Equity Bancshares (NYSE:EQBK) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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The full earnings call is available at https://events.q4inc.com/attendee/419906025
Summary
Full Transcript
Audra
Good morning. My name is Audra and I will be your conference operator today. At this time I would like to welcome everyone to the Equity Bancshares Inc. 2026 First Quarter Earnings Conference Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star key followed by the number one again. At this time I would like to turn the conference over to Brian Katzy, Vice President, Corporate Development and Investor Relations. Please go ahead.
Brian Katzy
Good Morning. Welcome everyone and thank you for joining us Equity Bancshares’ first quarter earnings call. A quick note before we dive in. Today’s call is being recorded and is available via webcast at investor.equitybank.com along with our earnings release and presentation materials. Today’s presentation contains forward looking statements which are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed. After the presentation, we’ll open the floor for questions and further discussion. With that, let me turn the call over to our Chairman and CEO Brad Elliot.
Brad Elliot
Thank you for being here with us today. We have a lot of exciting news to share today. Joining me are Rick Stens, our bank CEO and Chris Navratil, our CFO. We hit the ground running in 2026. Welcoming new customers and team members in Nebraska on January 1st. Entering the Nebraska market has been a strategic priority for us and I could not be more excited about what we will accomplish for the communities we now have the privilege to serve. The Frontier acquisition drove a 20% increase in assets and contributed to record quarterly revenue. It will be a great organic driver setting us up for an exceptional 2026 and beyond. As we grow the teams in Nebraska, as we have been growing the teams throughout our entire footprint, this is going to be a great strategic platform for us to grow organically. In February we completed the Frontier Core System conversion on time and on plan. The ability of our team to align vendors, allocate resources and execute complex integrations is a genuine competitive advantage. Julie Huber, David Pass and every team member who works with them and made this possible. I want to say thank you. As reflected in the year over year changes, we have accomplished a great deal over the past 12 months. Compared to March 2025, our asset base has grown by more than 40% while driving that level of growth through Strategic acquisitions We have grown tangible book value per share by 5% and just posted a quarter with core EPS of $1.32. A core return on average tangible equity of 16.1% exceeding the same period of 2025 by 32 and 46% respectively. Core net income for the quarter grew faster than model expectations for the combined company. When you put this with less tangible book value dilution than we expected, the result is an exceptional start to 2026. Having added Oklahoma City, Omaha, Lincoln, Des Moines and many other exceptional community markets to our legacy markets, we are positioned to continue to provide exceptional shareholder returns Beyond Merger Driven Momentum our bankers entered 2026 with purpose and energy focused on our mission, creating opportunities for growth, rolling out new products and processes to better serve our communities, staying laser focused on delivering outstanding returns and driving a more efficient companies Serving our customers is the core of what we do and we never lose sight of it. We’re leveraging technology and continuously monitoring performance to ensure we’re meeting the needs of every customer who relies on us. In the first quarter we opened a record number of DDA accounts as a result of our retail teams being led by Jonathan Root, prioritizing customer needs and delivering differentiated exceptional Service. We began 2026 with a larger, stronger balance sheet and earnings that beat even our own expectations. We’re deploying capital with conviction, driving toward our mission of being a premier community bank in our market while delivering exceptional returns for our shareholders. The market is competitive but our value proposition is intact and our balance sheet gives us the Runway to execute. Capital is strong, capital generation capacity is at an all time high and we remain confident in our $5 per share target for 2026. Our board leadership and team are aligned for continued growth. We’re operating at a high level and see additional opportunities on the horizon. I am very excited about what lies ahead now. Let me hand it over to Chris to walk you through the numbers.
Chris Navratil
Thank you Brad. Last night we reported net income of 17.0 million or $0.80 per diluted share, adjusting for non core items in the quarter including merger expense of 5.7 million and frontier related provisioning of 6.1 million. Adjusted earnings were 26.2 million or 123 per diluted share, up from adjusted earnings of 23.3 million or 121 per diluted share in the prior quarter. Purchase accounting accretion on the loan portfolio was $3.3 million in the current period compared to 2.3 million in Q4 2025 excluding the after tax impact of core deposit and tangible amortization of 1.5 million and 1.0 million respectively. Adjusted earnings on tangible common equity were 27.7 million versus 24.3 million adjusted return. On average, tangible common equity was a strong 16.1% for the quarter. Net interest income was 73.7 million, up 10.2 million. Linked quarter margin came in at 433 versus 447 last quarter. That dynamic higher earnings slightly lower margin reflect the expected impact of integrating Frontier’s balance sheet. Purchase Accounting accretion came in 800,000 ahead of forecast. Normalizing for that margin would have been 429, right in line with expectations. Non interest income held steady at 9.5 million. Expanding fee lines including debit card, credit card, mortgage insurance and trust and wealth offset declines in security transaction losses and swap fee revenue for the period. Non interest expenses for the quarter were 55 million, adjusting for M and A charges in both periods and the prior period. Litigation settlement accrual non interest expenses were 49.2 million versus 44.1 million, an 11.5% increase. Linked quarter driven by the Frontier integration on a normalized basis, adjusted non interest expense as a percentage of average assets improved 25 basis points to 2.57%. Pre SACs pre provisioned net revenue excluding M&A costs and 748,000 in provisioning for unfunded commitments was 34.7 million or 163 per share. That’s up from 28.8 million or 156 per share in the prior quarter. Comparing to the same period in 2025, the ratio has improved from 123 per share or 33.1%. The effective tax rate for the quarter was 23.7%. Impacted by periodic items not expected to recur. We continue to forecast a full year effective rate of 22 to 23%. Our GAAP net income included a $6 million provision for loan losses attributable to loan balances added through the Frontier acquisition. Ending acl coverage was 1.18%. The ending reserve ratio inclusive of merger related Discounts closed at 1.77%, up from 1.67% during the quarter. We were active under our repurchase authorization buying back 500,000 shares at a weighted average cost of $44.74. 327,662 shares remain under the board’s September 2025 authorization. TCE closed the quarter at 9.0% while CET1 and total capital were 11.5% and 14.4% respectively. At the bank level, the TCE ratio closed at 9.8%. Now let me hand it to Rick to walk through asset quality.
Rick Stens
Thanks Chris. Q1 delivered strong underlying credit. Non performing assets closed at 58.3 million up 11.6 million, primarily attributed to the addition of Frontier As a percentage of total assets. They moved just 3 basis points higher to 0.8%. Non accrual loans rose similarly to 52.4 million from 40.3 million, again primarily driven by addition of Frontier assets. Our non accrual exposure is granular with only four relationships exceeding 1.5 million. Charge offs reflect continued resolution activity on credits we previously flagged. Loans past due and non accrual as a percentage of end of period loans increased to 1.86% from 1.53% linked quarter. The move is primarily in the 30 to 59 day bucket concentrated in one acquired market. It’s a merger process issue, …
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