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EB

EQUITY BANCSHARES INC (EQBK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered net interest margin expansion to 4.17% (up 30 bps linked quarter) and net interest income of $49.5M, with GAAP diluted EPS of $1.04; core EPS was $1.10 .
  • Deposit balances rose to $4.37B (+$11.9M q/q) and tangible common equity to tangible assets improved to 9.95% following an $87.0M net common equity raise; CET1 jumped to 14.5% at the holding company .
  • Management guided Q1 2025 NIM to 3.95–4.05% on average earning assets of $4.75–$4.85B and provision of ~12 bps, with seasonal municipal deposit outflows expected early in Q1 .
  • Strategic catalysts: expanding M&A pipeline (6–8 active conversations), normalized margin at 4.06% in December, and resumption of organic balance growth in 2025; credit remains granular with QSR exposure <3% of loans .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 4.17% (3.87% in Q3); excluding nonrecurring nonaccrual reversals and prepayment fees ($1.5M), normalized margin was 4.04% per the release and 4.06% per management’s spot December commentary .
  • Capital strengthened: CET1 to 14.5%, total risk-based capital to 18.1%, TCE/TA to 9.95%, supported by the $87.0M net common equity raise (2.07M shares at $44.50) .
  • Asset quality stable-to-mixed but manageable: nonaccrual loans fell to $27.1M; NCOs 4 bps annualized in Q4 and 11 bps full-year; QSR exposure is <3% of loans and diversified across brands .

What Went Wrong

  • GAAP non-interest expense rose to $37.8M from $30.3M in Q3 as prior-quarter benefits (borrower preferred equity repurchase) and M&A effects rolled off; efficiency ratio worsened to 63.02% vs 52.59% .
  • Classified assets increased to $73.5M (12.1% of bank regulatory capital), driven primarily by one QSR customer; NPA rose to $34.7M due to Main Street Lending Program foreclosure (mostly participated) .
  • Loan balances decreased $100.1M in the quarter amid elevated paydowns, with management citing competitive rates and borrower decisions; loan originations normalized to $120M (7.36% WAC) .

Financial Results

GAAP and Core Results vs Prior Periods

MetricQ4 2023Q3 2024Q4 2024
Net Interest Income ($USD Millions)$39.47 $46.03 $49.47
Non-Interest Income ($USD Millions)$(43.41) $9.32 $8.82
Adjusted Total Net Revenue ($USD Millions) (NII + Adjusted NII)$46.67 $54.31 $58.29
Non-Interest Expense ($USD Millions)$34.99 $30.33 $37.81
Net Income ($USD Millions)$(28.30) $19.85 $16.99
Diluted EPS ($USD)$(1.84) $1.28 $1.04
Core EPS ($USD)$0.81 $1.32 $1.10
Net Interest Margin %3.49% 3.87% 4.17%
Efficiency Ratio %72.69% 54.70% 63.02%

Notes:

  • Q4 2024 GAAP NIM benefited by ~11 bps from nonrecurring nonaccrual reversals and prepayment fees; excluding these, NIM ~4.04–4.06% (release vs call) .
  • Adjusted Total Net Revenue uses “Net interest income plus adjusted non-interest income” from Company tables .

Segment Breakdown (Loans Held for Investment by Type)

Loan Type ($USD Millions)Q4 2023Q3 2024Q4 2024
Commercial Real Estate$1,759.86 $1,916.86 $1,830.51
Commercial & Industrial$598.33 $670.67 $658.87
Residential Real Estate$556.33 $567.06 $566.77
Agricultural Real Estate$196.11 $259.59 $267.25
Agricultural$118.59 $89.53 $87.34
Consumer$103.69 $97.22 $90.08
Total HFI Loans$3,332.90 $3,600.93 $3,500.82

KPIs and Balance Sheet

KPIQ4 2023Q3 2024Q4 2024
Total Assets ($USD Billions)$5.03 $5.36 $5.33
Total Deposits ($USD Billions)$4.15 $4.36 $4.37
Loan-to-Deposit Ratio %N/A82.5% 80.0%
CET1 (Company) %11.74% 11.37% 14.51%
Total RBC (Company) %15.48% 14.78% 18.07%
Tangible Common Equity / Tangible Assets %7.87% 8.21% 9.95%
Nonperforming Assets ($USD Millions) and % of Assets$— (0.53%) $32.3 (0.60%) $34.7 (0.65%)
Nonaccrual Loans ($USD Millions)$— (26.6 at 6/30) $31.3 $27.1
ACL / Loans %1.31% 1.21% 1.24%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (%)Q1 2025N/A3.95%–4.05% New
Average Earning Assets ($USD Billions)Q1 2025N/A$4.75–$4.85 New
Provision for Credit Losses (bps of avg loans)Q1 2025~12 bps (ongoing outlook) ~12 bps Maintained
Deposits (seasonality)Q1 2025N/ASeasonal outflows from municipalities expected New
Loan Growth (organic)FY 2025Mid- to high single-digit expansion targeted Mid- to high single-digit Maintained
DividendQ4 2024$0.15/share $0.15/share announced Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Jul-2024)Q3 2024 (Oct-2024)Q4 2024 (Jan-2025)Trend
Margin trajectoryNIM 3.94%; purchase accounting accretion 5–8 bps; asset-sensitivity modest; excess liquidity reduced margin by 9 bps NIM 3.87%; neutral position to rate cuts; excess liquidity reduced margin by ~10 bps NIM 4.17%; normalized ~4.04–4.06%; Q1 guide 3.95–4.05% Improving; cautious near-term normalization
Credit & QSR exposureLow NCOs; CRE resilient; office exposure minimal Classified assets 8.3% of capital; pressure in small operators and QSRs; granular exposure Nonaccrual down to $27.1M; classified assets up to $73.5M; QSR <3% and diversified Mixed but contained
M&A pipelineActive; KansasLand announced; BoK integration Conversations accelerating; geography unchanged 6–8 active M&A dialogues; disciplined earn-back, dilution control Strengthening
Capital actionsBuybacks; dividend; CET1 ~11% Dividend increase to $0.15; TBV up 10.4% $87M net equity raise; CET1 14.5%; TCE/TA 9.95% Bolstered capital stack
Deposits & competitionPressure abating; disciplined pricing Municipal seasonality; L/D ~82.5% Deposits +$200M ex-broker (seasonal inflows) with expected Q1 outflows Managing seasonality, focus on relationships

Management Commentary

  • “Our Company had an excellent year… enters 2025 positioned to execute.” — Brad S. Elliott, Chairman & CEO .
  • “Net interest income improved… NIM to 4.17%… normalized margin would have been 4.06%.” — Chris Navratil, CFO .
  • “Nonaccrual loans decreased by 13.5% to $27M… classified loans increased to $73.5M… primarily due to one QSR-related customer.” — Krzysztof Slupkowski, CCO .
  • “We were able to bring in $87 million… used for M&A growth and other organic growth… 6–8 conversations.” — Brad Elliott, CEO .
  • “We anticipate a return to growth… organic engine can add mid- to high single-digit expansion during the year.” — Richard Sems, Bank CEO .

Q&A Highlights

  • Rate sensitivity: Positioned neutral to modestly asset-sensitive; preference is disciplined management regardless of rate direction .
  • Margin specifics: Spot December adjusted NIM ~4.06%; Q1 margin guide embeds conservatism given contractual repricing and paydown mix .
  • Credit granularity: QSR exposure <3% of loans; diversified brands; largest classified credit with improvement plan via divestitures .
  • Capital markets strategy: Lead bank on large credits; ~$500–$600M of participated loans currently placed; internal hold limits $15–$25M .
  • Expenses & fees: Run-rate non-interest income $8–$9M/quarter; some inflationary data processing and people cost pressure; focus on driving treasury, trust, wealth .

Estimates Context

  • Wall Street consensus (S&P Global) estimates for EQBK were unavailable due to SPGI daily request limits at this time. As a result, formal “beat/miss” vs consensus cannot be determined for Q4 2024 and forward periods. Values would normally be retrieved from S&P Global; data was unavailable today.

Key Takeaways for Investors

  • NIM momentum and normalized December NIM (~4.06%) support near-term earnings resilience despite seasonal deposit outflows; watch Q1 margin within 3.95–4.05% guidance .
  • Elevated classified assets tied to a single QSR relationship are monitored; granularity and <3% QSR exposure mitigate concentration risk .
  • Strong capital ratios (CET1 14.5%, TCE/TA 9.95%) post-raise provide optionality for both organic and M&A-led growth; expect disciplined deployment .
  • Loan balances dipped on paydowns/competitive rates; management expects organic balance growth to resume in 2025 (mid- to high single digits), a key driver for NII .
  • Efficiency ratio rose in Q4 as prior-quarter benefits rolled off; watch execution on cost initiatives and mix shift to treasury/trust/wealth to sustain core fee income .
  • M&A pipeline (6–8 deals being modeled) is a potential upside catalyst; discipline on earn-back (<3 years) and dilution control remains central .
  • Dividend maintained at $0.15; repurchase program active but no Q4 buybacks—expect capital allocation balanced with growth opportunities .