Equity Bank(US:EQBK)2021-10-20 16:11Financial Data and Key Metrics Changes - The company reported net income of $11.8 million or $0.80 per diluted share, with core earnings at $0.96 per diluted share, beating street consensus [10] - Net interest income totaled $39 million in Q3, increasing from $34.6 million in the previous quarter, representing a $4.3 million increase [15] - The provision for credit losses totaled $1 million, with specific reserves increasing by $4.8 million during the quarter [14][15] Business Line Data and Key Metrics Changes - Organic loan growth totaled $46.5 million, representing an annualized growth of 7% during the quarter [19] - PPP loans declined by $176 million due to forgiveness, with $16.6 million of fee income recognized from this activity year-to-date [20] - Organic originated loans totaled $217.6 million in Q3, down slightly from $261 million in Q2, with 80% in commercial, CRE, and agricultural loans [21] Market Data and Key Metrics Changes - The weighted coupon in the portfolio, excluding PPP, increased approximately 13 basis points during the third quarter [16] - The coverage of allowance for credit losses to non-PPP loans was 2.04%, unchanged from the previous quarter [15] Company Strategy and Development Direction - The company aims to improve its revenue mix, increase fee contributions, and drive positive operational leverage off its expense base [34] - The integration of the American State Bank & Trust balance sheet is a key focus, with expectations of adding $78 million in deposits from the upcoming branch acquisition [36] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, citing supply chain issues, labor market challenges, and inflation as uncertainties affecting loan demand [34] - The company does not expect PPP income to influence its 2022 results significantly [35] Other Important Information - The company paid its first common stock dividend to shareholders, which is expected to broaden its investor base and serve as a capital management tool [36] - The company is actively pursuing additional acquisition opportunities, with several conversations ongoing [47] Q&A Session Summary Question: Clarification on Q4 and full year 2022 projections - The projections include the American State acquisition but not the Missouri Bank acquisition [38] Question: Fee income growth expectations - Fee income growth is expected to be driven by service charges, debit card interchange, and other initiatives in wealth management and treasury management products [40][42] Question: Impact of dividends on buyback strategy - The dividend will not affect the company's buyback strategy, which remains active [44] Question: Margin guidance and loan allocation assumptions - The company does not model changes in the yield curve but sees potential for improvement by reallocating cash and securities into loans [51][53] Question: Provision outlook for Q4 and 2022 - Management does not anticipate a meaningful provision in Q4 and expects the provision for 2022 to be lower than previously budgeted [68]