Equity Bancshares, Inc. (EQBK) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with improved margins, increased deposits, and a decline in nonaccrual loans. The company's strategic plans, including the Frontier merger, are progressing well. Despite competition, the company maintains a strong pipeline and expects consistent loan growth. The Q&A session did not reveal significant concerns, and guidance remains optimistic. The positive outlook on credit environment, margin projections, and strategic growth plans support a positive sentiment for the stock price over the next two weeks.
Key Financial Performance
Net Income $22.1 million or $1.15 per diluted share. Adjusted earnings were $23.3 million or $1.21 per diluted share compared to adjusted earnings of $22.4 million or $1.17 per diluted share in the previous quarter. The increase was due to adjustments for noncore items such as merger expense, litigation settlement expense, and nonaccrual benefit.
Net Interest Income $63.5 million, up $1 million linked quarter. The increase was driven by better-than-expected purchase accounting, asset quality, and bond portfolio repositioning.
Margin 4.47%, an improvement of 2 basis points compared to 4.45% in the linked quarter. The improvement was due to declines in the cost of funding outpacing declines in earning asset yield.
Noninterest Income $9.5 million, up $400,000 from adjusted Q3. The increase was in line with expectations.
Noninterest Expenses $46.6 million. Adjusted to exclude M&A charges and litigation settlement accrual, noninterest expenses were $44.1 million compared to $42.9 million, an increase of 2.7% linked quarter. The increase was due to provisioning for unfunded commitments.
Nonaccrual Loans $40.3 million, down from $48.6 million linked quarter, a 17% decline. The improvement was driven by resolution of a relationship brought on through NBC.
Loans Past Due and Nonaccrual 1.53% of end-of-period loans, down from 1.55% linked quarter. The decline was due to improved credit quality.
Net Charge-Offs 7 basis points for the quarter as a percent of average loans, down 4 basis points linked quarter. Year-to-date net charge-offs annualized were 6 basis points.
Total Deposits Increased approximately $43.5 million during the quarter, including core deposit expansion of $123.5 million, offset by a decline in brokered deposits of $80 million.
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Operating Highlights
Technology-driven service improvements: Equity Bank is focusing on using technology to improve service and efficiency, with a push on smarter data usage and faster operations.
Geographic expansion: The company expanded its presence to six states, including five major metropolitan areas, through the Frontier merger.
Loan production: Loan production in Q4 2025 was $220 million, up $100 million compared to the same period last year, with an average rate of 6.77%.
Deposit growth: Total deposits increased by $43.5 million in Q4 2025, including a $123.5 million increase in core deposits.
Efficiency improvements: Noninterest expense as a percentage of average assets improved by 2 basis points to 2.80%.
Mergers and acquisitions: The Frontier merger added $1.4 billion in assets, contributing to a nearly 50% growth in the balance sheet in 2025.
Focus on organic growth: The company is emphasizing organic growth initiatives, with a pipeline of $452 million and plans for mid-single-digit loan growth in 2026.
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Risk or Challenges
Merger Integration Challenges: The company has undergone two major mergers, including the Frontier merger, which could pose integration challenges, including system conversions and cultural alignment. The Frontier systems conversion is scheduled for February, with cost savings expected by the end of Q1 2026.
Increased Noninterest Expenses: Noninterest expenses increased by 2.7% linked quarter, partly due to provisioning for unfunded commitments and merger-related costs. The Frontier merger is expected to add $23 million to $24 million in noninterest expenses in 2026.
Litigation Risks: The company incurred $1 million in litigation settlement expenses related to ongoing overdraft suits, indicating potential legal and financial risks.
Economic Uncertainty: Despite stable credit quality trends, the company remains cautiously optimistic about the broader economic environment, which could impact credit performance and overall financial stability.
Loan Portfolio Risks: Loan production was down linked quarter, and loans as a percentage of average earning assets declined. Additionally, the Frontier merger is expected to dilute margins, which could impact profitability.
Competitive Pressures: The company faces a tough competitive environment with more competition and lower rates, which could impact loan growth and customer retention.
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Guidance & Outlook
Revenue and Earnings Projections: The company aims to achieve earnings of more than $5 per share in 2026, driven by the scale achieved through the Frontier merger and other growth initiatives.
Margin Projections: The company anticipates a margin range of 4.2% to 4.35% throughout 2026, with the Frontier merger expected to be dilutive to margins but accretive to net interest income.
Loan and Deposit Growth: Loans as a percentage of average earning assets are expected to reach approximately 80% in Q1 2026, with a loan-to-deposit ratio of 88%. The company is targeting mid-single-digit organic loan growth in 2026.
Noninterest Expense and Income: The Frontier merger is expected to add $23 million to $24 million in noninterest expenses and $2 million to $3 million in noninterest income in 2026. Cost savings from the merger are anticipated by the end of Q1 2026.
Credit Quality Outlook: The company remains cautiously optimistic about credit quality in 2026, with stable trends expected across the portfolio. The Frontier portfolio is not expected to negatively impact credit quality.
Market Expansion and Strategic Plans: The company plans to leverage its expanded presence in six states, including five major metros, to drive growth. It is also focusing on organic growth initiatives and utilizing available liquidity for market expansion.
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Shareholder Return Plan
Share Repurchase: During the quarter, the company was active under its repurchase authorization, acquiring 172,338 shares at a weighted average cost of $41.69. There are 872,662 shares remaining under the authorization approved by the Board in September.
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Key Q&A
Q:Does the margin guide include expected accretion from Frontier into 2026?
A:Yes, the margin guide includes the expected accretion from Frontier into 2026.
Q:Are you seeing competition stretch on pricing or underwriting standards?
A:Yes, there is competition stretching on pricing and underwriting standards. The company has strategically decided to hold pricing higher, even if it means losing some business to competitors offering lower rates.
Q:What types of loans are included in the opportunity to pull back participations from Frontier?
A:The loans are a combination of types, amounting to approximately $50 million, and are not limited to one specific type.
Q:How do you feel about the 23% cost savings target from the Frontier merger?
A:The 23% cost savings target is still considered a good baseline. There may be opportunities to exceed this target as the company progresses through the first quarter.
Q:What is the company's approach to capital management and buybacks post-Frontier merger?
A:The company is building capital at a strong pace and feels confident in its ability to pursue both buybacks and M&A opportunities. Decisions on buybacks will depend on the availability of capital and potential M&A opportunities.
Q:What is the margin outlook for the first quarter, and does it include opportunities to reduce higher-cost funding from Frontier?
A:The margin outlook for the first quarter is around 4.25%. It includes opportunities to reduce higher-cost funding from Frontier, such as paying off holding company debt and reducing high-cost FHLB borrowings and brokered funding.
Q:What is the visibility into expected payoffs and the cadence of net loan growth for 2026?
A:The pipeline is strong, and production levels are expected to remain consistent. Payoffs are often unexpected and unscheduled, but the company does not anticipate a repeat of last year's high payoff levels. Loan growth is typically stronger in the second and third quarters.
Q:What is the company's appetite for buybacks going forward?
A:The company evaluates buybacks similarly to acquisition opportunities, considering a 3-year earn-back range. The approach to buybacks will depend on capital needs and potential opportunities.
Q:What is the competitive environment for deposits, and what are the thoughts on deposit generation in newer markets?
A:Deposit account gathering is strong, but balances remain challenging due to competition. The company is focusing on account generation in newer markets like Oklahoma City and Omaha, as well as leveraging strong community markets.
Q:Are there any markets or commercial segments expected to outperform in loan growth for 2026?
A:Missouri, Oklahoma (including Oklahoma City and Tulsa), Nebraska, and Kansas City are expected to perform well in loan growth for 2026.
Q:Where are new loans coming on at compared to those paying off or maturing?
A:New originations are coming in about 50 basis points ahead of the coupon yield, providing an accretive impact to the loan portfolio.
Q:What is the near-term outlook for accretion within the margin range of 4.20% to 4.35%?
A:The accretion benefit from Frontier is included within the 4.20% to 4.35% margin range. The exact basis point attribution was not specified but is encapsulated in this range.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the exact basis point attribution for accretion within the margin range of 4.20% to 4.35%, stating only that it is included in the range.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bank platform
CET capital
CFO Equity
DDA comp
Equity Bancshares
Group transition
Loans percentage
NBC Group
Noninterest
accretion
addition portfolio
asset merger
authorization
bond portfolio
combination
cost funding
credit quality
decision
earning asset
effort
expansion decline
generation
history
investor
job
litigation settlement
loan purchase
loan relationship
merger expense
noncore item
percentage earning
point margin
process
purchase accounting
quality trend
repositioning
trend portfolio
EQBK Transcript
Equity Bancshares, Inc. (EQBK) Q4 2025 Earnings Call Transcript
Positive1-22
The earnings call highlights strong financial performance with improved margins, increased deposits, and a decline in nonaccrual loans. The company's strategic plans, including the Frontier merger, are progressing well. Despite competition, the company maintains a strong pipeline and expects consistent loan growth. The Q&A session did not reveal significant concerns, and guidance remains optimistic. The positive outlook on credit environment, margin projections, and strategic growth plans support a positive sentiment for the stock price over the next two weeks.
Equity Bancshares, Inc. (EQBK) Q3 2025 Earnings Call Transcript
Positive10-15
The earnings call reveals strong financial performance, with increased deposits, loan production, and a positive outlook on credit quality and loan growth. The NBC acquisition is expected to enhance margins and deposits. The Q&A section supports these positives, with management providing consistent strategies and a bullish loan growth outlook. However, there are concerns about margin compression and inflation, but these are mitigated by strategic measures. Overall, the sentiment leans positive, with expectations of improved financial performance and strategic growth initiatives.
Equity Bancshares, Inc. (EQBK) Q2 2025 Earnings Call Transcript
Unknown7-15
The earnings call summary and Q&A reveal a mixed outlook. Positive elements include merger benefits, strong loan growth, and strategic capital deployment. However, concerns arise from stress in the QSR sector, unclear management responses, and limited deposit cost reduction potential. The merger with NBC Corp. and optimistic loan growth support a neutral sentiment, but uncertainties in noninterest income and specific financial metrics temper expectations. Given the absence of market cap data, the stock price reaction is expected to be neutral, with fluctuations within a -2% to 2% range over the next two weeks.
Equity Bancshares, Inc. (NASDAQ:EQBK) Q1 2025 Earnings Call Transcript
Positive4-17
The earnings call reflects a positive sentiment with strong financial performance, including increased net income, EPS, and improved asset quality. Despite regulatory challenges and competitive pressures, the company shows resilience with a robust loan growth strategy and improved margins. The Q&A reveals management's proactive risk management and strategic focus on growth, contributing to a positive outlook. Although there is no share repurchase program, the absence of negative guidance and the anticipation of fee income recovery support a positive stock price movement over the next two weeks.
EQBK Slides
EQBK Report
Frequently Asked Questions
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