Equity Bank(US:EQBK)2024-07-16 20:45markdown [Second Quarter 2024 Financial Performance](index=1&type=section&id=Second%20Quarter%202024%20Financial%20Performance) [Performance Highlights](index=1&type=section&id=Performance%20Highlights) Equity Bancshares reported a strong second quarter with **record** net interest income of **$46.5 million** and an **expanded** net interest margin of **3.94%**, achieving adjusted net income of **$15.3 million** (**$0.99** per diluted share) while strategically integrating acquisitions and repurchasing shares Q2 2024 Key Financial Results | Metric | GAAP | Adjusted (Non-GAAP) | | :--- | :--- | :--- | | **Net Income** | $11.7 million | $15.3 million | | **Diluted EPS** | $0.76 | $0.99 | - Net interest income reached a company **record** of **$46.5 million**, with the net interest margin **expanding** to **3.94%**[1](index=1&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk) - The company was active in M&A, integrating the Rockhold Bancorp merger and closing the acquisition of KansasLand Bancshares, Inc. on July 1, 2024[2](index=2&type=chunk)[22](index=22&type=chunk) - Actively repurchased **152,982** shares at a weighted average price of **$33.35** during the quarter[22](index=22&type=chunk) [Detailed Financial Analysis](index=1&type=section&id=Detailed%20Financial%20Analysis) The company's financial performance was driven by a **28 basis point** increase in the yield on interest-earning assets to **6.37%**, with non-interest income at **$9.0 million** and non-interest expenses rising to **$38.9 million** due to acquisitions, while asset quality remained stable and capital ratios strong [Net Interest Income](index=1&type=section&id=Net%20Interest%20Income) Net interest income increased to **$46.5 million** in Q2 2024, driven by a significant expansion in net interest margin to **3.94%** and a **28 basis point** rise in the yield on interest-earning assets to **6.37%**, while deposit costs remained stable Net Interest Margin and Yields (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $46.5 M | $44.2 M | +$2.3 M | | **Net Interest Margin** | 3.94% | 3.75% | +19 bps | | **Yield on Earning Assets** | 6.37% | 6.09% | +28 bps | | **Cost of Int-Bearing Deposits** | 2.78% | 2.77% | +1 bp | [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses decreased to **$265** thousand from **$1.0 million** in the prior quarter, primarily due to realized charge-offs, with net charge-offs increasing to **$1.2 million** from **$667** thousand - Provision for credit losses was **$265** thousand, down from **$1.0 million** in Q1 2024[5](index=5&type=chunk) - Net charge-offs for the quarter were **$1.2 million**, compared to **$667** thousand in the previous quarter[5](index=5&type=chunk) [Non-Interest Income and Expense](index=2&type=section&id=Non-Interest%20Income%20and%20Expense) Total non-interest income was **$9.0 million**, down from **$11.7 million** due to prior non-recurring gains, while total non-interest expense rose to **$38.9 million** primarily due to the Bank of Kirksville acquisition - Non-interest income was **$9.0 million**, a decrease from **$11.7 million** in Q1 2024, which had included **$1.2 million** in acquisition gains and **$2.3 million** in special asset resolution gains[6](index=6&type=chunk) - Non-interest expense increased by **$1.8 million** to **$38.9 million**, primarily due to the addition of Bank of Kirksville operations[7](index=7&type=chunk) [Balance Sheet and Asset Quality](index=2&type=section&id=Balance%20Sheet%20and%20Asset%20Quality) As of June 30, 2024, total assets were **$5.2 billion**, with loans at **$3.5 billion** and deposits at **$4.3 billion**, while asset quality remained stable with the allowance for credit losses at **1.3%** and nonperforming assets at **0.5%** Key Balance Sheet Figures (as of June 30, 2024) | Metric | Value | | :--- | :--- | | **Total Assets** | $5.2 billion | | **Loans Held for Investment** | $3.5 billion | | **Total Deposits** | $4.3 billion | Asset Quality Metrics (as of June 30, 2024) | Metric | Value | | :--- | :--- | | **Allowance for Credit Losses / Total Loans** | 1.3% | | **Nonperforming Assets / Total Assets** | 0.5% | | **Classified Assets / Regulatory Capital** | 8.47% | [Capital Position](index=3&type=section&id=Capital%20Position) The company's capital ratios remained stable and strong as of June 30, 2024, with a Common Equity Tier 1 (CET1) ratio of **11.1%**, total capital to risk-weighted assets of **14.6%**, and a total leverage ratio of **9.1%** Company Capital Ratios (as of June 30, 2024) | Ratio | Value | | :--- | :--- | | **Common Equity Tier 1 (CET1)** | 11.1% | | **Total Capital to RWA** | 14.6% | | **Total Leverage Ratio** | 9.1% | Equity Bank Capital Ratios (as of June 30, 2024) | Ratio | Value | | :--- | :--- | | **Common Equity Tier 1 (CET1)** | 12.9% | | **Total Capital to RWA** | 14.0% | | **Total Leverage Ratio** | 10.1% | [Unaudited Financial Tables](index=8&type=section&id=Unaudited%20Financial%20Tables) [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2024, the company reported net income of **$11.7 million** (**$0.76** per diluted share), an increase from Q2 2023, driven by higher net interest income of **$46.5 million** Q2 2024 vs Q2 2023 Income Statement Highlights | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | **Net Interest Income** | $46.5 M | $39.4 M | | **Total Non-interest Income** | $9.0 M | $7.0 M | | **Total Non-interest Expense** | $38.9 M | $33.1 M | | **Net Income** | $11.7 M | $11.5 M | | **Diluted EPS** | $0.76 | $0.74 | Quarterly Income Statement Trend | Metric | Q2 2024 | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | **Net Interest Income** | $46.5 M | $44.2 M | $39.5 M | | **Net Income (Loss)** | $11.7 M | $14.1 M | ($28.3 M) | | **Diluted EPS** | $0.76 | $0.90 | ($1.84) | [Consolidated Balance Sheets](index=14&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets were **$5.25 billion**, with total deposits at **$4.34 billion** and total stockholders' equity increasing to **$461.4 million** Balance Sheet Summary (as of June 30, 2024) | Account | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | $5,245.5 M | $5,239.0 M | | **Net Loans** | $3,410.9 M | $3,437.7 M | | **Total Deposits** | $4,341.4 M | $4,371.0 M | | **Total Stockholders' Equity** | $461.4 M | $456.8 M | [Selected Financial Highlights](index=16&type=section&id=Selected%20Financial%20Highlights) Key performance ratios for Q2 2024 include a net interest margin of **3.94%**, ROAA of **0.91%**, and ROATCE of **13.31%**, with asset quality remaining stable and tangible book value per common share increasing to **$25.70** Q2 2024 Performance Ratios | Ratio | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | **Net Interest Margin** | 3.94% | 3.75% | | **ROAA (annualized)** | 0.91% | 1.10% | | **ROATCE (annualized)*** | 13.31% | 14.96% | | **Efficiency Ratio*** | 66.03% | 65.16% | Book Value Per Share | Metric | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | **Book Value per Common Share** | $30.36 | $29.80 | | **Tangible Book Value per Common Share*** | $25.70 | $25.10 | [Net Interest Income Analysis](index=19&type=section&id=Net%20Interest%20Income%20Analysis) The quarter-over-quarter increase in net interest income was driven by a **28 basis point** rise in the yield on total interest-earning assets to **6.37%** and a **30 basis point** increase in average loan yield to **7.15%**, contributing to an interest rate spread expansion to **3.28%** Q2 2024 vs Q1 2024 Yield/Cost Analysis | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | **Yield on Total Loans** | 7.15% | 6.85% | | **Yield on Total Interest-Earning Assets** | 6.37% | 6.09% | | **Cost of Total Interest-Bearing Deposits** | 2.78% | 2.77% | | **Cost of Total Interest-Bearing Liabilities** | 3.09% | 2.99% | | **Interest Rate Spread** | 3.28% | 3.10% | [Non-GAAP Financial Measures](index=22&type=section&id=Non-GAAP%20Financial%20Measures) The company's Q2 2024 adjusted operating net income was **$15.3 million** (**$0.99** per diluted share), after removing **$2.3 million** in merger expenses and a **$1.7 million** BOLI tax adjustment, resulting in an adjusted efficiency ratio of **66.03%** and adjusted operating ROAA of **1.18%** Reconciliation of Net Income and EPS (Q2 2024) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | **Net Income** | $11.7 M | +$3.6 M | $15.3 M | | **Diluted EPS** | $0.76 | +$0.23 | $0.99 | - Key adjustments include adding back **$2.3 million** in merger expenses and a **$1.7 million** BOLI tax adjustment[76](index=76&type=chunk) Key Adjusted Performance Ratios (Q2 2024) | Ratio | Value | | :--- | :--- | | **Adjusted Operating ROAA** | 1.18% | | **Return on Average Tangible Common Equity (ROATCE)** | 13.31% | | **Efficiency Ratio** | 66.03% | [Other Information](index=5&type=section&id=Other%20Information) [Conference Call and Webcast](index=5&type=section&id=Conference%20Call%20and%20Webcast) Equity Bancshares will host a conference call and webcast on July 17, 2024, at 10 a.m. ET to discuss Q2 2024 results, with a replay available on their investor relations website - A conference call is scheduled for July 17, 2024, at 10 a.m. ET (9 a.m. CT) to discuss the results[15](index=15&type=chunk) - A live webcast and replay will be accessible on the company's website at investor.equitybank.com[36](index=36&type=chunk)[56](index=56&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements subject to various risks and uncertainties, including competition and economic fluctuations, which could cause actual results to differ materially, and the company undertakes no obligation to update them - The report includes forward-looking statements that are not guarantees of future performance and are subject to various risks and uncertainties[16](index=16&type=chunk) - Key risk factors include competition, monetary and fiscal policy changes, interest rate fluctuations, and challenges with acquisition integration[16](index=16&type=chunk)[58](index=58&type=chunk)