Equity Bancshares, Inc. · NYSE:EQBK
Equity Bancshares — Debt Investor Presentation (July 2020)
45 slides from Equity Bancshares's debt investor presentation, Jul 2, 2020
Slide 1: Investor Presentation June 2020
Confidential Exhibit 99.2 Investor Presentation June 2020Confidential Exhibit 99.2 Investor Presentation June 2020
Slide 2: Confidentiality Notice and Disclaimer
Confidentiality Notice and Disclaimer This Confidential Investor Presentation (this “Confidential Investor Presentation”) is confidential and does not constitute or form part of any offer to sell, or a solicitation of an offer to purchase, any securities of Equity Bancshares, Inc. (the “Company”) or
Slide 3: Terms of Planned Capital Raise
Terms of Planned Capital Raise Equity Bancshares, Inc. Issuer Subordinated Notes Security Regulation D Private Placement with Registration Rights Offering Type $50 million Principal Amount (1) Egan-Jones BBB Rating June 2030 Maturity Date Semi-annually on [•] and [•] of each year through [•], 2025,
Slide 4: Overview of Equity Bancshares, Inc.
Overview of Equity Bancshares, Inc. 4Overview of Equity Bancshares, Inc. 4
Slide 5: Overview of Equity Bancshares, Inc.
Overview of Equity Bancshares, Inc. Investment Highlights Company Overview Headquarters: Wichita, KS • The Company operates 50 branches across four states (KS, MO, Holding Company Established: 2002 OK, AR) in growing metropolitan markets, such as Kansas City, Market Cap ($M): $265 Wichita and Tulsa,
Slide 6: Operating Strategy
Operating Strategy Performance Opportunity § Proven Acquirer and Integrator Focused on core deposit gathering across ü Successful track record four-state footprint and deploying funding ü Disciplined merger analytics into higher growth lending markets ü Ability to integrate, operate and enhance valu
Slide 7: Experienced Management Team
Experienced Management Team Greg Kossover Greg Kossover EVP, COO & CFO Brad Elliott Chief Operating Officer Chairman & CEO Years at Equity: 7 | Years in Banking: 20 Years at Equity: 18 | Years in Banking: 31 § Became COO in April 2020 § Founded Equity Bancshares in 2002 § Served as CFO from 2013 to
Slide 8: Franchise Overview
Franchise Overview 8Franchise Overview 8
Slide 9: Diverse Market Segments
Diverse Market Segments Diverse market segments with economies based on transportation, manufacturing and healthcare • Top employers in the region include a diverse range of operations such as telecommunications, professional services, aircraft manufacturing, OEM manufacturing and transportation. •
Slide 10: Continue Building Value via Strategic Execution
Continue Building Value via Strategic Execution Phase I Phase II Phase III Phase IV Leverage Infrastructure Profitably Platform for Best in Class Start-Up Growth 2012 - 2016 2017-present 2003 - 2007 2008 - 2011 2012 2017 2003-2004 2008 First Community Bancshares (FCB) Closed Prairie State merger (Ma
Slide 11: Proven Successful Acquiror
Proven Successful Acquiror Since July 2015, EQBK has announced and integrated 8 whole bank acquisitions First Community Eastman City Bank & Prairie State Cache Kansas Bank Adams Dairy Independence First National Trust Bancshares Holdings, Inc. Corporation Bancshares Corp. Bancshares Bancshares Compa
Slide 12: Financial Performance
Financial Performance 12Financial Performance 12
Slide 13: 2020 First Quarter Highlights
2020 First Quarter Highlights Performance Summary Proactive response to the COVID- (1)(2) • Core diluted EPS of $0.57 for 1Q 2020 19 pandemic for the benefit of our customers, personnel, • Diluted EPS of $0.08 for 1Q 2020 communities, and shareholders. – Net income to common stockholders was $1.3M •
Slide 14: Operating Performance Trends
Non-interest Exp. / Avg. Assets (%) Diluted EPS ($) Net Interest Margin (%) Operating Performance Trends Diluted EPS and Net Income to Common Stockholders Return on Average Tangible Common Equity $60,000 $3.00 18.00% $2.65 16.00% $50,000 $2.50 15.53% $2.34 $2.28 14.00% $40,000 $2.00 $1.90 12.00% 13.
Slide 15: Robust Growth
Robust Growth Gross Loans ($M) Total Deposits ($M) $4,000 $5,000 CAGR: 20.0% CAGR: 20.1% $3,000 $3,750 $2,578 $2,563 $2,514 $3,123 $3,064 $2,960 $2,120 $2,382 $2,000 $2,500 $1,388 $1,630 $1,000 $1,250 $0 $0 12/31/16 12/31/17 12/31/18 12/31/19 3/31/20 12/31/16 12/31/17 12/31/18 12/31/19 3/31/20 Total
Slide 16: Successfully Managing Profitability
Successfully Managing Profitability (1) (2) Non-Interest Income ($000s) Non-Interest Expense ($000s) $7,000 $25,000 $4,491 $768 $1,029 $3,853 $6,000 $957 $4,399 $4,818 $3,753 $507 $157 $802 $779 $503 $20,000 $784 $696 $499 $646 $785 $821 $722 $806 $5,000 $1,156 $1,367 $901 $852 $482 $820 $991 $1,228
Slide 17: Strong Capital Ratios
Strong Capital Ratios Consolidated Capital Ratios 16.0% 14.7% 14.3% 13.4% 14.0% 13.0% 12.5% 12.6% 12.2% 12.1% 12.2% 11.9% 11.8% 11.7% 11.5% 11.6% 11.5% 12.0% 11.0% 10.3% 9.1% 10.0% 9.0% 9.0% 8.6% 8.5% 8.5% 8.4% 7.7% 8.0% 6.0% 4.0% 2.0% 0.0% 12/31/16 12/31/17 12/31/18 12/31/19 3/31/20 (1) TCE/TA Leve
Slide 18: Diversified Loan Portfolio
Diversified Loan Portfolio Portfolio by Loan Type Mini Storage 1% Oil and Gas 1% Medical 1% Car Dealership 2% SNCs 1% Assisted Living 1% Single Family - Const 2% Consumer 3% RE Investment 1-4 Family Office Buildings 2% 7% 1-4 Family 19% Consumers 3% Agriculture 9% Multifamily 3% CRE 33% Professional
Slide 19: Top Largest Loans
Top 20 Largest Loans Score Credit Risk Rating % of Loan Credit Risk Balance Portfolio 1 High 2 Strong # Rating Market Description ($000s) (%) 3 Good 1 Satisfactory Wichita Non-Owner Occ CRE $20,000 0.80% 4 Satisfactory 2 Satisfactory Kansas City Comm. & Industrial 19,696 0.78 5 Acceptable 3 Good Wic
Slide 20: Top Lending Relationships & Classified Portfolios
Top Lending Relationships & Classified Portfolios Top 20 Lending Relationships as of 3/31/20 Classified Loans $ in thousands $ in thousands % of Classified Cumulative % % of Top 20 % of Total Loans in Quarter-end of Total Loans Sector/Property Type Commitment Balances Commitment Loans Segment* # Typ
Slide 21: Hotel Portfolio - $240 million
Hotel Portfolio - $240 million Top 20 Relationships: 84% of Hotel Portfolio Summary • Proactive communication with sophisticated borrowers has driven Under Hotel Indigo Hyatt borrower plans to conserve cash and fund operations. Loans Construction 4% 6% 20% modeled to be able to support debt service
Slide 22: Construction Portfolio - $222 million
Construction Portfolio - $222 million Loan Purpose Summary Vacant Land • The top 40 commercial construction relationships comprised 5% 73% of the total portfolio, or $161M. Residential – 95% of these projects have not been interrupted by the pandemic. 21% – Two projects have been delayed due to the
Slide 23: Agriculture Portfolio - $220 million
Agriculture Portfolio - $220 million Loan Purpose Summary • Within our footprint crop yields have outperformed the average throughout Other the Midwest and nationwide in 2019. 10% • Approximately 59% of our portfolio is secured by real estate. • Land values have seen very limited volatility in recen
Slide 24: Retail Portfolio - $144 million
Retail Portfolio - $144 million Customer Composition Summary • Shopping center exposure was $41M extended to 39 loan relationships. Amusement • Vehicle – primarily comprised of vehicle dealerships diversified 3% Convenience amongst our metro and community markets. Store Vehicle 15% Dealers • Retail
Slide 25: C&I Manufacturing Portfolio - $132 million
C&I Manufacturing Portfolio - $132 million C&I Manufacturing Composition Summary • Aerospace exposure within the portfolio was $62.9M or 48%. – Six borrowers comprise the aerospace segment of our portfolio. – Original projected revenues for 2020 associated with the Boeing 737 Max for these companies
Slide 26: Restaurant Portfolio - $96 million
Restaurant Portfolio - $96 million Customer Composition Summary (Dollars in thousands) • Predominantly QSRs in national concepts with Wichita roots, including Pizza Hut Local and Freddy’s, Papa John’s, and Pizza Hut (57%). 2% Independent • Top tier quick service restaurant brands with national scale
Slide 27: Multi-family Portfolio - $85 million
Multi-family Portfolio - $85 million Multi-family Composition Summary • Comprised of 93 loans with an average balance of approximately Under $915K. Construction 15% • Included within the portfolio is $9.5M in loans facilitating operations of low to moderate income apartment complexes. Low to Moderat
Slide 28: Oil And Gas / Medical / Assisted Living
Oil And Gas / Medical / Assisted Living The Bank has very limited exposure to the oil and gas industry and no direct exposure to exploration. Total balance of $19M OIL & GAS as of March 31, 2020, which is comprised of 59 loans with an average balance of $325K. The Bank has very limited exposure to t
Slide 29: Allowance for Loan Losses
Allowance for Loan Losses (1) Total Reserve Ratio • As provided for in the CARES Act, the Company elected to defer CECL implementation in favor of the historic probable, incurred 2.00% methodology. The Company was prepared to implement CECL prior to the emergence of this pandemic. 1.37% 1.50% 1.26%
Slide 30: Asset Quality – Year-over-Year
Asset Quality – Year-over-Year Nonperforming Assets Net Charge-Offs (NCO)/ Average Loans 1.22% 1.43% 1.52% 0.98% 1.19% $1.19 $0.89 $1.01 $17.58 $0.26 (1) $2.40 0.70% $70.0 0.60% $60.0 0.50% $50.0 $5.9 $7.9 $8.3 $40.0 0.40% 0.58% $6.4 $30.0 0.30% $8.7 $42.1 $20.0 $40.3 0.20% $38.4 $33.2 $22.7 $10.0 0
Slide 31: Strong Core Deposit Franchise
Strong Core Deposit Franchise (2) Deposit Composition Core Deposits / Total Deposits $4,000 100.0% Non-Interest 83.0% 82.4% 79.8% 78.2% 77.4% Bearing DDA, Time Deposits > 100K, 17% $3,000 75.0% 17% $2,524 $2,457 $2,417 $1,863 $2,000 50.0% $1,301 Time Deposits < $1,000 25.0% 100K, 10% Interest Bearin
Slide 32: Securities Portfolio
Securities Portfolio $ in thousands Amortized Carrying • At March 31, 2020, the carrying Cost Gain / Loss Fair Value Value amount of investment securities Residential MBS - AFS $181,965 $5,847 $187,812 $187,812 totaled $909.8M, a decrease of Residential MBS - HTM 561,258 25,601 586,859 561,258 $1.3M
Slide 33: Balance Sheet Liquidity and Hold Co. Debt
Balance Sheet Liquidity and Hold Co. Debt Liquidity Summary Holding Company Borrowings • As of March 31, 2020, the Company had $17M of • Ample liquidity and ability to upstream cash existing cash at the Holding Company and the ability from the bank to the holding company. to upstream $10.3M from the
Slide 34: Interest Income & Net Interest Margin
Interest Income & Net Interest Margin Interest Income and Net Interest Margin Performance Notes • Improved interest margin through $50,000 6.00% $881 $1,618 $1,356 proactive management of liability $867 $928 5.00% $40,000 costs 3.67% 3.49% 3.61% 4.00% • Interest spread was 3.46% as of 3.42% 3.42% $3
Slide 35: Interest Rate Sensitivity
Interest Rate Sensitivity Impact of Parallel Rate Shocks to Net Interest Income and Net Income 4. 0% 0.5% – ( 40 . % ) (1.7%) (3.7%) ( 80 . % ) (4.0%) (3.9%) (4.5%) (7.6%) ( 120 . % ) (8.4%) (8.4%) (9.9%) (10.3%) (11.3%) ( 160 . % ) (14.2%) ( 20. 0% ) (17.4%) (18.9%) (19.2%) ( 240 . % ) ( 280 . % )
Slide 36: Historical and Pro Forma Interest Coverage, Double Leverage
Historical and Pro Forma Interest Coverage Double Leverage $ in thousands As of the Period Ended, 2016Y 2017Y 2018Y 2019Y 2020 Q1 Investment in Subsidiaries 249,421 383,642 480,388 493,535 509,410 Consolidated Equity 257,964 374,144 455,941 478,060 477,351 Double Leverage Ratio 96.7% 102.5% 105.4% 1
Slide 37: Pro Forma Capital
Pro Forma Capital Pro Forma Consolidated Capital $ in thousands Actual Pro Forma 3/31/2020 Adjustments 3/31/2020 Regulatory Capital Common Equity Tier 1 Capital $321,955 $321,955 Additional Tier 1 Capital 14,638 14,638 Tier 1 Capital $336,593 $336,593 Sub Debt 0 $50,000 50,000 ALLL 21,915 21,915 Tie
Slide 38: Appendix
Appendix 38Appendix 38
Slide 39: Equity Bank: We Are Here For You - COVID Outreach 2020
Equity Bank: We Are Here For You - COVID Outreach 2020 • Paycheck Protection Program • Increased focus on digital - Began communicating with customers banking prior to applications opening • Full DocuSign Implementation Customers • Liquidity and action plans • Deferrals where appropriate • Dispersed
Slide 40: Equity Bank: We Are Here For You - COVID Outreach 2020
Equity Bank: We Are Here For You - COVID Outreach 2020 PPP Digital Banking Branch Light PHASE 1 KNOCK OR ONLINE & MOBILE CALL FOR TRAFFIC (1) LOBBY 78,000 ACCESS +9% CUSTOMER EMPLOYEES ASSISTED DRIVE-THRU +50% THROUGH SBA PPP FULL SERVICE LOANS NEW ACCOUNT APPLICATIONS 1,600 MONTH-OVER-MONTH COMPLET
Slide 41: COVID-19 Relief for Customers
COVID-19 Relief for Customers Loan Payment Deferrals As of May 11: Deferral of principal & interest payments for a period of 90 days. Commercial Participants: 674 Amount: $557M Proactive communication with customer base to determine greatest need. Management team has worked directly with borrowers t
Slide 42: Non-GAAP reconciliations
The following tables present non-GAAP reconciliations of the following calculations: • Tangible Common Equity (TCE) to Tangible Assets (TA) Ratio • Tangible Book Value per Common Share • Return on Average Tangible Common Equity (ROATCE) • Efficiency Ratio • Core Return on Average Assets, Core Return
Slide 43: TCE to TA and Tangible Book Value per Share
TCE to TA and Tangible Book Value per Share Non-GAAP Financial Measures (Unaudited) As of and for the years ended YTD March 31, December 31, December 31, December 31, December 31, (Dollars in thousands, except per share data) 2020 2019 2018 2017 2016 Total stockholders’ equity.......................
Slide 44: ROATCE and Efficiency Ratio
ROATCE and Efficiency Ratio YTD March 31, December 31, December 31, December 31, December 31, (Dollars in thousands, except per share data) 2020 2019 2018 2017 2016 Total average stockholders' equity.......................................................... $ 482,567 $ 463,445 $ 420,453 $ 293,798 $
Slide 45: Core ROAA, Core ROATCE and Core Diluted EPS
Core ROAA, Core ROATCE and Core Diluted EPS Non-GAAP Financial Measures, continued (Unaudited) As of and for the years ended (Dollars in thousands, except per share data) YTD March 31, December 31, December 31, December 31, December 31, 2020 2019 2018 2017 2016 Total average stockholders' equity....
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