Equity Bancshares, Inc. · NYSE:EQBK
Equity Bancshares — Q3 2020 Earnings Presentation
38 slides from Equity Bancshares's earnings presentation, Oct 20, 2020
Slide 1: Third Quarter 2020 Results Presentation
Third Quarter 2020 Results Presentation October 21, 2020 Exhibit 99.2
Slide 2: Disclaimers
Disclaimers 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 re
Slide 3: EQBK's Value Proposition
EQBK’s Value Proposition Market Diversification and Strategy for Growth Conservative Credit Culture and Effective Risk Management and Mitigation Robust Funding Capacity, Anchored by a Diverse, Low-Cost Deposit Base Experienced and Invested Management Team Focus on Efficient Performance Throughout ou
Slide 4: Franchise Overview
& Franchise Overview © Kansas City Uivesumne wes © Western MO S Wichita Riker — KANSAS “ Southwest KS © Guymon © Ozark Mountain See aon | © Cordell © Ponca City - Newkirk OKLAHOMA ARKANSAS © Southeast KS 9 Tulse Esai
Slide 5: Diverse Market Segments
Diverse Market Segments Source: S&P Market Intelligence. Equity Bancshares, Inc. operating market reported above includes all bank locations and counties in which Equity Bank operates. Diverse market segments with economies based on transportation, manufacturing and healthcare Top employers in the r
Slide 6: Continue Building Value via Strategic Execution
Continue Building Value via Strategic Execution 2009 $8.8MM of TARP issued Opened 2 branches in Overland Park, KS 2014 Repurchased 1.3mm shares Refinanced TARP with Loan Close/Sell 3 branches and opened branch at Waterfront 2012 First Community Bancshares (FCB) merger $20.4M Capital Raise 2011 Repai
Slide 7: Proven Track Record of Executing on M&A
Proven Track Record of Executing on M&A Since July 2015, EQBK has closed and integrated 8 whole bank acquisitions First Independence Corp. Community First Bancshares Prairie State Bancshares Eastman National Bancshares Cache Holdings, Inc. Kansas Bank Corporation Adams Dairy Bancshares City Bank & T
Slide 8: Uniquely Positioned for Growth
Uniquely Positioned for Growth There are over 500 banks with deposits less than $750MM in our operating market.
Slide 9: Diversified Loan Portfolio
Diversified Loan Portfolio Diverse, experienced officer team throughout our footprint specializing in commercial lending across a variety of industries. Relationship driven approach to provide most value to our customers as well as the Bank. Conservative approach to underwriting best positioning our
Slide 10: Conservative Credit Culture
Conservative Credit Culture Annualized Net Charge-Offs (NCO)/ Average Loans ($ in millions) Total Reserve Ratio Classified Assets to Total Regulatory Capital(1) Credit quality is our primary focus ahead of profitability. Robust risk identification and mitigation processes in place to proactively add
Slide 11: Bank Liquidity & Dividend Capacity
Bank Liquidity & Dividend Capacity Liquidity Analysis Using trailing 1 month CPR Note:Dollars in thousands Dividend Capacity from the Bank Amortized Cost Unrealized Gain / Loss Carrying Value Carrying Value Residential MBS $581,265 $23,605 $604,870 Private Label CMO 21,165 (81) 21,084 US GSE 995 34
Slide 12: Tangible Book Value
Tangible Book Value Tangible Book Value per Share(1) and Tangible Common Equity (1) TBV CAGR 2016 - 3Q 2020: 9.91% Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation.
Slide 13: Strong Core Deposit Franchise
Fully integrated digital banking platform with an adoption rate of 48.4% among core banking customers Online bill payment and mobile deposit activity is up 11.0% year over year Strong Core Deposit Franchise Year-to-Date annualized cost. Includes interest and non-interest bearing deposits. Core depos
Slide 14: Executive Leadership
Executive Leadership Founded Equity Bank in 2002 2018 EY Entrepreneur of the Year National Finalist 2014 Most Influential CEO, Wichita Business Journal Served as Regional President of Sunflower Bank prior to forming Equity Bank Previously served as Director of Sales and Marketing for Koch Industries
Slide 15: Senior Leadership Team
Senior Leadership Team Team Member Role Years with EQBK Years in Banking Julie Huber EVP, Strategic Initiatives 17 26 Craig Mayo EVP, Chief Credit Officer 2 36 Brett Reber EVP, General Counsel 2 2 Mark Parman EVP, President - Kansas City and Director of Metro Banking 10 39 Gaylyn McGregor EVP, Direc
Slide 16: Robust Growth
Robust Growth Gross Loans ($Millions) Total Deposits ($Millions) Tangible Book Value per Share(1) Annualized Pre-Tax, Pre-Provision Net Revenue ($Thousands)(2) Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation. Excludes impact of goodwill impairment charge t
Slide 17: Interest Income & Net Interest Margin
Interest Income & Net Interest Margin ($) Thousands (1) (1) (1) Excludes the impact of PPP loans for the second and third quarter 2020, as well as the 2020 YTD period. Including these balance the second and third quarter results would be 3.49% and 3.47%, respectively, while YTD results would be 3.54
Slide 18: Successfully Managing Profitability
Successfully Managing Profitability Does not include gains on sales and settlement of securities. See Non-GAAP reconciliation at the end of this presentation for detail on these items. Does not include merger expenses or effect of goodwill impairment. See Non-GAAP reconciliation at the end of this p
Slide 19: Third Quarter Highlights
Loss per share of $(6.01) for 3Q 2020 Impairment charge on goodwill of $104.8 million was taken during the quarter, resulting in net loss to common stockholders of $90.4 million Net income adjusted for the goodwill impairment charge, net of tax impact, was $9.1 million, or $0.60 per diluted share EQ
Slide 20: Third Quarter Highlights - Continued
Third Quarter Highlights - Continued Year-over-Year(1) Comparison Quarter-over-Quarter(1) Comparison Income Statement Balance Sheet Select Ratios Favorable (unfavorable) comparison to previous period. Year-over-Year is a comparison to comparable quarter end in previous year. Quarter-over-Quarter is
Slide 21: Adjusted Operating Performance Trends – Quarter-over-Quarter
Adjusted Operating Performance Trends – Quarter-over-Quarter(1) Adjusted Diluted Earnings Per Share (3) Efficiency Ratio(1,2) & Non-Interest Expense / Average Assets(3) Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation. Does not include gains on sales and se
Slide 22: Interest Income & Net Interest Margin
Interest Income & Net Interest Margin Exclusive of PPP loan impact margin was down 5 bps Q/Q driven by reduced loan volume and asset repricing. Y/Y adjusted NIM is up 18 bps. Stated NIM remained relatively stable at 3.47% as the repricing of liabilities continued to materially offset declining asset
Slide 23: Margin Dynamic – Adjusted to Exclude PPP Loans
Margin Dynamic – Adjusted to Exclude PPP Loans EQBK begins raising deposit rates, with a focus on locking in time deposits at fixed rates to get ahead of the curve. 6/30 – 12/31/18 – EQBK reduced exposure to FHLB advances by $275M from $600M to $325M as market rates continued to rise. Excludes PPP l
Slide 24: Successfully Managing Profitability
Successfully Managing Profitability Does not include gains on sales and settlement of securities. See Non-GAAP reconciliation at the end of this presentation. Does not include merger expenses or goodwill impairment charge. See Non-GAAP reconciliation at the end of this presentation. Q/Q increases in
Slide 25: Capital Position Over Time
Capital Position Over Time Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation. (1)
Slide 26: Total Loans by Purpose
Total Loans by Purpose(1, 2) Gross Total Loans ($000s) $2,575,408 $2,556,652 $1,383,605 $2,117,270 Year-to-Date Loan Yield 4.98% 5.43% 5.74% 5.73% For financial statement reporting, management considers other factors in addition to purpose when assessing risk and identifying reporting classes. As su
Slide 27: Hotel Portfolio
Hotel Portfolio Note: Dollars in Thousands, except as otherwise indicated. Total exposure as of the end of the third quarter was $285M Focused on ‘Select-Service’ subcategory within the industry, which has historically shown superior through-cycle performance Minimal restaurant and conference facili
Slide 28: C&I Manufacturing Portfolio
C&I Manufacturing Portfolio Total exposure of $136M as of the end of the third quarter 2020. The aerospace industry has been adversely impacted by both the Boeing 737 Max grounding and the coronavirus pandemic. Our customer base is comprised of experienced management teams who, we believe, have proa
Slide 29: Asset Quality – Quarter-over-Quarter
Asset Quality – Quarter-over-Quarter Nonperforming Assets NPAs / Assets 1.40% Net Charge-Offs (NCO)/ Average Loans $0.26 NCO in $ ($ in millions) Nonaccrual Detail Classified Assets to Total Bank Regulatory Capital $0.58 1.19% 1.37% $0.34 45.3% 62.5% 69.2% 1.22% $6.70 Adjusted to exclude impact of c
Slide 30: Total Deposits
Total Deposits Total ($000s) $3,123,447 $3,063,516 $2,382,013 Year-to-Date Cost of Deposits* 0.68% 0.96% 1.30% * Includes interest and non-interest bearing deposits. $2,960,397 0.91% $3,133,618 0.62%
Slide 31: Appendix
Appendix
Slide 32: Selected Income Statement Data
Selected Income Statement Data Selected Income Statement Data ($000s) YTD 09/30/20 12/31/19 12/31/18 12/31/17 12/31/16 12/31/14 2013 Interest income $,115,572 $,175,499 $,161,556 $,102,693 $61,799 $46,794 $46,845 Interest expense 18479 49641 36758 16691 9202 5433 5610 Net interest income 97093 12585
Slide 33: Selected Balance Sheet Data
Selected Balance Sheet Data Demonstrating balance sheet strength Includes interest-bearing deposits in other banks. Includes Federal Reserve Bank and Federal Home Loan Bank stock. Includes loans held-for-sale. Selected Balance Sheet Data ($000s) ASSETS 12/31/14 09/30/20 12/31/19 12/31/18 12/31/17 12
Slide 34: Capitalization
Capitalization (1) Total common equity less goodwill and intangibles divided by shares outstanding as of period end. Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation. Maintaining a strong regulatory capital position Ratio 12/31/14 09/30/20 12/31/19 12/31/18
Slide 35: Non-GAAP reconciliations overview
The subsequent 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
Slide 36: TCE to TA and Tangible Book Value per Share
TCE to TA and Tangible Book Value per Share As of and for the years ended Non-GAAP Financial Measures (Unaudited) (Dollars in thousands, except per share data) YTD September 30, 2020 December 31, 2019 December 31, 2018 December 31, 2017 December 31, 2016 December 31,2012 Total stockholders’ equity $
Slide 37: ROATCE and Efficiency Ratio
ROATCE and Efficiency Ratio Non-GAAP Financial Measures (Unaudited) Years Ended December 31, (Dollars in thousands, except per share data) Mar. 2018 Mar. 2018 2017 2016 Total stockholders’ equity $,381,487 $,381,487 $,374,144 $,257,964 Less: preferred stock 0 0 0 0 Less: goodwill ,103,412 ,103,412 ,
Slide 38: Equity Bancshares, Inc.
EQUITY BANCSHARES, INC. investor.equitybank.com