Business Overview and History
Equity Bancshares, Inc. (EQBK) is a financial holding company headquartered in Wichita, Kansas, that has demonstrated a remarkable ability to navigate the ever-evolving banking landscape. With a focus on organic growth and strategic acquisitions, Equity Bancshares has steadily expanded its footprint and enhanced shareholder value over the past two decades.
Equity Bancshares was founded in November 2002 by Brad S. Elliott, who serves as the company's Chairman and CEO. With 13 years of experience as a finance executive, including his role as a Regional President for a Kansas bank with over $1 billion in assets, Elliott implemented his vision of developing a strategic consolidator of community banks and a destination for seasoned bankers and businesspersons.
In 2003, Equity Bancshares raised capital from 23 local investors to finance the acquisition of National Bank of Andover in Andover, Kansas. This marked the beginning of the company's successful acquisition strategy. Over the next two decades, Equity Bancshares completed 22 acquisitions, two charter consolidations, and two branch dispositions. Key acquisitions included First Community Bancshares, Inc. in 2012, Community First Bancshares, Inc. in 2016, and American State Bancshares, Inc. in 2021.
The company's expansion efforts have allowed it to establish a diversified presence across Arkansas, Kansas, Missouri, and Oklahoma, with a network of 71 full-service branches as of December 31, 2024. Equity Bancshares' balanced approach to growth, combining organic initiatives and selective M&A, has enabled it to enhance its product and service offerings, improve operational efficiency, and establish a robust presence in both metropolitan and community markets.
In addition to its acquisition growth, Equity Bancshares focused on repositioning and improving the loan portfolio and deposit mix of the banks it acquired. The company worked to identify and dispose of problematic loans, replacing them with higher quality loans generated organically. It also concentrated on growing its commercial loan portfolio, which it believed offered higher return opportunities than its consumer loan portfolio, by hiring additional talented bankers and incentivizing its bankers to expand their commercial banking relationships.
The company's successful execution of its acquisition and organic growth strategies over the past two decades transformed it from a small community bank with 2 branches and $32 million in assets in 2003 to a regional banking franchise with 71 branches and $5.3 billion in assets as of December 31, 2024. While the company faced some challenges in integrating and improving the performance of acquired institutions, its experienced management team and disciplined approach to acquisitions allowed it to create value for shareholders through the consolidation of the community banking industry in its core markets.
Financial Performance and Strength
Equity Bancshares' financial performance has been consistently strong, with the company reporting net income of $62.62 million, or $4.00 per diluted share, for the fiscal year ended December 31, 2024. The company's revenue for the same period totaled $296.84 million, reflecting a diverse revenue stream that includes interest income, non-interest income, and gains from strategic acquisitions.
For the fourth quarter of 2024, Equity Bancshares reported revenue of $74.98 million and net income of $16.99 million. The company achieved record earnings per share of $4.04 for the full year 2024 and saw tangible book value per share growth of $4.70 or 18.5% during the same period.
The company's balance sheet remains solidly capitalized, with a tangible common equity ratio of 9.95% as of December 31, 2024. This strong capital position has allowed Equity Bancshares to weather economic downturns, pursue strategic growth initiatives, and maintain regulatory compliance.
Liquidity
Equity Bancshares maintains a strong liquidity position, ensuring its ability to meet short-term obligations and fund growth opportunities. The company's diverse funding sources, including a stable deposit base and access to various borrowing facilities, contribute to its robust liquidity profile.
Prudent Risk Management and Asset Quality
Equity Bancshares' success is underpinned by its disciplined approach to risk management. The company's allowance for credit losses stood at $43.27 million, or 1.24% of total loans, as of December 31, 2024, reflecting a prudent stance in the face of economic uncertainties.
The company's non-performing assets to total assets ratio stood at 0.65% as of the same date, indicating a well-managed loan portfolio. Equity Bancshares' focus on maintaining asset quality has been a key driver of its long-term profitability and stability.
Acquisition Strategy and Organic Growth
Equity Bancshares' growth strategy has been a combination of strategic acquisitions and organic initiatives. The company's disciplined approach to M&A has enabled it to selectively target and integrate community banks that align with its vision and operational capabilities.
In 2024, the company completed the acquisitions of Rockhold BanCorp and KansasLand Bancshares, adding $349.80 million and $42.40 million in deposits, respectively, and expanding its geographic footprint. These transactions underscore Equity Bancshares' ability to identify, evaluate, and successfully integrate target institutions, further strengthening its regional presence.
Alongside its acquisition strategy, Equity Bancshares has also emphasized organic growth, with a focus on expanding its commercial banking relationships, deepening customer relationships, and diversifying its revenue streams. The company's loan portfolio grew by 5% year-over-year as of December 31, 2024, reaching $3.50 billion, while its deposit base increased by 5% to $4.37 billion over the same period.
Loan Portfolio and Deposit Base
As of December 31, 2024, Equity Bank's loan portfolio totaled $3.50 billion, representing 65.70% of the company's total assets. The loan portfolio is diversified across several key categories:
- Commercial Real Estate Loans: $1.83 billion (52.30% of total loan portfolio)
- Commercial and Industrial Loans: $658.87 million (18.80%)
- Residential Real Estate Loans: $566.77 million (16.20%)
- Agricultural Loans: $354.59 million (10.10%)
- Consumer Loans: $90.08 million (2.60%)
The company's deposit base, which totaled $4.37 billion as of December 31, 2024, provides a stable, low-cost source of funding. The deposit mix consists of:
- Non-interest-bearing demand deposits: 21.80%
- Interest-bearing demand deposits: 26.80%
- Savings and money market accounts: 34.60%
- Time deposits: 16.80%
Other Business Segments
In addition to its core banking operations, Equity Bancshares has two other wholly-owned subsidiaries:
1. EBAC, LLC: Provides property and casualty insurance coverage to Equity Bancshares and Equity Bank, as well as reinsurance to other third-party insurance captives.
2. Equity Risk Management, Inc. (ERMI): Established to hold Equity Bank's investment in a real estate investment trust.
These ancillary business segments contribute to the overall diversification of Equity Bancshares' revenue streams and help support the company's strategic initiatives.
Talent Development and Operational Efficiency
Equity Bancshares' success is also underpinned by its commitment to developing and retaining a talented workforce. The company has invested in leadership development programs, such as Equity University, to groom its next generation of bankers and foster a culture of transparency, innovation, and accountability.
The company's focus on operational efficiency has also been a key driver of its performance. Equity Bancshares has made strategic investments in technology and infrastructure to streamline its processes, enhance customer experience, and improve overall profitability.
Outlook and Future Considerations
As Equity Bancshares looks to the future, the company remains well-positioned to capitalize on the ongoing consolidation in the banking industry. The company's strong capital position, disciplined acquisition strategy, and focus on organic growth provide a solid foundation for continued expansion and value creation.
For the first quarter of 2025, Equity Bancshares is forecasting a net interest margin between 3.95% and 4.05%, average earning assets between $4.75 billion and $4.85 billion, and a provision for credit losses around 12 basis points of average loans. The company is optimistic about maintaining its net interest margin and achieving mid to high single-digit organic loan growth for the full year 2025.
However, the company is not without its challenges. The banking industry continues to face heightened regulatory scrutiny, technological disruption, and macroeconomic uncertainties that could impact Equity Bancshares' operations and financial performance. The company's ability to navigate these headwinds while maintaining its competitive edge will be crucial to its long-term success.
Conclusion
Equity Bancshares has established itself as a leading regional banking player in the Midwest, delivering consistent value to its shareholders through a combination of strategic acquisitions and organic growth initiatives. The company's prudent risk management, operational efficiency, and commitment to talent development have been instrumental in its success, positioning it for continued growth and success in the years to come.