Equity Bancshares, Inc. · NYSE:EQBK
Equity Bancshares — Q2 2022 Earnings Presentation
40 slides from Equity Bancshares's earnings presentation, Jul 19, 2022
Slide 1: Second Quarter Earnings Presentation
Second Quarter Earnings Presentation 7/20/2022 Exhibit 99.2
Slide 2: Forward Looking Statements
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
Slide 3: Our Company
Our Company 3 Committed to our Entrepreneurial Spirit Equity Bancshares, Inc. NASDAQ: EQBK Start-Up: 2002 - 2007 Brad Elliott, current Chairman and CEO, founded Equity Bancshares, Inc. in 2002. Closed 5 branch or whole bank acquisitions Opened 2 branches in Missouri Growth: 2008 - 2016 Opened branch
Slide 4: Our Operating Footprint
Our Operating Footprint ory 7 KANSAS oe eg, OKLAHOMA ARKANSAS
Slide 5: Strong Senior Leadership Team
Strong Senior Leadership Team 5 Brad Elliott Chairman & CEO Years at Equity: 20 | Years in Banking: 33 Eric Newell Chief Financial Officer Years at Equity: 2 | Years in Banking: 20 Craig Anderson President Years at Equity: 4 | Years in Banking: 40 Greg Kossover Chief Operating Officer Years at Equit
Slide 6: Our Value Proposition
Our Value Proposition 6 Market Diversification and Strategy for Growth Experienced and Invested Management Team Conservative Credit Culture and Effective Risk Management and Mitigation Robust Funding Capacity, Anchored by a Diverse, Low-Cost Deposit Base Focus on Efficient Performance Throughout our
Slide 7: Proven record of M&A execution
Proven record of M&A execution 7 Pricing Multiples Transaction Impact
Slide 8: Our Opportunity
Our Opportunity 8 There are over 1000 bank offices with deposits less than $750MM in our operating market
Slide 9: Long Term Key Strategic Objectives
Long Term Key Strategic Objectives 9 Grow Tangible Book Value Maximize Risk Adjusted Return on Assets Offer best-in-class banking products and services Drive organic fee income generation Efficiently grow core earnings Effectively deploy capital through share repurchases, dividends and whole bank m&
Slide 10: Strong Core Deposit Franchise
Strong Core Deposit Franchise 10 Deposit Composition(1) Fully integrated digital banking platform with an adoption rate of 60.9% among core banking customers Continued emphasis on development of relationships to drive growth in non-interest bearing deposits. Cost of Deposits: 0.20%(1) Core Deposits(
Slide 11: Core Deposit Growth
Core Deposit Growth 11 Cost of Deposits(1) 0.18% 0.22% 0.52% 0.91% 1.30% Year-to-date, Includes the impact of non-interest bearing deposits Dollars in millions
Slide 12: Asset Quality Commentary
Asset Quality 12 Commentary Net charge-offs were $176 thousand for the quarter, or 2 bps of average loan assets annualized. Reserve ratio, exclusive of PPP assets, is 1.50% remaining well positioned for any losses which materialize from the current economic uncertainty surrounding inflation and re
Slide 13: Credit Quality
Credit Quality 13 Total Reserve Ratio Classified Assets Nonaccrual Detail
Slide 14: Diversified Loan Portfolio
Diversified Loan Portfolio 14 Year-to-Date Loan Yield 4.44% 5.19% 5.73% 5.74% For financial statement reporting, management considers other factors in addition to purpose when assessing risk and identifying reporting classes. As such, the above is not intended to reconcile to the Company’s loan disc
Slide 15: Allowance for Credit Loss (ACL)
Allowance for Credit Loss (ACL) 15 ACL intra-quarter movement
Slide 16: Investment Portfolio Strategy
We believe the structure in the portfolio outperforms peers through the cycle Portfolio average life is shorter than peer; effective duration equal to peer and hard final maturities of our bullet investments provide guaranteed cash flow Portfolio is nearly fully extended; future cash flow will be li
Slide 17: Capital Management
Capital Management 17 Capital Management Strategy Capital Targets EQBK establishes capital targets based on the following objectives: Maintain designation as a “well capitalized” institution under fully phased-in Basel III regulatory definitions Ensure capital levels are commensurate with the Compan
Slide 18: Bank Liquidity
Bank Liquidity 18 Liquidity Analysis Portfolio Characteristics Dividend Capacity from the Bank Description Amortized Cost Unrealized Gain / (Loss) Carrying Value
Slide 19: Revenue Mix
Revenue Mix 19 2022 YTD Operating Revenue(1) Noninterest Income 18.9% 2022 YTD operating revenue less PPP is equal to Noninterest Income of $18.7 million less gain on acquisition and branch sale of $540 thousand and net gain on securities transactions of $8 thousand plus net interest income of $78.9
Slide 20: Noninterest Income
Noninterest Income 20 Quarterly Results(1) (1) Excludes the impact of PPP loans, net gain on acquisition and branch sale, and net gain / (loss) on securities transactions Annual Results(1)
Slide 21: Net Interest Income
Net Interest Income 21 Quarterly Results Annual Results (1) Excludes the impact of PPP loans. Including these balances in the second, third, fourth quarter 2021 and first and second quarter 2022 results would be 3.50%, 3.86%, 3.13%, 3.38% and 3.39%, respectively, while YTD 2020 and 2021 results woul
Slide 22: Core Earnings per Share Contribution - PPP
Core Earnings per Share Contribution - PPP 22 Quarterly Results Note: Utilizes the quarterly effective tax rate.
Slide 23: Net Interest Margin
Net Interest Margin 23 Key Net Interest Margin Drivers Government Programs PPP fee income due to forgiveness received by borrowers decreased during the quarter. Roughly $125 thousand in deferred fee balances remain on the books at quarter end. Non-Interest Bearing Deposits Non-interest bearing depos
Slide 24: Performance Metrics
Performance Metrics 24 Return on Tangible Common Equity(1) Efficiency Ratio(1) Non-GAAP financial measure. Refer to the non-GAAP reconciliation at the end of this presentation.
Slide 25: Tangible Book Value
Tangible Book Value 25 Tangible book value per share(1) decreased $0.82 in Q2 2022, driven by unrealized losses in the investment portfolio Non-GAAP financial measure. Refer to the non-GAAP reconciliation at the end of this presentation.
Slide 26: Robust Growth
Robust Growth 26 Gross Loans 6.6% CAGR Total Deposits 9.4% CAGR
Slide 27: Second Quarter Highlights
Second Quarter Highlights 27 Favorable (unfavorable) comparison to previous period. Year-over-Year is a comparison to comparable quarter end in previous year. Quarter-over-Quarter is a comparison to prior quarter end. Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this pre
Slide 28: Adjusted Operating Performance
Adjusted Operating Performance 28 Adjusted Net Income(1) Adjusted Diluted Earnings Per Share(1) Efficiency Ratio & Adj. Non-Interest Expense / Average Assets Adjusted Pre-Tax, Pre-Provision Net Revenue(1) Non-GAAP financial measures. See the non-GAAP reconciliation at the end of this presentation. D
Slide 29: Outlook on Key Business Drivers
Outlook on Key Business Drivers 29 Consideration & Expectations Continued uncertainty of inflation, supply chain disruption and input cost escalation. Focus on continued balance sheet strength and security while continuing to pursue growth. NOTE: Figures presented in this outlook represent forward-l
Slide 30: Focus Variables for Outlook & Forecast
Focus Variables for Outlook & Forecast 30 Our outlook requires clarity around certain variables, including:
Slide 31: Appendix
31 Appendix
Slide 32: Our Markets
Our Markets 32 Missouri 10 counties 16 branches Kansas 21 Counties 38 branches Source: S&P Market Intelligence. Equity Bancshares, Inc. operating market reported above includes all bank locations and counties in which Equity
Slide 33: Our Markets
Our Markets 33 Arkansas Benton | Boone | Carroll 5 branches Oklahoma Kay | Texas | Tulsa | Washita 10 branches Source: S&P Market Intelligence. Equity Bancshares, Inc. operating market reported above includes all bank locations and counties in which Equity
Slide 34: Selected Income Statement Data
Selected Income Statement Data 34
Slide 35: Selected Balance Sheet Data
Selected Balance Sheet Data 35 Includes interest-bearing deposits in other banks. Includes Federal Reserve Bank and Federal Home Loan Bank stock. Includes loans held-for-sale.
Slide 36: Capitalization
Capitalization 36 (1) Non-GAAP financial measure. See the non-GAAP reconciliation at the end of this presentation. Maintaining a strong regulatory capital position
Slide 37: Non-GAAP reconciliations overview
37 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 38: TCE to TA and Tangible Book Value per Share
38 TCE to TA and Tangible Book Value per Share
Slide 39: ROATCE and Efficiency Ratio
39 ROATCE and Efficiency Ratio
Slide 40: Equity Bancshares, Inc.
EQUITY BANCSHARES, INC. investor.equitybank.com