Equity successfully acquired assets and deposits of Almena State Bank, originates $282.1 million of Main Street Lending Program loans through its continued support programs during the pandemic
and adds $3.93 tangible book value per share in 2020

WICHITA, Kan., Jan. 25, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the fourth quarter ended December 31, 2020.

Equity reported net income of $12.5 million, or $0.84, per diluted share in the quarter ended December 31, 2020, and a net loss of $75.0 million or $4.97 per share for the year ended December 31, 2020. When excluding the $104.8 million goodwill impairment recognized in the quarter ended September 30, 2020, adjusted net income totaled $23.9 million, or $1.57 per diluted share, for the year ended December 31, 2020. The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank, acquired on October 23, 2020, from the Federal Deposit Insurance Corporation (“FDIC”) and the success of Equity’s customers in obtaining forgiveness of Paycheck Protection Program (“PPP”) loans from the Small Business Administration (“SBA”) totaling $102.8 million resulting in a recognition of $3.8 million of fee income.

“No one could have imagined the challenges that our employees, customers and communities faced in 2020 due to the pandemic. The perseverance exhibited in collaborating with our customers through a period of great uncertainty showed the integrity, entrepreneurship and accountability of the Equity team. I am honored to be a part of a team that worked tirelessly for customers when they needed us, and in turn, our customers were able to support our communities in a time of need,” said Brad Elliott, Chairman and CEO of Equity.

“In a year that was dominated by events outside of Equity’s control, we took steps to fundamentally grow our franchise and position the Company for long-term stability and growth. We provided $24.3 million of reserves for potential loan losses, raised $75.0 million of proactive capital through a subordinated debt offering and grew tangible book value $3.93 per share, from $20.75 at December 31, 2019, to $24.68 at December 31, 2020, which is the highest level we have recorded as a publicly traded company.”

Notable Items:

Tangible book value per common share was $24.68 at December 31, 2020, as compared to $20.75 at December 31, 2019, representing an increase of 18.9% or $3.93 per share. The Company authorized a second stock repurchase program in October 2020, totaling 800,000 shares. During the quarter ended December 31, 2020, the Company repurchased 313,231 shares at a weighted average cost of $20.82, totaling $6.5 million.
The Company was anticipating adopting ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at December 31, 2020, effective January 1, 2020. On December 27, 2020, the President signed into law the 2021 Fiscal Year Omnibus Appropriations Bill, which included an option to delay adoption of ASU 2016-13 to January 1, 2022. The Company, after conferring with its advisors, will adopt CECL on January 1, 2021, and will not take the option to further delay adoption.
During the year ended December 31, 2020, Equity originated $282.1 million of loans through the Main Street Lending Program (“MSLP”). The MSLP program ended at December 31, 2020. Pursuant to the MSLP terms, 95% of the total originations were sold to a special purpose vehicle of the Federal Reserve Bank of Boston.
Of the $559.3 million of 2020 PPP loans originated, the Company’s customers have successfully had $102.8 million of PPP loans forgiven, resulting in the recognition of fee income totaling $3.8 million and $6.1 million in the three- and twelve-month periods ended December 31, 2020. At December 31, 2020, $253.7 million loans remain from the 2020 PPP with an unrecognized $4.5 million of fee income.
The Company completed the purchase of assets and assumption of deposit liabilities from the FDIC, as the receiver of Almena State Bank. Consequently, the Company recognized a bargain purchase gain of $2.1 million and $299 thousand of merger related expense in the quarter ended December 31, 2020.

Equity’s Balance Sheet Highlights:

Total loans held for investment of $2.59 billion at December 31, 2020, as compared to total loans held for investment of $2.56 billion at December 31, 2019.
Total deposits of $3.45 billion at December 31, 2020, as compared to $3.06 billion at December 31, 2019. Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $2.82 billion at December 31, 2020, relative to $2.23 billion at December 31, 2019.
Total assets were $4.01 billion at December 31, 2020, as compared to $3.95 billion at December 31, 2019.

Financial Results for the Quarter Ended December 31, 2020

Net income allocable to common stockholders was $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, as compared to the net loss allocable to common stockholders of $90.4 million, or $6.01 per diluted share, for the three months ended September 30, 2020, an increase of $102.9 million. This increase was primarily attributable to the goodwill impairment charge of $104.8 million taken during the quarter ended September 30, 2020, and a $2.1 million acquisition gain from the Almena State Bank transaction during the quarter ended December 31, 2020. Net income, excluding the gain on acquisition and merger expense, was $10.1 million for the quarter ended December 31, 2020, or $0.67 per diluted share. Net income, excluding the goodwill impairment and using an assumed 22.5% effective tax rate for the quarter ended September 30, 2020, totaled $9.1 million, or $0.60 per diluted share.

Net Interest Income

Net interest income was $35.6 million for the three months ended December 31, 2020, as compared to $32.1 million for the three months ended September 30, 2020, an increase of $3.5 million, or 10.8%. The increase in net interest income was driven by the recognition of fee income from PPP loan forgiveness by the SBA, totaling $3.8 million in the three months ended December 31, 2020, compared to $1.3 million in the three months ended September 30, 2020. As a result of the PPP loan forgiveness, net interest margin increased 41 basis points to 3.88% for the three months ended December 31, 2020 from 3.47% for the three months ended September 30, 2020. The yield on earning assets improved 35 basis points to 4.36% for the quarter ended December 31, 2020 from 4.01% from the previous quarter. The cost of interest-bearing liabilities declined to 0.65% or five basis points for the quarter ended December 31, 2020 from 0.70% in the quarter ended September 30, 2020. The cost of interest-bearing deposits declined seven basis points to 0.43% for the three months ended December 31, 2020 from 0.50% in the previous quarter primarily attributed to the decline in the cost of time deposits, which declined 23 basis points between the quarters. The cost of other borrowings increased to 4.71% in the three months ended December 31, 2020 from 4.45% from the quarter ended September 30, 2020, mainly due to the entire $75.0 million of subordinated debt at 7.0% not being on the balance sheet for the entire third quarter.

Provision for Loan Losses

The provision for loan losses was $1.0 million for the three months ended December 31, 2020, as compared to $815 thousand for the three months ended September 30, 2020. For the three months ended December 31, 2020, we had net charge-offs of $1.4 million as compared to $806 thousand for three months ended September 30, 2020.

Non-Interest Income

Total non-interest income was $8.5 million for the three months ended December 31, 2020, or $6.4 million with the net gain on the purchase and assumption of Almena State Bank excluded, as compared to the $6.5 million reported for the three months ended September 30, 2020. Service charges and fees were $1.8 million representing an increase of $53 thousand, or 3.1%, from the quarter ended September 30, 2020. Debit card income totaled $2.4 million in the quarter ended December 31, 2020, decreasing $90 thousand, or 3.6%, from the quarter ended September 30, 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2020 was $28.5 million, or $28.2 million with merger expense excluded. When the goodwill impairment charge of $104.8 million is excluded from the previous quarter, pro-forma non-interest expense totaled $26.0 million for the quarter ended September 30, 2020. The $2.5 million increase is primarily attributed to a $1.5 million increase in other real estate owned expense and a $437 thousand increase in FDIC insurance assessments. The most significant contributor to the increase in other real estate owned expense was a $947 thousand valuation adjustment on two facilities that were closed in May 2020.

Asset Quality

As of December 31, 2020, Equity’s allowance for loan losses to total loans was 1.30%, as compared to 0.48% at December 31, 2019. Total reserves, including purchase discounts, to total loans were approximately 2.12% as of December 31, 2020, as compared to 0.85% at December 31, 2019. Nonperforming assets were $53.6 million as of December 31, 2020, or 1.34% of total assets. Nonperforming assets were $46.9 million at December 31, 2019, or 1.19% of total assets.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.8%, the total capital to risk-weighted assets was 17.4% and the total leverage ratio was 9.3% at December 31, 2020. At December 31, 2019, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.6%, the total capital to risk-weighted assets ratio was 12.6% and the total leverage ratio was 9.0%. The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.5%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 10.1% at December 31, 2020. At December 31, 2019, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the ratio of total capital to risk-weighted assets was 12.5% and the total leverage ratio was 8.9%.

Non-GAAP Financial Measures

In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its total revenue; in other words, for every dollar of total revenue we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Return on average assets before income tax provision, provision for loan losses and goodwill impairment is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates the “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity we believe it can be used as an alternative measure of the Company’s earnings performance in relationship to its equity.

Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss fourth quarter 2020 results on Tuesday, January 26, 2021, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at. On Tuesday, January 26, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 6781789.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until February 2, 2021, accessible at (855) 859-2056 with conference ID no. 6781789 at investor.equitybank.com.

About Equity Bancshares, Inc.

Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NASDAQ Global Select Market under the symbol “EQBK.” Learn more at www.equitybank.com.

Special Note Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2020, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, such as COVID-19, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.

Investor Contact:

Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.com

Media Contact:

John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(816) 505-4063
jhanley@equitybank.com

Unaudited Financial Tables

Table 1. Consolidated Statements of Operations
Table 2. Quarterly Consolidated Statements of Operations
Table 3. Consolidated Balance Sheets
Table 4. Selected Financial Highlights
Table 5. Year-to-Date Net Interest Income Analysis
Table 6. Quarter-to-Date Net Interest Income Analysis
Table 7. Quarter-Over-Quarter Net Interest Income Analysis
Table 8. Non-GAAP Financial Measures

TABLE 1. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

	Three months ended December 31,						Year ended December 31,
	2020			2019			2020			2019
Interest and dividend income
Loans, including fees	$	35,383		$	36,687		$	134,664		$	149,298
Securities, taxable		3,408			4,615			15,521			19,339
Securities, nontaxable		913			1,037			3,682			4,180
Federal funds sold and other		285			645			1,694			2,682
Total interest and dividend income		39,989			42,984			155,561			175,499
Interest expense
Deposits		2,755			8,533			16,582			40,914
Federal funds purchased and retail repurchase agreements		25			39			105			155
Federal Home Loan Bank advances		94			1,564			2,292			6,667
Federal Reserve Bank discount window		—			—			6			—
Bank stock loan		—			147			415			654
Subordinated debt		1,556			296			3,509			1,251
Total interest expense		4,430			10,579			22,909			49,641

Net interest income		35,559			32,405			132,652			125,858
Provision for loan losses		1,000			1,055			24,255			18,354
Net interest income after provision for loan losses		34,559			31,350			108,397			107,504
Non-interest income
Service charges and fees		1,759			2,241			6,856			8,672
Debit card income		2,401			2,101			9,136			8,230
Mortgage banking		855			769			3,153			2,468
Increase in value of bank-owned life insurance		489			504			1,941			1,998
Net gain on acquisition		2,145			—			2,145			—
Net gains (losses) from securities transactions		(1	)		(3	)		11			14
Other		852			1,029			2,781			3,606
Total non-interest income		8,500			6,641			26,023			24,988
Non-interest expense
Salaries and employee benefits		14,053			11,918			54,129			52,122
Net occupancy and equipment		2,206			2,342			8,784			8,674
Data processing		2,748			2,688			10,991			10,124
Professional fees		1,095			1,359			4,282			4,734
Advertising and business development		801			901			2,498			3,075
Telecommunications		510			486			1,873			2,079
FDIC insurance		797			109			2,088			1,228
Courier and postage		338			328			1,441			1,348
Free nationwide ATM cost		423			440			1,609			1,680
Amortization of core deposit intangibles		1,044			820			3,850			3,168
Loan expense		161			267			789			875
Other real estate owned		1,600			381			2,310			707
Merger expenses		299			—			299			915
Goodwill impairment		—			—			104,831			—
Other		2,385			2,807			9,216			8,906
Total non-interest expense		28,460			24,846			208,990			99,635
Income (loss) before income tax		14,599			13,145			(74,570	)		32,857
Provision for income taxes		2,111			3,131			400			7,278
Net income (loss) and net income (loss) allocable to common stockholders	$	12,488		$	10,014		$	(74,970	)	$	25,579
Basic earnings (loss) per share	$	0.85		$	0.65		$	(4.97	)	$	1.64
Diluted earnings (loss) per share	$	0.84		$	0.64		$	(4.97	)	$	1.61
Weighted average common shares		14,760,810			15,442,841			15,098,512			15,619,891
Weighted average diluted common shares		14,934,058			15,684,673			15,098,512			15,843,139

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	December 31, 2020			September 30, 2020			June 30, 2020		March 31, 2020		December 31, 2019
Interest and dividend income
Loans, including fees	$	35,383		$	32,278		$	32,627	$	34,376	$	36,687
Securities, taxable		3,408			3,476			4,017		4,620		4,615
Securities, nontaxable		913			923			880		966		1,037
Federal funds sold and other		285			405			409		595		645
Total interest and dividend income		39,989			37,082			37,933		40,557		42,984
Interest expense
Deposits		2,755			3,064			3,899		6,864		8,533
Federal funds purchased and retail repurchase agreements		25			25			24		31		39
Federal Home Loan Bank advances		94			471			552		1,175		1,564
Federal Reserve Bank discount window		—			—			6		—		—
Bank stock loan		—			—			306		109		147
Subordinated debentures		1,556			1,415			255		283		296
Total interest expense		4,430			4,975			5,042		8,462		10,579

Net interest income		35,559			32,107			32,891		32,095		32,405
Provision for loan losses		1,000			815			12,500		9,940		1,055
Net interest income after provision for loan losses		34,559			31,292			20,391		22,155		31,350
Non-interest income
Service charges and fees		1,759			1,706			1,365		2,026		2,241
Debit card income		2,401			2,491			2,201		2,043		2,101
Mortgage banking		855			877			831		590		769
Increase in value of bank-owned life insurance		489			489			481		482		504
Net gain on acquisition		2,145			—			—		—		—
Net gains (losses) from securities transactions		(1	)		—			4		8		(3	)
Other		852			922			850		157		1,029
Total non-interest income		8,500			6,485			5,732		5,306		6,641
Non-interest expense
Salaries and employee benefits		14,053			13,877			12,695		13,504		11,918
Net occupancy and equipment		2,206			2,224			2,119		2,235		2,342
Data processing		2,748			2,817			2,763		2,663		2,688
Professional fees		1,095			877			943		1,367		1,359
Advertising and business development		801			598			403		696		901
Telecommunications		510			486			390		487		486
FDIC insurance		797			360			414		517		109
Courier and postage		338			366			353		384		328
Free nationwide ATM cost		423			439			327		420		440
Amortization of core deposit intangibles		1,044			1,030			974		802		820
Loan expense		161			107			287		234		267
Other real estate owned		1,600			133			269		308		381
Merger expenses		299			—			—		—		—
Goodwill impairment		—			104,831			—		—		—
Other		2,385			2,690			2,000		2,141		2,807
Total non-interest expense		28,460			130,835			23,937		25,758		24,846
Income (loss) before income tax		14,599			(93,058	)		2,186		1,703		13,145
Provision for income taxes (benefit)		2,111			(2,653	)		497		445		3,131
Net income (loss) and net income (loss) allocable to common stockholders	$	12,488		$	(90,405	)	$	1,689	$	1,258	$	10,014
Basic earnings (loss) per share	$	0.85		$	(6.01	)	$	0.11	$	0.08	$	0.65
Diluted earnings (loss) per share	$	0.84		$	(6.01	)	$	0.11	$	0.08	$	0.64
Weighted average common shares		14,760,810			15,040,407			15,209,483		15,387,697		15,442,841
Weighted average diluted common shares		14,934,058			15,040,407			15,304,009		15,595,024		15,684,673

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)

	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
ASSETS
Cash and due from banks	$	280,150		$	65,534		$	178,045		$	141,989		$	88,973
Federal funds sold		548			305			245			263			318
Cash and cash equivalents		280,698			65,839			178,290			142,252			89,291
Interest-bearing time deposits in other banks		249			499			2,248			2,498			2,498
Available-for-sale securities		871,827			798,576			177,228			187,812			142,067
Held-to-maturity securities⁽¹⁾		—			—			662,522			721,992			769,059
Loans held for sale		12,394			9,053			4,802			6,494			5,933
Loans, net of allowance for loan losses⁽²⁾		2,557,987			2,691,626			2,772,256			2,485,208			2,544,420
Other real estate owned, net		11,733			8,727			7,374			5,870			8,293
Premises and equipment, net		89,412			86,087			87,055			84,732			84,478
Bank-owned life insurance		77,044			76,555			76,066			75,585			75,103
Federal Reserve Bank and Federal Home Loan Bank stock		16,415			32,545			31,832			31,662			31,137
Interest receivable		15,831			18,110			19,598			15,549			15,738
Goodwill		31,601			31,601			136,432			136,432			136,432
Core deposit intangibles, net		16,057			17,101			18,131			19,105			19,907
Other		32,108			29,252			31,435			28,641			25,222
Total assets	$	4,013,356		$	3,865,571		$	4,205,269		$	3,943,832		$	3,949,578
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	791,639		$	693,967		$	756,613		$	508,441		$	481,298
Total non-interest-bearing deposits		791,639			693,967			756,613			508,441			481,298
Savings, NOW and money market		2,029,097			1,816,307			1,800,132			1,668,145			1,749,048
Time		626,854			623,344			690,522			783,811			833,170
Total interest-bearing deposits		2,655,951			2,439,651			2,490,654			2,451,956			2,582,218
Total deposits		3,447,590			3,133,618			3,247,267			2,960,397			3,063,516
Federal funds purchased and retail repurchase agreements		36,029			46,295			51,557			37,113			35,708
Federal Home Loan Bank advances		10,144			167,862			344,900			389,620			324,373
Bank stock loan		—			—			—			40,000			8,990
Subordinated debentures		87,684			87,537			55,575			14,638			14,561
Contractual obligations		5,189			5,478			5,571			5,781			5,836
Interest payable and other liabilities		19,071			22,609			20,633			18,932			18,534
Total liabilities		3,605,707			3,463,399			3,725,503			3,466,481			3,471,518
Commitments and contingent liabilities
Stockholders’ equity
Common stock		174			174			174			174			174
Additional paid-in capital		386,820			386,017			384,955			383,850			382,731
Retained earnings		50,787			38,299			128,704			127,015			125,757
Accumulated other comprehensive income (loss)		19,781			21,074			3,390			3,769			(3	)
Employee stock loans		(43	)		(43	)		(43	)		(43	)		(77	)
Treasury stock		(49,870	)		(43,349	)		(37,414	)		(37,414	)		(30,522	)
Total stockholders’ equity		407,649			402,172			479,766			477,351			478,060
Total liabilities and stockholders’ equity	$	4,013,356		$	3,865,571		$	4,205,269		$	3,943,832		$	3,949,578

⁽¹⁾ Fair market value of held-to-maturity securities	$	—		$	—		$	689,206		$	750,900		$	783,911
⁽²⁾ Allowance for loan losses		33,709			34,087			34,078			21,915			12,232

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2020			2020			2020			2020			2019
Loans Held-For-Investment by Type
Commercial real estate	$	1,188,696		$	1,188,329		$	1,191,336		$	1,200,762		$	1,158,022
Commercial and industrial		734,495			857,244			883,355			542,571			592,052
Residential real estate		382,026			402,242			442,486			480,603			503,439
Agricultural real estate		133,693			127,349			129,080			130,795			141,868
Consumer		58,464			67,465			71,037			64,799			68,378
Agricultural		94,322			83,084			89,040			87,593			92,893
Total loans held-for-investment		2,591,696			2,725,713			2,806,334			2,507,123			2,556,652
Allowance for loan losses		(33,709	)		(34,087	)		(34,078	)		(21,915	)		(12,232	)
Net loans held-for-investment	$	2,557,987		$	2,691,626		$	2,772,256		$	2,485,208		$	2,544,420


Asset Quality Ratios
Allowance for loan losses to total loans		1.30	%		1.25	%		1.21	%		0.87	%		0.48	%
Past due or nonaccrual loans to total loans		2.11	%		2.12	%		1.88	%		2.47	%		1.66	%
Nonperforming assets to total assets		1.34	%		1.55	%		1.37	%		1.22	%		1.19	%
Nonperforming assets to total loans plus other real estate owned		2.06	%		2.19	%		2.05	%		1.92	%		1.83	%
Classified assets to bank total regulatory capital		25.50	%		18.35	%		20.81	%		19.50	%		21.24	%


Selected Average Balance Sheet Data (QTD Average)
Investment securities	$	814,114		$	802,525		$	877,308		$	907,910		$	911,923
Total gross loans receivable		2,692,223			2,758,680			2,806,865			2,525,344			2,568,301
Interest-earning assets		3,647,730			3,679,168			3,786,629			3,519,267			3,563,642
Total assets		3,910,628			4,041,187			4,159,336			3,888,205			3,932,909
Interest-bearing deposits		2,551,219			2,430,407			2,487,187			2,531,508			2,563,519
Borrowings		172,730			377,158			384,727			355,303			377,561
Total interest-bearing liabilities		2,723,949			2,807,565			2,871,914			2,886,811			2,941,080
Total deposits		2,960,791			3,145,810			3,257,631			3,021,181			3,055,275
Total liabilities		3,501,055			3,558,100			3,675,731			3,405,638			3,459,347
Total stockholders' equity		409,572			483,088			483,605			482,567			473,562
Tangible common equity^*		355,025			329,039			327,411			325,470			315,569


Performance ratios
Return on average assets (ROAA) annualized		1.27	%		(8.90	)%		0.16	%		0.13	%		1.01	%
Return on average assets before income tax, provision for loan losses and goodwill impairment*		1.59	%		1.24	%		1.42	%		1.20	%		1.43	%
Return on average equity (ROAE) annualized		12.13	%		(74.45	)%		1.40	%		1.05	%		8.39	%
Return on average equity before income tax, provision for loan losses and goodwill impairment*		15.15	%		10.37	%		12.21	%		9.70	%		11.90	%
Return on average tangible common equity (ROATCE) annualized^*		14.93	%		(108.31	)%		3.03	%		2.35	%		13.42	%
Return on average tangible common equity adjusted for goodwill impairment*		14.93	%		12.02	%		3.03	%		2.35	%		13.42	%
Yield on loans annualized		5.23	%		4.65	%		4.68	%		5.47	%		5.67	%
Cost of interest-bearing deposits annualized		0.43	%		0.50	%		0.63	%		1.09	%		1.32	%
Cost of total deposits annualized		0.37	%		0.39	%		0.48	%		0.91	%		1.11	%
Net interest margin annualized		3.88	%		3.47	%		3.49	%		3.67	%		3.61	%
Efficiency ratio^*		67.19	%		67.38	%		61.98	%		68.88	%		63.63	%
Non-interest income / average assets		0.86	%		0.64	%		0.55	%		0.55	%		0.67	%
Non-interest expense / average assets		2.90	%		12.88	%		2.31	%		2.66	%		2.51	%


Capital Ratios
Tier 1 Leverage Ratio		9.30	%		8.76	%		8.52	%		9.02	%		9.02	%
Common Equity Tier 1 Capital Ratio		12.82	%		12.76	%		12.02	%		11.67	%		11.63	%
Tier 1 Risk Based Capital Ratio		13.38	%		13.32	%		12.57	%		12.20	%		12.15	%
Total Risk Based Capital Ratio		17.36	%		17.35	%		15.33	%		13.00	%		12.59	%
Total stockholders' equity to total assets		10.16	%		10.40	%		11.41	%		12.10	%		12.10	%
Tangible common equity to tangible assets^*		9.05	%		9.23	%		8.00	%		8.47	%		8.45	%
Book value per common share	$	28.04		$	27.08		$	31.53		$	31.41		$	30.95
Tangible book value per common share^*	$	24.68		$	23.72		$	21.29		$	21.10		$	20.75
Tangible book value per diluted common share^*	$	24.32		$	23.57		$	21.13		$	20.96		$	20.39

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

TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

	For the year ended							For the year ended
	December 31, 2020							December 31, 2019
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	763,971	$	35,601		4.66	%	$	567,215	$	34,225		6.03	%
Commercial real estate		952,083		50,667		5.32	%		1,012,146		57,316		5.66	%
Real estate construction		238,015		10,947		4.60	%		212,658		13,776		6.48	%
Residential real estate		449,789		19,894		4.42	%		519,119		24,338		4.69	%
Agricultural real estate		133,813		8,008		5.98	%		140,365		8,496		6.05	%
Consumer		70,064		4,603		6.57	%		70,390		5,563		7.90	%
Agricultural		88,206		4,944		5.61	%		85,747		5,584		6.51	%
Total loans		2,695,941		134,664		5.00	%		2,607,640		149,298		5.73	%
Securities
Taxable securities		727,452		15,521		2.13	%		777,802		19,339		2.49	%
Nontaxable securities		122,783		3,682		3.00	%		142,816		4,180		2.93	%
Total securities		850,235		19,203		2.26	%		920,618		23,519		2.55	%
Federal funds sold and other		112,053		1,694		1.51	%		83,887		2,682		3.20	%
Total interest-earning assets	$	3,658,229		155,561		4.25	%	$	3,612,145		175,499		4.86	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	1,795,108		5,893		0.33	%	$	1,699,952		21,008		1.24	%
Time deposits		704,921		10,689		1.52	%		967,803		19,906		2.06	%
Total interest-bearing deposits		2,500,029		16,582		0.66	%		2,667,755		40,914		1.53	%
FHLB advances		213,155		2,292		1.08	%		277,328		6,667		2.40	%
Other borrowings		109,064		4,035		3.70	%		69,270		2,060		2.97	%
Total interest-bearing liabilities	$	2,822,248		22,909		0.81	%	$	3,014,353		49,641		1.65	%

Net interest income			$	132,652						$	125,858
Interest rate spread						3.44	%						3.21	%

Net interest margin ⁽²⁾						3.63	%						3.48	%

⁽¹⁾ Average loan balances include nonaccrual loans.
⁽²⁾ Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
⁽³⁾ Tax exempt income is not included in the above table on a tax-equivalent basis.
⁽⁴⁾ Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

	For the three months ended							For the three months ended
	December 31, 2020							December 31, 2019
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	782,433	$	10,943		5.56	%	$	568,868	$	8,657		6.04	%
Commercial real estate		980,686		12,647		5.13	%		942,447		13,966		5.88	%
Real estate construction		216,714		2,301		4.22	%		236,447		3,308		5.55	%
Residential real estate		406,450		5,005		4.90	%		522,113		5,815		4.42	%
Agricultural real estate		135,337		2,244		6.60	%		144,824		2,236		6.13	%
Consumer		78,430		1,080		5.48	%		69,980		1,385		7.85	%
Agricultural		92,173		1,163		5.02	%		83,622		1,320		6.26	%
Total loans		2,692,223		35,383		5.23	%		2,568,301		36,687		5.67	%
Securities
Taxable securities		698,985		3,408		1.94	%		768,867		4,615		2.38	%
Nontaxable securities		115,129		913		3.15	%		143,056		1,037		2.88	%
Total securities		814,114		4,321		2.11	%		911,923		5,652		2.46	%
Federal funds sold and other		141,393		285		0.80	%		83,418		645		3.07	%
Total interest-earning assets	$	3,647,730		39,989		4.36	%	$	3,563,642		42,984		4.79	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	1,915,280		970		0.20	%	$	1,683,157		4,094		0.97	%
Time deposits		635,939		1,785		1.12	%		880,362		4,438		2.00	%
Total interest-bearing deposits		2,551,219		2,755		0.43	%		2,563,519		8,533		1.32	%
FHLB advances		39,245		94		0.95	%		310,592		1,564		2.00	%
Other borrowings		133,485		1,581		4.71	%		66,969		482		2.86	%
Total interest-bearing liabilities	$	2,723,949		4,430		0.65	%	$	2,941,080		10,579		1.43	%

Net interest income			$	35,559						$	32,405
Interest rate spread						3.71	%						3.36	%

Net interest margin ⁽²⁾						3.88	%						3.61	%

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

TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

	For the three months ended							For the three months ended
	December 31, 2020							September 30, 2020
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/Rate⁽³⁾⁽⁴⁾
Interest-earning assets
Loans ⁽¹⁾
Commercial and industrial	$	782,433	$	10,943		5.56	%	$	848,096	$	8,400		3.94	%
Commercial real estate		980,686		12,647		5.13	%		979,775		12,886		5.23	%
Real estate construction		216,714		2,301		4.22	%		214,775		2,233		4.14	%
Residential real estate		406,450		5,005		4.90	%		429,965		4,733		4.38	%
Agricultural real estate		135,337		2,244		6.60	%		131,725		1,718		5.19	%
Consumer		78,430		1,080		5.48	%		69,485		1,104		6.32	%
Agricultural		92,173		1,163		5.02	%		84,859		1,204		5.65	%
Total loans		2,692,223		35,383		5.23	%		2,758,680		32,278		4.65	%
Securities
Taxable securities		698,985		3,408		1.94	%		683,630		3,476		2.02	%
Nontaxable securities		115,129		913		3.15	%		118,895		923		3.09	%
Total securities		814,114		4,321		2.11	%		802,525		4,399		2.18	%
Federal funds sold and other		141,393		285		0.80	%		117,963		405		1.36	%
Total interest-earning assets	$	3,647,730		39,989		4.36	%	$	3,679,168		37,082		4.01	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	1,915,280		970		0.20	%	$	1,784,891		875		0.19	%
Time deposits		635,939		1,785		1.12	%		645,516		2,189		1.35	%
Total interest-bearing deposits		2,551,219		2,755		0.43	%		2,430,407		3,064		0.50	%
FHLB advances		39,245		94		0.95	%		248,437		471		0.75	%
Other borrowings		133,485		1,581		4.71	%		128,721		1,440		4.45	%
Total interest-bearing liabilities	$	2,723,949		4,430		0.65	%	$	2,807,565		4,975		0.70	%

Net interest income			$	35,559						$	32,107
Interest rate spread						3.71	%						3.31	%

Net interest margin ⁽²⁾						3.88	%						3.47	%

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

TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

	As of and for the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2020			2020			2020			2020			2019

Income before income taxes	$	14,599		$	(93,058	)	$	2,186		$	1,703		$	13,145
Add: goodwill impairment		—			104,831			—			—			—
Less: tax effect		2,111			2,652			497			445			3,131
Adjusted income	$	12,488		$	9,121		$	1,689		$	1,258		$	10,014
Weighted average common shares outstanding		14,760,810			15,040,407			15,209,483			15,387,697			15,442,841
Effect of weighted average dilutive shares assuming positive net income		173,248			82,804			94,526			207,327			241,832
Weighted average diluted shares		14,934,058			15,123,211			15,304,009			15,595,024			15,684,673
Diluted earnings per share adjusted for goodwill impairment	$	0.84		$	0.60		$	0.11		$	0.08		$	0.64

Total stockholders' equity	$	407,649		$	402,172		$	479,766		$	477,351		$	478,060
Less: goodwill		31,601			31,601			136,432			136,432			136,432
Less: core deposit intangibles, net		16,057			17,101			18,131			19,105			19,907
Less: mortgage servicing asset, net		—			1			2			4			5
Less: naming rights, net		1,130			1,141			1,152			1,163			1,174
Tangible common equity	$	358,861		$	352,328		$	324,049		$	320,647		$	320,542
Common shares issued at period end		14,540,556			14,853,487			15,218,301			15,198,986			15,444,434
Diluted common shares outstanding at period end		14,756,378			14,945,282			15,333,977			15,297,319			15,719,810
Book value per common share	$	28.04		$	27.08		$	31.53		$	31.41		$	30.95
Tangible book value per common share	$	24.68		$	23.72		$	21.29		$	21.10		$	20.75
Tangible book value per diluted common share	$	24.32		$	23.57		$	21.13		$	20.96		$	20.39

Total assets	$	4,013,356		$	3,865,571		$	4,205,269		$	3,943,832		$	3,949,578
Less: goodwill		31,601			31,601			136,432			136,432			136,432
Less: core deposit intangibles, net		16,057			17,101			18,131			19,105			19,907
Less: mortgage servicing asset, net		—			1			2			4			5
Less: naming rights, net		1,130			1,141			1,152			1,163			1,174
Tangible assets	$	3,964,568		$	3,815,727		$	4,049,552		$	3,787,128		$	3,792,060
Total stockholders' equity to total assets		10.16	%		10.40	%		11.41	%		12.10	%		12.10	%
Tangible common equity to tangible assets		9.05	%		9.23	%		8.00	%		8.47	%		8.45	%

Total average stockholders' equity	$	409,572		$	483,088		$	483,605		$	482,567		$	473,562
Less: average intangible assets		54,547			154,049			156,194			157,097			157,993
Average tangible common equity	$	355,025		$	329,039		$	327,411		$	325,470		$	315,569
Net income (loss) allocable to common stockholders	$	12,488		$	(90,405	)	$	1,689		$	1,258		$	10,014
Add: goodwill impairment	$	—		$	104,831		$	—		$	—		$	—
Less: tax effect of goodwill impairment	$	—		$	5,305		$	—		$	—		$	—
Adjusted net income (loss) plus goodwill impairment	$	12,488		$	9,121		$	1,689		$	1,258		$	10,014
Amortization of intangible assets		1,055			1,043			986			814			833
Less: tax effect of intangible assets amortization		222			234			207			171			175
Adjusted net income (loss) allocable to common stockholders	$	13,321		$	9,930		$	2,468		$	1,901		$	10,672
Return on total average stockholders' equity (ROAE) annualized		12.13	%		(74.45	)%		1.40	%		1.05	%		8.39	%
Return on average tangible common equity (ROATCE) annualized		14.93	%		(108.31	)%		3.03	%		2.35	%		13.42	%
Adjusted return on average tangible common equity		14.93	%		12.01	%		3.03	%		2.35	%		13.42	%



Non-interest expense	$	28,460		$	130,835		$	23,937		$	25,758		$	24,846
Less: merger expense		299			—			—			—			—
Less: goodwill impairment		—			104,831			—			—			—
Non-interest expense, excluding goodwill impairment	$	28,161		$	26,004		$	23,937		$	25,758		$	24,846
Net interest income	$	35,559		$	32,107		$	32,891		$	32,095		$	32,405
Non-interest income		8,500			6,485			5,732			5,306			6,641
Less: net gain on acquisition		2,145			—			—			—			—
Less: net gains (losses) from securities transactions		(1	)		—			4			8			(3	)
Non-interest income, excluding gains (losses) from securities transactions	$	6,356		$	6,485		$	5,728		$	5,298		$	6,644
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions	$	41,915		$	38,592		$	38,619		$	37,393		$	39,049
Non-interest expense to net interest income plus non-interest income		64.60	%		339.02	%		61.98	%		68.87	%		63.63	%
Efficiency ratio		67.19	%		67.38	%		61.98	%		68.88	%		63.63	%
Net income (loss) allocable to common stockholders	$	12,488		$	(90,405	)	$	1,689		$	1,258		$	10,014
Add: income tax provision		2,111			(2,653	)		497			445			3,131
Add: provision for loan losses		1,000			815			12,500			9,940			1,055
Add: goodwill impairment		—			104,831			—			—			—
Adjusted net income	$	15,599		$	12,588		$	14,686		$	11,643		$	14,200
Total average assets	$	3,910,628		$	4,041,187		$	4,159,336		$	3,888,205		$	3,932,909
Total average stockholders' equity	$	409,572		$	483,088		$	483,605		$	482,567		$	473,562
Return on average assets (ROAA) annualized		1.27	%		(8.90	)%		0.16	%		0.13	%		1.01	%
Adjusted return on average assets		1.59	%		1.24	%		1.42	%		1.20	%		1.43	%
Adjusted return on average equity		15.15	%		10.37	%		12.21	%		9.70	%		11.90	%

Equity Bancshares, Inc. Reports Fourth Quarter Results