------------------|:-----------------------------------------------|:----------------------------------------------------| | Hedging Instruments (Interest rate swaps) | 22,107 | 1,694 | — | | Cash Flow Hedges (Interest rate swaps) | 157,500 | 1,733 | 1,549 | | Non-Hedging Instruments (Interest rate swaps) | 150,375 | 2,379 | 2,098 | | Total | 329,982 | 5,806 | 3,647 | - Total notional amount of derivatives increased significantly from **$184.9 million** at December 31, 2021, to **$329.9 million** at June 30, 2022, primarily driven by an increase in cash flow hedges[98](index=98&type=chunk) [NOTE 5 – LEASE OBLIGATIONS](index=29&type=section&id=NOTE%205%20%E2%80%93%20LEASE%20OBLIGATIONS) This note outlines the company's lease assets, liabilities, and associated costs | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:-------|:----------------------------|:--------------------------------| | Right-of-Use Asset | 5,627 | 5,963 | | Lease Liability | 5,669 | 5,928 | | Weighted Average Lease Term (Years) | 16.0 | 13.3 | | Weighted Average Discount Rate | 2.79% | 2.30% | - Operating lease costs increased for both the three-month and six-month periods ended June 30, 2022, compared to 2021, with total operating lease cost rising from **$129 thousand** to **$196 thousand** (QoQ) and **$264 thousand** to **$426 thousand** (YoY)[108](index=108&type=chunk) - During Q2 2022, one bank location became non-operational, leading to the transfer of its right-of-use asset to other real estate owned[106](index=106&type=chunk) [NOTE 6 – BORROWINGS](index=30&type=section&id=NOTE%206%20%E2%80%93%20BORROWINGS) This note details the company's various borrowing arrangements, including their terms and outstanding balances | Borrowing Type | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:---------------|:----------------------------|:--------------------------------| | Retail Repurchase Agreements | 52,750 | 56,006 | | Federal Home Loan Bank Advances | 80,000 | — | | Subordinated Debentures | 23,088 | 22,924 | | Subordinated Notes | 73,047 | 72,961 | | Total Subordinated Debt | 96,135 | 95,885 | - Federal Home Loan Bank advances significantly increased to **$80 million** at June 30, 2022, from zero at December 31, 2021. The maximum borrowing amount for the bank stock loan was decreased from **$40 million** to **$25 million** and renewed until February 11, 2023[115](index=115&type=chunk)[120](index=120&type=chunk) - The company has various subordinated debentures and notes with fixed-to-floating interest rates, maturing between 2030 and 2037[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk)[130](index=130&type=chunk) [NOTE 7 – STOCKHOLDERS' EQUITY](index=33&type=section&id=NOTE%207%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) This note provides information on the components of stockholders' equity, including common stock and comprehensive income | Stock Class | June 30, 2022 | December 31, 2021 | |:------------|:--------------|:------------------| | Class A common stock – issued | 20,163,989 | 20,077,059 | | Class A common stock – outstanding | 16,106,818 | 16,760,115 | | Class B common stock – issued | 234,903 | 234,903 | | Class B common stock – outstanding | — | — | - The company repurchased **740,227 shares** of common stock at an average price of **$31.89 per share** during the six months ended June 30, 2022, with **126,900 shares** remaining available under the program[141](index=141&type=chunk) | Component | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:----------|:----------------------------|:--------------------------------| | Net unrealized or unamortized gains (losses) | (102,878) | 2,369 | | Tax effect | 25,452 | (593) | | Accumulated Other Comprehensive Income (Loss) | (77,426) | 1,776 | - Accumulated other comprehensive income shifted from a gain of **$1.776 million** at December 31, 2021, to a loss of **$77.426 million** at June 30, 2022, primarily due to unrealized losses on available-for-sale securities[144](index=144&type=chunk) [NOTE 8 – REGULATORY MATTERS](index=34&type=section&id=NOTE%208%20%E2%80%93%20REGULATORY%20MATTERS) This note outlines the company's compliance with capital adequacy requirements and regulatory classifications - Equity Bancshares, Inc. and Equity Bank meet all capital adequacy requirements, with Equity Bank categorized as 'well capitalized' under prompt corrective action regulations as of June 30, 2022[145](index=145&type=chunk)[148](index=148&type=chunk)[150](index=150&type=chunk) | Capital Ratio | Equity Bancshares, Inc. (June 30, 2022) | Equity Bank (June 30, 2022) | |:--------------|:----------------------------------------|:----------------------------| | Total capital to risk weighted assets | 15.97% | 15.14% | | Tier 1 capital to risk weighted assets | 12.71% | 13.88% | | Common equity Tier 1 capital to risk weighted assets | 12.08% | 13.88% | | Tier 1 leverage to average assets | 9.11% | 9.94% | [NOTE 9 – EARNINGS PER SHARE](index=36&type=section&id=NOTE%209%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per common share | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:-------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Basic Earnings Per Common Share | $0.95 | $1.06 | $1.88 | $2.10 | | Diluted Earnings Per Common Share | $0.94 | $1.03 | $1.86 | $2.06 | | Weighted Average Common Shares Outstanding (Basic) | 16,106,643 | 14,355,310 | 16,426,098 | 14,405,370 | | Average Shares and Dilutive Potential Common Shares (Diluted) | 16,312,953 | 14,674,838 | 16,639,970 | 14,704,240 | - Basic and diluted earnings per share decreased for both the three-month and six-month periods ended June 30, 2022, compared to the prior year, despite an increase in net income, due to a higher weighted average common shares outstanding[152](index=152&type=chunk) [NOTE 10 – FAIR VALUE](index=36&type=section&id=NOTE%2010%20%E2%80%93%20FAIR%20VALUE) This note explains the company's fair value measurement hierarchy and the fair values of financial instruments - The Company uses a three-level hierarchy (Level 1, 2, 3) to measure and disclose fair values of financial instruments, prioritizing observable inputs. Available-for-sale securities and derivatives are primarily classified as Level 2, while individually evaluated loans and other real estate owned are Level 3 due to significant unobservable inputs[153](index=153&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[163](index=163&type=chunk)[167](index=167&type=chunk) | Asset/Liability Category | June 30, 2022 (Level 1, $ thousands) | June 30, 2022 (Level 2, $ thousands) | June 30, 2022 (Level 3, $ thousands) | |:-------------------------|:--------------------------------------|:--------------------------------------|:--------------------------------------| | Total Assets | 237,026 | 1,055,421 | — | | Total Liabilities | 50 | 3,647 | — | | Financial Instrument | Carrying Amount (June 30, 2022, $ thousands) | Estimated Fair Value (June 30, 2022, $ thousands) | |:---------------------|:---------------------------------------------|:--------------------------------------------------| | Loans, net of allowance for credit losses | 3,175,208 | 3,134,957 | | Deposits | 4,291,771 | 4,284,337 | [NOTE 11 – COMMITMENTS AND CREDIT RISK](index=41&type=section&id=NOTE%2011%20%E2%80%93%20COMMITMENTS%20AND%20CREDIT%20RISK) This note describes the company's credit extension commitments and associated credit risk management practices - The Company extends credit for commercial real estate, residential mortgages, working capital, and consumer loans, with credit risk managed through underwriting guidelines and collateral evaluation[175](index=175&type=chunk)[176](index=176&type=chunk) | Commitment Type | June 30, 2022 (Fixed Rate, $ thousands) | June 30, 2022 (Variable Rate, $ thousands) | December 31, 2021 (Fixed Rate, $ thousands) | December 31, 2021 (Variable Rate, $ thousands) | |:----------------|:----------------------------------------|:-------------------------------------------|:--------------------------------------------|:-----------------------------------------------| | Commitments to make loans | 89,350 | 168,286 | 101,923 | 173,976 | | Unused lines of credit | 114,878 | 344,260 | 106,291 | 317,249 | | Standby letters of credit | 14,138 | 9,617 | 14,656 | 5,799 | [NOTE 12 – LEGAL MATTERS](index=42&type=section&id=NOTE%2012%20%E2%80%93%20LEGAL%20MATTERS) This note provides an overview of the company's involvement in legal proceedings and potential liabilities - Equity Bank is currently involved in two class-action lawsuits filed in January and February 2022, alleging improperly collected overdraft fees. The Company believes these lawsuits are without merit and intends to vigorously defend against the claims, but is currently unable to reasonably estimate the potential loss amount[181](index=181&type=chunk)[182](index=182&type=chunk) [NOTE 13 – REVENUE RECOGNITION](index=42&type=section&id=NOTE%2013%20%E2%80%93%20REVENUE%20RECOGNITION) This note explains the company's policies for recognizing interest and non-interest income - The majority of the Company's revenue comes from interest income on financial instruments, which are outside the scope of ASC 606. Non-interest income, recognized under ASC 606, includes service charges, debit card income, investment referral income, and insurance sales commissions[183](index=183&type=chunk)[185](index=185&type=chunk) | Non-Interest Income Category | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-----------------------------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Service charges and fees | 2,617 | 2,169 | 5,139 | 3,765 | | Debit card income | 2,810 | 2,679 | 5,438 | 5,029 | | Mortgage banking | 428 | 848 | 990 | 1,783 | | Increase in bank-owned life insurance | 736 | 676 | 1,601 | 1,277 | | Net gain (loss) on acquisition | 540 | 663 | 540 | 585 | | Other | 2,538 | 2,065 | 4,943 | 3,356 | | Total Non-Interest Income | 9,637 | 9,100 | 18,659 | 15,812 | [NOTE 14 – BUSINESS COMBINATIONS AND BRANCH SALES](index=43&type=section&id=NOTE%2014%20%E2%80%93%20BUSINESS%20COMBINATIONS%20AND%20BRANCH%20SALES) This note details recent acquisitions and branch sales, including their financial impact - The Company completed the acquisition of American State Bancshares, Inc. (October 2021) and three Security Bank of Kansas City locations (December 2021). Additionally, it completed the sale of three Kansas branch locations to United Bank & Trust on June 24, 2022, resulting in a net gain of **$540 thousand**[187](index=187&type=chunk) | Metric | Amount ($ thousands) | |:-------|:---------------------| | Total Assets Sold | 29,762 | | Total Liabilities Assumed | 52,733 | | Total Net Assets | (22,971) | | Cash Paid | 22,431 | | Gain on Branch Sale | (540) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Equity Bancshares, Inc.'s financial condition and results of operations for the periods ended June 30, 2022, and 2021. It covers key financial data, an overview of the business, critical accounting policies, a breakdown of operating results (net income, net interest income, provision for credit losses, non-interest income/expense, efficiency ratio, income taxes), an analysis of financial condition (loan portfolio, credit quality, nonperforming assets, deposits, borrowings), and a review of liquidity and capital resources, including reconciliations of non-GAAP financial measures [Overview](index=48&type=section&id=Overview) This section provides a high-level summary of the company's business, operations, and key financial metrics - Equity Bancshares, Inc. is a bank holding company headquartered in Wichita, Kansas, operating **66** full-service banking sites across Arkansas, Kansas, Missouri, and Oklahoma. As of June 30, 2022, the company reported consolidated total assets of **$5.00 billion**, net loans of **$3.18 billion**, total deposits of **$4.29 billion**, and total stockholders' equity of **$428.1 million**[199](index=199&type=chunk) | Metric | June 30, 2022 ($ thousands) | June 30, 2021 ($ thousands) | |:-------|:----------------------------|:----------------------------| | Net Income (QTD) | 15,259 | 15,166 | | Net Income (YTD) | 30,909 | 30,241 | | Basic EPS (QTD) | $0.95 | $1.06 | | Diluted EPS (QTD) | $0.94 | $1.03 | [Critical Accounting Policies](index=48&type=section&id=Critical%20Accounting%20Policies) This section discusses the accounting policies that require significant judgment and estimation by management - The Allowance for Credit Losses (ACL) is a critical accounting policy, representing management's estimate of expected credit losses over the loan portfolio's contractual life. This estimate is complex, relying on historical loss experience, economic conditions, asset quality trends, and other factors, with significant changes potentially leading to material impacts on financial statements[201](index=201&type=chunk)[204](index=204&type=chunk) - Goodwill is assessed annually for impairment, or more frequently if triggering events occur. As of June 30, 2022, management determined no triggering event for impairment, based on improving market conditions and strong earnings performance[205](index=205&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, expenses, and profitability [Net Income](index=49&type=section&id=Net%20Income) This subsection analyzes the factors contributing to the company's net income for the reporting periods - Net income for the three months ended June 30, 2022, increased by **$100 thousand** to **$15.3 million**, driven by a **$3.4 million** increase in loan interest income and **$2.3 million** in taxable securities interest income, partially offset by a **$5.6 million** increase in non-interest expense[210](index=210&type=chunk) - For the six months ended June 30, 2022, net income rose by **$668 thousand** to **$30.9 million**, primarily due to a **$12.5 million** increase in net interest income and a **$2.8 million** increase in non-interest income, partially offset by a **$10.2 million** increase in non-interest expense[210](index=210&type=chunk) [Net Interest Income and Net Interest Margin Analysis](index=49&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20Analysis) This subsection examines the components of net interest income and the factors influencing net interest margin | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | |:-------|:---------------------------------|:---------------------------------| | Net Interest Income ($ thousands) | 39,566 | 34,630 | | Interest Rate Spread | 3.25% | 3.36% | | Net Interest Margin | 3.39% | 3.50% | | Total Cost of Deposits | 0.20% | 0.22% | - For the three months ended June 30, 2022, net interest income increased by **$4.9 million**, primarily due to a **$5.3 million** increase in interest income from interest-earning assets (driven by loan and taxable securities volume), partially offset by a slight increase in interest expense. Net interest margin decreased by **11 basis points** to **3.39%**[219](index=219&type=chunk)[221](index=221&type=chunk) - For the six months ended June 30, 2022, net interest income increased by **$12.5 million**, mainly from an **$12.1 million** increase in interest income on interest-earning assets (loans and taxable securities volume). The cost of interest-bearing liabilities decreased by **$320 thousand**, leading to a **2 basis point** decrease in net interest margin to **3.39%**[224](index=224&type=chunk) [Provision for Credit Losses](index=55&type=section&id=Provision%20for%20Credit%20Losses) This subsection analyzes the provision for credit losses, reflecting management's estimate of expected loan losses | Metric | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Provision (reversal) for credit losses | 824 | (1,657) | 412 | (7,413) | | Net Charge-offs | 176 | 567 | 539 | 632 | - The Company recorded a provision for credit losses of **$824 thousand** for Q2 2022, a significant change from a **$1.7 million** reversal in Q2 2021. This provision reflects increased general reserves due to slowing prepayment speeds and perceived economic risks (inflation, supply chain, monetary policy)[227](index=227&type=chunk) - For the six months ended June 30, 2022, a provision of **$412 thousand** was recorded, contrasting with a **$7.4 million** reversal in the prior year, driven by economic risk factors[228](index=228&type=chunk) [Non-Interest Income](index=56&type=section&id=Non-Interest%20Income) This subsection details the sources and changes in the company's non-interest income | Non-Interest Income Category | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:-----------------------------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Service charges and fees | 2,617 | 2,169 | 5,139 | 3,765 | | Debit card income | 2,810 | 2,679 | 5,438 | 5,029 | | Mortgage banking | 428 | 848 | 990 | 1,783 | | Total Non-Interest Income | 9,637 | 9,100 | 18,659 | 15,812 | - Total non-interest income increased by **$537 thousand (5.9%)** for Q2 2022 and **$2.8 million (18.0%)** for the six months ended June 30, 2022, compared to the prior year. This growth was primarily driven by increases in service charges and fees (including non-sufficient funds fees) and other non-interest income (credit card fees, derivatives), partially offset by a decrease in mortgage banking income due to reduced activity[234](index=234&type=chunk)[236](index=236&type=chunk) [Non-Interest Expense](index=58&type=section&id=Non-Interest%20Expense) This subsection analyzes the various categories of non-interest expenses and their drivers | Non-Interest Expense Category | Three Months Ended June 30, 2022 ($ thousands) | Three Months Ended June 30, 2021 ($ thousands) | Six Months Ended June 30, 2022 ($ thousands) | Six Months Ended June 30, 2021 ($ thousands) | |:------------------------------|:-----------------------------------------------|:-----------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Salaries and employee benefits | 15,383 | 12,769 | 30,451 | 25,491 | | Net occupancy and equipment | 3,007 | 2,327 | 6,177 | 4,695 | | Data processing | 3,642 | 3,474 | 7,411 | 6,137 | | Other | 4,169 | 2,458 | 6,343 | 4,566 | | Total Non-Interest Expense | 31,436 | 25,806 | 60,895 | 50,687 | - Total non-interest expense increased by **$5.6 million (21.8%)** for Q2 2022 and **$10.2 million (20.1%)** for the six months ended June 30, 2022, compared to the prior year. This was primarily due to increased salaries and employee benefits, net occupancy and equipment costs, and data processing expenses, largely attributable to recent acquisitions[238](index=238&type=chunk)[239](index=239&type=chunk)[242](index=242&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Other non-interest expenses saw a **$1.7 million** increase for Q2 2022 and **$1.8 million** for the six months ended June 30, 2022, mainly due to losses from limited partnerships for tax credits, partially offset by a reversal of provision for unfunded commitments[240](index=240&type=chunk)[245](index=245&type=chunk) [Efficiency Ratio](index=59&type=section&id=Efficiency%20Ratio) This subsection discusses the company's efficiency in managing expenses relative to its revenue generation | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |:-------|:---------------------------------|:---------------------------------|:-------------------------------|:-------------------------------| | Efficiency Ratio | 64.38% | 58.85% | 62.4% | 61.4% | - The efficiency ratio increased to **64.4%** for Q2 2022 (from **58.9%** in Q2 2021) and to **62.4%** for the six months ended June 30, 2022 (from **61.4%** in the prior year), primarily due to increased non-interest expense, partially offset by higher net interest income and non-interest income[198](index=198&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) [Income Taxes](index=60&type=section&id=Income%20Taxes) This subsection analyzes the company's effective income tax rate and its contributing factors - The effective income tax rate for Q2 2022 was **9.9%**, down from **22.6%** in Q2 2021. For the six months ended June 30, 2022, the rate was **14.6%**, compared to **22.3%** in the prior year. This reduction was due to tax benefits from restricted stock units/option exercises and federal tax credits[251](index=251&type=chunk)[252](index=252&type=chunk) [Financial Condition](index=60&type=section&id=Financial%20Condition) This section assesses the company's financial position, including assets, liabilities, and equity structure - Total assets decreased by **$135 million** to **$5.00 billion** at June 30, 2022, primarily due to decreases in cash and securities, partially offset by an increase in loans. Total liabilities decreased by **$63.0 million**, mainly from a decline in deposits, partially offset by FHLB advances. Stockholders' equity decreased by **$72.5 million** due to unrealized holding losses in the investment securities portfolio[253](index=253&type=chunk) [Loan Portfolio](index=60&type=section&id=Loan%20Portfolio) This subsection provides a detailed breakdown of the company's loan portfolio by category and changes over time | Loan Type | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | |:----------|:----------------------------|:--------------------------------|:---------------------|:-----------| | Commercial and industrial | 578,899 | 567,497 | 11,402 | 2.0% | | Commercial real estate | 1,643,068 | 1,486,148 | 156,920 | 10.6% | | Residential real estate | 578,936 | 638,087 | (59,151) | (9.3)% | | Agricultural | 124,753 | 166,975 | (42,222) | (25.3)% | | Total loans held for investment | 3,223,446 | 3,155,627 | 67,819 | 2.1% | - The total loan portfolio increased by **2.1%** to **$3.22 billion** at June 30, 2022, primarily driven by a **10.6%** increase in commercial real estate loans. Residential real estate and agricultural loans experienced decreases[255](index=255&type=chunk) - As of June 30, 2022, gross total loans (including held for sale) were **75.2%** of deposits and **64.5%** of total assets, up from **71.5%** and **61.5%** respectively at December 31, 2021[259](index=259&type=chunk) [Credit Quality Indicators](index=62&type=section&id=Credit%20Quality%20Indicators) This subsection describes the methodologies and categories used to assess the credit quality of the loan portfolio - The Company categorizes loans into risk categories (Pass, Special Mention, Substandard, Doubtful) based on borrower's ability to service debt, financial information, payment history, collateral, and economic trends. Consumer loans are generally 'pass' unless downgraded due to payment status[73](index=73&type=chunk) [Nonperforming Assets](index=62&type=section&id=Nonperforming%20Assets) This subsection reports on nonperforming loans and other assets, indicating potential credit issues | Metric | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | |:-------|:----------------------------|:--------------------------------| | Nonaccrual loans | 18,860 | 29,361 | | Accruing loans 90+ days past due | 386 | 256 | | OREO acquired through foreclosure, net | 8,838 | 7,582 | | Other repossessed assets | 8,888 | 28,799 | | Total Nonperforming Assets | 36,972 | 65,998 | | Nonperforming assets to total assets | 0.74% | 1.28% | | Nonperforming assets to total loans + OREO and repossessed assets | 1.14% | 2.07% | - Total nonperforming assets significantly decreased to **$37.0 million** at June 30, 2022, from **$66.0 million** at December 31, 2021. This reduction was primarily driven by a decrease in nonaccrual loans and other repossessed assets[273](index=273&type=chunk) [Potential Problem Loans](index=63&type=section&id=Potential%20Problem%20Loans) This subsection identifies loans that are currently performing but have characteristics that raise concerns about future repayment - Potential problem loans, which are performing but raise concerns about repayment ability, decreased to **$29.0 million** at June 30, 2022, from **$32.6 million** at December 31, 2021. These loans are assigned 'special mention' or 'substandard' grades and are evaluated for impairment[277](index=277&type=chunk)[278](index=278&type=chunk) [Allowance for Credit Losses](index=63&type=section&id=Allowance%20for%20Credit%20Losses) This subsection discusses the adequacy of the allowance for credit losses relative to the loan portfolio and non-accrual loans | Metric | June 30, 2022 | December 31, 2021 | |:-------|:--------------|:------------------| | Allowance for Credit Losses (ACL) | $48,238,000 | $48,365,000 | | ACL to total loans | 1.5% | 1.5% | | ACL to non-accrual loans | 255.8% | 91.2% | - Management believes the allowance for credit losses of **$48.2 million** at June 30, 2022, is adequate to cover expected losses. The ACL to total loans ratio remained constant at **1.5%**, while the ACL to non-accrual loans ratio significantly increased to **255.8%** from **91.2%**, indicating improved coverage of non-accrual loans[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk) [Securities](index=66&type=section&id=Securities) This subsection describes the composition and purpose of the company's investment securities portfolio - Securities constituted **25.8%** of total assets at June 30, 2022, consistent with December 31, 2021. The portfolio is used for liquidity, return, interest rate risk management, and regulatory requirements, with no securities held for trading[286](index=286&type=chunk)[287](index=287&type=chunk) | Security Type | June 30, 2022 (Fair Value, $ thousands) | December 31, 2021 (Fair Value, $ thousands) | |:--------------|:----------------------------------------|:--------------------------------------------| | U.S. Government-sponsored entities | 111,392 | 123,407 | | U.S. Treasury securities | 238,566 | 155,602 | | Mortgage-backed securities | 737,929 | 836,575 | | State and political subdivisions | 130,939 | 141,606 | | Total available-for-sale securities | 1,288,180 | 1,327,442 | - Mortgage-backed securities, primarily fixed-rate, comprised a significant portion of the portfolio, with **64.0%** having contractual final maturities over ten years at June 30, 2022, but a shorter weighted average life of **5.2 years** due to prepayments[295](index=295&type=chunk)[298](index=298&type=chunk) [Goodwill Impairment Assessment](index=69&type=section&id=Goodwill%20Impairment%20Assessment) This subsection reports on the qualitative analysis performed to assess potential impairment of goodwill - As of June 30, 2022, the Company performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired[299](index=299&type=chunk) [Deposits](index=69&type=section&id=Deposits) This subsection analyzes the composition and changes in the company's deposit base | Deposit Type | June 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | Change ($ thousands) | Change (%) | |:-------------|:----------------------------|:--------------------------------|:---------------------|:-----------| | Non-interest-bearing demand | 1,194,863 | 1,244,117 | (49,254) | (4.0)% | | Interest-bearing demand and NOW accounts | 1,112,659 | 1,202,408 | (89,749) | (7.5)% | | Savings and money market | 1,332,886 | 1,319,881 | 13,005 | 1.0% | | Time | 651,363 | 653,598 | (2,235) | (0.3)% | | Total deposits | 4,291,771 | 4,420,004 | (128,233) | (2.9)% | - Total deposits decreased by **$128.2 million (2.9%)** to **$4.29 billion** at June 30, 2022, primarily due to declines in non-interest-bearing demand and interest-bearing demand/NOW accounts. Reciprocal and brokered deposits also decreased from **$373.5 million** to **$350.8 million**[303](index=303&type=chunk)[306](index=306&type=chunk) [Other Borrowed Funds](index=70&type=section&id=Other%20Borrowed%20Funds) This subsection describes the company's use of various borrowed funds to support its lending and investing activities - The Company uses short-term and long-term borrowings, including federal funds purchased, retail repurchase agreements, FHLB advances, Federal Reserve Bank discount window, a bank stock loan, and subordinated debt, to supplement deposits for funding lending and investing activities[307](index=307&type=chunk) [Liquidity and Capital Resources](index=70&type=section&id=Liquidity%20and%20Capital%20Resources) This section evaluates the company's ability to meet its financial obligations and maintain adequate capital levels [Liquidity](index=70&type=section&id=Liquidity) This subsection discusses the company's strategies and sources for managing its liquidity needs - Liquidity is managed by meeting customer demands for funds at a reasonable cost, considering on- and off-balance sheet sources and demands. Primary liquidity sources include core deposits, security/loan maturities, and amortizing portfolios, supplemented by federal funds, brokered CDs, and FHLB borrowings[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Cash and cash equivalents decreased by **$156.4 million** to **$103.6 million** at June 30, 2022, primarily due to **$173.1 million** used in investing activities and **$26.4 million** in financing activities, partially offset by **$43.1 million** from operating activities[314](index=314&type=chunk) [Off-Balance-Sheet Items](index=71&type=section&id=Off-Balance-Sheet%20Items) This subsection describes the company's off-balance-sheet commitments and their associated risks - The Company utilizes off-balance-sheet transactions, such as commitments to extend credit and standby/commercial letters of credit, to meet customer financing needs. These involve credit and interest rate risk, managed with the same policies as on-balance sheet instruments[315](index=315&type=chunk) [Capital Resources](index=71&type=section&id=Capital%20Resources) This subsection details the company's capital structure and compliance with regulatory capital requirements - Both Equity Bancshares, Inc. and Equity Bank are subject to federal regulatory capital requirements and maintain capital levels above minimums. Equity Bank is categorized as 'well capitalized' as of June 30, 2022, under prompt corrective action regulations[317](index=317&type=chunk)[318](index=318&type=chunk)[320](index=320&type=chunk) [Non-GAAP Financial Measures](index=71&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for financial measures not prepared in accordance with GAAP - The Company uses non-GAAP financial measures like Tangible Book Value Per Common Share, Tangible Common Equity to Tangible Assets, and Return on Average Tangible Common Equity to provide investors with insights into financial performance exclusive of intangible assets, which management believes are important for evaluating financial institutions[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[328](index=328&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk) [Tangible Book Value Per Common Share and Tangible Book Value Per Diluted Common Share](index=72&type=section&id=Tangible%20Book%20Value%20Per%20Common%20Share%20and%20Tangible%20Book%20Value%20Per%20Diluted%20Common%20Share) This subsection presents the calculation and trend of tangible book value per common and diluted share | Metric | June 30, 2022 | December 31, 2021 | |:-------|:--------------|:------------------| | Book value per common share | $26.58 | $29.87 | | Tangible book value per common share | $22.42 | $25.65 | | Tangible book value per diluted common share | $22.17 | $25.22 | - Tangible book value per common share decreased to **$22.42** at June 30, 2022, from **$25.65** at December 31, 2021, reflecting the impact of intangible assets on overall book value[327](index=327&type=chunk) [Tangible Common Equity to Tangible Assets](index=72&type=section&id=Tangible%20Common%20Equity%20to%20Tangible%20Assets) This subsection analyzes the ratio of tangible common equity to tangible assets, indicating capital strength | Metric | June 30, 2022 | December 31, 2021 | |:-------|:--------------|:------------------| | Equity to assets | 8.56% | 9.74% | | Tangible common equity to tangible assets | 7.32% | 8.48% | - Tangible common equity to tangible assets decreased to **7.32%** at June 30, 2022, from **8.48%** at December 31, 2021, indicating a lower proportion of tangible equity supporting tangible assets[330](index=330&type=chunk) [Return on Average Tangible Common Equity](index=73&type=section&id=Return%20on%20Average%20Tangible%20Common%20Equity) This subsection presents the annualized return on average tangible common equity, a key profitability metric | Metric | June 30, 2022 | December 31, 2021 | |:-------|:--------------|:------------------| | Return on total average stockholders' equity (ROAE) annualized | 13.99% | 7.37% | | Return on average tangible common equity (ROATCE) annualized | 17.60% | 8.97% | - Annualized Return on Average Tangible Common Equity (ROATCE) significantly increased to **17.60%** at June 30, 2022, from **8.97%** at December 31, 2021, reflecting improved earnings quality on tangible common equity[332](index=332&type=chunk) [Efficiency Ratio](index=73&type=section&id=Efficiency%20Ratio) This subsection provides the non-GAAP efficiency ratio, illustrating operational cost management | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | |:-------|:---------------------------------|:---------------------------------| | Efficiency Ratio | 64.38% | 58.85% | | Non-interest expense to net interest income plus non-interest income | 63.89% | 59.01% | - The non-GAAP efficiency ratio increased to **64.38%** for the three months ended June 30, 2022, from **58.85%** in the prior year, indicating a less efficient allocation of resources to generate income[336](index=336&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section describes the company's exposure to market risks, primarily interest rate risk, and its management strategies [Market Risk](index=74&type=section&id=Market%20Risk) This subsection details the company's primary market risk, interest rate volatility, and its impact on financial performance - The primary market risk is interest rate volatility, managed by the Asset Liability Committee (ALCO) through balance sheet structuring and simulation analysis to monitor Net Interest Income (NII) and Economic Value of Equity (EVE) sensitivity[338](index=338&type=chunk)[340](index=340&type=chunk)[343](index=343&type=chunk) | Change in prevailing interest rates | Impact on Net Interest Income (June 30, 2022) | Impact on Net Interest Income (December 31, 2021) | |:------------------------------------|:----------------------------------------------|:--------------------------------------------------| | +300 basis points | (4.4)% | (4.4)% | | +200 basis points | (2.7)% | (2.4)% | | +100 basis points | (1.2)% | (1.0)% | | -100 basis points | (3.6)% | (4.4)% | | Change in prevailing interest rates | Impact on Economic Value of Equity (June 30, 2022) | Impact on Economic Value of Equity (December 31, 2021) | |:------------------------------------|:---------------------------------------------------|:-------------------------------------------------------| | +300 basis points | (14.0)% | (2.8)% | | +200 basis points | (8.9)% | 0.7% | | +100 basis points | (4.6)% | 2.7% | | -100 basis points | 0.5% | (14.8)% | - The Company is in a liability-sensitive position, leading to negative impacts on NII in rising rate scenarios due to assumed migration of non-term deposits to higher-rate term deposits and fixed-rate assets not repricing. In falling rate scenarios, NII is negatively impacted by decreasing investment income from mortgage-backed securities and faster prepayment of fixed-rate loans[344](index=344&type=chunk)[345](index=345&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022, providing reasonable assurance that required information is accumulated, communicated, processed, and reported timely[352](index=352&type=chunk) - There were no material changes in the Company's internal control over financial reporting during the period covered by this Quarterly Report on Form 10-Q[353](index=353&type=chunk) [PART II—OTHER INFORMATION](index=73&type=section&id=Part%20II%E2%80%94Other%20Information) This section provides additional information not covered in Part I, including updates on legal proceedings, confirmation of no material changes to risk factors, details on common stock repurchases, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=73&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on the company's ongoing legal matters - The Company is party to various litigation matters in the ordinary course of business, with details provided in Note 12 of the Condensed Notes to Interim Consolidated Financial Statements[355](index=355&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) This section confirms whether there have been any material changes to the company's previously disclosed risk factors - There have been no material changes to the Company's risk factors previously disclosed in its Annual Report on Form 10-K filed on March 9, 2022[356](index=356&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on any unregistered sales of equity securities and the application of their proceeds [Repurchase of Common Stock](index=77&type=section&id=Repurchase%20of%20Common%20Stock) This subsection details the company's common stock repurchase program and recent activity - The Board of Directors authorized a repurchase program for up to **1,000,000 shares** of common stock, concluding October 28, 2022. During Q2 2022, the Company repurchased **355,844 shares** at an average price of **$31.54 per share**, with **126,900 shares** remaining available for repurchase[357](index=357&type=chunk)[359](index=359&type=chunk) [Item 3. Defaults Upon Senior Securities](index=77&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms whether there have been any defaults on senior securities - There were no defaults upon senior securities reported[360](index=360&type=chunk) [Item 4. Mine Safety Disclosures](index=77&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section addresses mine safety disclosures, if applicable to the company's operations - Mine safety disclosures are not applicable to the Company[360](index=360&type=chunk) [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) This section includes any other material information not covered elsewhere in the report - No other information was reported in this section[361](index=361&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the report, including certifications and interactive data files - The report includes various exhibits, such as certifications of the CEO and CFO (pursuant to Rules 13a-14(a) and 18 U.S.C. Section 1350) and Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents, and Cover Page Interactive Data File)[361](index=361&type=chunk)[363](index=363&type=chunk)

Exhibit 99.2 Second Quarter Earnings Presentation 7/20/2022 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 throu ...

Equity Bancshares, Inc. (NYSE:EQBK) Q2 2022 Earnings Conference Call July 20, 2022 10:00 AM ET Company Participants Chris Navratil - Investor Relations Brad Elliott - Chairman and Chief Executive Officer Eric Newell - Chief Financial Officer Greg Kossover - Chief Operating Officer John Creech - Chief Credit Officer Craig Anderson - President Conference Call Participants Terry McEvoy - Stephens Jeff Rulis - D.A. Davidson Andrew Liesch - Piper Chandler Damon DelMonte - KBW Operator Thank you for standing by a ...

[PART I FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20Financial%20Information) This section provides the unaudited interim consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed interim consolidated financial statements for Equity Bancshares, Inc. and its subsidiaries, including balance sheets, income statements, comprehensive income, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, securities, loans, derivatives, leases, borrowings, equity, regulatory matters, earnings per share, fair value measurements, commitments, legal proceedings, revenue recognition, and recent business combinations [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2021, to March 31, 2022, primarily driven by a reduction in cash and cash equivalents, partially offset by an increase in loans, net of allowance for credit losses; total stockholders' equity also decreased due to unrealized losses on available-for-sale securities | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Total assets | $5,078,623 | $5,137,631 | | Cash and cash equivalents | $90,050 | $259,954 | | Loans, net of allowance for credit losses | $3,194,987 | $3,107,262 | | Total liabilities | $4,626,608 | $4,637,000 | | Total deposits | $4,379,670 | $4,420,004 | | Total stockholders' equity | $452,015 | $500,631 | - Total assets decreased by **$59.0 million** from December 31, 2021, to March 31, 2022, primarily due to a **$169.4 million** decrease in cash and due from banks, partially offset by an **$87.7 million** increase in loans, net of allowance for credit losses, and a **$25.5 million** increase in securities[227](index=227&type=chunk) - Total stockholders' equity decreased by **$48.6 million**, from **$500.6 million** at December 31, 2021, to **$452.0 million** at March 31, 2022, mainly due to unrealized holding losses, net of tax, in the investment securities portfolio[227](index=227&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income for the three months ended March 31, 2022, increased slightly compared to the same period in 2021, driven by higher net interest income and non-interest income, despite a lower reversal of provision for credit losses and increased non-interest expenses | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Total interest and dividend income | $42,652 | $35,812 | | Total interest expense | $3,363 | $4,053 | | Net interest income | $39,289 | $31,759 | | Provision (reversal) for credit losses | $(412) | $(5,756) | | Total non-interest income | $9,022 | $6,712 | | Total non-interest expense | $29,459 | $24,881 | | Net income | $15,650 | $15,075 | | Basic earnings per share | $0.94 | $1.04 | | Diluted earnings per share | $0.93 | $1.02 | - Net income increased by **$575 thousand**, from **$15.1 million** in Q1 2021 to **$15.7 million** in Q1 2022, driven by a **$5.3 million** increase in loan interest income, a **$1.6 million** increase in taxable securities interest income, and a **$1.1 million** increase in other non-interest income, partially offset by a lower reversal of provision for credit loss (**$5.3 million** decrease) and a **$4.6 million** increase in non-interest expense[196](index=196&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The company reported a comprehensive loss for the three months ended March 31, 2022, primarily due to significant unrealized holding losses on available-for-sale securities, net of tax effects, which outweighed the net income | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Net income | $15,650 | $15,075 | | Unrealized holding gains (losses) on available-for-sale securities | $(69,339) | $(10,369) | | Other comprehensive income (loss), net of tax | $(51,788) | $(7,762) | | Comprehensive income (loss) | $(36,138) | $7,313 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased from January 1, 2022, to March 31, 2022, primarily due to significant other comprehensive losses, net of tax effects, related to available-for-sale securities, and treasury stock purchases, partially offset by net income and stock-based compensation | Equity Component | Balance at January 1, 2022 (in thousands) | Changes during Q1 2022 (in thousands) | Balance at March 31, 2022 (in thousands) | |:---|:---|:---|:---|\ | Common Stock | $203 | $1 | $204 | | Additional Paid-In Capital | $478,862 | $1,244 | $480,106 | | Retained Earnings | $88,324 | $14,308 | $102,632 | | Accumulated Other Comprehensive Income (Loss), net of tax | $1,776 | $(51,788) | $(50,012) | | Treasury Stock | $(68,534) | $(12,381) | $(80,915) | | Total Stockholders' Equity | $500,631 | $(48,616) | $452,015 | - The decrease in total stockholders' equity was principally due to unrealized holding losses, net of tax, in the investment securities portfolio[227](index=227&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents significantly decreased during the three months ended March 31, 2022, primarily due to substantial net cash used in investing activities, particularly for purchases of available-for-sale securities and net changes in loans, and net cash used in financing activities, partially offset by net cash provided by operating activities | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Net cash provided by (used in) operating activities | $7,804 | $23,726 | | Net cash provided by (used in) investing activities | $(165,912) | $(352,958) | | Net cash provided by (used in) financing activities | $(11,796) | $185,222 | | Net change in cash and cash equivalents | $(169,904) | $(144,010) | | Ending cash and cash equivalents | $90,050 | $136,688 | - The decrease in cash and cash equivalents is driven primarily by **$165.9 million** net cash used in investing activities and **$11.8 million** used in financing activities, partially offset by **$7.8 million** provided by operating activities[288](index=288&type=chunk) [Condensed Notes to Interim Consolidated Financial Statements](index=11&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures supporting the interim consolidated financial statements, covering the basis of presentation, significant accounting policies, specific financial instrument details (securities, loans, derivatives, leases, borrowings), equity structure, regulatory compliance, earnings per share calculations, fair value measurements, credit commitments, legal contingencies, revenue recognition practices, and recent M&A activities [NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The interim consolidated financial statements are prepared in accordance with GAAP and SEC guidance, requiring management estimates; the Company has evaluated recent accounting pronouncements (ASU 2020-04, ASU 2021-01, ASU 2022-01, ASU 2022-02) related to reference rate reform, derivatives, and credit losses, and does not expect a material financial impact from their adoption, though future loan disclosures will be affected - The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission[32](index=32&type=chunk) - The Company is currently evaluating ASU 2022-01 (Derivatives and Hedging) but does not expect it will have a material financial impact on its financial condition, results of operations and cash flows[37](index=37&type=chunk) - The Company will not be early adopting ASU 2022-02 (Financial Instruments – Credit Losses) and does not expect the guidance to have a material financial impact on its financial condition, results of operations and cash flows, but it will impact future loan disclosures[38](index=38&type=chunk) [NOTE 2 – SECURITIES](index=12&type=section&id=NOTE%202%20%E2%80%93%20SECURITIES) The Company's available-for-sale securities portfolio increased in amortized cost but decreased in fair value from December 31, 2021, to March 31, 2022, resulting in a significant increase in gross unrealized losses, primarily due to changes in interest rates; the majority of these securities are expected to recover as they approach maturity | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Amortized Cost of AFS Securities | $1,419,885 | $1,325,015 | | Fair Value of AFS Securities | $1,352,894 | $1,327,442 | | Gross Unrealized Gains | $2,095 | $15,296 | | Gross Unrealized Losses | $(69,086) | $(12,869) | - As of March 31, 2022, the Company held **413** available-for-sale securities in an unrealized loss position[45](index=45&type=chunk) - Unrealized losses on securities have not been recognized into income because the security issuers are of high credit quality, management does not intend to sell, and the decline in fair value is largely due to changes in interest rates, with fair value expected to recover as securities approach maturity[46](index=46&type=chunk) [NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=14&type=section&id=NOTE%203%20%E2%80%93%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Total loans increased from December 31, 2021, to March 31, 2022, with commercial real estate and commercial and industrial loans showing growth; the allowance for credit losses decreased slightly, with a reversal of provision for credit losses in Q1 2022; nonaccrual loans decreased, and the company had no CARES Act deferred loans at March 31, 2022, compared to $36.3 million at December 31, 2021 | Loan Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Commercial real estate | $1,552,134 | $1,486,148 | | Commercial and industrial | $629,181 | $567,497 | | Residential real estate | $613,928 | $638,087 | | Total loans | $3,242,577 | $3,155,627 | | Allowance for credit losses | $(47,590) | $(48,365) | | Net loans | $3,194,987 | $3,107,262 | | Allowance for Credit Losses Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Beginning balance | $48,365 | $33,709 (prior to ASC 326 adoption) | | Provision for credit losses (reversal) | $(412) | $(5,756) | | Loans charged-off | $(534) | $(291) | | Recoveries | $171 | $226 | | Total ending allowance balance | $47,590 | $55,525 | - Nonaccrual loans decreased from **$29.36 million** at December 31, 2021, to **$20.70 million** at March 31, 2022[247](index=247&type=chunk) - As of March 31, 2022, the Company had no loans deferred under the CARES Act, compared to **20** deferrals totaling **$36.3 million** at December 31, 2021[81](index=81&type=chunk)[82](index=82&type=chunk) [NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS](index=22&type=section&id=NOTE%204%20%E2%80%93%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS) The Company uses interest rate swaps to manage interest rate risk, classifying them as fair value hedges, cash flow hedges, or stand-alone derivatives; notional amounts for all derivatives totaled $180.5 million at March 31, 2022, with net derivative assets of $3.7 million; the company recorded net gains of $713 thousand on derivatives and hedging activities for the three months ended March 31, 2022 | Derivative Type | Notional Amount (March 31, 2022, in thousands) | Fair Value (March 31, 2022, in thousands) | |:---|:---|:---| | Fair Value Hedges | $26,164 | $1,116 (assets) | | Cash Flow Hedges | $7,500 | $1,184 (assets) | | Stand-Alone Derivatives | $146,849 | $1,419 (assets), $1,499 (liabilities) | | Total Notional Amount | $180,513 | | | Total Derivative Assets | | $3,719 | | Total Derivative Liabilities | | $1,499 | - The Company recorded net gains of **$713 thousand** on derivatives and hedging activities for the three months ended March 31, 2022, compared to **$350 thousand** in the prior year[95](index=95&type=chunk) [NOTE 5 – LEASE OBLIGATIONS](index=24&type=section&id=NOTE%205%20%E2%80%93%20LEASE%20OBLIGATIONS) The Company has operating lease obligations primarily for land and buildings, with a right-of-use asset and lease liability of approximately $5.8 million at March 31, 2022; operating lease costs for the three months ended March 31, 2022, were $220 thousand, an increase from the prior year | Lease Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Right-of-Use Asset | $5,805 | $5,963 | | Lease Liability | $5,773 | $5,928 | | Weighted Average Lease Term | 13.3 years | 13.3 years | | Weighted Average Discount Rate | 2.31% | 2.30% | | Operating Lease Cost | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Total operating lease cost | $220 | $135 | [NOTE 6 – BORROWINGS](index=25&type=section&id=NOTE%206%20%E2%80%93%20BORROWINGS) The Company's borrowings include retail repurchase agreements, Federal Home Loan Bank (FHLB) advances, and subordinated debt; FHLB advances increased significantly to $50 million at March 31, 2022, from zero at December 31, 2021; subordinated debt remained stable at approximately $96 million; the bank stock loan facility was renewed with a reduced maximum borrowing amount | Borrowing Type | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Retail repurchase agreements | $48,199 | $56,006 | | Federal Home Loan Bank advances | $50,000 | $0 | | Subordinated debt | $96,010 | $95,885 | - The bank stock loan facility was renewed on February 11, 2022, with the maximum borrowing amount decreased from **$40 million** to **$25 million**, and the interest rate floor reduced to **3.25%**[113](index=113&type=chunk) | Future Principal Repayments (March 31, 2022, in thousands) | |:---|\ | Due in one year or less: $98,199 | | Due after one year through two years: $0 | | Due after two years through three years: $0 | | Due after three years through four years: $0 | | Due after four years through five years: $0 | | Thereafter: $103,352 | | Total: $201,551 | [NOTE 7 – STOCKHOLDERS' EQUITY](index=28&type=section&id=NOTE%207%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) The Company's Class A common stock outstanding decreased from December 31, 2021, to March 31, 2022, primarily due to treasury stock repurchases; accumulated other comprehensive income (loss) shifted from a gain to a significant loss, mainly driven by unrealized losses on available-for-sale securities | Common Stock Shares | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Class A common stock – issued | 20,156,293 | 20,077,059 | | Class A common stock – held in treasury | (3,701,327) | (3,316,944) | | Class A common stock – outstanding | 16,454,966 | 16,760,115 | - During the three months ended March 31, 2022, the Company repurchased **384,383** shares of its outstanding common stock at an average price of **$32.21** per share, with **482,744** shares remaining available under the program[134](index=134&type=chunk) | Accumulated Other Comprehensive Income (Loss) Components (in thousands) | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Net unrealized or unamortized gains (losses) on Available-for-Sale Securities | $(66,991) | $2,427 | | Net unrealized or unamortized gains (losses) on Cash Flow Hedges | $540 | $(58) | | Total Accumulated Other Comprehensive Income (Loss), net of tax | $(50,012) | $1,776 | [NOTE 8 – REGULATORY MATTERS](index=29&type=section&id=NOTE%208%20%E2%80%93%20REGULATORY%20MATTERS) Both Equity Bancshares, Inc. and Equity Bank met all capital adequacy requirements at March 31, 2022, with Equity Bank categorized as 'well capitalized' under prompt corrective action regulations; the capital ratios generally decreased slightly from December 31, 2021, to March 31, 2022, but remained well above minimum requirements - Management believes as of March 31, 2022, the Company and Bank meet all capital adequacy requirements to which they are subject[138](index=138&type=chunk) - As of March 31, 2022, Equity Bank was categorized as 'well capitalized' under the regulatory framework for prompt corrective action[141](index=141&type=chunk) | Capital Ratio | Equity Bancshares, Inc. (March 31, 2022) | Equity Bancshares, Inc. (December 31, 2021) | Equity Bank (March 31, 2022) | Equity Bank (December 31, 2021) | |:---|:---|:---|:---|:---|\ | Total capital to risk weighted assets | 15.88% | 15.96% | 15.15% | 15.28% | | Tier 1 capital to risk weighted assets | 12.62% | 12.67% | 13.90% | 14.02% | | Common equity Tier 1 capital to risk weighted assets | 11.98% | 12.03% | 13.90% | 14.02% | | Tier 1 leverage to average assets | 9.06% | 9.09% | 9.98% | 10.07% | [NOTE 9 – EARNINGS PER SHARE](index=31&type=section&id=NOTE%209%20%E2%80%93%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per share decreased for the three months ended March 31, 2022, compared to the same period in 2021, despite an increase in net income, primarily due to a higher weighted average common shares outstanding | EPS Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:---|:---|:---| | Net income allocable to common stockholders (in thousands) | $15,650 | $15,075 | | Weighted average common shares outstanding | 16,647,851 | 14,455,986 | | Basic earnings per common share | $0.94 | $1.04 | | Diluted earnings per common share | $0.93 | $1.02 | - The decrease in basic and diluted EPS is despite an increase in net income, primarily due to a higher weighted average common shares outstanding in 2022[145](index=145&type=chunk) [NOTE 10 – FAIR VALUE](index=31&type=section&id=NOTE%2010%20%E2%80%93%20FAIR%20VALUE) The Company measures and discloses fair values of financial instruments using a three-level hierarchy based on input observability; recurring fair value measurements primarily include available-for-sale securities and derivatives, mostly classified as Level 2; non-recurring measurements for impaired loans and OREO are typically Level 3, relying on significant unobservable inputs like real estate appraisals - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[146](index=146&type=chunk) - Available-for-sale securities and derivatives are measured at fair value on a recurring basis, with most AFS securities classified as Level 2 and U.S. Treasury securities as Level 1, while derivatives are classified as Level 2[150](index=150&type=chunk)[151](index=151&type=chunk) - Individually evaluated loans and other real estate owned are measured at fair value on a non-recurring basis when impaired, typically classified as Level 3 due to reliance on third-party appraisals and significant judgment involving unobservable inputs[155](index=155&type=chunk)[156](index=156&type=chunk)[160](index=160&type=chunk) [NOTE 11 – COMMITMENTS AND CREDIT RISK](index=36&type=section&id=NOTE%2011%20%E2%80%93%20COMMITMENTS%20AND%20CREDIT%20RISK) The Company extends credit through various loan types and offers off-balance-sheet commitments, including commitments to originate loans and standby letters of credit; total commitments to make loans (fixed and variable rate) and unused lines of credit increased from December 31, 2021, to March 31, 2022, indicating continued lending activity | Commitment Type (in thousands) | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Commitments to make loans (Fixed Rate) | $95,136 | $101,923 | | Commitments to make loans (Variable Rate) | $176,994 | $173,976 | | Unused lines of credit | $426,635 | $423,540 | | Standby letters of credit | $20,490 | $20,455 | - The Company's exposure to credit loss from these commitments is represented by their contractual amounts, and the same credit policies and procedures are used as for on-balance sheet instruments[291](index=291&type=chunk) [NOTE 12 – LEGAL MATTERS](index=37&type=section&id=NOTE%2012%20%E2%80%93%20LEGAL%20MATTERS) Equity Bank is currently involved in two class action lawsuits filed in January and February 2022, alleging improperly collected overdraft fees; the Company believes these lawsuits are without merit and intends to vigorously defend against the claims, but is currently unable to reasonably estimate the potential loss amount - Equity Bank is party to a lawsuit filed on January 28, 2022, in Sedgwick County Kansas District Court alleging improperly collected overdraft fees, seeking class action certification[173](index=173&type=chunk) - Another lawsuit was filed on February 2, 2022, in Jackson County, Missouri District Court, also alleging improperly collected overdraft fees and seeking class action certification[174](index=174&type=chunk) - The Company believes both lawsuits are without merit and intends to vigorously defend against the claims, but is unable to reasonably estimate the loss amount at this time[173](index=173&type=chunk)[174](index=174&type=chunk) [NOTE 13 – REVENUE RECOGNITION](index=37&type=section&id=NOTE%2013%20%E2%80%93%20REVENUE%20RECOGNITION) The majority of the Company's revenue comes from interest income, which is outside the scope of ASC 606; non-interest income, recognized under ASC 606, increased by $2.3 million (34.4%) for the three months ended March 31, 2022, compared to the prior year, driven by higher service charges and fees, debit card income, and other non-interest income - The majority of the Company's revenues come from interest income on financial instruments, which are outside the scope of ASC 606[175](index=175&type=chunk) | Non-Interest Income Component (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | |:---|:---|:---|:---|:---|\ | Service charges and fees | $2,522 | $1,596 | $926 | 58.0% | | Debit card income | $2,628 | $2,350 | $278 | 11.8% | | Mortgage banking | $562 | $935 | $(373) | (39.9)% | | Increase in value of bank-owned life insurance | $865 | $601 | $264 | 43.9% | | Other non-interest income | $2,405 | $1,291 | $1,114 | 86.3% | | Total non-interest income | $9,022 | $6,712 | $2,310 | 34.4% | - The increase in other non-interest income was due to increases in credit card fees (**$135 thousand**), loan repurchase obligation reversal (**$502 thousand**), and derivatives not designated as hedging relationships (**$325 thousand**)[214](index=214&type=chunk) [NOTE 14 – BUSINESS COMBINATIONS AND BRANCH SALES](index=38&type=section&id=NOTE%2014%20%E2%80%93%20BUSINESS%20COMBINATIONS%20AND%20BRANCH%20SALES) The Company completed two acquisitions in Q4 2021: American State Bancshares, Inc. (October 2021) and three Security Bank of Kansas City branches (December 2021), incurring related costs in Q1 2022; additionally, the Company announced a definitive agreement to sell three Equity Bank branches to United Bank & Trust, scheduled to close in June 2022 - The Company acquired American State Bancshares, Inc. on October 1, 2021, incurring **$187 thousand** in related costs during Q1 2022[178](index=178&type=chunk) - The Company acquired three bank locations from Security Bank of Kansas City on December 3, 2021, incurring **$136 thousand** in related costs during Q1 2022[178](index=178&type=chunk) - The Company announced an agreement to sell three Equity Bank branches (Concordia, Belleville, and Clyde, Kansas) to United Bank & Trust, with the transaction scheduled to close on June 24, 2022[178](index=178&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition and results of operations, including an overview of its business, critical accounting policies, a comprehensive review of operating results (net income, net interest income, non-interest income/expense, taxes), an analysis of financial position (loan portfolio, credit quality, deposits, securities), and a discussion of liquidity and capital resources, along with reconciliations of non-GAAP financial measures [Overview](index=41&type=section&id=Overview) Equity Bancshares, Inc. is a bank holding company operating 69 full-service banking sites across Arkansas, Kansas, Missouri, and Oklahoma; as of March 31, 2022, the Company reported $5.08 billion in total assets, $3.19 billion in net loans, $4.38 billion in total deposits, and $452.0 million in total stockholders' equity, with net income of $15.7 million for the three months ended March 31, 2022 - Equity Bancshares, Inc. operates **69** full-service banking sites in Arkansas, Kansas, Missouri, and Oklahoma[185](index=185&type=chunk) | Metric | As of March 31, 2022 (in thousands) | |:---|:---|\ | Consolidated total assets | $5,080,000 | | Total loans held for investment, net of allowance | $3,190,000 | | Total deposits | $4,380,000 | | Total stockholders' equity | $452,000 | | Net income (three months ended) | $15,700 | | Net income (three months ended March 31, 2021) | $15,100 | [Critical Accounting Policies](index=41&type=section&id=Critical%20Accounting%20Policies) The Company's critical accounting policies involve significant management judgments and assumptions, particularly for the Allowance for Credit Losses (ACL) and Goodwill; the ACL is an estimate of expected credit losses over the loan portfolio's life, influenced by economic conditions and historical experience; Goodwill is assessed annually for impairment, with management determining no triggering event occurred in Q1 2022 - The Allowance for Credit Losses (ACL) represents management's estimate of all expected credit losses over the expected contractual life of the loan portfolio, based on historical loss experience, economic conditions, asset quality trends, and other factors[187](index=187&type=chunk) - Goodwill results from business acquisitions and is assessed at least annually for impairment; for Q1 2022, management determined there was no evidence of a triggering event, thus a quantitative assessment was not necessary[191](index=191&type=chunk) - Significant changes in circumstances related to loan quality or economic conditions could materially impact the ACL, and the CECL methodology's life-of-loan perspective can exacerbate periodic differences[188](index=188&type=chunk)[190](index=190&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) The Company's operating results for Q1 2022 showed an increase in net income, driven by higher net interest income and non-interest income, despite a lower reversal of credit loss provision and increased non-interest expenses; net interest margin improved, and the efficiency ratio decreased, indicating better operational efficiency [Net Income](index=42&type=section&id=Net%20Income) Net income for the three months ended March 31, 2022, increased to $15.7 million, up $575 thousand from $15.1 million in the prior year; this growth was primarily due to increased loan and taxable securities interest income and other non-interest income, partially offset by a smaller credit loss provision reversal and higher non-interest expenses | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Net income | $15,650 | $15,075 | | Increase in loan interest income | $5,300 | N/A | | Increase in taxable securities interest income | $1,600 | N/A | | Decrease in provision for credit loss reversal | $(5,300) | N/A | | Increase in non-interest expense | $4,600 | N/A | [Net Interest Income and Net Interest Margin Analysis](index=42&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20Analysis) Net interest income increased by $7.5 million to $39.3 million for Q1 2022 compared to Q1 2021, driven by higher loan and taxable securities volumes; the net interest margin improved by 7 basis points to 3.38%, and the net interest spread increased by 11 basis points to 3.26%, primarily due to lower costs of interest-bearing deposits and subordinated debt | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:---|:---|:---| | Net interest income (in thousands) | $39,289 | $31,759 | | Net interest margin (annualized) | 3.38% | 3.31% | | Interest rate spread | 3.26% | 3.15% | | Yield on loans (annualized) | 4.61% | 4.59% | | Cost of interest-bearing deposits (annualized) | 0.22% | 0.36% | - Interest income on interest-earning assets increased by **$6.8 million**, with **$4.5 million** from increased loan volume and **$1.9 million** from increased taxable securities volume[204](index=204&type=chunk) - The reduction in interest expense on deposits was primarily due to a **49 basis point** decrease in the cost of certificates of deposits (from **0.96%** to **0.47%**) and a general decrease in other interest-bearing deposit costs, partially offset by volume increases[204](index=204&type=chunk) [Provision for Credit Losses](index=45&type=section&id=Provision%20for%20Credit%20Losses) The Company recorded a reversal of provision for credit losses of $412 thousand for Q1 2022, significantly lower than the $5.8 million reversal in Q1 2021; this was due to a release of reserves on specifically analyzed loans, partially offset by increased perceived economic risk; net charge-offs increased to $363 thousand in Q1 2022 from $65 thousand in Q1 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | |:---|:---|:---| | Reversal of provision for credit losses | $(412) | $(5,756) | | Net charge-offs | $363 | $65 | | Gross charge-offs | $534 | $291 | | Gross recoveries | $171 | $226 | - The Q1 2022 provision reversal was largely due to the release of reserves on specifically analyzed loans, partially offset by increased perceived economic risk from recent inflation, geopolitical uncertainty, and monetary policy impacts[209](index=209&type=chunk) - The large reversal in Q1 2021 was primarily due to improvements in economic inputs to the CECL model and historical loss experience[209](index=209&type=chunk) [Non-Interest Income](index=45&type=section&id=Non-Interest%20Income) Total non-interest income increased by $2.3 million (34.4%) to $9.0 million for Q1 2022 compared to Q1 2021; this growth was primarily driven by increases in service charges and fees ($926 thousand), debit card income ($278 thousand), and other non-interest income ($968 thousand), reflecting management's focus on relationship development and product utilization | Non-Interest Income Component (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | |:---|:---|:---|:---|:---|\ | Service charges and fees | $2,522 | $1,596 | $926 | 58.0% | | Debit card income | $2,628 | $2,350 | $278 | 11.8% | | Mortgage banking | $562 | $935 | $(373) | (39.9)% | | Increase in value of bank-owned life insurance | $865 | $601 | $264 | 43.9% | | Other non-interest income | $2,405 | $1,291 | $1,114 | 86.3% | | Total non-interest income | $9,022 | $6,712 | $2,310 | 34.4% | - Increases in service charges and fees included **$369 thousand** from non-sufficient funds fees and **$154 thousand** from statement fees[213](index=213&type=chunk) - Other non-interest income growth was attributed to increases in credit card fees (**$135 thousand**), loan repurchase obligation reversal (**$502 thousand**), and derivatives not designated as hedging relationships (**$325 thousand**)[214](index=214&type=chunk) [Non-Interest Expense](index=46&type=section&id=Non-Interest%20Expense) Total non-interest expense increased by $4.6 million (18.4%) to $29.5 million for Q1 2022 compared to Q1 2021; this rise was primarily driven by a $2.3 million increase in salaries and employee benefits due to staff additions from recent acquisitions, and a $1.1 million increase in data processing costs related to additional accounts from mergers | Non-Interest Expense Component (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change | % Change | |:---|:---|:---|:---|:---|\ | Salaries and employee benefits | $15,068 | $12,722 | $2,346 | 18.4% | | Net occupancy and equipment | $3,170 | $2,368 | $802 | 33.9% | | Data processing | $3,769 | $2,663 | $1,106 | 41.5% | | Professional fees | $1,171 | $1,073 | $98 | 9.1% | | Advertising and business development | $976 | $682 | $294 | 43.1% | | Total non-interest expense | $29,459 | $24,881 | $4,578 | 18.4% | - The increase in salaries and employee benefits was primarily due to the addition of staff related to the ASBI acquisition in October 2021 and the Security acquisition in December 2021[217](index=217&type=chunk) - Data processing costs increased due to additional accounts from the ASBI and Security mergers, covering debit card processing, software licensing, and online banking services[218](index=218&type=chunk) [Efficiency Ratio](index=46&type=section&id=Efficiency%20Ratio) The efficiency ratio, a non-GAAP measure, improved to 60.4% for Q1 2022 from 64.2% in Q1 2021; this decrease indicates improved operational efficiency, primarily due to increases in net interest income and non-interest income, partially offsetting the rise in non-interest expense | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:---|:---|:---| | Efficiency Ratio (Non-GAAP) | 60.36% | 64.18% | | Non-interest expense to net interest income plus non-interest income (GAAP) | 60.98% | 64.67% | - The decrease in the efficiency ratio was primarily due to increases in net interest income and non-interest income, partially offset by an increase in non-interest expense[224](index=224&type=chunk) [Income Taxes](index=47&type=section&id=Income%20Taxes) The effective income tax rate for Q1 2022 was 18.8%, a decrease from 22.1% in Q1 2021; this lower rate was influenced by a tax benefit of $96 thousand from stock-based compensation and $941 thousand from federal tax credits recognized during the period | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | |:---|:---|:---| | Provision (benefit) for income taxes (in thousands) | $3,614 | $4,271 | | Effective income tax rate | 18.8% | 22.1% | - Income tax expense for Q1 2022 included a **$96 thousand** tax benefit from the settlement of restricted stock units and stock option exercises, and a **$941 thousand** benefit from federal tax credits[226](index=226&type=chunk) [Financial Condition](index=47&type=section&id=Financial%20Condition) The Company's financial condition at March 31, 2022, reflected a slight decrease in total assets and stockholders' equity, primarily due to reduced cash and unrealized losses on securities, despite growth in the loan portfolio; credit quality indicators remained stable, with a decrease in nonperforming assets; deposits saw a minor decline, while FHLB advances increased to supplement funding - Total assets decreased by **$59.0 million** to **$5.08 billion** at March 31, 2022, primarily due to a **$169.4 million** decrease in cash and due from banks, partially offset by increases in loans and securities[227](index=227&type=chunk) - Total stockholders' equity decreased by **$48.6 million** to **$452.0 million**, principally due to unrealized holding losses, net of tax, in the investment securities portfolio[227](index=227&type=chunk) - Total deposits decreased by **$40.3 million** to **$4.38 billion**, while Federal Home Loan Bank advances increased by **$50.0 million**[227](index=227&type=chunk) [Loan Portfolio](index=47&type=section&id=Loan%20Portfolio) The Company's gross total loans held for investment increased by 2.8% to $3.24 billion at March 31, 2022, compared to December 31, 2021; commercial real estate and commercial and industrial loans were the primary drivers of this growth, while residential real estate and agricultural loans saw slight decreases; the portfolio is diversified across various loan types, with a significant portion having adjustable/floating interest rates | Loan Type | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | |:---|:---|:---|:---|:---|\ | Commercial and industrial | $629,181 | $567,497 | $61,684 | 10.9% | | Commercial real estate | $1,552,134 | $1,486,148 | $65,986 | 4.4% | | Residential real estate | $613,928 | $638,087 | $(24,159) | (3.8)% | | Total loans held for investment | $3,242,577 | $3,155,627 | $86,950 | 2.8% | | Loan Interest Rate Type (March 31, 2022, in thousands) | |:---|:---|\ | Loans with a predetermined fixed interest rate | $1,712,349 | | Loans with an adjustable/floating interest rate | $1,530,228 | | Total | $3,242,577 | - At March 31, 2022, gross total loans, including loans held for sale, were **74.1%** of deposits and **63.9%** of total assets, up from **71.5%** and **61.5%** respectively at December 31, 2021[234](index=234&type=chunk) [Credit Quality Indicators](index=49&type=section&id=Credit%20Quality%20Indicators) The Company categorizes loans into risk categories (Pass, Special Mention, Substandard, Doubtful) based on borrower's ability to service debt and collateral; consumer loans are generally 'Pass' unless payment status or a larger credit relationship dictates a downgrade; this system helps monitor and manage credit risk within the portfolio - Loans are categorized into Pass, Special Mention, Substandard, and Doubtful based on borrower's debt servicing ability, financial information, payment history, credit documentation, public information, and economic trends[68](index=68&type=chunk)[245](index=245&type=chunk) - Special Mention loans have potential weaknesses requiring management attention, while Substandard loans are inadequately protected and jeopardize debt liquidation[69](index=69&type=chunk)[70](index=70&type=chunk) [Nonperforming Assets](index=49&type=section&id=Nonperforming%20Assets) Total nonperforming assets significantly decreased to $37.5 million at March 31, 2022, from $66.0 million at December 31, 2021; this reduction was primarily driven by a decrease in nonaccrual loans and other repossessed assets; the ratio of nonperforming assets to total assets improved to 0.74% from 1.28% | Nonperforming Asset (in thousands) | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Nonaccrual loans | $20,696 | $29,361 | | Accruing loans 90 or more days past due | $0 | $256 | | OREO acquired through foreclosure, net | $7,957 | $7,582 | | Other repossessed assets | $8,805 | $28,799 | | Total nonperforming assets | $37,458 | $65,998 | | Ratio | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Nonperforming assets to total assets | 0.74% | 1.28% | | Nonperforming assets to total loans plus OREO and repossessed assets | 1.15% | 2.07% | - Loans are generally designated as nonaccrual when principal or interest payments are **90 days or more** past due, unless well secured and in the process of collection[247](index=247&type=chunk) [Potential Problem Loans](index=50&type=section&id=Potential%20Problem%20Loans) Potential problem loans, categorized as special mention or substandard, increased to $49.3 million at March 31, 2022, from $32.6 million at December 31, 2021; these loans are performing but raise concerns about the borrower's future repayment ability, and are reviewed for impairment and potential allowance additions - Potential problem loans, which are performing but raise concerns about borrower repayment ability, increased to **$49.3 million** at March 31, 2022, from **$32.6 million** at December 31, 2021[251](index=251&type=chunk) - These loans are assigned a grade of special mention or substandard and are evaluated for impairment to determine the need for write-downs or additions to the allowance for credit losses[251](index=251&type=chunk)[252](index=252&type=chunk) [Allowance for Credit Losses](index=50&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses (ACL) decreased slightly to $47.6 million at March 31, 2022, from $48.4 million at December 31, 2021; management believes the ACL is adequate to cover expected credit losses; the ACL to total loans ratio was 1.5% at March 31, 2022, and the ACL to non-accrual loans ratio was 229.9% | ACL Metric | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Allowance for credit losses (in thousands) | $47,590 | $48,365 | | ACL to total loans outstanding | 1.5% | 1.5% | | ACL to non-accrual loans | 229.9% | 164.7% | | Net charge-offs to average loans | 0.0% | 0.0% | - Management believes that the allowance for credit losses at March 31, 2022, was adequate to cover current expected credit losses in the loan portfolio[258](index=258&type=chunk) - The allowance for credit losses on loans measured on a collective basis totaled **$41.4 million**, or **1.33%** of the **$3.11 billion** in loans measured on a collective basis at March 31, 2022[259](index=259&type=chunk) [Securities](index=51&type=section&id=Securities) The securities portfolio, primarily available-for-sale, increased to 26.6% of total assets at March 31, 2022; while the amortized cost increased, the fair value slightly decreased, leading to a significant increase in unrealized losses, mainly due to rising interest rates; mortgage-backed securities constitute a large portion, with their expected lives differing from contractual maturities due to prepayment rights | Securities Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Amortized Cost of AFS Securities | $1,419,885 | $1,325,015 | | Fair Value of AFS Securities | $1,352,894 | $1,327,442 | | Securities as % of total assets | 26.6% | 25.8% | - The increase in unrealized losses on available-for-sale securities is largely due to changes in interest rates, with fair value expected to recover as securities approach maturity[46](index=46&type=chunk) - Mortgage-backed securities' contractual maturity is not a reliable indicator of their expected lives due to borrower prepayment rights, leading to average lives much different than stated lives[272](index=272&type=chunk) [Goodwill Impairment Assessment](index=56&type=section&id=Goodwill%20Impairment%20Assessment) At March 31, 2022, the Company performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired, based on improving market conditions and strong earnings performance - At March 31, 2022, the Company performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired[274](index=274&type=chunk) - This conclusion was based on improving market conditions and strong earnings performance by the Company[191](index=191&type=chunk) [Deposits](index=56&type=section&id=Deposits) Total deposits decreased by $40.3 million (0.9%) to $4.38 billion at March 31, 2022, compared to December 31, 2021; non-interest-bearing demand deposits increased, while interest-bearing demand, savings, money market, and time deposits decreased; the Company utilizes reciprocal deposit services (ICS and CDARS) for large deposits | Deposit Type | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | |:---|:---|:---| | Non-interest-bearing demand | $1,255,793 | $1,244,117 | | Interest-bearing demand and NOW accounts | $1,179,381 | $1,202,408 | | Savings and money market | $1,332,097 | $1,319,881 | | Time | $612,399 | $653,598 | | Total deposits | $4,379,670 | $4,420,004 | - Total deposits decreased by **$40.3 million**, or **0.9%**, compared to December 31, 2021[276](index=276&type=chunk) - The Company participates in Insured Cash Sweep (ICS) and Certificate of Deposit Account Registry Service (CDARS) programs to manage large deposits and ensure FDIC insurance coverage[277](index=277&type=chunk) [Other Borrowed Funds](index=57&type=section&id=Other%20Borrowed%20Funds) The Company uses various borrowings, including federal funds purchased, retail repurchase agreements, FHLB advances, and subordinated debt, to supplement deposits and fund lending and investing activities; these sources are crucial for managing liquidity and capital - The Company utilizes borrowings to supplement deposits to fund its lending and investing activities[282](index=282&type=chunk) - Short-term and long-term borrowings include federal funds purchased and retail repurchase agreements, FHLB advances, Federal Reserve Bank discount window, a bank stock loan, and subordinated debt[282](index=282&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The Company manages liquidity to meet anticipated demands for funds through core deposits, security/loan maturities, and other funding sources like FHLB borrowings; cash and cash equivalents decreased significantly in Q1 2022 due to investing and financing activities; capital resources are maintained above regulatory minimums, with Equity Bank categorized as 'well capitalized,' ensuring financial soundness and access to liquidity [Liquidity](index=57&type=section&id=Liquidity) The Company's liquidity is managed to meet anticipated customer demands and unexpected cash needs, primarily through core deposits, security and loan maturities, and amortizing portfolios; other funding sources include federal funds purchased, brokered CDs, and FHLB borrowings; cash and cash equivalents decreased by $169.9 million in Q1 2022, mainly due to investing and financing activities - Liquidity needs are primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios[286](index=286&type=chunk) - Cash and cash equivalents decreased by **$169.9 million** to **$90.1 million** at March 31, 2022, driven primarily by net cash used in investing activities (**$165.9 million**) and financing activities (**$11.8 million**)[288](index=288&type=chunk) - The Company believes its daily funding needs can be met through operating activities, loan/investment payments, the core deposit base, and FHLB advances/other borrowing relationships[288](index=288&type=chunk) [Off-Balance-Sheet Items](index=57&type=section&id=Off-Balance-Sheet%20Items) The Company engages in off-balance-sheet transactions, such as commitments to extend credit and standby/commercial letters of credit, to meet customer financing needs; these involve credit and interest rate risk, managed with the same credit policies as on-balance sheet instruments - Off-balance-sheet items include commitments to extend credit and standby and commercial letters of credit, which involve credit risk and interest rate risk[289](index=289&type=chunk) - The Company uses the same credit policies and procedures for these commitments as for on-balance sheet instruments[291](index=291&type=chunk) [Capital Resources](index=58&type=section&id=Capital%20Resources) The Company and Equity Bank are subject to federal regulatory capital requirements and maintain capital levels above minimums; as of March 31, 2022, Equity Bank was categorized as 'well capitalized' under prompt corrective action regulations, indicating strong financial soundness and compliance with all capital adequacy requirements - The Company and Equity Bank are subject to regulatory capital requirements and maintain minimum capital relative to assets[293](index=293&type=chunk) - Management believes that as of March 31, 2022, both the Company and Equity Bank met all applicable capital adequacy requirements[294](index=294&type=chunk) - Equity Bank was categorized as 'well capitalized' under the regulatory framework for prompt corrective action as of March 31, 2022[296](index=296&type=chunk) [Non-GAAP Financial Measures](index=58&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures used by the Company, including Tangible Book Value Per Common Share, Tangible Common Equity to Tangible Assets, Return on Average Tangible Common Equity, and Efficiency Ratio; these measures are used by management and investors to evaluate financial performance and condition by excluding or adjusting for certain GAAP amounts, particularly intangible assets and non-recurring expenses - Non-GAAP financial measures are used to supplement GAAP measures, providing additional insights into financial performance and condition, especially by adjusting for intangible assets and certain expenses[297](index=297&type=chunk)[298](index=298&type=chunk) - Key non-GAAP measures discussed include Tangible Book Value Per Common Share, Tangible Common Equity to Tangible Assets, Return on Average Tangible Common Equity, and Efficiency Ratio[299](index=299&type=chunk)[303](index=303&type=chunk)[307](index=307&type=chunk)[309](index=309&type=chunk) [Tangible Book Value Per Common Share and Tangible Book Value Per Diluted Common Share](index=58&type=section&id=Tangible%20Book%20Value%20Per%20Common%20Share%20and%20Tangible%20Book%20Value%20Per%20Diluted%20Common%20Share) Tangible book value per common share and per diluted common share are non-GAAP measures that exclude goodwill and other intangible assets from total stockholders' equity; these metrics are important for investors to assess changes in book value exclusive of intangible assets, which do not increase tangible book value | Metric | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Total stockholders' equity (in thousands) | $452,015 | $500,631 | | Less: goodwill (in thousands) | $54,465 | $54,465 | | Less: core deposit intangibles, net (in thousands) | $13,830 | $14,879 | | Tangible common equity (in thousands) | $382,393 | $429,924 | | Book value per common share | $27.47 | $29.87 | | Tangible book value per common share | $23.24 | $25.65 | | Tangible book value per diluted common share | $22.95 | $25.22 | - Management believes these measures are important to investors interested in period-to-period changes in book value per common share, exclusive of changes in intangible assets[302](index=302&type=chunk) [Tangible Common Equity to Tangible Assets](index=59&type=section&id=Tangible%20Common%20Equity%20to%20Tangible%20Assets) Tangible common equity to tangible assets is a non-GAAP measure that excludes goodwill and other intangible assets from both total stockholders' equity and total assets; this ratio provides a clearer view of the Company's capital strength relative to its tangible asset base, which is valued by financial analysts and investors | Metric | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Total stockholders' equity (in thousands) | $452,015 | $500,631 | | Tangible common equity (in thousands) | $382,393 | $429,924 | | Total assets (in thousands) | $5,078,623 | $5,137,631 | | Tangible assets (in thousands) | $5,009,001 | $5,066,924 | | Equity to assets (GAAP) | 8.90% | 9.74% | | Tangible common equity to tangible assets (Non-GAAP) | 7.63% | 8.48% | - This measure is important to investors interested in the relative changes in common equity and total assets, exclusive of changes in intangible assets[304](index=304&type=chunk) [Return on Average Tangible Common Equity](index=60&type=section&id=Return%20on%20Average%20Tangible%20Common%20Equity) Return on average tangible common equity (ROATCE) is a non-GAAP measure that adjusts net income for intangible asset amortization and uses average tangible common equity; for Q1 2022, ROATCE was 15.85%, higher than the GAAP return on average equity (12.88%), providing a better indication of earnings quality on tangible equity by excluding the impact of goodwill and other intangible assets | Metric | March 31, 2022 | December 31, 2021 | |:---|:---|:---| | Total average stockholders' equity (in thousands) | $492,599 | $563,046 | | Average tangible common equity (in thousands) | $422,418 | $501,860 | | Net income allocable to common stockholders (in thousands) | $15,650 | $10,466 | | Adjusted net income allocable to common stockholders (in thousands) | $16,507 | $11,348 | | Return on total average stockholders' equity (ROAE) annualized (GAAP) | 12.88% | 7.37% | | Return on average tangible common equity (ROATCE) annualized (Non-GAAP) | 15.85% | 8.97% | - Management believes this measure is important to investors interested in earnings quality on tangible common equity, as goodwill and other intangible assets increase total stockholders' equity without increasing tangible common equity[308](index=308&type=chunk) [Efficiency Ratio](index=60&type=section&id=Efficiency%20Ratio) The non-GAAP efficiency ratio, which excludes merger expenses and loss on debt extinguishment from non-interest expense and net gain on acquisition/securities transactions from non-interest income, was 60.36% for Q1 2022, an improvement from 72.25% in Q4 2021 and 64.18% in Q1 2021; this adjusted ratio helps investors assess operating expenses in relation to operating revenue by removing non-recurring or non-operational items | Metric | March 31, 2022 | December 31, 2021 | March 31, 2021 | |:---|:---|:---|:---|\ | Non-interest expense, excluding adjustments (in thousands) | $29,136 | $33,527 | $24,729 | | Net interest income plus non-interest income, excluding adjustments (in thousands) | $48,271 | $46,406 | $38,532 | | Efficiency Ratio (Non-GAAP) | 60.36% | 72.25% | 64.18% | - The adjusted efficiency ratio allows investors and analysts to better assess operating expenses in relation to operating revenue by removing merger expenses and net gain (loss) from securities transactions[311](index=311&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk is interest rate volatility, managed by the Asset Liability Committee (ALCO) through balance sheet structuring and simulation analysis; ALCO monitors net interest income (NII) and economic value of equity (EVE) sensitivity to interest rate changes; simulation results for March 31, 2022, indicate negative impacts on NII and EVE in both rising and falling interest rate scenarios, primarily due to liability sensitivity, fixed-rate assets, and prepayment assumptions - The primary component of market risk is interest rate volatility, which impacts income, expense, and market value of interest-earning assets and liabilities[315](index=315&type=chunk) - The Asset Liability Committee (ALCO) manages interest rate exposure by structuring the balance sheet and using simulation analysis to monitor NII and EVE sensitivity to interest rate changes[317](index=317&type=chunk)[319](index=319&type=chunk) | Change in prevailing interest rates | Impact on Net Interest Income (March 31, 2022) | Impact on Economic Value of Equity (March 31, 2022) | |:---|:---|:---| | +300 basis points | (5.1)% | (10.1)% | | +200 basis points | (3.1)% | (4.3)% | | +100 basis points | (1.5)% | (1.9)% | | 0 basis points | — | — | | -100 basis points | (2.7)% | (4.3)% | - Negative impacts on NII in up-rate scenarios are due to assumed migration of non-term deposits to higher-rate term deposits, fixed-rate investments/loans not repricing, and variable-rate loan restrictions; negative impacts in down-rate scenarios are due to decreased investment income from negative convexity of mortgage-backed securities and assumed prepayments[320](index=320&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2022, concluding they are effective in providing reasonable assurance that required information is accumulated, communicated, recorded, processed, summarized, and reported timely; there were no material changes in internal control over financial reporting during the period - The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed is accumulated, communicated, recorded, processed, summarized, and reported within specified time periods[329](index=329&type=chunk) - There were no changes in the Company's internal control over financial reporting during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[330](index=330&type=chunk) [PART II OTHER INFORMATION](index=62&type=section&id=Part%20II%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, defaults, and other disclosures [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various litigation matters in the ordinary course of business, with specific details on pending lawsuits regarding overdraft fees provided in Note 12 to the financial statements - The Company is a party to various litigation matters incidental to the conduct of its business[332](index=332&type=chunk) - Specific details on pending lawsuits regarding overdraft fees are discussed in Note 12 of the Condensed Notes to Interim Consolidated Financial Statements[332](index=332&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the Company's risk factors previously disclosed in its Annual Report on Form 10-K filed on March 9, 2022 - There have been no material changes in the Company's risk factors previously disclosed in its Annual Report on Form 10-K filed with the SEC on March 9, 2022[333](index=333&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company repurchased 384,383 shares of its Class A common stock during Q1 2022 under a program authorized in September 2021; the average price paid was $32.21 per share, with 482,744 shares remaining available for repurchase under the program as of March 31, 2022 - The Company's Board of Directors authorized the repurchase of up to **1,000,000** shares of outstanding common stock, commencing October 29, 2021, and concluding October 28, 2022[334](index=334&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | |:---|:---|:---| | January 1, 2022 through January 31, 2022 | 80,864 | $33.50 | | February 1, 2022 through February 28, 2022 | 113,659 | $32.04 | | March 1, 2022 through March 31, 2022 | 189,860 | $31.76 | | Total (Q1 2022) | 384,383 | $32.21 | - As of March 31, 2022, **482,744** shares remained available for repurchase under the program[336](index=336&type=chunk) [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - None[337](index=337&type=chunk) [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[337](index=337&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - None[338](index=338&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including amendments to loan agreements, equity incentive plans, certifications from the CEO and CFO, and Inline XBRL documents - Exhibit 10.1: Fifth Amendment to Loan and Security Agreement, dated February 11, 2022, by and between Equity Bancshares, Inc. and ServisFirst Bank[338](index=338&type=chunk) - Exhibit 10.2: Equity Bancshares, Inc. 2022 Omnibus Equity Incentive Plan[338](index=338&type=chunk) - Exhibits 31.1* and 31.2*: Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act[338](index=338&type=chunk) - Exhibits 32.1** and 32.2**: Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350[339](index=339&type=chunk) - Exhibits 101.INS* through 101.PRE* and 104*: Inline XBRL documents[339](index=339&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income of $15.7 million or $0.93 per diluted share, exceeding consensus estimates of $0.63 [6][11] - Non-interest income decreased slightly to $9 million, while non-interest expenses (excluding merger costs) decreased to $29.1 million [11][12] - The allowance for credit losses (ACL) coverage ratio for non-PPP loans decreased to 1.48% from 1.55% in the previous quarter [13][17] Business Line Data and Key Metrics Changes - Organic loan originations totaled $304 million, with 92% in commercial, CRE, and agricultural loans, resulting in a linked quarter loan growth of $87 million [19] - Net interest income increased to $39.3 million from $37.2 million in the linked quarter, with a net interest margin (NIM) increase of 19 basis points to 3.2% [26][27] - Fee income related to PPP loans decreased significantly, with only $755,000 recognized in the first quarter compared to $2.6 million in the previous quarter [28] Market Data and Key Metrics Changes - The company noted strong economic performance in its markets, particularly in oil and gas, retail, and aerospace, with no significant slowdowns observed [65][66] - The agricultural sector remains healthy, with customers sitting on cash and benefiting from rising grain prices [52][66] Company Strategy and Development Direction - The company aims to improve operating performance and achieve a return on tangible equity in the mid-teens, focusing on reducing excess liquidity and increasing fee income [32][34] - There is a commitment to organic growth and enhancing the digital experience for customers while exploring potential M&A opportunities that align with strategic goals [35][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic landscape, despite concerns over inflation and supply chain disruptions, indicating that customers have not yet faced significant difficulties [19][65] - The company anticipates moderate declines in NIM in the second quarter due to uncertainties regarding the cost of funds and potential rate hikes by the Federal Reserve [30][31] Other Important Information - The company is implementing an ITM network and focusing on automating processes to improve operational efficiency [9][21] - Recent changes in regional leadership are expected to enhance contributions to the company's results [24] Q&A Session Summary Question: Impact of potential Fed rate hikes on net interest margin - Management indicated minimal dependence on wholesale funding, suggesting that a 50 basis point increase would have a balanced impact on both sides of the balance sheet [37][38] Question: M&A pricing expectations amid economic uncertainty - Management noted active conversations with potential partners, emphasizing the importance of strategic fit and economic viability in any potential deals [40][41] Question: Loan growth outlook amid economic uncertainty - Management expressed confidence in loan growth, projecting a midpoint annualized growth of about 8% from current levels [45][46] Question: Fee income sustainability - Management expects non-interest income to stabilize in the low $2 million range, with positive contributions from derivatives due to higher rates [67] Question: Credit leverage and provisioning outlook - Management indicated a budgeted provision of about 10 basis points on an annualized basis, reflecting improved asset quality and growth expectations [58][60]