Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

As of ~~April 29,~~August 1, 2022, the registrant had ~~16,276,395~~16,091,406 shares of Class A common stock, $0.01 par value per share, outstanding.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report to “we,” “our,” “us,” “the Company” and “Equity” refer to Equity Bancshares, Inc. and its consolidated subsidiaries, including Equity Bank, which we sometimes refer to as “Equity Bank,” “the Bank” or “our Bank.”

The information contained in this Quarterly Report is accurate only as of the date of this Quarterly Report on Form 10-Q and as of the dates specified herein.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Item 1A - Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 9, 2022, and in Item 1A – Risk Factors of this Quarterly Report.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this Quarterly Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or verbal forward-looking statements that we or persons acting on our behalf may issue.

	(Unaudited) March 31,			December 31,			(Unaudited) June 30,			December 31,
	2022			2021			2022			2021
ASSETS
Cash and due from banks	$	89,764		$	259,131		$	103,126		$	259,131
Federal funds sold		286			823			458			823
Cash and cash equivalents		90,050			259,954			103,584			259,954
Available-for-sale securities		1,352,894			1,327,442			1,288,180			1,327,442
Loans held for sale		1,575			4,214			1,714			4,214
Loans, net of allowance for credit losses of $47,590 and $48,365		3,194,987			3,107,262
Loans, net of allowance for credit losses of $48,238 and $48,365								3,175,208			3,107,262
Other real estate owned, net		9,897			9,523			12,969			9,523
Premises and equipment, net		103,168			104,038			101,212			104,038
Bank-owned life insurance		120,928			120,787			121,665			120,787
Federal Reserve Bank and Federal Home Loan Bank stock		19,890			17,510			21,479			17,510
Interest receivable		16,923			18,048			16,519			18,048
Goodwill		54,465			54,465			53,101			54,465
Core deposit intangibles, net		13,830			14,879			12,554			14,879
Other		100,016			99,509			93,971			99,509
Total assets	$	5,078,623		$	5,137,631		$	5,002,156		$	5,137,631
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	1,255,793		$	1,244,117		$	1,194,863		$	1,244,117
Total non-interest-bearing deposits		1,255,793			1,244,117			1,194,863			1,244,117
Savings, NOW and money market		2,511,478			2,522,289
Demand, savings and money market								2,445,545			2,522,289
Time		612,399			653,598			651,363			653,598
Total interest-bearing deposits		3,123,877			3,175,887			3,096,908			3,175,887
Total deposits		4,379,670			4,420,004			4,291,771			4,420,004
Federal funds purchased and retail repurchase agreements		48,199			56,006			52,750			56,006
Federal Home Loan Bank advances		50,000			—			80,000			—
Subordinated debt		96,010			95,885			96,135			95,885
Contractual obligations		17,307			17,692			15,813			17,692
Interest payable and other liabilities		35,422			47,413			37,572			47,413
Total liabilities		4,626,608			4,637,000			4,574,041			4,637,000
Commitments and contingent liabilities, see Notes 11 and 12
Stockholders’ equity, see Note 7
Common stock		204			203			204			203
Additional paid-in capital		480,106			478,862			480,897			478,862
Retained earnings		102,632			88,324			116,576			88,324
Accumulated other comprehensive income (loss), net of tax		(50,012	)		1,776			(77,426	)		1,776
Treasury stock		(80,915	)		(68,534	)		(92,136	)		(68,534	)
Total stockholders’ equity		452,015			500,631			428,115			500,631
Total liabilities and stockholders’ equity	$	5,078,623		$	5,137,631		$	5,002,156		$	5,137,631

	(Unaudited) Three Months Ended March 31,						(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,
	2022			2021			2022			2021			2022		2021
Interest and dividend income
Loans, including fees	$	36,306		$	31,001		$	36,849		$	33,810		$	73,155	$	64,811
Securities, taxable		5,391			3,799			5,584			3,523			10,975		7,322
Securities, nontaxable		655			724			678			717			1,333		1,441
Federal funds sold and other		300			288			513			268			813		556
Total interest and dividend income		42,652			35,812			43,624			38,318			86,276		74,130
Interest expense
Deposits		1,722			2,410			2,183			2,025			3,905		4,435
Federal funds purchased and retail repurchase agreements		33			22			46			26			79		48
Federal Home Loan Bank advances		9			65			176			80			185		145
Subordinated debt		1,599			1,556			1,653			1,557			3,252		3,113
Total interest expense		3,363			4,053			4,058			3,688			7,421		7,741
Net interest income		39,289			31,759			39,566			34,630			78,855		66,389
Provision (reversal) for credit losses		(412	)		(5,756	)		824			(1,657	)		412		(7,413	)
Net interest income after provision (reversal) for credit losses		39,701			37,515			38,742			36,287			78,443		73,802
Non-interest income
Service charges and fees		2,522			1,596			2,617			2,169			5,139		3,765
Debit card income		2,628			2,350			2,810			2,679			5,438		5,029
Mortgage banking		562			935			428			848			990		1,783
Increase in value of bank-owned life insurance		865			601			736			676			1,601		1,277
Net gain on acquisition		—			(78	)
Net gain from securities transactions		40			17
Net gain on acquisition and branch sales								540			663			540		585
Net gain (loss) from securities transactions								(32	)		—			8		17
Other		2,405			1,291			2,538			2,065			4,943		3,356
Total non-interest income		9,022			6,712			9,637			9,100			18,659		15,812
Non-interest expense
Salaries and employee benefits		15,068			12,722			15,383			12,769			30,451		25,491
Net occupancy and equipment		3,170			2,368			3,007			2,327			6,177		4,695
Data processing		3,769			2,663			3,642			3,474			7,411		6,137
Professional fees		1,171			1,073			1,111			999			2,282		2,072
Advertising and business development		976			682			972			799			1,948		1,481
Telecommunications		470			580			442			512			912		1,092
FDIC insurance		180			415			260			425			440		840
Courier and postage		423			369			489			327			912		696
Free nationwide ATM cost		501			472			541			513			1,042		985
Amortization of core deposit intangibles		1,050			1,034			1,111			1,030			2,161		2,064
Loan expense		185			238			207			181			392		419
Other real estate owned		(1	)		5			14			(468	)		13		(463	)
Merger expenses		323			152			88			460			411		612
Other		2,174			2,108			4,169			2,458			6,343		4,566
Total non-interest expense		29,459			24,881			31,436			25,806			60,895		50,687
Income (loss) before income taxes		19,264			19,346			16,943			19,581			36,207		38,927
Provision (benefit) for income taxes		3,614			4,271			1,684			4,415			5,298		8,686
Net income (loss) and net income (loss) allocable to common stockholders	$	15,650		$	15,075		$	15,259		$	15,166		$	30,909	$	30,241
Basic earnings (loss) per share	$	0.94		$	1.04		$	0.95		$	1.06		$	1.88	$	2.10
Diluted earnings (loss) per share	$	0.93		$	1.02		$	0.94		$	1.03		$	1.86	$	2.06

	(Unaudited) Three Months Ended March 31,						(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,
	2022			2021			2022			2021			2022			2021
Net income	$	15,650		$	15,075		$	15,259		$	15,166		$	30,909		$	30,241
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period on available-for-sale securities		(69,339	)		(10,369	)		(35,364	)		1,911			(104,703	)		(8,458	)
Less: reclassification for net gains included in net income		(79	)		—			2			—			(77	)		—
Unrealized holding gains (losses) arising during the period on cash flow hedges		598			—			(1,065	)		—			(467	)		—
Total other comprehensive income (loss)		(68,820	)		(10,369	)		(36,427	)		1,911			(105,247	)		(8,458	)
Tax effect		17,032			2,607			9,013			(480	)		26,045			2,127
Other comprehensive income (loss), net of tax		(51,788	)		(7,762	)		(27,414	)		1,431			(79,202	)		(6,331	)
Comprehensive income (loss)	$	(36,138	)	$	7,313		$	(12,155	)	$	16,597		$	(48,293	)	$	23,910

	Common Stock					Additional						Accumulated Other			Employee						Total
	Shares Outstanding			Amount		Paid-In Capital			Retained Earnings			Comprehensive Income (Loss)			Stock Loans			Treasury Stock			Stockholders’ Equity
Balance at January 1, 2021		14,540,556		$	174	$	386,820		$	50,787		$	19,781		$	(43	)	$	(49,870	)	$	407,649
Implementation of ASU 2016-13, current expected credit losses		—			—		—			(12,403	)		—			—			—			(12,403	)
Net income		—			—		—			30,241			—			—			—			30,241
Other comprehensive income (loss), net of tax effects		—			—		—			—			(6,331	)		—			—			(6,331	)
Stock-based compensation		9,351			—		1,660			—			—			—			—			1,660
Common stock issued upon exercise of stock options		49,236			1		674			—			—			—			—			675
Common stock issued under stock-based incentive plan		72,424			1		(1	)		—			—			—			—			—
Common stock issued under employee stock purchase plan		17,621			—		241			—			—			—			—			241
Repayment on employee stock loans		—					—			—			—			43						43
Treasury stock purchase		(329,016	)		—		—			—			—			—			(8,780	)		(8,780	)
Balance at June 30, 2021		14,360,172		$	176	$	389,394		$	68,625		$	13,450		$	—		$	(58,650	)	$	412,995

Balance at January 1, 2022		16,760,115		$	203	$	478,862		$	88,324		$	1,776		$	—		$	(68,534	)	$	500,631
Net income		—			—		—			30,909			—			—			—			30,909
Other comprehensive income (loss), net of tax effects		—			—		—			—			(79,202	)		—			—			(79,202	)
Cash dividends - common stock, $0.16 per share		—			—		—			(2,608	)		—			—			—			(2,608	)
Dividend equivalents - restricted stock units, $0.16 per share		—			—		—			(49	)		—			—			—			(49	)
Stock-based compensation		624			—		1,548			—			—			—			—			1,548
Common stock issued upon exercise of stock options		7,156			—		97			—			—			—			—			97
Common stock issued under stock-based incentive plan		64,876			1		(1	)		—			—			—			—			—
Common stock issued under employee stock purchase plan		14,274			—		391			—			—			—			—			391
Treasury stock purchases		(740,227	)		—		—			—			—			—			(23,602	)		(23,602	)
Balance at June 30, 2022		16,106,818		$	204	$	480,897		$	116,576		$	(77,426	)	$	—		$	(92,136	)	$	428,115

Common Stock

Additional

Accumulated
Other

Employee

Total

Shares
Outstanding

Amount

Paid-In
Capital

Retained
Earnings

Comprehensive
Income (Loss)

Stock
Loans

Treasury
Stock

Stockholders’
Equity

Balance at January 1, 2021

14,540,556

$
174

$
386,820

$
50,787

$
19,781

$
(43
)

$
(49,870
)

$
407,649

Implementation of ASU 2016-13,
   current expected credit losses

—

—

—

(12,403
)

—

—

—

(12,403
)
Net income

—

—

—

15,075

—

—

—

15,075

Other comprehensive income (loss),
   net of tax effects

—

—

—

—

(7,762
)

—

—

(7,762
)
Stock-based compensation

—

—

712

—

—

—

—

712

Common stock issued upon
   exercise of stock options

11,483

—

167

—

—

—

—

167

Common stock issued under
   stock-based incentive plan

47,265

1

(1
)

—

—

—

—

—

Common stock issued under
   employee stock purchase plan

17,621

—

241

—

—

—

—

241

Repayment on employee stock loans

—

—

—

—

43

43

Treasury stock purchase

(233,012
)

—

—

—

—

—

(5,907
)

(5,907
)
Balance at March 31, 2021

14,383,913

$
175

$
387,939

$
53,459

$
12,019

$
—

$
(55,777
)

$
397,815

Balance at January 1, 2022

16,760,115

$
203

$
478,862

$
88,324

$
1,776

$
—

$
(68,534
)

$
500,631

Net income

—

—

—

15,650

—

—

—

15,650

Other comprehensive income (loss),
   net of tax effects

—

—

—

—

(51,788
)

—

—

(51,788
)
Cash dividends - common stock, $0.08 per share

—

—

—

(1,318
)

—

—

—

(1,318
)
Dividend equivalents - restricted stock units, $0.08 per share

—

—

—

(24
)

—

—

—

(24
)
Stock-based compensation

—

—

804

—

—

—

—

804

Common stock issued upon
   exercise of stock options

3,500

—

50

—

—

—

—

50

Common stock issued under
   stock-based incentive plan

61,460

1

(1
)

—

—

—

—

—

Common stock issued under
   employee stock purchase plan

14,274

—

391

—

—

—

—

391

Treasury stock purchases

(384,383
)

—

—

—

—

—

(12,381
)

(12,381
)
Balance at March 31, 2022

16,454,966

$
204

$
480,106

$
102,632

$
(50,012
)

$
—

$
(80,915
)

$
452,015

	(Unaudited) March 31,						(Unaudited) June 30,
	2022			2021			2022			2021
Cash flows from operating activities
Net income	$	15,650		$	15,075		$	30,909		$	30,241
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation		804			712			1,548			1,660
Depreciation		1,172			1,011			2,313			2,024
Amortization of operating lease right-of-use asset		175			100			352			200
Amortization of cloud computing implementation costs		47			30			94			77
Provision (reversal) for credit losses		(412	)		(5,756	)		412			(7,413	)
Net amortization (accretion) of purchase valuation adjustments		(1,430	)		(361	)		(2,083	)		8,847
Amortization (accretion) of premiums and discounts on securities		1,926			2,261			3,622			4,890
Amortization of intangible assets		1,085			1,045			2,233			2,086
Deferred income taxes		(226	)		1,687			(382	)		905
Federal Home Loan Bank stock dividends		(18	)		(2	)		(92	)		(22	)
Loss (gain) on sales and valuation adjustments on other real estate owned		(172	)		(171	)		(108	)		(775	)
Net loss (gain) on sales and settlements of securities		(79	)	—				(77	)	—
Change in unrealized (gains) losses on equity securities		39			(17	)		71			(17	)
Loss (gain) on disposal of premises and equipment		(43	)		(8	)		(68	)		(17	)
Loss (gain) on lease termination							—				(2	)
Loss (gain) on sales of foreclosed assets		(49	)		9			(49	)		(6	)
Loss (gain) on sales of loans		(463	)		(793	)		(793	)		(1,515	)
Originations of loans held for sale		(16,193	)		(27,907	)		(31,431	)		(53,218	)
Proceeds from the sale of loans held for sale		19,295			32,485			34,724			60,859
Increase in the value of bank-owned life insurance		(865	)		(601	)		(1,601	)		(1,277	)
Change in fair value of derivatives recognized in earnings		(810	)		(350	)		(1,195	)		(245	)
Gain on acquisition	—				78
Gain on acquisition and branch sales								(540	)		(585	)
Payments on operating lease payable		(205	)		(123	)		(411	)		(246	)
Net change in:
Interest receivable		1,125			(824	)		1,138			767
Other assets		(101	)		7,553			17,556			3,806
Interest payable and other liabilities		(12,448	)		(1,407	)		(13,006	)		(3,788	)
Net cash provided by (used in) operating activities		7,804			23,726			43,136			47,236
Cash flows (to) from investing activities
Purchases of available-for-sale securities		(153,850	)		(242,563	)		(166,932	)		(410,487	)
Proceeds from sales, calls, pay-downs and maturities of available-for-sale securities		57,134			103,660			97,870			227,352
Net change in interest-bearing time deposits in other banks							—				249
Net change in loans		(85,273	)		(100,306	)		(93,562	)		(47,046	)
Purchase of mortgage loans	—				(89,450	)		(795	)		(167,983	)
Purchase of government guaranteed loans		(2,293	)		—			(2,293	)		(3,861	)
Purchase of premises and equipment		(309	)		(1,921	)		(722	)		(3,494	)
Proceeds from sale of premises and equipment		50			8			78			23
Proceeds from sale of foreclosed assets		20,063			37			20,368			123
Net redemptions (purchases) of Federal Home Loan Bank and Federal Reserve Bank stock		(2,362	)		1,243			(3,876	)		(2,017	)
Net redemptions (purchases) of correspondent and miscellaneous other stock	—				(68	)		(1,970	)		(68	)
Proceeds from sale of other real estate owned		205			1,402			935			1,974
Purchase of bank-owned life insurance	—				(25,000	)	—				(25,000	)
Proceeds from bank-owned life insurance death benefits		723		—				723		—
Net cash paid from branch sale to United Bank and Trust								(22,939	)	—
Net cash provided by (used in) investing activities		(165,912	)		(352,958	)		(173,115	)		(430,235	)
Cash flows (to) from financing activities
Net increase (decrease) in deposits		(40,311	)		186,931
Net change in federal funds purchased and retail repurchase agreements		(7,807	)		4,310
Net borrowings (repayments) on Federal Home Loan Bank line of credit		20,000			—

Cash flows (to) from financing activities
Net increase (decrease) in deposits								(75,470	)		239,953
Net change in federal funds purchased and retail repurchase agreements								(3,256	)		11,155
Net borrowings (repayments) on Federal Home Loan Bank line of credit							—				—
Proceeds from Federal Home Loan Bank term advances		122,128			—			403,501			70,000
Principal repayments on Federal Home Loan Bank term advances		(92,128	)		(214	)		(323,501	)		(70,929	)
Proceeds from Federal Reserve Bank discount window		1,000			1,000			1,000			1,000
Principal payments on Federal Reserve Bank discount window		(1,000	)		(1,000	)		(1,000	)		(1,000	)
Principal payments on employee stock loans	—				43		—				43
Proceeds from the exercise of employee stock options		50			167			97			675
Proceeds from employee stock purchase plan		391			241			391			241
Debt issuance cost	—				(16	)	—				(16	)
Purchase of treasury stock		(12,381	)		(5,907	)		(23,602	)		(8,780	)
Net change in contractual obligations		(385	)		(333	)		(1,879	)		(720	)
Dividends paid on common stock		(1,353	)		—			(2,672	)		—
Net cash provided by (used in) financing activities		(11,796	)		185,222			(26,391	)		241,622
Net change in cash and cash equivalents		(169,904	)		(144,010	)		(156,370	)		(141,377	)
Cash and cash equivalents, beginning of period		259,954			280,698			259,954			280,698
Ending cash and cash equivalents	$	90,050		$	136,688		$	103,584		$	139,321
Supplemental cash flow information:
Interest paid	$	4,739		$	3,035		$	7,295		$	8,157
Income taxes paid, net of refunds		82			—			196			6,920
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans		555			60			2,208			705
Other repossessed assets acquired in settlement of loans	$	20		$	59			436			67
Other real estate owned recorded as a result of transferring non-operational branch right-of-use-asset							$	2,210		$	—

The interim consolidated financial statements include the accounts of Equity Bancshares, Inc., its wholly-owned subsidiaries, EBAC, LLC and Equity Bank and Equity Bank’s wholly-owned subsidiaries, EBHQ, LLC and SA Holdings, Inc. These entities are collectively referred to as the “Company”. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial information. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2022. Operating results for the ~~three~~six months ended ~~March 31,~~June 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Some items in prior financial statements were reclassified to conform to the current presentation. Management determined the items reclassified are immaterial to the consolidated financial statements taken as a whole and did not result in a change in equity or net income for the periods reported.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The transactions primarily include contract modifications; hedging relationships; and sale or transfer of debt securities classified as held-to-maturity. The guidance was effective immediately for the Company and the amendments may be applied prospectively through December 31, 2022. The Company’s contracts issued prior to December 31, 2021, are primarily LIBOR tenures that will continue to be published until June 30, 2023, and the Company has reviewed the respective fallback language of these contracts and believes that the language is operational. The Company will continually evaluate these contracts until the indexes are no longer published; however, the financial impact on our financial condition, results of operations and cash flows will depend on the population of contracts that are still outstanding on the date the underlying indexes are no longer published.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848). ASU 2021-01 clarify that certain optional expedients and exceptions that are noted in Topic 848 apply to derivatives that are affected by the discounting transition. Certain provisions, if elected by the Company, apply to derivative instruments that use an interest rate for managing, discounting or contract price alignment that is modified as a result of reference rate reform. The guidance was effective immediately for the Company and the amendments may be applied prospectively through December 31, 2022. The Company’s contracts issued prior to December 31, 2021, are primarily LIBOR tenures that will continue to be published until June 30, 2023, and the Company has reviewed the respective fallback language of these contracts and believes that the language is operational. The Company will continually evaluate these contracts until the indexes are no longer published; however, the financial impact on the Company’s financial condition, results of operations and cash flows will depend on the population of contracts that are still outstanding on the date the underlying indexes are no longer published.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815), Fair Value Hedging – Portfolio Layer Method. ASU 2022-01 expands the current last-of-layer method to allow multiple hedged layers of a single closed portfolio; expands the scope of the portfolio layer method to include nonprepayable financial assets; addresses the types of hedging instruments that are

eligible in a single-layer hedge; provided additional guidance on the accounting for and disclosure of hedging basis adjustments; and

provided guidance on how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. The guidance will be effective for the Company in fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This guidance requires a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. The Company is currently evaluating the guidance but does not expect it will have a material financial impact on its financial condition, results of operations ~~and~~or cash flows.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326), Trouble Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for loan restructurings by creditor when a borrower is experiencing financial difficulty. Creditors will be required to apply the refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. Additionally, ASU 2022-02 requires that public business entities disclose gross write offs by year of origination for financing receivables and net investment in leases within the scope of Financial Instruments – Credit Losses – Measured at Amortized Cost of the Accounting Standards Codification. The guidance is effective for the Company for fiscal years beginning after December 31, 2022, including interim periods within those fiscal years. The Company is permitted to apply the guidance prospectively or through a modified retrospective method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Since the Company had adopted ASU 2016-13 effective January 1, 2021, the Company is permitted to early adopt the guidance in totality or individually for the topics covered in this update. The Company will not be early adopting this guidance and does not expect the guidance to have a material financial impact on our financial condition, results of operations ~~and~~or cash flows, but will impact the Company’s future loan disclosures.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and the restriction is not considered in measuring fair value. In addition, the guidance clarifies that the contractual restriction cannot be valued as a separate unit of account or be recognized separately. This guidance provides additional disclosures for equity securities subject to contractual sale restrictions. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not been issued or made available for issuance. The Company does not expect this guidance to have a material financial impact on our financial condition, results of operations or cash flows.

The amortized cost and fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are listed below.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
December 31, 2021
June 30, 2022
Available-for-sale securities
U.S. Government-sponsored entities	$	124,898	$	13	$	(1,504	)	$	—	$	123,407	$	123,550	$	—	$	(12,158	)	$	—	$	111,392
U.S. Treasury securities		157,289		—		(1,687	)		—		155,602		257,329		—		(18,763	)		—		238,566
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		661,584		10,215		(6,912	)		—		664,887		599,868		56		(41,452	)		—		558,472
Private label residential mortgage-backed securities		173,717		—		(2,029	)		—		171,688		198,447		—		(18,990	)		—		179,457
Corporate		52,555		1,437		(215	)		—		53,777		56,598		33		(1,588	)		—		55,043
Small Business Administration loan pools		16,568		13		(106	)		—		16,475		14,864		—		(553	)		—		14,311
State and political subdivisions		138,404		3,618		(416	)		—		141,606		139,877		266		(9,204	)		—		130,939
	$	1,325,015	$	15,296	$	(12,869	)	$	—	$	1,327,442	$	1,390,533	$	355	$	(102,708	)	$	—	$	1,288,180

The fair value and amortized cost of debt securities at ~~March 31,~~June 30, 2022, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	Available-for-Sale				Available-for-Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	6,325	$	6,363	$	6,955	$	6,978
One to five years		235,854		227,053		258,317		244,218
Five to ten years		263,257		248,913		244,867		225,103
After ten years		82,192		77,768		82,079		73,952
Mortgage-backed securities		832,257		792,797		798,315		737,929
Total debt securities	$	1,419,885	$	1,352,894	$	1,390,533	$	1,288,180

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately ~~$844,630~~$878,436 at ~~March 31,~~June 30, 2022, and $892,182 at December 31, 2021.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at ~~March 31,~~June 30, 2022, and December 31, 2021.

	Less Than 12 Months					12 Months or More					Total					Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2022
June 30, 2022
Available-for-sale securities
U.S. Government-sponsored entities	$	115,235	$	(8,489	)	$	—	$	—		$	115,235	$	(8,489	)	$	111,392	$	(12,158	)	$	—	$	—		$	111,392	$	(12,158	)
U.S. Treasury securities		243,256		(13,895	)		—		—			243,256		(13,895	)		238,566		(18,763	)		—		—			238,566		(18,763	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		433,989		(19,841	)		97,065		(9,754	)		531,054		(29,595	)		433,909		(27,821	)		115,996		(13,631	)		549,905		(41,452	)
Private label residential mortgage-backed securities		191,560		(10,490	)		4,722		(271	)		196,282		(10,761	)		168,463		(17,623	)		10,994		(1,367	)		179,457		(18,990	)
Corporate		26,441		(559	)		—		—			26,441		(559	)		52,510		(1,588	)							52,510		(1,588	)
Small Business Administration loan pools		6,431		(374	)		8,842		(61	)		15,273		(435	)		5,898		(531	)		8,413		(22	)		14,311		(553	)
State and political subdivisions		61,392		(5,352	)		—		—			61,392		(5,352	)		83,381		(9,204	)							83,381		(9,204	)
Total temporarily impaired securities	$	1,078,304	$	(59,000	)	$	110,629	$	(10,086	)	$	1,188,933	$	(69,086	)	$	1,094,119	$	(87,688	)	$	135,403	$	(15,020	)	$	1,229,522	$	(102,708	)
December 31, 2021
Available-for-sale securities
U.S. Government-sponsored entities	$	117,618	$	(1,504	)	$	—	$	—		$	117,618	$	(1,504	)	$	117,618	$	(1,504	)	$	—	$	—		$	117,618	$	(1,504	)
U.S. Treasury securities		155,601		(1,687	)		—		—			155,601		(1,687	)		155,601		(1,687	)		—		—			155,601		(1,687	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		378,057		(6,860	)		2,868		(52	)		380,925		(6,912	)		378,057		(6,860	)		2,868		(52	)		380,925		(6,912	)
Private label residential mortgage-backed securities		159,381		(1,978	)		2,208		(51	)		161,589		(2,029	)		159,381		(1,978	)		2,208		(51	)		161,589		(2,029	)
Corporate		4,785		(215	)		—		—			4,785		(215	)		4,785		(215	)		—		—			4,785		(215	)
Small Business Administration loan pools		15,459		(106	)		—		—			15,459		(106	)		15,459		(106	)		—		—			15,459		(106	)
State and political subdivisions		28,443		(416	)		—		—			28,443		(416	)		28,443		(416	)		—		—			28,443		(416	)
Total temporarily impaired securities	$	859,344	$	(12,766	)	$	5,076	$	(103	)	$	864,420	$	(12,869	)	$	859,344	$	(12,766	)	$	5,076	$	(103	)	$	864,420	$	(12,869	)

As of ~~March 31,~~June 30, 2022, the Company held ~~413~~514 available-for-sale securities in an unrealized loss position.

Unrealized losses on securities have not been recognized into income because the security issuers are of high credit quality, management does not intend to sell, it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the securities approach maturity.

The proceeds from sales and the associated gains and losses on available-for-sale securities reclassified from other comprehensive income to income are listed below.

	Three Months Ended March 31,		Three Months Ended June 30,		Six Months Ended June 30,
	2022		2022		2022
Proceeds	$	3,265	$	—	$	3,265
Gross gain		115		—		115
Gross losses		36		—		36
Income tax expense on net realized gains		20		—		20

There were 0 proceeds from sales of available-for-sale securities during the three or six months ended ~~March 31,~~June 30, 2021.

Commercial real estate: Commercial real estate loans include all loans secured by nonfarm, nonresidential properties and by multifamily residential properties, as well as 1-4 family investment-purpose real estate loans.

Commercial and industrial: Commercial and industrial loans include loans used to purchase fixed assets, provide working capital or meet other financing needs of the business. Loans are normally secured by the assets being purchased or already owned by the borrower, inventory or accounts receivable. These may include SBA and other guaranteed or partially guaranteed types of loans.

Residential real estate: Residential real estate loans include loans secured by primary or secondary personal residences.

Agricultural real estate: Agricultural real estate loans are loans typically secured by farmland.

Agricultural: Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. These loans may be secured by growing crops, stored crops, livestock, equipment, and miscellaneous receivables.

Consumer: Consumer loans may include installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit. These loans are generally secured by consumer assets but may be unsecured.

The following table lists categories of loans at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Commercial real estate	$	1,552,134		$	1,486,148		$	1,643,068		$	1,486,148
Commercial and industrial		629,181			567,497			578,899			567,497
Residential real estate		613,928			638,087			578,936			638,087
Agricultural real estate		198,844			198,330			197,938			198,330
Agricultural		150,077			166,975			124,753			166,975
Consumer		98,413			98,590			99,852			98,590
Total loans		3,242,577			3,155,627			3,223,446			3,155,627
Allowance for credit losses		(47,590	)		(48,365	)		(48,238	)		(48,365	)
Net loans	$	3,194,987		$	3,107,262		$	3,175,208		$	3,107,262

Included in the commercial and industrial loan balances at ~~March 31,~~June 30, 2022, and December 31, 2021, are ~~$20,256~~$7,440 and $44,783 of loans that were originated under the SBA PPP program. At ~~March 31,~~June 30, 2022, and December 31, 2021, unamortized loan fees on these loans were ~~$498 thousand~~$125 and ~~$1.3 million.~~$1,252.

From time to time, the Company has purchased pools of residential real estate loans originated by other financial institutions to hold for investment with the intent to diversify the residential real estate portfolio. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2022, the Company ~~did 0t purchase any pools~~purchased 1 pool of residential mortgage ~~loans.~~loans totaling $795. During the first ~~three~~six months of 2021, the Company purchased 23 pools of residential real estate loans totaling ~~$89,450.~~$168,206. As of ~~March 31,~~June 30, 2022, and December 31, 2021, residential real estate loans include ~~$359,376~~$343,966 and $372,069 of purchased residential real estate loans.

The Company occasionally purchases the government guaranteed portion of loans originated by other financial institutions to hold for investment. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2022, the Company purchased $2,293 in loans guaranteed by governmental agencies. Government guaranteed loans ~~from governmental agencies. NaN such purchases~~totaling $3,861 were ~~made~~purchased in the ~~three~~six months ended ~~March 31,~~June 30, 2021.

The unamortized discount of merger purchase accounting adjustments related to non-purchase credit deteriorated loans included in the loan totals above are ~~$5,687~~$4,548 with related loans of ~~$444,568~~$368,703 at ~~March 31,~~June 30, 2022, and $6,649 with related loans of $527,422 at December 31, 2021.

Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled ~~$516~~$577 at ~~March 31,~~June 30, 2022, and $886 at December 31, 2021.

The following tables present the activity in the allowance for credit losses by class for the three month periods ended June 30, 2022 and 2021.

The following tables present the activity in the allowance for credit losses by class for the ~~three-month~~six month periods ended ~~March 31,~~June 30, 2022 and 2021.

March 31, 2022	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
June 30, 2022																						Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	22,478		$	12,248		$	5,560		$	2,235		$	3,756		$	2,088		$	48,365		$	22,478		$	12,248		$	5,560		$	2,235		$	3,756		$	2,088		$	48,365
Provision for credit losses		(492	)		1,572			402			(700	)		(1,284	)		90			(412	)		419			922			1,272			(1,235	)		(1,466	)		500			412
Loans charged-off		(283	)		(44	)		(2	)		—			—			(205	)		(534	)		(294	)		(79	)		(48	)		—			(1	)		(494	)		(916	)
Recoveries		61			38			—			7			—			65			171			62			118			34			7			—			156			377
Total ending allowance balance	$	21,764		$	13,814		$	5,960		$	1,542		$	2,472		$	2,038		$	47,590		$	22,665		$	13,209		$	6,818		$	1,007		$	2,289		$	2,250		$	48,238

March 31, 2021	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
June 30, 2021																						Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance, prior to adoption of ASC 326	$	9,012		$	12,456		$	4,559		$	904		$	758		$	6,020		$	33,709		$	9,012		$	12,456		$	4,559		$	904		$	758		$	6,020		$	33,709
Cumulative effect adjustment of adopting ASC 326		5,612			4,167			8,870			167			(207	)		(2,877	)		15,732			5,612			4,167			8,870			167			(207	)		(2,877	)		15,732
Impact of adopting ASC 326 - PCD loans		4,627			1,680			221			1,186			4,306			-			12,020			4,571			(218	)		220			960			4,905			—			10,438
Provision for credit losses		(4,207	)		1,646			(2,131	)		(345	)		(511	)		(323	)		(5,871	)		(4,044	)		2,276			(3,834	)		(700	)		(764	)		(347	)		(7,413	)
Loans charged-off		(53	)		(7	)		(9	)		(12	)		—			(210	)		(291	)		(53	)		(61	)		(12	)		(502	)		(1	)		(375	)		(1,004	)
Recoveries		127			23			1			—			3			72			226			127			70			5			18			4			148			372
Total ending allowance balance	$	15,118		$	19,965		$	11,511		$	1,900		$	4,349		$	2,682		$	55,525		$	15,225		$	18,690		$	9,808		$	847		$	4,695		$	2,569		$	51,834

The following tables present the recorded investment in loans and the balance in the allowance for credit losses by portfolio and class based on method to determine allowance for credit loss as of ~~March 31,~~June 30, 2022, and December 31, 2021.

March 31, 2022	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
June 30, 2022															Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
Allowance for credit losses:
Individually evaluated for credit losses	$	1,078	$	1,322	$	852	$	676	$	2,178	$	95	$	6,201	$	1,188	$	1,034	$	723	$	346	$	1,923	$	67	$	5,281
Collectively evaluated for credit losses		20,686		12,492		5,108		866		294		1,943		41,389		21,477		12,175		6,095		661		366		2,183		42,957
Total	$	21,764	$	13,814	$	5,960	$	1,542	$	2,472	$	2,038	$	47,590	$	22,665	$	13,209	$	6,818	$	1,007	$	2,289	$	2,250	$	48,238
Loan Balance:
Individually evaluated for credit losses	$	3,810	$	8,263	$	4,682	$	5,274	$	5,649	$	368	$	28,046	$	6,735	$	5,993	$	3,017	$	4,067	$	4,903	$	276	$	24,991
Collectively evaluated for credit losses		1,548,324		620,918		609,246		193,570		144,428		98,045		3,214,531		1,636,333		572,906		575,919		193,871		119,850		99,576		3,198,455
Total	$	1,552,134	$	629,181	$	613,928	$	198,844	$	150,077	$	98,413	$	3,242,577	$	1,643,068	$	578,899	$	578,936	$	197,938	$	124,753	$	99,852	$	3,223,446

The following table presents information related to nonaccrual loans and the level of collateral that supports the nonaccrual loans at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022										June 30, 2022
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated		Average Recorded Investment		Interest Income Recognized		Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	1,010		818	$	—		409	$	—	$	2,989	$	2,327	$	—
Commercial and industrial		1		—		—		982		—		6,081		1,964		—
Residential real estate		1,466		1,106		—		767		1		32		—		—
Agricultural real estate		1,795		1,660		—		1,660		—		1,276		1,140		—
Agricultural		—		—		—		—		—		41		—		—
Consumer		—		—		—		24		—		19		—		—
Subtotal		4,272		3,584		—		3,842		1		10,438		5,431		—
With an allowance recorded:
Commercial real estate		3,386		2,822		1,057		4,827		—		3,353		2,778		930
Commercial and industrial		8,078		3,711		631		4,152		��		1,679		1,387		367
Residential real estate		3,760		3,416		846		4,031		—		3,147		2,903		718
Agricultural real estate		3,671		2,419		639		2,579		—		3,635		2,337		335
Agricultural		6,666		4,386		1,832		5,281		—		6,298		3,757		1,639
Consumer		430		358		94		316		—		335		267		66
Subtotal		25,991		17,112		5,099		21,186		—		18,447		13,429		4,055
Total	$	30,263		20,696	$	5,099		25,028	$	1	$	28,885	$	18,860	$	4,055

	December 31, 2021										December 31, 2021
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated		Average Recorded Investment		Interest Income Recognized		Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	—	$	—	$	—	$	336	$	3	$	—	$	—	$	—
Commercial and industrial		6,060		1,964		—		521		101		6,060		1,964		—
Residential real estate		609		429		—		126		4		609		429		—
Agricultural real estate		1,795		1,660		—		2,178		82		1,795		1,660		—
Agricultural		—		—		—		1,725		—		—		—		—
Consumer		49		49		—		10		2		49		49		—
Subtotal		8,513		4,102		—		4,896		192		8,513		4,102		—
With an allowance recorded:
Commercial real estate		7,690		6,833		1,632		6,985		19		7,690		6,833		1,632
Commercial and industrial		4,976		4,593		1,800		25,881		119		4,976		4,593		1,800
Residential real estate		5,170		4,646		888		3,204		41		5,170		4,646		888
Agricultural real estate		3,726		2,738		637		3,224		56		3,726		2,738		637
Agricultural		8,836		6,175		2,307		6,028		113		8,836		6,175		2,307
Consumer		314		274		74		251		8		314		274		74
Subtotal		30,712		25,259		7,338		45,573		356		30,712		25,259		7,338
Total	$	39,225	$	29,361	$	7,338	$	50,469	$	548	$	39,225	$	29,361	$	7,338

The table below presents average recorded investment and interest income related to nonaccrual loans for the three and six months ended June 30, 2022, and 2021. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality.

The following tables present the aging of the recorded investment in past due loans as of ~~March 31,~~June 30, 2022, and December 31, 2021, by portfolio and class of loans.

March 31, 2022	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
June 30, 2022													30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
Commercial real estate	$	1,305	$	304	$	—	$	3,640	$	1,546,885	$	1,552,134	$	598	$	249	$	386	$	5,105	$	1,636,730	$	1,643,068
Commercial and industrial		1,207		8		—		3,711		624,255		629,181		655		2,923		—		3,351		571,970		578,899
Residential real estate		557		—		—		4,522		608,849		613,928		623		357		—		2,903		575,053		578,936
Agricultural real estate		886		—		—		4,079		193,879		198,844		7		—		—		3,477		194,454		197,938
Agricultural		1,571		—		—		4,386		144,120		150,077		1		95		—		3,757		120,900		124,753
Consumer		160		40		—		358		97,855		98,413		466		47		—		267		99,072		99,852
Total	$	5,686	$	352	$	—	$	20,696	$	3,215,843	$	3,242,577	$	2,350	$	3,671	$	386	$	18,860	$	3,198,179	$	3,223,446

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. Loans that participated in the short-term deferral program are not automatically considered classified solely due to a deferral, are subject to ongoing monitoring and will be downgraded or placed on nonaccrual if a noted weakness exists. The Company uses the following definitions for risk ratings.

Pass: Loans classified as pass include all loans that do not fall under one of the three following categories.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Based on the most recent analysis performed, the risk category of loans, by type and year of origination, at ~~March 31,~~June 30, 2022, is as follows.

March 31, 2022	2022		2021		2020		2019		2018			Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
June 30, 2022																				2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	106,730	$	288,567	$	202,242	$	150,844	$	141,302		$	215,915	$	427,111	$	1,374	$	1,534,085	$	229,399	$	278,359	$	210,424	$	133,787	$	125,997	$	206,294	$	447,861	$	1,318	$	1,633,439
Special mention		—		125		—		—		13			8,648		—		—		8,786		294		220		—		—		—		576		—		—		1,090
Substandard		—		4,719		398		213		75			3,247		611		—		9,263		—		3,145		369		173		73		4,170		609		—		8,539
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	106,730	$	293,411	$	202,640	$	151,057	$	141,390		$	227,810	$	427,722	$	1,374	$	1,552,134	$	229,693	$	281,724	$	210,793	$	133,960	$	126,070	$	211,040	$	448,470	$	1,318	$	1,643,068
Commercial and industrial
Risk rating
Pass	$	85,018	$	146,488	$	91,722	$	54,953	$	9,078		$	18,481	$	190,669	$	2,094	$	598,503	$	113,838	$	108,123	$	79,707	$	46,546	$	8,109	$	14,022	$	177,644	$	2,027	$	550,016
Special mention		—		—		—		—		1,306			4,533		—		—		5,839		—		—		—		—		693		3,775		—		—		4,468
Substandard		21		4,214		2,920		10,178		1,544	��		928		5,034		—		24,839		148		4,215		2,913		10,162		1,480		831		4,666		—		24,415
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	85,039	$	150,702	$	94,642	$	65,131	$	11,928		$	23,942	$	195,703	$	2,094	$	629,181	$	113,986	$	112,338	$	82,620	$	56,708	$	10,282	$	18,628	$	182,311	$	2,026	$	578,899
Residential real estate
Risk rating
Pass	$	4,913	$	324,960	$	23,114	$	18,512	$	57,899		$	127,000	$	52,613	$	191	$	609,202	$	17,504	$	311,614	$	6,352	$	16,170	$	52,637	$	115,386	$	56,027	$	152	$	575,842
Special mention		—		—		—		—		—			24		—		—		24		—		—		—		—		—		24		—		—		24
Substandard		—		—		104		47		227			4,250		74		—		4,702		—		—		52		47		223		2,673		75		—		3,070
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total residential real estate	$	4,913	$	324,960	$	23,218	$	18,559	$	58,126		$	131,274	$	52,687	$	191	$	613,928	$	17,504	$	311,614	$	6,404	$	16,217	$	52,860	$	118,083	$	56,102	$	152	$	578,936
Agricultural real estate
Risk rating
Pass	$	5,912	$	34,360	$	32,119	$	16,500	$	10,971		$	33,770	$	52,300	$	300	$	186,232	$	18,490	$	24,251	$	30,299	$	20,000	$	9,169	$	23,511	$	67,465	$	300	$	193,485
Special mention		430		—		—		—		—			486		32		—		948		—		—		—		—		—		486		22		—		508
Substandard		140		1,789		80		6,026		475			1,842		1,312		—		11,664		107		1,519		—		117		467		1,292		443		—		3,945
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	6,482	$	36,149	$	32,199	$	22,526	$	11,446		$	36,098	$	53,644	$	300	$	198,844	$	18,597	$	25,770	$	30,299	$	20,117	$	9,636	$	25,289	$	67,930	$	300	$	197,938
Agricultural
Risk rating
Pass	$	8,584	$	16,415	$	15,857	$	5,234	$	3,284		$	4,059	$	85,600	$	75	$	139,108	$	14,040	$	14,438	$	13,361	$	3,702	$	2,641	$	2,575	$	65,845	$	75	$	116,677
Special mention		—		—		—		86		32			430		—		—		548		—		—		—		86		32		375		—		—		493
Substandard		—		3,598		2,219		2,108		1,106			307		1,083		—		10,421		—		1,724		1,925		2,086		388		251		1,209		—		7,583
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total agricultural	$	8,584	$	20,013	$	18,076	$	7,428	$	4,422		$	4,796	$	86,683	$	75	$	150,077	$	14,040	$	16,162	$	15,286	$	5,874	$	3,061	$	3,201	$	67,054	$	75	$	124,753
Consumer
Risk rating
Pass	$	29,616	$	27,029	$	12,902	$	5,867	$	2,871		$	5,013	$	14,755	$	1	$	98,054	$	39,242	$	23,191	$	11,006	$	4,740	$	2,264	$	4,234	$	14,907	$	1	$	99,585
Special mention		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		22		30		136		112		19			40		—		—		359		—		41		66		96		25		39		—		—		267
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total consumer	$	29,638	$	27,059	$	13,038	$	5,979	$	2,890		$	5,053	$	14,755	$	1	$	98,413	$	39,242	$	23,232	$	11,072	$	4,836	$	2,289	$	4,273	$	14,907	$	1	$	99,852
Total loans
Risk rating
Pass	$	240,773	$	837,819	$	377,956	$	251,910	$	225,405		$	404,238	$	823,048	$	4,035	$	3,165,184	$	432,513	$	759,976	$	351,149	$	224,945	$	200,817	$	366,022	$	829,749	$	3,873	$	3,169,044
Special mention		430		125		—		86		1,351			14,121		32		—		16,145		294		220		—		86		725		5,236		22		—		6,583
Substandard		183		14,350		5,857		18,684		3,446			10,614		8,114		—		61,248		255		10,644		5,325		12,681		2,656		9,256		7,002		—		47,819
Doubtful		—		—		—		—		—			—		—		—		—		—		—		—		—		—		—		—		—		—
Total loans	$	241,386	$	852,294	$	383,813	$	270,680	$	230,202		$	428,973	$	831,194	$	4,035	$	3,242,577	$	433,062	$	770,840	$	356,474	$	237,712	$	204,198	$	380,514	$	836,773	$	3,873	$	3,223,446

Based on the analysis performed at December 31, 2021, the risk category of loans, by type and year of origination is as follows.

December 31, 2021	2021		2020		2019		2018		2017		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	301,947	$	212,444	$	159,374	$	134,465	$	72,249	$	164,363	$	409,109	$	594	$	1,454,545
Special mention		126		885		—		11,817		1,168		8,705		—		—		22,701
Substandard		1,687		401		145		77		828		5,764		—		—		8,902
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	303,760	$	213,730	$	159,519	$	146,359	$	74,245	$	178,832	$	409,109	$	594	$	1,486,148
Commercial and industrial
Risk rating
Pass	$	170,263	$	100,457	$	57,955	$	11,019	$	17,327	$	8,855	$	155,181	$	9,726	$	530,783
Special mention		19		—		1,958		1,482		284		5,750		—		—		9,493
Substandard		4,200		5,410		10,238		1,417		444		43		5,469		—		27,221
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	174,482	$	105,867	$	70,151	$	13,918	$	18,055	$	14,648	$	160,650	$	9,726	$	567,497
Residential real estate
Risk rating
Pass	$	336,775	$	24,633	$	22,520	$	60,461	$	34,453	$	102,363	$	51,584	$	184	$	632,973
Special mention		—		—		—		—		—		25		—		—		25
Substandard		—		79		48		159		1,909		2,740		154		—		5,089
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	336,775	$	24,712	$	22,568	$	60,620	$	36,362	$	105,128	$	51,738	$	184	$	638,087
Agricultural real estate
Risk rating
Pass	$	38,412	$	36,667	$	18,442	$	12,142	$	14,432	$	21,792	$	42,541	$	—	$	184,428
Special mention		682		—		—		—		40		456		32		—		1,210
Substandard		1,705		206		6,020		592		2,530		554		1,085		—		12,692
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	40,799	$	36,873	$	24,462	$	12,734	$	17,002	$	22,802	$	43,658	$	—	$	198,330
Agricultural
Risk rating
Pass	$	27,637	$	17,393	$	6,391	$	2,399	$	2,930	$	1,593	$	93,982	$	172	$	152,497
Special mention		—		—		90		1,299		—		645		—		—		2,034
Substandard		3,456		2,112		1,414		1,651		137		1,164		2,510		—		12,444
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	31,093	$	19,505	$	7,895	$	5,349	$	3,067	$	3,402	$	96,492	$	172	$	166,975
Consumer
Risk rating
Pass	$	40,692	$	15,171	$	7,186	$	3,640	$	2,228	$	3,551	$	25,799	$	1	$	98,268
Special mention		—		—		—		—		—		—		—		—		—
Substandard		6		154		94		15		24		29		—		—		322
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	40,698	$	15,325	$	7,280	$	3,655	$	2,252	$	3,580	$	25,799	$	1	$	98,590
Total loans
Risk rating
Pass	$	915,726	$	406,765	$	271,868	$	224,126	$	143,619	$	302,517	$	778,196	$	10,677	$	3,053,494
Special mention		827		885		2,048		14,598		1,492		15,581		32		—		35,463
Substandard		11,054		8,362		17,959		3,911		5,872		10,294		9,218		—		66,670
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	927,607	$	416,012	$	291,875	$	242,635	$	150,983	$	328,392	$	787,446	$	10,677	$	3,155,627

Consistent with accounting and regulatory guidance, the Company recognizes a TDR when the Company, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to the borrower that would not normally be considered. Regardless of the form of concession granted, the Company’s objective in offering a TDR is to increase the probability of repayment of the borrower’s loans.

The following table summarizes the Company’s TDRs by accrual status at ~~March 31,~~June 30, 2022, and December 31, 2021. The allowance for credit losses on nonaccrual loans represents specific loan reserves, while the allowance on accrual loans represents collectively evaluated estimated losses.

March 31, 2022	Nonaccrual		Related Allowance for Credit Losses		Accrual		Related Allowance for Credit Losses		Total TDR Loan Balance		Total Related Allowance for Credit Losses
June 30, 2022													Nonaccrual		Related Allowance for Credit Losses		Accrual		Related Allowance for Credit Losses		Total TDR Loan Balance		Total Related Allowance for Credit Losses
Commercial real estate	$	2,567	$	810	$	2,976	$	104	$	5,543	$	914	$	4,045	$	688	$	4,226	$	251	$	8,271	$	939
Commercial and industrial		2,332		327		1,839		—		4,171		327		2,321		109		1,813		223		4,134		332
Residential real estate		1,529		106		—		—		1,529		106		—		—		—		—		—		—
Agricultural real estate		1,842		471		—		—		1,842		471		1,181		602		1,650		284		2,831		886
Agricultural		1,752		752		1,693		344		3,445		1,096		2,956		189		—		—		2,956		189
Total troubled debt restructurings	$	10,022	$	2,466	$	6,508	$	448	$	16,530	$	2,914	$	10,503	$	1,588	$	7,689	$	758	$	18,192	$	2,346

At ~~March 31,~~June 30, 2022, and December 31, 2021, there were 0 commitments to lend additional amounts on these loans.

During the three ~~months ended March 31,~~and six month periods ending June 30, 2022, there ~~was~~were a total of ~~$6.3 million~~$2,412 and $8,743 in loan modifications considered to be troubled debt restructurings. There were 0 loan modifications considered to be troubled debt restructurings that occurred during the ~~three-month period~~three or six month periods ended ~~March 31,~~June 30, 2021. There was 0$15 in interest income recognized on loans modified as TDRs during the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2022.

The Company had $752 thousand in agricultural loans that subsequently defaulted on their modified terms within the twelve months preceding ~~March 31,~~June 30, 2022, as compared to 0 loans at ~~March 31,~~June 30, 2021. Default is determined at 90 or more days past due, charge-off, or foreclosure.

As of ~~March 31,~~June 30, 2022, the Company had 0 loans deferred as compared to December 31, 2021, with 20 deferrals of either the full loan payment or the principal component of the loan payment on outstanding loan balances of $36.3 million in connection with the COVID-19 relief provided by the CARES Act. These deferrals were not considered troubled debt restructurings based on the CARES Act, Consolidated Appropriations Act (“CAA”), or regulatory guidance.

The following table lists loans included in the payment deferral program under the CARES Act by deferment type and category at December 31, 2021. There were no CARES Act deferred loans at ~~March 31,~~June 30, 2022.

The classification status of loans participating in the payment deferral program at December 31, 2021, is listed below. There were no such deferrals at ~~March 31,~~June 30, 2022.

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit loss expense recognized within other non-interest expense on the consolidated statements of income and included in other liabilities on the consolidated balance sheets. The estimated credit loss includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The estimate of expected credit loss is based on the historical loss rate for the class of loan the commitments would be classified as if funded.

The following table lists allowance for credit losses on off-balance-sheet credit exposures as of ~~March 31,~~June 30, 2022, and December 31, 2021.

	Allowance for Credit Losses					Allowance for Credit Losses
		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
Commercial real estate		$	450	$	484		$	402	$	484
Commercial and industrial			417		1,323			742		1,323
Residential real estate			15		16			49		16
Agricultural			4		3			4		3
Consumer			343		397			321		397
Total allowance for credit losses		$	1,229	$	2,223		$	1,518	$	2,223

The Company is exposed to interest-rate risk primarily from the effect of interest rate changes on its interest-earning assets and its sources of funding these assets. The Company will periodically enter into interest rate swaps or interest rate caps/floors to manage certain interest rate risk exposure.

The Company periodically enters into interest rate swaps to hedge the fair value of certain commercial real estate loans. These transactions are designated as fair value hedges. In this type of transaction, the Company typically receives from the counterparty a variable-rate cash flow based on the one-month London Interbank Offered Rate (“LIBOR”) plus a spread to this index and pays a fixed-rate cash flow equal to the customer loan rate. At ~~March 31,~~June 30, 2022, the portfolio of interest rate swaps had a weighted average maturity of ~~8.6~~9.03 years, a weighted average pay rate of ~~4.63%~~4.54% and a weighted average rate received of ~~3.17%~~3.01%. At December 31, 2021, the portfolio of interest rate swaps had a weighted average maturity of 8.8 years, a weighted average pay rate of 4.63% and a weighted average rate received of 3.11%.

The Company ~~acquired a swap agreement designed~~has entered into cash flow hedges to ~~offset~~hedge future cash flows related to subordinated notes interest expense ~~of acquired subordinated debentures. This agreement is~~and prime rate adjustable rate loans interest income. These agreements are designated as a cash flow ~~hedge~~hedges and isare marked to market through other comprehensive income. At March 31, 2022, this interest rate swap had a maturity of 13.5 years, a pay rate of 2.81% and a rate received of 2.00%. At December 31, 2021, this interest rate swap had a maturity of 13.7 years, a pay rate of 2.81% and a rate received of 1.92%.

The Company periodically enters into interest rate swaps with our borrowers and simultaneously enters into swaps with a counterparty with offsetting terms for the purpose of providing our borrowers long-term fixed rate loans, in addition to stand alone interest-rate swaps designed to offset the economic impact of fixed rate loans. Neither swap is designated as a hedge, and both are marked to market through earnings. At ~~March 31,~~June 30, 2022, this portfolio of interest rate swaps had a weighted average maturity of ~~7.8~~8.4 years, weighted average pay rate of ~~4.37%~~4.74% and a weighted average rate received of ~~4.18%~~4.67%. At December 31, 2021, this portfolio of interest rate swaps had a weighted average maturity of 8.2 years, weighted average pay rate of 4.35% and weighted average rate received of 4.16%.

The notional amount of a derivative contract is a factor in determining periodic interest payments or cash flows received or paid. The notional amount of derivatives serves as a level of involvement in various types of derivatives. The notional amount does not represent the Company’s overall exposure to credit or market risk, generally, the exposure is significantly smaller.

The following table shows the notional balances and fair values (including net accrued interest) of the derivatives outstanding by derivative type at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022							December 31, 2021							June 30, 2022								December 31, 2021
	Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	$	26,164	$	1,116	$	—		$	26,663	$	—	$	369		$	22,107	$	1,694		$	—		$	26,663	$	—	$	369
Derivatives designated as cash flow hedges:
Interest rate swaps		7,500		1,184		—		$	7,500	$	602	$	—			157,500		1,733			1,549			7,500		602		—
Total derivatives designated as hedging relationships		33,664		2,300		—			34,163		602		369			179,607		3,427			1,549			34,163		602		369
Derivatives not designated as hedging instruments:
Interest rate swaps		146,849		1,419		1,499			150,780		4,419		5,184			150,375		2,379			2,098			150,780		4,419		5,184
Total derivatives not designated as hedging instruments		146,849		1,419		1,499			150,780		4,419		5,184			150,375		2,379			2,098			150,780		4,419		5,184
Total	$	180,513		3,719		1,499		$	184,943		5,021		5,553		$	329,982		5,806			3,647		$	184,943		5,021		5,553
Cash collateral				—		(4,311	)				—		(8,441	)				—			2,162					—		(8,441	)
Netting adjustments				3,589		3,589					2,994		2,994					(2,112	)		(2,112	)				2,994		2,994
Net amount presented in Balance Sheet			$	7,308	$	777				$	8,015	$	106				$	3,694		$	3,697				$	8,015	$	106

The table below lists designated and qualifying hedged items in fair value hedges at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022							December 31, 2021						June 30, 2022							December 31, 2021
	Carrying Amount		Hedging Fair Value Adjustment			Fair Value Adjustments on Discontinued Hedges		Carrying Amount		Hedging Fair Value Adjustment		Fair Value Adjustments on Discontinued Hedges		Carrying Amount		Hedging Fair Value Adjustment			Fair Value Adjustments on Discontinued Hedges		Carrying Amount		Hedging Fair Value Adjustment		Fair Value Adjustments on Discontinued Hedges
Commercial real estate loans	$	26,161	$	(1,145	)	$	—	$	26,661	$	213	$	—	$	20,270	$	(1,764	)	$	—	$	26,661	$	213	$	—
Total	$	26,161	$	(1,145	)	$	—	$	26,661	$	213	$	—	$	20,270	$	(1,764	)	$	—	$	26,661	$	213	$	—

The Company reports hedging derivative gains (losses) as adjustments to loan interest income along with the related net interest settlements and the derivative gains (losses) and net interest settlements for economic derivatives are reported in other income. For the three ~~months period~~and six month periods ended ~~March 31,~~June 30, 2022 and 2021, the Company recorded net gains (losses) on derivatives and hedging activities.

	Three Months Ended March 31,				Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021		2022		2021			2022		2021
Derivatives designated as hedging instruments:
Interest rate swaps	$	38	$	0	$	64	$	0		$	102	$	0
Total net gain (loss) related to derivatives designated as hedging instruments		38		0		64		0			102		0
Derivatives designated as cash flow hedges:
Interest rate swaps		0		0		0		0			0		0
Total net gain (loss) related to derivatives designated as cash flow hedges		0		0		0		0			0		0
Total net gains (losses) related to hedging relationships		38		0		64		0			102		0
Derivatives not designated as hedging instruments:
Economic hedges:
Interest rate swaps		675		350		467		(105	)		1,142		245
Total net gains (losses) related to derivatives not designated as hedging instruments		675		350		467		(105	)		1,142		245
Net gains (losses) on derivatives and hedging activities	$	713	$	350	$	531	$	(105	)	$	1,244	$	245

The following table shows the recorded net gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Company’s net interest income for the ~~three-month~~three month periods ended ~~March 31,~~June 30, 2022 and 2021.

	March 31, 2022										June 30, 2022
	Gain/(Loss) on Derivatives		Gain/(Loss) on Hedged Items			Net Fair Value Hedge Gain/(Loss)		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives		Gain/(Loss) on Hedged Items			Net Fair Value Hedge Gain/(Loss)		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	1,396	$	(1,358	)	$	38	$	(157	)	$	683	$	(619	)	$	64	$	629
Total	$	1,396	$	(1,358	)	$	38	$	(157	)	$	683	$	(619	)	$	64	$	629

	March 31, 2021										June 30, 2021
	Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Gain/(Loss)		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Gain/(Loss)		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	(204	)	$	204	$	0	$	(28	)	$	(171	)	$	171	$	0	$	(56	)
Total	$	(204	)	$	204	$	0	$	(28	)	$	(171	)	$	171	$	0	$	(56	)

Right-of-use asset and lease obligations by type of property for the periods ended ~~March 31,~~June 30, 2022, and December 31, 2021, are listed below.

	March 31, 2022									June 30, 2022
Operating Leases	Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate			Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate
Land and building leases	$	5,805	$	5,773		13.3		2.31	%	$	5,627	$	5,669		16.0		2.79	%
Total operating leases	$	5,805	$	5,773		13.3		2.31	%	$	5,627	$	5,669		16.0		2.79	%

Right-of-use-asset reported in premise and equipment										$	3,437
Right-of-use-asset not in operation, reported in other real estate owned											2,190
Total										$	5,627

During the quarter ended June 30, 2022, one of our bank locations became non-operational. The right-of-use-asset for this location was transferred to other real estate owned, the weighted average lease term is 8.8 years.

Operating lease costs for the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2022 and 2021, are listed below.

	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2022		2021
Operating lease cost	$	208	$	125	$	191	$	126	$	399	$	251
Short-term lease cost		—		—		—		—		—		—
Variable lease cost		12		10		5		3		27		13
Total operating lease cost	$	220	$	135	$	196	$	129	$	426	$	264

There were no sales and leaseback transactions, leverage leases, lease transactions with related parties or leases that had not yet commenced during the three ~~months~~or six month periods ended ~~March 31,~~June 30, 2022.

A maturity analysis of operating lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is listed below.

Lease Payments	March 31, 2022			June 30, 2022
Due in one year or less	$	748		$	794
Due after one year through two years		652			607
Due after two years through three years		553			554
Due after three years through four years		556			555
Due after four years through five years		553			553
Thereafter		3,869			3,731
Total undiscounted cash flows		6,931			6,794
Discount on cash flows		(1,158	)		(1,125	)
Total operating lease liability	$	5,773		$	5,669

Federal funds purchased and retail repurchase agreements as of ~~March 31,~~June 30, 2022, and December 31, 2021, are listed below.

March 31,

2022

December 31,

2021

June 30,

2022

December 31,

2021

Federal funds purchased

Retail repurchase agreements

48,199

56,006

52,750

56,006

Securities sold under agreements to repurchase (retail repurchase agreements) consist of obligations of the Company to other parties. The obligations are secured by residential mortgage-backed securities held by the Company with a fair value of ~~$56,714~~$69,158 and $55,605 at ~~March 31,~~June 30, 2022, and December 31, 2021. The agreements are on a day-to-day basis and can be terminated on demand.

The following table presents the borrowing usage and interest rate information for federal funds purchased and retail repurchase agreements at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Average daily balance during the period	$	54,209		$	45,819		$	57,217		$	45,819
Average interest rate during the period		0.25	%		0.23	%		0.26	%		0.23	%
Maximum month-end balance year-to-date	$	52,117		$	56,006		$	64,323		$	56,006
Weighted average interest rate at period-end		0.25	%		0.23	%		0.32	%		0.23	%

Federal Home Loan Bank advances as of ~~March 31,~~June 30, 2022, are as follows.

	March 31, 2022		Weighted Average Rate	Weighted Average Term in Years	June 30, 2022		Weighted Average Rate			Weighted Average Term in Years
Federal Home Loan Bank line of credit advances	$	20,000	0.47%	—	$	—		—		—
Federal Home Loan Bank fixed-rate term advances		30,000	0.45%	—		80,000		1.50	%	—
Total Federal Home Loan Bank advances	$	50,000			$	80,000

There were 0 Federal Home Loan Bank ~~line of credit~~ advances outstanding as of December 31, 2021.

At ~~March 31,~~June 30, 2022, and December 31, 2021, the Company had undisbursed advance commitments (letters of credit) with the Federal Home Loan Bank of ~~$14,575~~$17,455 and $17,025. These letters of credit were obtained in lieu of pledging securities to secure public fund deposits that are over the FDIC insurance limit.

The advances, Mortgage Partnership Finance credit enhancement obligations and letters of credit were collateralized by certain qualifying loans of ~~$520,928~~$605,295 and securities of ~~$13,598~~$82,007 for a total of ~~$534,526~~$687,302 at ~~March 31,~~June 30, 2022, and qualifying loans of $694,892 and securities of $15,409 for a total of $710,302 at December 31, 2021. Based on this collateral and the Company’s holdings of Federal Home Loan Bank stock, the Company was eligible to borrow an additional ~~$467,904~~$587,800 and $691,149 at ~~March 31,~~June 30, 2022, and December 31, 2021.

At ~~March 31,~~June 30, 2022, to support the ~~$401,841~~$366,864 borrowing capacity from the Federal Reserve Bank, the Company has pledged loans with an outstanding balance of ~~$472,655~~$399,753 and securities with a fair value of ~~$38,850.~~$38,265. NaN borrowings were secured from this facility at periods ended ~~March 31,~~June 30, 2022, or December 31, 2021.

The Company entered into an agreement with an unaffiliated financial institution that provided for a maximum borrowing facility of $40,000, secured by the Company’s stock in Equity Bank. The loan was renewed and amended on June 30, 2020, with a maturity date of August 15, 2021, and was extended to February 11, 2022. Each draw of funds on the facility will create a separate note that is repayable over a term of five years. Each note will bear interest at the greater of a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.50%. Accrued interest and principal payments will be due quarterly with one final payment of unpaid principal and interest due at the end of the five-year term of each separate note. The Company is also required to pay an unused commitment fee in an amount equal to 20 basis points per annum on the unused portion of the maximum borrowing facility.

The loan was renewed and amended on February 11, 2022, with a new maturity date of February 11, 2023. With this amendment, the maximum borrowing amount was decreased from $40,000 to $25,000. Each note will bear interest at the greater of a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.25%. The Company is also required to pay an unused commitment fee in an amount equal to 20 basis points per annum on the unused portion of the maximum borrowing facility due on the maturity date of the renewal.

There were 0 outstanding principal balances on the bank stock loan at ~~March 31,~~June 30, 2022, or December 31, 2021.

The terms of the borrowing facility require the Company and Equity Bank to maintain minimum capital ratios and other covenants. In the event of default, the lender has the option to declare all outstanding balances immediately due. The Company believes it is in compliance with the terms of the borrowing facility and has not been otherwise notified of noncompliance.

Subordinated debt as of ~~March 31,~~June 30, 2022, and December 31, 2021, are listed below.

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Subordinated debentures	$	23,006	$	22,924	$	23,088	$	22,924
Subordinated notes		73,004		72,961		73,047		72,961
Total	$	96,010	$	95,885	$	96,135	$	95,885

In conjunction with prior acquisitions, the Company assumed certain subordinated debentures owed to special purpose unconsolidated subsidiaries that are controlled by the Company. These subordinated debentures have the same terms as the trust preferred securities issued by the special purpose unconsolidated subsidiaries.

FCB Capital Trust II (“CTII”): The trust preferred securities issued by CTII accrue and pay distributions quarterly at three-month LIBOR plus 2.00% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on April 15, 2035, or upon earlier redemption.

FCB Capital Trust III (“CTIII”): The trust preferred securities issued by CTIII accrue and pay distributions quarterly at three-month LIBOR plus 1.89% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on June 15, 2037, or upon earlier redemption.

Community First (AR) Statutory Trust I (“CFSTI”): The trust preferred securities issued by CFSTI accrue and pay distributions quarterly at three-month LIBOR plus 3.25% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on December 26, 2032, or upon earlier redemption.

American State Bank Statutory Trust I (“ASBSTI”): The trust preferred securities issued by ASBSTI accrue and pay distributions quarterly at three-month LIBOR plus 1.80% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on September 15, 2035, or upon earlier redemption.

Subordinated debentures as of ~~March 31,~~June 30, 2022, and December 31, 2021, are listed below.

	March 31, 2022			Weighted Average Rate			Weighted Average Term in Years		June 30, 2022			Weighted Average Rate			Weighted Average Term in Years
CTII subordinated debentures	$	10,310			2.24	%		13.0	$	10,310			3.04	%		12.8
CTIII subordinated debentures		5,155			2.72	%		15.2		5,155			2.72	%		15.0
CFSTI subordinated debentures		5,155			4.22	%		10.7		5,155			4.22	%		10.5
ASBI subordinated debentures		7,732			2.63	%		13.5		7,732			2.63	%		13.2
Total contractual balance		28,352								28,352
Fair market value adjustments		(5,346	)							(5,264	)
Total subordinated debentures	$	23,006							$	23,088

On June 29, 2020, the Company entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and institutional accredited investors pursuant to which the Company issued and sold $42,000 in aggregate principal amount of its 7.00% Fixed-to-Floating Rate Subordinated notes due 2030. The notes were issued under an Indenture, dated as of June 29, 2020 (the “Indenture”), by and between the Company and UMB Bank, N.A., as trustee. The notes will mature on June 30, 2030. From June 29, 2020, through June 29, 2025, the Company will pay interest on the notes semi-annually in arrears on June 30 and December 30 of each year, commencing on December 30, 2020, at a fixed interest rate of 7.00%. Beginning June 30, 2025, the notes convert to a floating interest rate, to be reset quarterly, equal to the then-current Three-Month Term SOFR, as defined in the Indenture, plus 688 basis points. Interest payments during the floating-rate period will be paid quarterly in arrears on March 30, June 30, September 30 and December 30 of each year, commencing on September 30, 2025. On July 23, 2020, the Company closed on an additional $33,000 of subordinated notes with the same terms as the June 29, 2020, issue.

	March 31, 2022			Weighted Average Rate			Weighted Average Term in Years		June 30, 2022			Weighted Average Rate			Weighted Average Term in Years
Subordinated notes	$	75,000			7.00	%		8.3	$	75,000			7.00	%		8.0
Total principal outstanding		75,000								75,000
Debt issuance cost		(1,996	)							(1,953	)
Total subordinated notes	$	73,004							$	73,047

Future principal repayments of the ~~March 31,~~June 30, 2022, outstanding balances are as follows.

	Retail Repurchase Agreements		FHLB Advances		Subordinated Debentures		Subordinated Notes		Total		Retail Repurchase Agreements		FHLB Advances		Subordinated Debentures		Subordinated Notes		Total
Due in one year or less	$	48,199	$	50,000	$	—	$	—	$	98,199	$	52,750	$	80,000	$	—	$	—	$	132,750
Due after one year through two years		—		—		—		—		—		—		—		—		—		—
Due after two years through three years		—		—		—		—		—		—		—		—		—		—
Due after three years through four years		—		—		—		—		—		—		—		—		—		—
Due after four years through five years		—		—		—		—		—		—		—		—		—		—
Thereafter		—		—		28,352		75,000		103,352		—		—		28,352		75,000		103,352
Total	$	48,199	$	50,000	$	28,352	$	75,000	$	201,551	$	52,750	$	80,000	$	28,352	$	75,000	$	236,102

The Company’s articles of incorporation provide for the issuance of shares of preferred stock. At ~~March 31,~~June 30, 2022, and December 31, 2021, there was 0 preferred stock outstanding.

The Company’s articles of incorporation provide for the issuance of 45,000,000 shares of Class A voting common stock (“Class A common stock”) and 5,000,000 shares of Class B non-voting common stock (“Class B common stock”), both of which have a par value of $0.01 per share.

The following table presents shares that were issued, held in treasury or were outstanding at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Class A common stock – issued		20,156,293			20,077,059			20,163,989			20,077,059
Class A common stock – held in treasury		(3,701,327	)		(3,316,944	)		(4,057,171	)		(3,316,944	)
Class A common stock – outstanding		16,454,966			16,760,115			16,106,818			16,760,115
Class B common stock – issued		234,903			234,903			234,903			234,903
Class B common stock – held in treasury		(234,903	)		(234,903	)		(234,903	)		(234,903	)
Class B common stock – outstanding		0			0			0			0

In 2019, the Company’s Board of Directors adopted the Equity Bancshares, Inc. 2019 Employee Stock Purchase Plan (“ESPP”). The ESPP enables eligible employees to purchase the Company’s common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each offering period. ESPP compensation expense of ~~$36~~$42 and ~~$25~~

$78 was recorded for the three ~~months~~and six month periods ended ~~March 31, 2022,~~June 30, 2022. ESPP compensation expense of $30 and ~~March 31, 2021. The~~$55 was recorded for the three and six month periods ended June 30, 2021.The following table presents the offering periods and costs associated with this program during the reporting period.

In September of 2020, the Company’s Board of Directors authorized the repurchase of up to 800,000 shares of the Company’s outstanding common stock, from time to time, beginning October 30, 2020, and concluding October 29, 2021. The repurchase program does not obligate the Company to acquire a specific dollar amount or number of shares and it could be extended, modified or discontinued at any time without notice. Under this program, during the years ended December 31, 2021, and 2020, the Company repurchased a total of 679,557 shares of the Company’s outstanding common stock at an average price paid of $24.12 per share.

In September of 2021, the Company’s Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock, from time to time, beginning October 29, 2021, and concluding October 28, 2022. The repurchase program ~~does~~did not obligate the Company to acquire a specific dollar amount or number of shares and it may be extended, modified or discontinued at any time without notice. Under this program, during the year ended December 31, 2021, the Company repurchased a total of 132,873 shares of the Company’s outstanding common stock at an average price paid of $32.99 per share. During the ~~three~~six months ended ~~March 31,~~June 30, 2022, the Company repurchased a total of ~~384,383~~740,227 shares of the Company’s outstanding common stock at an average price paid of ~~$32.21~~$31.89 per share. At ~~March 31,~~June 30, 2022, there are ~~482,744~~126,900 shares remaining available for repurchase under the program.

At ~~March 31,~~June 30, 2022, and December 31, 2021, accumulated other comprehensive income (loss) consisted of (i) the after-tax effect of unrealized gains (losses) on available-for-sale securities and (ii) unrealized gains (losses) on cash flow hedges.

Components of accumulated other comprehensive income as of ~~March 31,~~June 30, 2022, and December 31, 2021, are listed below.

	Available-for- Sale Securities			Cash Flow Hedges			Accumulated Other Comprehensive Income (Loss)			Available-for- Sale Securities			Cash Flow Hedges			Accumulated Other Comprehensive Income (Loss)
March 31, 2022
June 30, 2022
Net unrealized or unamortized gains (losses)	$	(66,991	)	$	540		$	(66,451	)	$	(102,353	)	$	(525	)	$	(102,878	)
Tax effect		16,574			(135	)		16,439			25,322			130			25,452
	$	(50,417	)	$	405		$	(50,012	)	$	(77,031	)	$	(395	)	$	(77,426	)
December 31, 2021
Net unrealized or unamortized gains (losses)	$	2,427		$	(58	)	$	2,369		$	2,427		$	(58	)	$	2,369
Tax effect		(607	)		14		$	(593	)		(607	)		14		$	(593	)
	$	1,820		$	(44	)	$	1,776		$	1,820		$	(44	)	$	1,776

Banks and bank holding companies (on a consolidated basis) are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The Basel III rules require banks to maintain a Common Equity Tier 1 capital ratio of 6.5%, a total Tier 1 capital ratio of 8%, a total capital ratio of 10% and a leverage ratio of 5% to be deemed “well capitalized” for purposes of certain rules and prompt corrective action requirements. The risk-based ratios include a “capital conservation buffer” of 2.5% which can limit certain activities of an institution, including payment of dividends, share repurchases and discretionary bonuses to executive officers, if its capital level is below the buffer amount. Management believes as of ~~March 31,~~June 30, 2022, the Company and Bank meet all capital adequacy requirements to which they are subject.

condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as are asset growth and acquisitions, and capital restoration plans are required.

As of ~~March 31,~~June 30, 2022, the most recent notifications from the federal regulatory agencies categorized Equity Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Equity Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed Equity Bank’s category.

The Company’s and Equity Bank’s capital amounts and ratios at ~~March 31,~~June 30, 2022, and December 31, 2021, are presented in the table below. Ratios provided for Equity Bancshares, Inc. represent the ratios of the Company on a consolidated basis.

	Actual					Minimum Required for Capital Adequacy Under Basel III					To Be Well Capitalized Under Prompt Corrective Provisions					Actual					Minimum Required for Capital Adequacy Under Basel III					To Be Well Capitalized Under Prompt Corrective Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2022
June 30, 2022
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	576,173		15.88	%	$	381,017		10.50	%	$	N/A	N/A			$	582,458		15.97	%	$	382,980		10.50	%	$	N/A	N/A
Equity Bank		549,179		15.15	%		380,516		10.50	%		362,396		10.00	%		551,436		15.14	%		382,540		10.50	%		364,324		10.00	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		457,767		12.62	%		308,442		8.50	%	N/A		N/A				463,767		12.71	%		310,031		8.50	%	N/A		N/A
Equity Bank		503,836		13.90	%		308,037		8.50	%		289,917		8.00	%		505,843		13.88	%		309,675		8.50	%		291,459		8.00	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		434,762		11.98	%		254,011		7.00	%	N/A		N/A				440,679		12.08	%		255,320		7.00	%	N/A		N/A
Equity Bank		503,836		13.90	%		253,678		7.00	%		235,558		6.50	%		505,843		13.88	%		255,027		7.00	%		236,810		6.50	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		457,767		9.06	%		202,096		4.00	%	N/A		N/A				463,767		9.11	%		203,674		4.00	%	N/A		N/A
Equity Bank		503,836		9.98	%		201,890		4.00	%		252,362		5.00	%		505,843		9.94	%		203,462		4.00	%		254,328		5.00	%
December 31, 2021
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	571,514		15.96	%	$	376,013		10.50	%	$	N/A	N/A			$	571,514		15.96	%	$	376,013		10.50	%	$	N/A	N/A
Equity Bank		546,503		15.28	%		375,646		10.50	%		357,758		10.00	%		546,503		15.28	%		375,646		10.50	%		357,758		10.00	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		453,718		12.67	%		304,391		8.50	%	N/A		N/A				453,718		12.67	%		304,391		8.50	%	N/A		N/A
Equity Bank		501,711		14.02	%		304,094		8.50	%		286,206		8.00	%		501,711		14.02	%		304,094		8.50	%		286,206		8.00	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		430,794		12.03	%		250,675		7.00	%	N/A		N/A				430,794		12.03	%		250,675		7.00	%	N/A		N/A
Equity Bank		501,711		14.02	%		250,430		7.00	%		232,543		6.50	%		501,711		14.02	%		250,430		7.00	%		232,543		6.50	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		453,718		9.09	%		199,563		4.00	%	N/A		N/A				453,718		9.09	%		199,563		4.00	%	N/A		N/A
Equity Bank		501,711		10.07	%		199,381		4.00	%		249,226		5.00	%		501,711		10.07	%		199,381		4.00	%		249,226		5.00	%

Equity Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.

The following table presents earnings per share for the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2022, and 2021.

	Three months ended				Three months ended				Six months ended
	March 31, 2022		March 31, 2021		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Basic:
Net income (loss) allocable to common stockholders	$	15,650	$	15,075	$	15,259	$	15,166	$	30,909	$	30,241
Weighted average common shares outstanding		16,647,851		14,455,986		16,106,643		14,355,310		16,426,098		14,405,370
Weighted average vested restricted stock units		4,705		8,305		40		1,648		2,437		4,958
Weighted average shares		16,652,556		14,464,291		16,106,683		14,356,958		16,428,535		14,410,328
Basic earnings (loss) per common share	$	0.94	$	1.04	$	0.95	$	1.06	$	1.88	$	2.10
Diluted:
Net income (loss) allocable to common stockholders	$	15,650	$	15,075	$	15,259	$	15,166	$	30,909	$	30,241
Weighted average common shares outstanding for:
Basic earnings per common share		16,652,556		14,464,291		16,106,683		14,356,958		16,428,535		14,410,328
Dilutive effects of the assumed exercise of stock options		102,763		168,846		95,010		207,322		98,886		188,083
Dilutive effects of the assumed vesting of restricted stock units		112,195		99,095		109,036		107,286		110,618		103,267
Dilutive effects of the assumed exercise of ESPP purchases		1,638		1,851		2,224		3,272		1,931		2,562
Average shares and dilutive potential common shares		16,869,152		14,734,083		16,312,953		14,674,838		16,639,970		14,704,240
Diluted earnings (loss) per common share	$	0.93	$	1.02	$	0.94	$	1.03	$	1.86	$	2.06

Average shares not included in the computation of diluted earnings per share because they were antidilutive are shown in the following table ~~as of March 31,~~for the three and six month periods ended June 30, 2022, and 2021.

	Three months ended				Three months ended				Six months ended
	March 31, 2022		March 31, 2021		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Stock options		201,758		305,493		281,669		301,709		205,750		302,165
Restricted stock units		3,505		34,446		3,505		7,575		3,505		8,799
Total antidilutive shares		205,263		339,939		285,174		309,284		209,255		310,964

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels of inputs that may be used to measure fair values are defined as follows.

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Level 1 inputs are considered to be the most transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (Level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or

of the underlying collateral. Although, in some instances, third party price indications may be available, limited trading activity can challenge the implied value of those quotations.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the hierarchy.

The fair values of securities available-for-sale and equity securities with readily determinable fair value are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as Level 1. For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities, generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company’s available-for-sale securities, including U.S. Government sponsored entity securities, residential mortgage-backed securities (all of which are issued or guaranteed by government sponsored agencies), corporate securities, Small Business Administration securities, and State and Political Subdivision securities are classified as Level 2.

The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate yield curves (Level 2 inputs) adjusted for credit risk attributable to the seller of the interest rate derivative. Cash collateral received from or delivered to a derivative counterparty is classified as Level 1.

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables as of ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022							June 30, 2022
	(Level 1)			(Level 2)		(Level 3)		(Level 1)			(Level 2)		(Level 3)
Assets:
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		$	115,235	$	—	$	—		$	111,393	$	—
U.S. Treasury securities		243,256			—		—		238,565			—		—
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—			596,515		—		—			558,472		—
Private label residential mortgage-backed securities		—			196,282		—		—			179,457		—
Corporate		—			56,339		—		—			55,043		—
Small Business Administration loan pools		—			15,273		—		—			14,311		—
State and political subdivisions		—			129,994		—		—			130,939		—
Derivative assets:
Derivative assets (included in other assets)		—			3,719		—		—			5,806		—
Cash collateral held by counterparty and netting adjustments		3,589			—		—		(2,112	)		—		—
Total derivative assets		3,589			3,719		—		(2,112	)		5,806		—
Other assets:
Equity securities with readily determinable fair value		605			—		—		573			—		—
Total other assets		605			—		—		573			—		—
Total assets	$	247,450		$	1,113,357	$	—	$	237,026		$	1,055,421	$	—
Liabilities:
Derivative liabilities:
Derivative liabilities (included in other liabilities)	$	—		$	1,499	$	—	$	—		$	3,647	$	—
Cash collateral held by counterparty and netting adjustments		(722	)		—		—		50			—		—
Total derivative liabilities		(722	)		1,499		—		50			3,647		—
Total liabilities	$	(722	)	$	1,499	$	—	$	50		$	3,647	$	—

There were 0 material transfers between levels during the ~~three~~six months ended ~~March 31,~~June 30, 2022, or the year ended December 31, 2021. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period.

Certain assets are measured at fair value on a non-recurring basis when there is evidence of impairment. The fair value of individually evaluated securities is determined as discussed previously for available-for-sale securities. The fair values of individually evaluated loans with specific allocations of the allowance for credit losses are generally based on recent real estate appraisals of the collateral less estimated cost to sell. Declines in the fair values of other real estate owned subsequent to their initial acquisitions are also based on recent real estate appraisals less estimated selling costs.

Real estate appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. We routinely value loans other than real estate as multiples of earnings or with the discounted cash flow approach and adjustments are made to observable market data to make the valuation consistent with the underlying credit. Such adjustments made to real estate appraisals and other loan valuations are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets measured at fair value on a non-recurring basis are summarized below as of ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022						June 30, 2022
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Individually evaluated loans:
Commercial real estate	$	—	$	—	$	1,765	$	—	$	—	$	1,848
Commercial and industrial		—		—		3,080		—		—		1,020
Residential real estate		—		—		2,570		—		—		2,185
Agricultural real estate		—		—		1,780		—		—		2,002
Other		—		—		2,818		—		—		2,319
Other real estate owned:
Commercial real estate		—		—		2,175		—		—		2,175
Residential real estate		—		—		48		—		—		48

The Company did 0t record any liabilities for which the fair value was measured on a non-recurring basis at ~~March 31,~~June 30, 2022, or December 31, 2021.

Valuations of individually evaluated loans and other real estate owned utilize third party appraisals or broker price opinions and were classified as Level 3 due to the significant judgment involved. Appraisals may include the utilization of unobservable inputs, subjective factors and quantitative data to estimate fair market value.

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized with Level 3 of the fair value hierarchy as of ~~March 31,~~June 30, 2022, and December 31, 2021.

	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average) or Multiple of Earnings	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average) or Multiple of Earnings
March 31, 2022
June 30, 2022
Individually evaluated real estate loans	$	12,013	Sales Comparison Approach	Adjustments for differences between comparable sales	7% - 44% (25%)	$	9,374	Sales Comparison Approach	Adjustments for differences between comparable sales	5% - 52% (28%)
Individually evaluated other real estate owned	$	2,223	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 20% (12%)	$	2,223	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 20% (12%)
December 31, 2021
Individually evaluated real estate loans	$	17,921	Sales Comparison Approach	Adjustments for differences between comparable sales	5% - 31% (18%)	$	17,921	Sales Comparison Approach	Adjustments for differences between comparable sales	5% - 31% (18%)
Individually evaluated other real estate owned	$	2,234	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 20% (12%)	$	2,234	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 20% (12%)

Carrying amount and estimated fair values of financial instruments at period end were as follows for ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022													June 30, 2022
	Carrying Amount			Estimated Fair Value			(Level 1)			(Level 2)		(Level 3)		Carrying Amount			Estimated Fair Value			(Level 1)			(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	90,050		$	90,050		$	90,050		$	—	$	—	$	103,584		$	103,584		$	103,584		$	—	$	—
Available-for-sale securities		1,352,894			1,352,894			243,256			1,109,638		—		1,288,180			1,288,180			238,565			1,049,615		—
Loans held for sale		1,575			1,575			—			1,575		—		1,714			1,714			—			1,714		—
Loans, net of allowance for credit losses		3,194,987			3,185,946			—			—		3,185,946		3,175,208			3,134,957			—			—		3,134,957
Federal Reserve Bank and Federal Home Loan Bank stock		19,890			19,890			—			19,890		—		21,479			21,479			—			21,479		—
Interest receivable		16,923			16,923			—			16,923		—		16,519			16,519			—			16,519		—
Derivative assets		3,719			3,719			—			3,719		—		5,806			5,806			—			5,806		—
Cash collateral held by derivative counterparty and netting adjustments		3,589			3,589			3,589			—		—		(2,112	)		(2,112	)		(2,112	)		—		—
Total derivative assets		7,308			7,308			3,589			3,719		—		3,694			3,694			(2,112	)		5,806		—
Equity securities with readily determinable fair value		605			605			605			—		—		573			573			573			—		—
Total assets	$	4,684,232		$	4,675,191		$	337,500		$	1,151,745	$	3,185,946	$	4,610,951		$	4,570,700		$	340,610		$	1,095,133	$	3,134,957
Financial liabilities:
Deposits	$	4,379,670		$	4,381,007		$	—		$	4,381,007	$	—	$	4,291,771		$	4,284,337		$	—		$	4,284,337	$	—
Federal funds purchased and retail repurchase agreements		48,199			48,199			—			48,199		—		52,750			52,750			—			52,750		—
Federal Home Loan Bank advances		50,000			50,000			—			50,000		—		80,000			80,000			—			80,000		—
Subordinated debentures		23,006			23,006			—			23,006		—		23,088			23,088			—			23,088		—
Subordinated notes		73,004			76,754			—			76,754		—		73,047			74,360			—			74,360		—
Contractual obligations		17,307			17,307			—			17,307		—		15,813			15,813			—			15,813		—
Interest payable		1,714			1,714			—			1,714		—		492			492			—			492		—
Derivative liabilities		1,499			1,499			—			1,499		—		3,647			3,647			—			3,647		—
Cash collateral held by derivative counterparty and netting adjustments		(722	)		(722	)		(722	)		—		—		50			50			50			—		—
Total derivative liabilities		777			777			(722	)		1,499		—		3,697			3,697			50			3,647		—
Total liabilities	$	4,593,677		$	4,598,764		$	(722	)	$	4,599,486	$	—	$	4,540,658		$	4,534,537		$	50		$	4,534,487	$	—

The Company extends credit for commercial real estate mortgages, residential mortgages, working capital financing and loans to businesses and consumers.

Commitments to originate loans and available lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments and lines of credit may expire without being drawn upon, the total commitment and lines of credit amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Mortgage loans in the process of origination represent amounts that the Company plans to fund within a normal period of 60 to 90 days, and which are intended for sale to investors in the secondary market.

The contractual amounts of commitments to originate loans and available lines of credit as of ~~March 31,~~June 30, 2022, and December 31, 2021, were as follows.

	March 31, 2022				December 31, 2021				June 30, 2022				December 31, 2021
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	95,136	$	176,994	$	101,923	$	173,976	$	89,350	$	168,286	$	101,923	$	173,976
Mortgage loans in the process of origination		8,384		5,253		7,404		2,353		3,793		5,343		7,404		2,353
Unused lines of credit		118,300		308,335		106,291		317,249		114,878		344,260		106,291		317,249

The fixed rate loan commitments have interest rates ranging from ~~2.49%~~3.25% to 18.00% and maturities ranging from 1 month to ~~368~~364 months.

Standby letters of credit are irrevocable commitments issued by the Company to guarantee the performance of a customer to a third party once specified pre-conditions are met. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.

The contractual amounts of standby letters of credit as of ~~March 31,~~June 30, 2022, and December 31, 2021, were as follows.

The Company is party to various matters of litigation in the ordinary course of business. The Company periodically reviews all outstanding pending or threatened legal proceedings and determines if such matters will have an adverse effect on the business, financial condition, results of operations or cash flows. A loss contingency is recorded when the outcome is probable and reasonably able to be estimated. Any loss contingency described below has been identified by the Company as reasonably possible to result in an unfavorable outcome for the Company or the Bank.

Equity Bank is party to a lawsuit that was filed on January 28, 2022, in the Sedgwick County Kansas District Court on behalf of one of our customers alleging improperly collected overdraft fees. The plaintiff seeks to have the case certified as a class action. The Bank has filed a motion to dismiss this claim on its merits and on the grounds that the defendant must litigate any such claims in arbitration. The Company believes that the lawsuit is without merit, and it intends to vigorously defend against the claim asserted. At this time, the Company is unable to reasonably estimate the loss amount of this litigation.

Equity Bank is party to a lawsuit that was filed on February 2, 2022, in Jackson County, Missouri District Court against the Bank on behalf of a Missouri ~~customers~~customer alleging improperly collected overdraft fees. The plaintiff seeks to have the case certified as a class action. ~~The Company intends to file a motion to dismiss the claims.~~ The Company believes that the lawsuit is without merit, and it intends to vigorously defend against the claims now asserted. At this time, the Company is unable to reasonably estimate the loss amount of this litigation.

The majority of the Company’s revenues come from interest income on financial instruments, including loans, leases, securities and derivatives, which are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented with non-interest income and are recognized as revenue as the Company satisfies its obligation to the customer. Services

within the scope of ASC 606 include service charges and fees on deposits, debit card income, investment referral income, insurance sales commissions and other non-interest income related to loans and deposits.

Except for gains or losses from the sale of other real estate owned, all of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized in non-interest income. The following table presents the Company’s sources of non-interest income for the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2022, and 2021.

		Three Months Ended March 31,							Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021				2022			2021			2022			2021
Non-interest income
Service charges and fees		$	2,522		$	1,596			$	2,617		$	2,169		$	5,139		$	3,765
Debit card income			2,628			2,350				2,810			2,679			5,438			5,029
Mortgage banking^(a)			562			935				428			848			990			1,783
Increase in bank-owned life insurance^(a)			865			601				736			676			1,601			1,277
Net gain (loss) on acquisition^(a)			—			(78	)			540			663			540			585
Net gain (loss) from securities transactions^(a)			40			17				(32	)		—			8			17
Other
Investment referral income			143			122				140			194			283			317
Trust income			294			160				264			336			557			496
Insurance sales commissions			65			60				47			46			113			106
Recovery on zero-basis purchased loans^(a)			20			34				13			19			33			53
Income (loss) from equity method investments^(a)			(55	)		(55	)			(56	)		(56	)		(111	)		(111	)
Other non-interest income related to loans and deposits			1,931			968				2,113			1,481			4,044			2,448
Other non-interest income not related to loans and deposits^(a)			7			2				17			45			24			47
Total other non-interest income			2,405			1,291				2,538			2,065			4,943			3,356
Total		$	9,022		$	6,712			$	9,637		$	9,100		$	18,659		$	15,812
^(a) Not within the scope of ASC 606.	^(a) Not within the scope of ASC 606.							^(a) Not within the scope of ASC 606.

At the close of business on October 1, 2021, the Company acquired the 100% of the outstanding common shares of American State Bancshares, Inc. (“ASBI”), based in Wichita, Kansas. Costs related to this acquisition during the three and six months ended ~~March 31,~~June 30, 2022, were ~~$187~~$87 and $274 ($~~141~~65 and $206 on an after-tax basis).

At the close of business on December 3, 2021, the Company acquired the assets and assumed the deposits and certain other liabilities of 3 bank locations in St. Joseph, Missouri, from Security Bank of Kansas City, based in Kansas City Kansas (“Security”). Costs related to this acquisition during the three and six months ended June 30, 2022, were $1 and $137 ($0 and $102 on an after-tax basis).

At the close of business on October 25, 2021, the Company announced a definitive purchase and assumption agreement with United Bank & Trust in Marysville, Kansas, (“UBT”) with UBT acquiring certain assets and assuming deposits of bank locations in Concordia, Belleville and Clyde, Kansas from Equity Bank. ~~For the quarter ended March 31, 2022, these 3 branches had average gross loans outstanding of $28.8 million and average deposits outstanding of $68.9 million.~~ This transaction ~~is scheduled to close~~was completed on June 24, 2022. The completed transaction resulted in a net gain of $540.

The following table summarizes the ~~close~~carrying value of ~~business on December 3, 2021, the Company acquired the~~ assets and ~~assumed~~liabilities sold on June 24, 2022.

The following tables present the carrying value of loans and deposits ~~and certain other liabilities of three bank locations in St. Joseph, Missouri, from Security Bank of Kansas City, based in Kansas City Kansas (“Security”). Costs related~~sold to ~~this acquisition during the three months ended March 31, 2022, were $136 ($102~~UBT on ~~an after-tax basis).~~June 24, 2022.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K filed with the SEC on March 9, 2022, and our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. See “Cautionary Note Regarding Forward-Looking Statements.” Also, see the risk factors and other cautionary statements described under the heading “Item 1A: Risk Factors” included in the Annual Report on Form 10-K and in Item 1A of this Quarterly Report. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

This discussion and analysis of our financial condition and results of operation includes the following sections:

(Dollars in thousands, except per share data)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Statement of Income Data (for the quarterly period ended)
Interest and dividend income	$	42,652		$	40,792		$	42,446		$	38,318		$	35,812		$	43,624		$	42,652		$	40,792		$	42,446		$	38,318
Interest expense		3,363			3,577			3,471			3,688			4,053			4,058			3,363			3,577			3,471			3,688
Net interest income		39,289			37,215			38,975			34,630			31,759			39,566			39,289			37,215			38,975			34,630
Provision (reversal) for credit losses		(412	)		(2,125	)		1,058			(1,657	)		(5,756	)		824			(412	)		(2,125	)		1,058			(1,657	)
Net gain on acquisition		—			—			—			663			(78	)
Net gain on acquisition and branch sales																	540			—			—			—			663
Net gain (loss) from securities transactions		40			8			381			—			17			(32	)		40			8			381			—
Other non-interest income		8,982			9,191			7,450			9,100			6,695			9,129			8,982			9,191			7,450			8,437
Loss on debt extinguishment		—			—			372			—			—			—			—			—			372			—
Merger expenses		323			4,562			4,015			460			152			88			323			4,562			4,015			460
Goodwill impairment		—			—			—			—			—
Other non-interest expense		29,136			33,527			26,302			25,346			24,729			31,348			29,136			33,527			26,302			25,346
Income (loss) before income taxes		19,264			10,450			15,059			19,581			19,346			16,943			19,264			10,450			15,059			19,581
Provision for income taxes		3,614			(16	)		3,286			4,415			4,271			1,684			3,614			(16	)		3,286			4,415
Net income (loss)		15,650			10,466			11,773			15,166			15,075			15,259			15,650			10,466			11,773			15,166
Net income (loss) allocable to common stockholders		15,650			10,466			11,773			15,166			15,075			15,259			15,650			10,466			11,773			15,166
Basic earnings (loss) per share	$	0.94		$	0.62		$	0.82		$	1.06		$	1.04		$	0.95		$	0.94		$	0.62		$	0.82		$	1.06
Diluted earnings (loss) per share	$	0.93		$	0.61		$	0.80		$	1.03		$	1.02		$	0.94		$	0.93		$	0.61		$	0.80		$	1.03
Balance Sheet Data (at period end)
Cash and cash equivalents	$	90,050		$	259,954		$	142,318		$	139,321		$	136,688		$	103,584		$	90,050		$	259,954		$	142,318		$	139,321
Available-for-sale securities		1,352,894			1,327,442			1,157,423			1,041,613			998,100			1,288,180			1,352,894			1,327,442			1,157,423			1,041,613
Loans held for sale		1,575			4,214			4,108			6,183			8,609			1,714			1,575			4,214			4,108			6,183
Gross loans held for investment		3,242,577			3,155,627			2,685,911			2,815,061			2,795,740			3,223,446			3,242,577			3,155,627			2,685,911			2,815,061
Allowance for credit losses		47,590			48,365			52,763			51,834			55,525			48,238			47,590			48,365			52,763			51,834
Loans held for investment, net of allowance for credit losses		3,194,987			3,107,262			2,633,148			2,763,227			2,740,215			3,175,208			3,194,987			3,107,262			2,633,148			2,763,227
Goodwill and core deposit intangibles, net		68,295			69,344			44,564			45,594			46,624			65,655			68,295			69,344			44,564			45,594
Mortgage servicing asset, net		251			276												226			251			276			—			—
Naming rights, net		1,076			1,087			1,098			1,109			1,119			1,065			1,076			1,087			1,098			1,109
Total assets		5,078,623			5,137,631			4,263,268			4,268,216			4,196,184			5,002,156			5,078,623			5,137,631			4,263,268			4,268,216
Total deposits		4,379,670			4,420,004			3,662,777			3,687,555			3,634,530			4,291,771			4,379,670			4,420,004			3,662,777			3,687,555
Borrowings		194,209			151,891			127,167			144,300			138,053			228,885			194,209			151,891			127,167			144,300
Total liabilities		4,626,608			4,637,000			3,845,519			3,855,221			3,798,369			4,574,041			4,626,608			4,637,000			3,845,519			3,855,221
Total stockholders’ equity		452,015			500,631			417,749			412,995			397,815			428,115			452,015			500,631			417,749			412,995
Tangible common equity*		382,393			429,924			372,087			366,292			350,072			361,169			382,393			429,924			372,087			366,292
Performance ratios
Return on average assets (ROAA) annualized		1.24	%		0.82	%		1.09	%		1.44	%		1.48	%		1.21	%		1.24	%		0.82	%		1.09	%		1.44	%
Return on average equity (ROAE) annualized		12.88	%		7.37	%		11.05	%		15.06	%		15.45	%		13.99	%		12.88	%		7.37	%		11.05	%		15.06	%
Return on average tangible common equity (ROATCE) annualized*		15.85	%		8.97	%		13.27	%		17.98	%		18.57	%		17.60	%		15.85	%		8.97	%		13.27	%		17.98	%
Yield on loans annualized		4.61	%		4.36	%		5.43	%		4.75	%		4.59	%		4.59	%		4.61	%		4.36	%		5.43	%		4.75	%
Cost of interest-bearing deposits annualized		0.22	%		0.25	%		0.28	%		0.31	%		0.36	%		0.28	%		0.22	%		0.25	%		0.28	%		0.31	%
Net interest margin annualized		3.38	%		3.13	%		3.86	%		3.50	%		3.31	%		3.39	%		3.38	%		3.13	%		3.86	%		3.50	%
Efficiency ratio*		60.36	%		72.25	%		56.65	%		58.85	%		64.18	%		64.38	%		60.36	%		72.25	%		56.65	%		58.85	%
Non-interest income / average assets annualized		0.72	%		0.72	%		0.73	%		0.86	%		0.66	%		0.76	%		0.72	%		0.72	%		0.73	%		0.86	%
Non-interest expense / average assets annualized		2.34	%		2.98	%		2.85	%		2.45	%		2.44	%		2.49	%		2.34	%		2.98	%		2.85	%		2.45	%

Dividend payout ratio		8.60	%		13.05	%		9.96	%		0.00	%		0.00	%

Capital Ratios
Tier 1 Leverage Ratio		9.07	%		9.09	%		9.02	%		8.88	%		8.73	%		9.11	%		9.07	%		9.09	%		9.02	%		8.88	%
Common Equity Tier 1 Capital Ratio		11.81	%		12.03	%		12.39	%		12.41	%		12.53	%		12.08	%		11.81	%		12.03	%		12.39	%		12.41	%
Tier 1 Risk Based Capital Ratio		12.43	%		12.67	%		12.90	%		12.93	%		13.08	%		12.71	%		12.43	%		12.67	%		12.90	%		12.93	%
Total Risk Based Capital Ratio		15.66	%		15.96	%		16.63	%		16.74	%		17.02	%		15.97	%		15.66	%		15.96	%		16.63	%		16.74	%
Equity / Assets		8.90	%		9.74	%		9.80	%		9.68	%		9.48	%		8.56	%		8.90	%		9.74	%		9.80	%		9.68	%
Tangible common equity to tangible assets*		7.63	%		8.48	%		8.82	%		8.68	%		8.44	%		7.32	%		7.63	%		8.48	%		8.82	%		8.68	%
Dividend payout ratio																	8.61	%		8.58	%		13.05	%		9.96	%		0.00	%
Book value per share	$	27.47		$	29.87		$	29.08		$	28.76		$	27.66		$	26.58		$	27.47		$	29.87		$	29.08		$	28.76
Tangible common book value per share*	$	23.24		$	25.65		$	25.90		$	25.51		$	24.34		$	22.42		$	23.24		$	25.65		$	25.90		$	25.51
Tangible common book value per diluted share*	$	22.95		$	25.22		$	25.42		$	24.98		$	23.87		$	22.17		$	22.95		$	25.22		$	25.42		$	24.98

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2.

We are a bank holding company headquartered in Wichita, Kansas. Our wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through our network of 6966 full-service banking sites located in Arkansas, Kansas, Missouri, and Oklahoma. As of ~~March 31,~~June 30, 2022, we had consolidated total assets of ~~$5.08~~$5.00 billion, total loans held for investment, net of allowance, of ~~$3.19~~$3.18 billion, total deposits of ~~$4.38~~$4.29 billion, and total stockholders’ equity of ~~$452.0~~$428.1 million. During the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2022, the Company had net income of ~~$15.7~~$15.3 million and $30.9 million. The Company had net income of ~~$15.1~~$15.2 million and $30.2 million for the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2021.

Our significant accounting policies are integral to understanding the results reported. Our accounting policies are described in detail in Note 1 to the December 31, 2021, audited financial statements included in our Annual Report on Form 10-K filed with the SEC on March 9, 2022. The preparation of our financial statements in accordance with GAAP requires management to make a number of judgements and assumptions that affect our reported results and disclosures. Several of our accounting policies are inherently subject to valuation assumptions and other subjective assessments and are more critical than others in terms of their importance to results. Changes in any of the estimates and assumptions underlying critical accounting policies could have a material effect on our financial statements. Our accounting policies are described in “NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the Notes to Interim Consolidated Financial Statements.

The accounting policies that management believes are the most critical to an understanding of our financial condition and results of operations and require complex management judgement are described below.

Allowance for Credit Losses: The allowance for credit losses for loans represents management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay a loan (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications, and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date; however, determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. The allowance for credit losses for loans, as reported in our consolidated balance sheets, is adjusted by provision for credit losses, which is recognized in earnings and is reduced by the charge-off of loan amounts, net of recoveries.

The allowance represents management’s best estimate, but significant changes in circumstances relating to loan quality and economic conditions could result in significantly different results than what is reflected in the consolidated balance sheet as of ~~March 31,~~June 30, 2022. Likewise, an improvement in loan quality or economic conditions may allow for a further reduction in the required allowance. Changing credit conditions would be expected to impact realized losses, driving variability in specifically assessed

allowances, as well as calculated quantitative and more subjectively analyzed qualitative factors. Depending on the volatility in these conditions, material impacts could be realized within the Company’s operations. Likewise, significant changes in economic

conditions, both positive and negative, could result in unexpected realization of provision or reversal of allowance for credit losses due to its impact on the quantitative and qualitative inputs to the Company’s calculation. Under the CECL methodology, the impact of these conditions has the potential to further exacerbate periodic differences due to its life of loan perspective. The life of loans calculated under the methodology is based in contractual duration and modified for prepayment expectations, making significant variation in periodic results possible due to changing contractual or adjusted duration of the assets within the calculation.

Goodwill: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Goodwill is assessed at least annually for impairment and any such impairment is recognized and expensed in the period identified. Goodwill will be assessed more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired. We have selected December 31 as the date to perform our annual goodwill impairment test. Goodwill is the only intangible asset with an indefinite useful life. For the quarter ended ~~March 31,~~June 30, 2022, based on the improving market conditions and strong earnings performance by the Company, management has determined there was not evidence of a triggering event as of or during the period then ended. Based on this qualitative analysis and conclusion, it was determined that a more robust quantitative assessment was not necessary at our measurement date.

When performing quantitative goodwill impairment assessments, management is required to estimate the fair value of the Company’s equity in a change in control transaction. To complete this valuation, management is required to derive assumptions related to industry performance, reporting unit business performance, economic and market conditions, and various other assumptions, many of which require significant management judgement.

Although management believes that the judgements and estimates used are reasonable, actual results could differ and we may be exposed to losses or gains that could be material.

We generate our revenue from interest income and fees on loans, interest and dividends on investment securities, and non-interest income, such as service charges and fees, debit card income, trust and wealth management fees, and mortgage banking income. We incur interest expense on deposits and other borrowed funds and non-interest expense, such as salaries and employee benefits, occupancy expenses and technology.

Changes in interest rates on interest-earning assets or on interest-bearing liabilities, as well as the volume and types of interest-earning assets and interest-bearing liabilities, are the largest drivers of periodic change in net interest income. Fluctuations in interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international environments, and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Arkansas, Kansas, Missouri, and Oklahoma, as well as developments affecting the commercial, consumer, and real estate sectors within these markets.

Three months ended ~~March 31,~~June 30, 2022, compared with three months ended ~~March 31,~~June 30, 2021: Net income and net income allocable to common stockholders for the three months ended ~~March 31,~~June 30, 2022, was ~~$15.7~~$15.3 million as compared to a net income and net income allocable to common stockholders of ~~$15.1~~$15.2 million for the three months ended ~~March 31,~~June 30, 2021, an increase of ~~$575~~$100 thousand. The increase during the ~~three-month~~three month period ended ~~March 31,~~June 30, 2022, was largely due to an increase in loan interest income of ~~$5.3~~$3.4 million, taxable securities interest income of ~~$1.6 million, an increase in other non-interest income of $1.1 million and a decrease in provision for income taxes.~~$2.3 million. This increase was partially offset by ~~a lower reversal~~an increase in non-interest expense of ~~provision~~$5.6 million.

Six months ended June 30, 2022, compared with six months ended June 30, 2021: Net income and net income allocable to common stockholders for ~~credit loss~~the six months ended June 30, 2022, was $30.9 million as compared to $30.2 million for the six months ended June 30, 2021, an increase of ~~$5.3~~$668 thousand. The increase during the six month period ended June 30, 2022, was primarily due to an increase in net interest income of $12.5 million and an increase in non-interest income of $2.8 million. This increase was partially offset by an increase in non-interest expense of ~~$4.6 million.~~$10.2 million when compared with the six months ended June 30, 2021. The changes in the components of net income are discussed in more detail in the following “Results of Operations” sections.

Net interest income is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. To evaluate net interest income,

management measures and monitors (1) yields on loans and other interest-earning assets, (2) the costs of deposits and other funding sources, (3) the net interest spread, and (4) net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources of funds. Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume

change,” and is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a “yield/rate change.”

Three months ended ~~March 31,~~June 30, 2022, compared with three months ended ~~March 31,~~June 30, 2021: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the three months ended ~~March 31,~~June 30, 2022, and 2021. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

	For the Three Months Ended March 31,														For the Three Months Ended June 30,
	2022							2021							2022							2021
(Dollars in thousands)	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾
Interest-earning assets:
Loans⁽¹⁾
Commercial and industrial	$	575,563	$	7,761		5.47	%	$	803,012	$	9,234		4.66	%	$	588,126	$	7,483		5.10	%	$	826,647	$	11,729		5.69	%
Commercial real estate		1,190,128		13,451		4.58	%		971,825		11,441		4.77	%		1,210,185		14,521		4.81	%		991,033		11,433		4.63	%
Real estate construction		342,536		3,299		3.91	%		255,677		2,178		3.45	%		384,317		4,297		4.48	%		253,947		2,352		3.71	%
Residential real estate		632,581		5,665		3.63	%		394,329		4,452		4.58	%		597,680		5,206		3.49	%		465,525		4,642		4.00	%
Agricultural real estate		202,145		2,663		5.34	%		140,875		1,696		4.88	%		202,038		2,643		5.25	%		131,906		1,687		5.13	%
Agricultural		149,676		2,316		6.28	%		94,787		1,037		4.44	%		134,826		1,533		4.56	%		94,407		1,024		4.35	%
Consumer		103,158		1,151		4.53	%		76,413		963		5.11	%		99,680		1,166		4.69	%		89,680		943		4.22	%
Total loans		3,195,787		36,306		4.61	%		2,736,918		31,001		4.59	%		3,216,852		36,849		4.59	%		2,853,145		33,810		4.75	%
Taxable securities		1,285,942		5,391		1.70	%		839,349		3,799		1.84	%		1,210,828		5,584		1.85	%		887,983		3,523		1.59	%
Nontaxable securities		111,479		655		2.38	%		108,104		724		2.72	%		108,271		678		2.51	%		99,003		717		2.90	%
Total Securities																1,319,099		6,262		1.90	%		986,986		4,240		1.72	%
Federal funds sold and other		122,181		300		1.00	%		206,769		288		0.56	%		140,016		513		1.47	%		124,502		268		0.86	%
Total interest-earning assets		4,715,389		42,652		3.67	%		3,891,140		35,812		3.73	%		4,675,967		43,624		3.74	%		3,964,633		38,318		3.88	%
Non-interest-earning assets:
Other real estate owned, net		9,622							11,123							9,570							10,466
Premises and equipment, net		103,693							89,807							102,772							90,720
Bank-owned life insurance		121,033							85,839							121,182							102,877
Goodwill, core deposit and other intangibles, net		70,181							48,376							68,978							47,334
Other non-interest-earning assets		88,203							17,467							89,217							15,409
Total assets	$	5,108,121						$	4,143,752						$	5,067,686						$	4,231,439
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,213,541		579		0.19	%	$	1,029,353		582		0.23	%	$	1,149,691		865		0.30	%	$	1,004,030		523		0.21	%
Savings and money market		1,320,561		417		0.13	%		1,049,704		389		0.15	%		1,331,911		481		0.14	%		1,064,289		372		0.14	%
Savings, NOW and money market		2,534,102		996		0.16	%		2,079,057		971		0.19	%
Demand, savings and money market																2,481,602		1,346		0.22	%		2,068,319		895		0.17	%
Certificates of deposit		629,675		726		0.47	%		611,102		1,439		0.96	%		630,698		837		0.53	%		587,733		1,130		0.77	%
Total interest-bearing deposits		3,163,777		1,722		0.22	%		2,690,159		2,410		0.36	%		3,112,300		2,183		0.28	%		2,656,052		2,025		0.31	%
FHLB term and line of credit advances		9,943		9		0.37	%		10,013		65		2.63	%		80,266		176		0.88	%		37,656		80		0.86	%
Subordinated debt		95,931		1,599		6.76	%		87,715		1,556		7.19	%		96,068		1,653		6.90	%		87,841		1,557		7.11	%
Other borrowings		54,221		33		0.25	%		41,632		22		0.22	%		61,728		46		0.30	%		46,161		26		0.22	%
Total interest-bearing liabilities		3,323,872		3,363		0.41	%		2,829,519		4,053		0.58	%		3,350,362		4,058		0.49	%		2,827,710		3,688		0.52	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		1,230,102							887,466							1,227,896							968,898
Non-interest-bearing liabilities		61,548							31,129							51,945							30,792
Stockholders’ equity		492,599							395,638							437,483							404,039
Total liabilities and stockholders’ equity	$	5,108,121						$	4,143,752						$	5,067,686						$	4,231,439
Net interest income			$	39,289						$	31,759						$	39,566						$	34,630
Interest rate spread						3.26	%						3.15	%						3.25	%						3.36	%
Net interest margin⁽²⁾						3.38	%						3.31	%						3.39	%						3.50	%
Total cost of deposits, including non-interest bearing deposits	$	4,393,879	$	1,722		0.16	%	$	3,577,625	$	2,410		0.27	%	$	4,340,196	$	2,183		0.20	%	$	3,624,950	$	2,025		0.22	%
Average interest-earning assets to interest-bearing liabilities						141.86	%						137.52	%						139.57	%						140.21	%

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the ~~three-month~~three month periods ended ~~March 31,~~June 30, 2022, and 2021.

	Increase (Decrease) Due to:						Total Increase /			Increase (Decrease) Due to:						Total Increase /
(Dollars in thousands)	Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)			Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)
Interest-earning assets:
Loans
Commercial and industrial	$	(2,896	)	$	1,423		$	(1,473	)	$	(3,127	)	$	(1,119	)	$	(4,246	)
Commercial real estate		2,482			(472	)		2,010			2,614			474			3,088
Real estate construction		810			311			1,121			1,386			559			1,945
Residential real estate		2,275			(1,062	)		1,213			1,202			(638	)		564
Agricultural real estate		795			172			967			917			39			956
Agricultural		746			533			1,279			457			52			509
Consumer		308			(120	)		188			111			112			223
Total loans		4,520			785			5,305			3,560			(521	)		3,039
Taxable securities		1,890			(298	)		1,592			1,425			636			2,061
Nontaxable securities		22			(91	)		(69	)		63			(102	)		(39	)
Total securities											1,488			534			2,022
Federal funds sold and other		(149	)		161			12			37			208			245
Total interest-earning assets		6,283			557			6,840			5,085			221			5,306
Interest-bearing liabilities:
Interest-bearing demand deposits		95			(98	)		(3	)		84			258			342
Savings and money market		91			(63	)		28			96			13			109
Savings, NOW and money market		186			(161	)		25
Demand, savings and money market											180			271			451
Certificates of deposit		42			(755	)		(713	)		78			(371	)		(293	)
Total interest-bearing deposits		228			(916	)		(688	)		258			(100	)		158
FHLB term and line of credit advances		—			(56	)		(56	)		93			3			96
Subordinated debt		140			(97	)		43			143			(47	)		96
Other borrowings		7			4			11			10			10			20
Total interest-bearing liabilities		375			(1,065	)		(690	)		504			(134	)		370
Net Interest Income	$	5,908		$	1,622		$	7,530		$	4,581		$	355		$	4,936

Interest income on interest-earning assets increased ~~$6.8~~$5.3 million for the quarter ended ~~March 31,~~June 30, 2022, as compared to the quarter ended ~~March 31,~~June 30, 2021. Of this increase, ~~$4.5~~$3.6 million and ~~$1.9~~$1.5 million are attributable to increases in loan and taxable securities volume. Yield on loans ~~increased~~decreased by 216 basis points and yield on ~~taxable~~total securities ~~decreased~~increased by 1418 basis points for the quarter ended June 30, 2022, as compared to June 30, 2021. The decrease in yield on loans from the ~~first quarter~~three months ended June 30, 2022 was primarily due to the forgiveness of ~~2022.~~PPP loans and the resulting recognition of the unamortized fees on these loans during 2021.

~~The reduction~~There was a slight increase in interest expense on interest-bearing deposits ~~was~~ primarily due to a general increase in the cost and volume of interest-bearing deposits, partially offset by a decrease in the cost of certificates of deposits from ~~0.96%~~0.77% to ~~0.47%~~0.53%, a 4924 basis point ~~decrease, along with a general decrease in the cost of other interest-bearing deposits, partially offset by increases in volume of interest-bearing deposits.~~decrease. The reduction is reflective of the Company’s continued efforts to attract and retain strong, low-cost deposit relationships, excess liquidity in the economy leading to higher carrying balances, and the depressed interest rate environment over the past year.

When compared to the quarter ended ~~March 31,~~June 30, 2021, net interest margin ~~increased 7~~decreased 11 basis points during the quarter ended ~~March 31,~~June 30, 2022. Comparing the same periods, net interest spread ~~increased~~decreased by 11 basis points to ~~3.26%~~3.25% from ~~3.15%~~3.36%, largely due to lower yield on interest-earning assets.

Six months ended June 30, 2022, compared with six months ended June 30, 2021: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the six months ended June 30, 2022, and 2021. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

	For the Six Months Ended June 30,
	2022							2021
(Dollars in thousands)	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾
Interest-earning assets:
Loans⁽¹⁾
Commercial and industrial	$	581,880	$	15,244		5.28	%	$	814,895	$	20,962		5.19	%
Commercial real estate		1,200,212		27,972		4.70	%		981,482		22,873		4.70	%
Real estate construction		363,542		7,596		4.21	%		254,807		4,531		3.59	%
Residential real estate		615,035		10,872		3.56	%		430,123		9,093		4.26	%
Agricultural real estate		202,091		5,306		5.29	%		136,366		3,384		5.00	%
Agricultural		142,210		3,849		5.46	%		94,596		2,062		4.40	%
Consumer		101,409		2,316		4.60	%		83,083		1,906		4.63	%
Total loans		3,206,379		73,155		4.60	%		2,795,352		64,811		4.68	%
Taxable securities		1,248,178		10,975		1.77	%		863,801		7,322		1.71	%
Nontaxable securities		109,866		1,333		2.45	%		103,529		1,441		2.81	%
Total securities		1,358,044		12,308		1.83	%		967,330		8,763		1.83	%
Federal funds sold and other		131,148		813		1.25	%		165,408		556		0.68	%
Total interest-earning assets		4,695,571		86,276		3.71	%		3,928,090		74,130		3.81	%
Non-interest-earning assets:
Other real estate owned, net		9,596							10,792
Premises and equipment, net		103,230							90,266
Bank-owned life insurance		121,108							94,405
Goodwill, core deposit and other intangibles, net		69,576							47,852
Other non-interest-earning assets		88,709							16,432
Total assets	$	5,087,790						$	4,187,837
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,181,440		1,445		0.25	%	$	1,016,621		1,104		0.22	%
Savings and money market		1,326,267		897		0.14	%		1,057,037		761		0.15	%
Demand, savings and money market		2,507,707		2,342		0.19	%		2,073,658		1,865		0.18	%
Certificates of deposit		630,189		1,563		0.50	%		599,353		2,570		0.86	%
Total interest-bearing deposits		3,137,896		3,905		0.25	%		2,673,011		4,435		0.33	%
FHLB term and line of credit advances		45,299		185		0.82	%		23,911		145		1.22	%
Federal Reserve Bank discount window		6		—		0.25	%		5		—		0.25	%
Subordinated debt		96,000		3,252		6.83	%		87,778		3,113		7.15	%
Other borrowings		57,989		79		0.27	%		43,904		48		0.22	%
Total interest-bearing liabilities		3,337,190		7,421		0.45	%		2,828,609		7,741		0.55	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		1,228,949							928,407
Non-interest-bearing liabilities		56,722							30,959
Stockholders’ equity		464,929							399,862
Total liabilities and stockholders’ equity	$	5,087,790						$	4,187,837
Net interest income			$	78,855						$	66,389
Interest rate spread						3.26	%						3.26	%
Net interest margin⁽²⁾						3.39	%						3.41	%
Total cost of deposits, including non-interest bearing deposits	$	4,366,845	$	3,905		0.18	%	$	3,601,418	$	4,435		0.25	%
Average interest-earning assets to interest-bearing liabilities						140.70	%						138.87	%

Interest income on interest-earning assets increased $12.1 million for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. This increase in interest income is primarily due to increases in average loans and taxable securities volume, which can be attributed to $8.0 million and $3.4 million of the change in total interest income. Yield on loans decreased by 8 basis points while yield on total securities remained consistent at 1.83% from the six months ended June 30, 2021, to the six months ended June 30, 2022. The decrease in yield on loans from the six months ended June 30, 2022 was primarily due to the forgiveness of PPP loans and the resulting recognition of the unamortized fees on these loans during 2021.

The cost of interest-bearing liabilities decreased $320 thousand for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. Of this change, $1.2 million is attributable to decreases in rate, which was partially offset by an increase in interest expense of $901 thousand due to higher volume in interest-bearing liabilities. Interest-bearing deposits ~~and~~were responsible for $530 thousand of the decrease in interest expense, which was partially offset by an increase in the cost of subordinated ~~debt.~~borrowings of $139 thousand. Total cost of interest-bearing liabilities decreased by 10 basis points from the six months ended June 30, 2021, to the six months ended June 30, 2022.

44When compared to the quarter ended June 30, 2021, net interest margin decreased 2 basis points during the quarter ended June 30, 2022. This is due to higher interest income, due to increased volume, offset by an increase in average stockholder’s equity. Comparing the same periods, net interest spread remained constant at 3.26%.

We maintain an allowance for credit losses for estimated losses in our loan portfolio. The allowance for credit losses is increased by a provision for credit losses, which is a charge to earnings, and subsequent recoveries of amounts previously charged-off, but is decreased by charge-offs when the collectability of a loan balance is unlikely. Management estimates the allowance balance

required using past loan loss experience within the Company’s portfolio. This historical loss calculation is then modified to reflect quantitative economic circumstances based on evidenced economic conditions and regression formulas, which incorporate lag factors in identifying a sufficiently predictive adjusted-R square, as well as qualitative factors not inherently reflected in our historical loss or quantitative economic inputs. Included in our qualitative assessment is the consideration of a prospective adjustment based on economic conditions over the preceding 12 months, which is considered the Company’s reasonable, supportable forecast period. As these factors change, the amount of the credit loss provision changes.

Three months ended ~~March 31,~~June 30, 2022, compared with three months ended ~~March 31, 2021~~June 30, 2021: During the three months ended June 30, 2022, there was a provision for credit losses of $824 thousand compared to a reversal of provision for credit losses of $1.7 million during the three months ended June 30, 2021. The provision for the second quarter of 2022 was due to an increase in general reserves, driven by slowing prepayment speeds, and the perceived risk associated with current economic environment, including significant inflation, supply chain concerns, and impact of monetary policy on the economy.

The reversal of provision for credit losses in the quarter ended June 30, 2021, is attributed primarily to a decrease in specific reserves on loans individually assessed for impairment. Net charge-offs for the three months ended ~~March 31,~~June 30, 2022, ~~and~~were $176 thousand compared to net charge-offs of $567 thousand for the three months ended June 30, 2021. For the three months ended June 30, 2022, gross charge-offs were $382 thousand, offset by gross recoveries of $206 thousand. In comparison, gross charge-offs were $713 thousand for the three months ended June 30, 2021, offset by gross recoveries of $146 thousand.

Six months ended June 30, 2022, compared with six months ended June 30, 2021: During the six months ended June 30, 2022, there was a provision of $412 thousand ~~and $5.8 million. The~~compared to a provision reversal of $7.4 million for the ~~quarter~~six months ended June 30, 2021. The increase in provision for the six months ending ~~March 31,~~June 30, 2022, was largely due to ~~release of reserves on specifically analyzed loans, partially offset by increased~~the perceived economic risk due to recent periods of inflation, geopolitical uncertainty, and impacts of monetary policy. The large reversal of provision in the ~~quarter~~six months ended ~~March 31,~~June 30, 2021, was primarily due to improvements in economic inputs to the CECL model at that time, along with improvements in historical loss experience. Net charge-offs for the ~~three~~six months ended ~~March 31,~~June 30, 2022, were ~~$363~~$539 thousand compared to net charge-offs of ~~$65~~$632 thousand for the ~~three~~six months ended ~~March 31,~~June 30, 2021. For the ~~three~~six months ended ~~March 31,~~June 30, 2022, gross charge-offs were ~~$534~~$916 thousand, offset by gross recoveries of ~~$171~~$377 thousand. In comparison, gross charge-offs were ~~$291 thousand~~$1.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, offset by gross recoveries of ~~$226~~$372 thousand.

Three months ended June 30, 2022, compared with three months ended June 30, 2021:The primary sources of non-interest income are service charges and fees, debit card income, mortgage banking income, and increases in the value of bank-owned life insurance. Non-interest income does not include loan origination or other loan fees, which are recognized as an adjustment to yield using the interest method.

The following table provides a comparison of the major components of non-interest income for the three months ended ~~March 31,~~June 30, 2022, and 2021.

							2022 vs. 2021												2022 vs. 2021
(Dollars in thousands)	2022			2021			Change			%			2022			2021			Change			%
Service charges and fees	$	2,522		$	1,596		$	926			58.0	%	$	2,617		$	2,169		$	448			20.7	%
Debit card income		2,628			2,350			278			11.8	%		2,810			2,679			131			4.9	%
Mortgage banking		562			935			(373	)		(39.9	)%		428			848			(420	)		(49.5	)%
Increase in value of bank-owned life insurance		865			601			264			43.9	%		736			676			60			8.9	%
Other
Investment referral income		143			122			21			17.2	%		140			194			(54	)		(27.8	)%
Trust income		294			160			134			83.8	%		264			336			(72	)		(21.4	)%
Insurance sales commissions		65			60			5			8.3	%		48			46			2			4.3	%
Recovery on zero-basis purchased loans		20			34			(14	)		(41.2	)%		13			19			(6	)		(31.6	)%
Income (loss) from equity method investments		(55	)		(55	)		—			—	%		(56	)		(56	)		—			—	%
Other non-interest income		1,938			970			968			99.8	%		2,129			1,526			603			39.5	%
Total other		2,405			1,291			1,114			86.3	%		2,538			2,065			473			22.9	%
Subtotal		8,982			6,773			2,209			32.6	%		9,129			8,437			692			8.2	%
Net gain (loss) on acquisition		—			(78	)		78			(100.0	)%
Net gain (loss) on acquisition and branch sales														540			663			(123	)		(18.6	)%
Net gain (loss) from securities transactions		40			17			23			135.3	%		(32	)		—			(32	)		(100.0	)%
Total non-interest income	$	9,022		$	6,712		$	2,310			34.4	%	$	9,637		$	9,100		$	537			5.9	%

Six months ended June 30, 2022, compared with six months ended June 30, 2021:Other non-interest income increased ~~$2.3 million~~$537 thousand during the three months ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021. The increase is largely attributable to increases in ~~services~~other non-interest income of $603 thousand and service charges and fees of ~~$926 thousand and other non-interest income of $968~~$448 thousand. Included in service charges and fees were increases in non-sufficient funds fees of ~~$369 thousand and~~

~~statement fees of $154~~$422 thousand, with the remaining increase primarily from service charges. The decrease in mortgage banking income is due to decreased activity in held for sale mortgage activity. Included in other non-interest income were increases in credit card fees of ~~$135~~$124 thousand ~~loan repurchase obligation reversal of $502,~~ and increases in derivatives not designated as hedging relationships of ~~$325~~$572 thousand, offset by decreases in loan repurchase obligation reversal of $178 thousand.

During the quarter, management’s continued focus on relationship development and provision of value to our customer base, resulted in a comparative increase in service charges and fees, debit card income, and trust income through increasing product adoption and utilization.

The following table provides a comparison of the major components of non-interest income for the six months ended June 30, 2022, and 2021.

Total non-interest income increased $2.8 million during the six months ended June 30, 2022, as compared to the same period in 2021. The increase is largely attributable to increases in other non-interest income of $1.6 million and services charges and fees of $1.4 million. Included in service charges and fees were increases in non-sufficient funds fees of $813 thousand and statement fees of $157 thousand, with the remaining increase primarily from service charges. The decrease in mortgage banking income is due to decreased activity in held for sale mortgage activity. Included in other non-interest income were increases in credit card fees of $259 thousand, loan repurchase obligation reversal of $324 thousand, and increases in derivatives not designated as hedging relationships of $838 thousand.

Three months ended June 30, 2022, compared with three months ended June 30, 2021:For the three months ended ~~March 31,~~June 30, 2022, non-interest expense totaled ~~$29.5~~$31.4 million, an increase of ~~$4.6~~$5.6 million, when compared to the three months ended ~~March 31,~~June 30, 2021. Changes in the various components of non-interest expense for the three months ended ~~March 31,~~June 30, 2022, and 2021, are discussed in more detail in the following table.

						2022 vs. 2021											2022 vs. 2021
(Dollars in thousands)	2022			2021		Change			%			2022		2021			Change			%
Salaries and employee benefits	$	15,068		$	12,722	$	2,346			18.4	%	$	15,383	$	12,769		$	2,614			20.5	%
Net occupancy and equipment		3,170			2,368		802			33.9	%		3,007		2,327			680			29.2	%
Data processing		3,769			2,663		1,106			41.5	%		3,642		3,474			168			4.8	%
Professional fees		1,171			1,073		98			9.1	%		1,111		999			112			11.2	%
Advertising and business development		976			682		294			43.1	%		972		799			173			21.7	%
Telecommunications		470			580		(110	)		(19.0	)%		442		512			(70	)		(13.7	)%
FDIC insurance		180			415		(235	)		(56.6	)%		260		425			(165	)		(38.8	)%
Courier and postage		423			369		54			14.6	%		489		327			162			49.5	%
Free nationwide ATM cost		501			472		29			6.1	%		541		513			28			5.5	%
Amortization of core deposit intangible		1,050			1,034		16			1.5	%		1,111		1,030			81			7.9	%
Loan expense		185			238		(53	)		(22.3	)%		207		181			26			14.4	%
Other real estate owned		(1	)		5		(6	)		(120.0	)%		14		(468	)		482			(103.0	)%
Other		2,174			2,108		66			3.1	%		4,169		2,458			1,711			69.6	%
Subtotal		29,136			24,729		4,407			17.8	%		31,348		25,346			6,002			23.7	%
Merger expenses		323			152		171			112.5	%		88		460			(372	)		(80.9	)%
Total non-interest expense	$	29,459		$	24,881	$	4,578			18.4	%	$	31,436	$	25,806		$	5,630			21.8	%

Salaries and employee benefits: There was a ~~$2.3~~$2.6 million increase in salaries for the period ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021. The increase was primarily due to the addition of staff related to the ASBI acquisition in October 2021 and the Security acquisition in December 2021.

~~Data processing~~Net occupancy and equipment: ~~Data processing~~Net occupancy and equipment costs increased ~~$1.1 million~~$680 thousand for the period ended ~~March 31,~~June 30, 2022, as compared to the same period in 2021. The increase is primarily due to $117 thousand in ~~expense was primarily~~building maintenance, $99 thousand in real-estate taxes, and $78 thousand in utilities. Increased occupancy expenses are due to additional locations from the ~~additional accounts added as part of the merger with~~ ASBI ~~and Security,~~acquisition in October 2021 and the ~~expense categories are comprised of debit card processing, software licensing, and online banking services.~~Security acquisition in December 2021.

Other: Other non-interest expenses ~~consist~~consists of subscriptions, memberships and dues, employee expenses, ~~(including~~including travel, meals, entertainment and ~~education),~~education, supplies, printing, insurance, ~~account-related~~account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, ~~and~~losses net of gains on the sale of repossessed assets other than real estate, other operating ~~expenses.~~expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. Overall, in the other expense category, there was a net ~~$66 thousand~~$1.7 million increase, or ~~3.1%~~69.6%, between the quarters ending ~~March 31,~~June 30, 2022, and 2021.

Six months ended June 30, 2022, compared with six months ended June 30, 2021: For the six months ended June 30, 2022, non-interest expense totaled $60.9 million, an increase of $10.2 million, when compared to the six months ended June 30, 2021. Changes in the various components of non-interest expense for the six months ended June 30, 2022, and 2021, are discussed in more detail in the following table.

Salaries and employee benefits: There was a $5.0 million increase in salaries for the six month periods ended June 30, 2022, as compared to the same period in 2021. The increase was primarily due to the addition of staff related to the ASBI acquisition in October 2021 and the Security acquisition in December 2021.

Net occupancy and equipment: Net occupancy and equipment costs increased $1.5 million for the six month periods ended June 30, 2022, as compared to the same period in 2021. Increased occupancy expenses are due to additional locations from the ASBI acquisition in October 2021 and the Security acquisition in December 2021.

Data processing: Data processing costs increased $1.3 million for the six month periods ended June 30, 2022, as compared to the same period in 2021. The increase was due to software licenses of $468 thousand, processing expenses of $535 thousand, and card processing expenses of $262 thousand.

Other: Other non-interest expenses consists of subscriptions, memberships and dues, employee expenses, including travel, meals, entertainment and education, supplies, printing, insurance, account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, losses net of gains on the sale of repossessed assets other than real estate, other operating expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. Overall, in the other expense, category there was a net $1.8 million increase, or 38.9%, between the six month periods ending June 30, 2022, and 2021. The increase is largely due to losses from limited partnerships entered into for tax credits of $1.4 million, partially offset by a $869 thousand reversal of provision for unfunded commitments for the six months ended June 30, 2022.

The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of performance and is not defined under GAAP. For a reconciliation of non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2. Our efficiency ratio is computed by dividing non-interest expense, excluding loss on debt extinguishment, merger expenses, and goodwill impairment, by the sum of net interest income and non-interest income, excluding net gain on acquisition and net gain or loss from securities transactions. Generally, an increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease would indicate a more efficient allocation of resources.

The efficiency ratio was ~~60.4%~~64.4% for the three months ended ~~March 31,~~June 30, 2022, compared with ~~64.2%~~58.9% for the three months ended ~~March 31,~~June 30, 2021. The ~~decrease~~increase was primarily due to an increase in non-interest expense, partially offset by increases in net interest income and non-interest ~~income, partially offset by~~income.

The efficiency ratio was 62.4% for the six months ended June 30, 2022, compared with 61.4% for the six months ended June 30, 2021. The increase was primarily due to an increase in non-interest ~~expense.~~expense, partially offset by increases in net interest income and non-interest income.

In general, the Company records income tax expense each quarter based on its estimate as to the full year’s effective tax rate which includes, in addition to statutory rates, estimated amounts for tax-exempt interest income, non-taxable life insurance income, non-deductible executive compensation, valuation allowance on deferred assets, other non-deductible expense, and federal & state income tax credits anticipated to be available in proportion to anticipated annual income before income taxes. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits or shortfalls with respect to share-based compensation, changes in tax law, and non-deductible merger ~~expense, and benefits related to tax credits secured within the quarter.~~expense.

Three months ended ~~March 31,~~June 30, 2022, compared with three months ended ~~March 31, 2021~~June 30, 2021:: The effective income tax rate for the ~~3-month~~three month period ended ~~March 31,~~June 30, 2022, was ~~18.8%~~9.9% as compared to ~~22.1%~~22.6% for the ~~three-month~~three month period ended ~~March 31,~~June 30, 2021. Income tax expense for the ~~three-month~~three month period ended ~~March 31,~~June 30, 2022, includes ~~$96~~$29 thousand of tax benefit attributable to the settlement in stock of restricted stock units and the exercise of options and ~~$941~~$2.6 million of benefit related to the recognition of federal tax credits.

Six months ended June 30, 2022, compared with six months ended June 30, 2021: The effective income tax rate for the six month period ended June 30, 2022, was 14.6% as compared to 22.3% for the six month period ended June 30, 2021. Income tax expense for the six month period ended June 30, 2022, includes $125 thousand of tax benefit attributable to the settlement in stock of restricted stock units and the exercise of options and $3.5 million of benefit related to the recognition of federal tax credits.

Total assets decreased ~~$59.0 million~~$135 thousand from December 31, 2021, to ~~$5.08~~$5.00 billion at ~~March 31,~~June 30, 2022. This variance was primarily due to decreases of ~~$169.4~~$156.0 million in cash and due from banks and $39.3 million in securities, partially offset by ~~increases~~an increase of ~~$87.7~~$67.9 million of loans, net of allowance for credit ~~losses, and $25.5 million in securities.~~losses. Total liabilities decreased ~~$10.4~~$63.0 million to ~~$4.6~~$4.57 billion at ~~March 31,~~June 30, 2022. The change in total liabilities is mostly due to a decline in total deposits of ~~$40.3~~$128.2 million and a ~~$12.0~~$9.8 million reduction in interest payable and other liabilities, partially offset by an additional ~~$50.0~~$80.0 million in Federal Home Loan Bank advances. Total stockholders’ equity decreased ~~$48.6~~$72.5 million from $500.6 million at December 31, 2021, to ~~$452.0~~$428.1 million at ~~March 31,~~June 30, 2022, principally due to unrealized holding losses, net of tax, in the investment securities portfolio.

The following table summarizes our loan portfolio by type of loan as of the dates indicated.

	March 31, 2022					December 31, 2021											June 30, 2022					December 31, 2021
	Amount		Percent			Amount		Percent			Change			%			Amount		Percent			Amount		Percent			Change			%
	(Dollars in thousands)																(Dollars in thousands)
Commercial and industrial	$	629,181		19.4	%	$	567,497		18.0	%	$	61,684			10.9	%	$	578,899		18.0	%	$	567,497		18.0	%	$	11,402			2.0	%
Real estate loans:
Commercial real estate		1,552,134		48.0	%		1,486,148		47.1	%		65,986			4.4	%		1,643,068		51.0	%		1,486,148		47.1	%		156,920			10.6	%
Residential real estate		613,928		18.9	%		638,087		20.2	%		(24,159	)		(3.8	)%		578,936		18.0	%		638,087		20.2	%		(59,151	)		(9.3	)%
Agricultural real estate		198,844		6.1	%		198,330		6.3	%		514			0.3	%		197,938		6.1	%		198,330		6.3	%		(392	)		(0.2	)%
Total real estate loans		2,364,906		73.0	%		2,322,565		73.6	%		42,341			1.8	%		2,419,942		75.1	%		2,322,565		73.6	%		97,377			4.2	%
Agricultural		150,077		4.6	%		166,975		5.3	%		(16,898	)		(10.1	)%		124,753		3.9	%		166,975		5.3	%		(42,222	)		(25.3	)%
Consumer		98,413		3.0	%		98,590		3.1	%		(177	)		(0.2	)%		99,852		3.0	%		98,590		3.1	%		1,262			1.3	%
Total loans held for investment	$	3,242,577		100.00	%	$	3,155,627		100.0	%	$	86,950			2.8	%	$	3,223,446		100.0	%	$	3,155,627		100.0	%	$	67,819			2.1	%
Total loans held for sale	$	1,575		100.0	%	$	4,214		100.0	%	$	(2,639	)		(62.6	)%	$	1,714		100.0	%	$	4,214		100.0	%	$	(2,500	)		(59.3	)%
Total loans held for investment (net of allowances)	$	3,194,987		100.0	%	$	3,107,262		100.0	%	$	87,725			2.8	%	$	3,175,208		100.0	%	$	3,107,262		100.0	%	$	67,946			2.2	%

Our commercial loan portfolio consists of various types of loans, most of which are generally made to borrowers located in the Wichita, Kansas City, and Tulsa Metropolitan Statistical Areas (“MSAs”), as well as various community markets throughout Arkansas, Kansas, Missouri, and Oklahoma. Most of our loan portfolio consists of commercial and industrial and commercial real estate loans, and a substantial portion of our borrowers’ ability to honor their obligations is dependent on local economies in which they operate.

At ~~March 31,~~June 30, 2022, gross total loans, including loans held for sale, were ~~74.1%~~75.2% of deposits and ~~63.9%~~64.5% of total assets. At December 31, 2021, gross total loans, including loans held for sale, were 71.5% of deposits and 61.5% of total assets.

We provide commercial lines of credit, working capital loans, commercial real estate loans (including loans secured by owner-occupied commercial properties), term loans, equipment financing, aircraft financing, real property acquisition and development loans, borrowing base loans, real estate construction loans, homebuilder loans, SBA loans, agricultural and agricultural real estate loans, letters of credit and other loan products to national and regional companies, real estate developers, mortgage lenders, manufacturing and industrial companies and other businesses. The types of loans we make to consumers include residential real estate loans, home equity loans, home equity lines of credit, installment loans, unsecured and secured personal lines of credit, overdraft protection, and letters of credit.

Commercial and industrial: Commercial and industrial loans include loans used to purchase fixed assets, to provide working capital or meet other financing needs of the business.

Commercial real estate: Commercial real estate loans include all loans secured by nonfarm nonresidential properties and multifamily residential properties, as well as 1-4 family investment-purpose real estate loans.

Residential real estate: Residential real estate loans include loans secured by primary or secondary personal residences. Pools of mortgages are occasionally purchased to expand our loan portfolio and provide additional loan income.

Agricultural real estate, Agricultural, Consumer and other: Agricultural real estate loans are loans related to farmland. Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. Consumer loans are generally secured by consumer assets but may be unsecured.

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with predetermined interest rates and floating rates in each maturity range as of ~~March 31,~~June 30, 2022, are summarized in the following table.

	As of March 31, 2022										As of June 30, 2022
	One year or less		After one year through five years		After five years through fifteen years		After fifteen years		Total		One year or less		After one year through five years		After five years through fifteen years		After fifteen years		Total
	(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	$	183,757	$	353,078	$	85,747	$	6,599	$	629,181	$	168,194	$	319,528	$	86,779	$	4,398	$	578,899
Real Estate:
Commercial real estate		262,545		904,694		325,625		59,270		1,552,134		341,452		905,751		329,682		66,183		1,643,068
Residential real estate		4,370		12,797		135,739		461,022		613,928		2,820		10,575		119,555		445,986		578,936
Agricultural real estate		59,388		88,276		39,454		11,726		198,844		59,387		94,251		35,890		8,410		197,938
Total real estate		326,303		1,005,767		500,818		532,018		2,364,906		403,659		1,010,577		485,127		520,579		2,419,942
Agricultural		103,339		36,318		4,690		5,730		150,077		82,978		32,937		4,230		4,608		124,753
Consumer		33,438		41,016		20,852		3,107		98,413		33,599		42,060		21,278		2,915		99,852
Total	$	646,837	$	1,436,179	$	612,107	$	547,454	$	3,242,577	$	688,430	$	1,405,102	$	597,414	$	532,500	$	3,223,446
Loans with a predetermined fixed interest rate	$	271,659	$	891,914	$	220,225	$	328,551	$	1,712,349	$	279,364	$	820,528	$	205,989	$	317,958	$	1,623,839
Loans with an adjustable/floating interest rate		375,178		544,265		391,882		218,903		1,530,228		409,066		584,574		391,425		214,542		1,599,607
Total	$	646,837	$	1,436,179	$	612,107	$	547,454	$	3,242,577	$	688,430	$	1,405,102	$	597,414	$	532,500	$	3,223,446

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with predetermined interest rates and floating rates in each maturity range as of December 31, 2021, are summarized in the following table.

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, current economic trends, and other factors. Loans are analyzed individually and classified based on credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship.

For additional information, see “NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES” in the Condensed Notes to Interim Consolidated Financial Statements.

The following table presents information regarding nonperforming assets at the dates indicated.

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
	(Dollars in thousands)						(Dollars in thousands)
Nonaccrual loans	$	20,696		$	29,361		$	18,860		$	29,361
Accruing loans 90 or more days past due		—			256			386			256
OREO acquired through foreclosure, net		7,957			7,582			8,838			7,582
Other repossessed assets		8,805			28,799			8,888			28,799
Total nonperforming assets	$	37,458		$	65,998		$	36,972		$	65,998
Ratios:
Nonperforming assets to total assets		0.74	%		1.28	%		0.74	%		1.28	%
Nonperforming assets to total loans plus OREO and repossessed assets		1.15	%		2.07	%		1.14	%		2.07	%

Generally, loans are designated as nonaccrual when either principal or interest payments are 90 days or more past due based on contractual terms, unless the loan is well secured and in the process of collection. Consumer loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual, or charged off, at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed on nonaccrual status, unpaid interest credited to income earned in the current year is reversed against income and unpaid interest earned in prior years is charged off. Future interest income may be recorded on a

cash basis after recovery of principal is reasonably assured. Nonaccrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The nonperforming loans at ~~March 31,~~June 30, 2022, consisted of ~~168~~165 separate credits and ~~129~~127 separate borrowers. We had 76 non-performing loan relationships, totaling ~~$10.0~~$8.9 million, with an outstanding balance in excess of $1.0 million as of ~~March 31,~~June 30, 2022.

There are several procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by lenders and we also monitor delinquency levels for any negative or adverse trends. In accordance with applicable regulation, appraisals or evaluations are required to independently value real estate and are an important element to consider when underwriting loans secured in part or in whole by real estate. The value of real estate collateral provides additional support to the borrower’s credit capacity. There can be no assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

Potential problem loans consist of loans that are performing in accordance with contractual terms, but for which management has concerns about the borrower’s ability to comply with repayment terms because of the borrower’s potential financial difficulties. Potential problem loans are assigned a grade of special mention or substandard. At ~~March 31,~~June 30, 2022, the Company had ~~$49.3~~$29.0 million in potential problem loans which were not included in either non-accrual or 90 days past due categories, compared to $32.6 million at December 31, 2021.

With respect to potential problem loans, all monitored and under-performing loans are reviewed and evaluated to determine if they are impaired. If we determine that a loan is impaired, then we evaluate the borrower’s overall financial condition to determine the need, if any, for possible write downs or appropriate additions to the allowance for credit losses based on the unlikelihood of full repayment of principal and interest in accordance with the contractual terms or the net realizable value of the pledged collateral.

Please see “Critical Accounting Policies – Allowance for Credit Losses” for additional discussion of our allowance policy.

In connection with our review of the loan portfolio, risk elements attributable to particular loan types or categories are considered when assessing the quality of individual loans. Some of the risk elements include the following items.

The following table presents, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data.

Allowance for Credit Losses
For the Quarters Ended,
(Dollars in thousands)
June 30, 2022	Commercial Real Estate				Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	22,665			$	13,209		$	6,818		$	1,007		$	2,289		$	2,250		$	48,238
Total loans outstanding (1)		1,643,068				578,899			578,936			197,938			124,753			99,852			3,223,446
Net (charge-offs) recoveries QTD		(10	)			45			(12	)		-			(1	)		(198	)		(176	)
Net (charge-offs) recoveries YTD		(232	)			39			(14	)		7			(1	)		(338	)		(539	)
Average loan balance (1) QTD		1,594,502				588,126			595,575			202,038			134,826			99,680			3,214,747
Average loan balance (1) YTD		1,563,754				581,880			612,886			202,091			142,210			101,409			3,204,230
Non-accrual loan balance		5,104				3,351			2,903			3,478			3,757			267			18,860
Loans to total loans outstanding		51.0	%			18.0	%		18.0	%		6.1	%		3.9	%		3.1	%		100.0	%
ACL to total loans		1.4	%			2.3	%		1.2	%		0.5	%		1.8	%		2.3	%		1.5	%
Net charge-offs to average loans QTD		—	%			—	%		—	%		—	%		—	%		(0.2	)%		—	%
Net charge-offs to average loans YTD		—	%			—	%		—	%		—	%		—	%		(0.3	)%		—	%
Non-accrual loans to total loans		0.3	%			0.6	%		0.5	%		1.8	%		3.0	%		0.3	%		0.6	%
ACL to non-accrual loans		444.1	%			394.2	%		234.9	%		29.0	%		60.9	%		842.7	%		255.8	%


June 30, 2021	Commercial Real Estate			Commercial and Industrial				Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	15,225			$	18,690		$	9,808		$	847		$	4,695		$	2,569		$	51,834
Total loans outstanding (1)		1,261,214				732,126			503,110			129,020			97,912			91,679			2,815,061
Net (charge-offs) recoveries QTD		-				(7	)		1			(472	)		-			(89	)		(567	)
Net (charge-offs) recoveries YTD		74				9			(7	)		(484	)		3			(227	)		(632	)
Average loan balance (1) QTD		1,244,980				826,647			458,870			131,906			94,407			89,680			2,846,490
Average loan balance (1) YTD		1,236,289				814,895			421,617			136,366			94,596			83,083			2,786,846
Non-accrual loan balance		8,042				29,510			2,647			6,535			9,843			231			56,808
Loans to total loans outstanding		44.8	%			26.0	%		17.9	%		4.6	%		3.5	%		3.3	%		100.0	%
ACL to total loans		1.2	%			2.6	%		1.9	%		0.7	%		4.8	%		2.8	%		1.8	%
Net charge-offs to average loans QTD		—	%			—	%		—	%		(0.4	)%		—	%		(0.1	)%		—	%
Net charge-offs to average loans YTD		—	%			—	%		—	%		(0.4	)%		—	%		(0.3	)%		—	%
Non-accrual loans to total loans		0.6	%			4.0	%		0.5	%		5.1	%		10.1	%		0.3	%		2.0	%
ACL to non-accrual loans		189.3	%			63.3	%		370.5	%		13.0	%		47.7	%		1112.1	%		91.2	%

Management believes that the allowance for credit losses at ~~March 31,~~June 30, 2022, was adequate to cover current expected credit losses in the loan portfolio as of such date. There can be no assurance, however, that we will not sustain losses in future periods, which could be substantial in relation to the size of the allowance at ~~March 31,~~June 30, 2022.

The allowance for credit losses on loans measured on a collective basis totaled ~~$41.4~~$43.0 million, or ~~1.33%~~1.34% of the ~~$3.11~~$3.20 billion in loans measured on a collective basis at ~~March 31,~~June 30, 2022, compared to an allowance for credit losses of $34.3 million, or 1.12%, of the $3.06 billion in loans measured on a collective basis at December 31, 2021. The total reserve percentage held constant at 1.5% from December 31, 2021, to ~~March 31,~~June 30, 2022.

We use our securities portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk, to meet pledging requirements and to meet regulatory capital requirements. At ~~March 31,~~June 30, 2022, securities represented ~~26.6%~~25.8% of total assets, ~~compared~~staying consistent with 25.8% at December 31, 2021.

At the date of purchase, debt securities are classified into one of two categories: held-to-maturity or available-for-sale. We do not purchase securities for trading purposes. At each reporting date, the appropriateness of the classification is reassessed. Investments in debt securities are classified as held-to-maturity, carried at cost, and adjusted for the amortization of premiums and the accretion of discounts, only if management has the positive intent and ability to hold those securities to maturity. Debt securities not

classified as held-to-maturity are classified as available-for-sale and measured at fair value in the financial statements with unrealized gains and losses reported, net of tax, as accumulated comprehensive income or loss until realized. Interest earned on securities is included in total interest and dividend income. Also included in total interest and dividend income are dividends received on stock investments in the Federal Reserve Bank of Kansas City and the FHLB of Topeka. These stock investments are stated at cost.

The following table summarizes the amortized cost and fair value by classification of available-for-sale securities as of the dates shown.

	March 31, 2022				December 31, 2021				June 30, 2022				December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)								(Dollars in thousands)
U.S. Government-sponsored entities	$	123,724	$	115,235	$	124,898	$	123,407	$	123,550	$	111,392	$	124,898	$	123,407
U.S. Treasury securities		257,151		243,256		157,289		155,602		257,329		238,566		157,289		155,602
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		625,214		596,515		661,584		664,887		599,868		558,472		661,584		664,887
Private label residential mortgage-backed securities		207,043		196,282		173,717		171,688		198,447		179,457		173,717		171,688
Corporate		56,576		56,339		52,555		53,777		56,598		55,043		52,555		53,777
Small Business Administration loan pools		15,708		15,273		16,568		16,475		14,864		14,311		16,568		16,475
State and political subdivisions		134,469		129,994		138,404		141,606		139,877		130,939		138,404		141,606
Total available-for-sale securities	$	1,419,885	$	1,352,894	$	1,325,015	$	1,327,442	$	1,390,533	$	1,288,180	$	1,325,015	$	1,327,442

At ~~March 31,~~June 30, 2022, and December 31, 2021, we did not own any securities classified as held-to-maturity.

At ~~March 31,~~June 30, 2022, and December 31, 2021, we did not own securities of any one issuer (other than the U.S. government and its agencies or sponsored entities) for which aggregate par value exceeded 10% of consolidated stockholders’ equity at the reporting dates noted.

The following tables summarize the contractual maturity of debt securities and their weighted average yields as of ~~March 31,~~June 30, 2022, and December 31, 2021. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations, with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Available-for-sale securities are shown at fair value.

	March 31, 2022																									June 30, 2022
	Due in one year or less					Due after one year through five years					Due after five years through 10 years					Due after 10 years					Total					Due in one year or less					Due after one year through five years					Due after five years through 10 years					Due after 10 years					Total
	Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield
	(Dollars in thousands)																									(Dollars in thousands)
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		—	%	$	47,203		0.70	%	$	60,712		1.48	%	$	7,320		1.89	%	$	115,235		1.18	%	$	—		—	%	$	48,855		0.72	%	$	55,719		1.49	%	$	6,819		1.89	%	$	111,393		1.18	%
U.S. Treasury securities		—		—	%		141,722		1.25	%		101,534		1.10	%		—	—%				243,256		1.19	%		—		—	%		158,534		1.21	%		80,031		1.15	%		—	—%				238,565		1.19%
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		70,249		1.42	%		194,706		1.68	%		331,560		2.26	%		596,515		1.97	%		—		—	%		72,474		1.44	%		193,430		1.79	%		292,568		2.35	%		558,472		2.04	%
Private label residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		196,282		2.09	%		196,282		2.09	%		—		—	%		—		—	%		—		—	%		179,457		2.11	%		179,457		2.11	%
Corporate		—		—	%		18,175		3.45	%		34,172		4.23	%		3,992		4.75	%		56,339		4.02	%		—		—	%		17,927		4.44	%		37,116		4.29	%		—		—	%		55,043		4.34	%
Small Business Administration loan pools		—		—	%		—		—	%		9,635		1.03	%		5,638		1.75	%		15,273		1.29	%		—		—	%		—		—	%		9,127		1.20	%		5,184		1.76	%		14,311		1.41	%
State and political subdivisions⁽¹⁾		6,363		2.68	%		19,952		2.40	%		42,861		2.25	%		60,818		2.37	%		129,994		2.35	%		6,978		2.61	%		18,902		2.45	%		43,110		2.23	%		61,949		2.47	%		130,939		2.39	%
Total available-for-sale securities		6,363		2.68	%		297,301		1.42	%		443,620		1.75	%		605,610		2.22	%		1,352,894		1.89	%		6,978		2.61	%		316,692		1.44	%		418,533		1.88	%		545,977		2.28	%		1,288,180		1.94	%
Total debt securities	$	6,363		2.68	%	$	297,301		1.42	%	$	443,620		1.75	%	$	605,610		2.22	%	$	1,352,894		1.89	%	$	6,978		2.61	%	$	316,692		1.44	%	$	418,533		1.88	%	$	545,977		2.28	%	$	1,288,180		1.94	%

Mortgage-backed securities are securities that have been developed by pooling a number of real estate mortgages and which are principally issued by federal agencies such as Ginnie Mae, Fannie Mae, and Freddie Mac. Unlike U.S. Treasury and U.S. government agency securities, which have a lump sum payment at maturity, mortgage-backed securities provide cash flows from regular principal and interest payments and principal prepayments throughout the lives of the securities. Premiums and discounts on mortgage-backed securities are amortized and accreted over the expected life of the security and may be impacted by prepayments. As such, mortgage-backed securities which are purchased at a premium will generally produce decreasing net yields as interest rates drop because homeowners tend to refinance their mortgages, resulting in prepayments and an acceleration of premium amortization. Securities

purchased at a discount will reflect higher net yields in a decreasing interest rate environment, as prepayments result in an acceleration of discount accretion.

The contractual maturity of mortgage-backed securities is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time. Monthly pay downs on mortgage-backed securities cause the average lives of these securities to be much different than their stated lives. At ~~March 31,~~June 30, 2022, and December 31, 2021, ~~66.6%~~64.0% and 66.3% of the residential

mortgage-backed securities held by us had contractual final maturities of more than ten years, with a weighted average life of ~~5.0~~5.2 years and 4.4 years and a modified duration of ~~4.4~~4.5 years and 4.1 years.

At ~~March 31,~~June 30, 2022, we performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired.

Our lending and investing activities are primarily funded by deposits. A variety of deposit accounts are offered with a wide range of interest rates and terms including demand, savings, money market, and time deposits. We rely primarily on competitive pricing policies, convenient locations, comprehensive marketing strategy, and personalized service to attract and retain these deposits.

The following table shows our composition of deposits at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022					December 31, 2021					June 30, 2022					December 31, 2021
	Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total
	(Dollars in thousands)										(Dollars in thousands)
Non-interest-bearing demand	$	1,255,793		28.7	%	$	1,244,117		28.1	%	$	1,194,863		27.8	%	$	1,244,117		28.1	%
Interest-bearing demand and NOW accounts		1,179,381		26.9	%		1,202,408		27.2	%		1,112,659		25.9	%		1,202,408		27.2	%
Savings and money market		1,332,097		30.4	%		1,319,881		29.9	%		1,332,886		31.1	%		1,319,881		29.9	%
Time		612,399		14.0	%		653,598		14.8	%		651,363		15.2	%		653,598		14.8	%
Total deposits	$	4,379,670		100.0	%	$	4,420,004		100.0	%	$	4,291,771		100.0	%	$	4,420,004		100.0	%

Total deposits at ~~March 31,~~June 30, 2022, were ~~$4.38~~$4.29 billion, a decrease of ~~$40.3~~$128.2 million, or ~~0.9%~~2.9%, compared to total deposits of $4.42 billion at December 31, 2021.

Equity Bank participates in the Insured Cash Sweep (“ICS”) service that allows the bank to break large money market deposits into smaller amounts and place them in a network of other ICS banks to ensure FDIC insurance coverage on the entire deposit. These deposits are placed through ICS services, but are Equity Bank’s customer relationships that management views as core funding. The bank also participates in the Certificate of Deposit Account Registry Service (“CDARS”) program. CDARS allows the bank to break large time deposits into smaller amounts and place them in a network of other CDARS banks to ensure FDIC insurance coverage on the entire deposit. Reciprocal deposits are not considered brokered deposits as long as the aggregate balance is less than the lesser of 20% of total liabilities or $5.0 billion and Equity Bank is well capitalized and well rated. All non-reciprocal deposits and reciprocal deposits in excess of regulatory limits are considered brokered deposits.

The following table lists reciprocal and brokered deposits included in total deposits categorized by type at ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Interest-bearing demand
Reciprocal	$	284,139	$	308,374	$	240,814	$	308,374
Total interest-bearing demand		284,139		308,374		240,814		308,374
Savings and money market
Reciprocal		9,106		52,173		11,389		52,173
Total savings and money market		9,106		52,173		11,389		52,173
Time
Reciprocal		22,722		2,969		17,635		2,969
Non-reciprocal brokered		—		10,000		81,000		10,000
Total time		22,722		12,969		98,635		12,969
Total reciprocal and brokered deposits	$	315,967	$	373,516	$	350,838	$	373,516

The following table provides information on the maturity distribution of time deposits of $250 thousand or more as of ~~March 31,~~June 30, 2022, and December 31, 2021.

	March 31, 2022		December 31, 2021		Change			%			June 30, 2022		December 31, 2021		Change			%
	(Dollars in thousands)										(Dollars in thousands)
3 months or less	$	98,245	$	88,969	$	9,276			10.4	%	$	72,434	$	88,969	$	(16,535	)		(18.6	)%
Over 3 through 6 months		49,264		115,063		(65,799	)		(57.2	)%		18,861		115,063		(96,202	)		(83.6	)%
Over 6 through 12 months		38,974		14,047		24,927			177.5	%		45,268		14,047		31,221			222.3	%
Over 12 months		21,395		15,381		6,014			39.1	%		31,036		15,381		15,655			101.8	%
Total Time Deposits	$	207,878	$	233,460	$	(25,582	)		(11.0	)%	$	167,599	$	233,460	$	(65,861	)		(28.2	)%

We utilize borrowings to supplement deposits to fund our lending and investing activities. Short-term borrowings and long-term borrowings include federal funds purchased and retail repurchase agreements, FHLB advances, Federal Reserve Bank discount window, a bank stock loan, and subordinated debt. For additional information see “NOTE 6 – BORROWINGS” in the Condensed Notes to Interim Consolidated Financial Statement.

Market and public confidence in our financial strength and financial institutions in general will largely determine access to appropriate levels of liquidity. This confidence is significantly dependent on our ability to maintain sound asset quality and appropriate levels of capital reserves.

Liquidity is defined as the ability to meet anticipated customer demands for future funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis. We measure our liquidity position by considering both on and off-balance sheet sources of and demands for funds on a daily, weekly, and monthly basis.

Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations in a cost-effective manner and to meet current and future potential obligations such as loan commitments, lease obligations, and unexpected deposit outflows. In this process, we focus on both assets and liabilities, and the way they combine to provide adequate liquidity to meet our needs.

During the ~~three~~six months ended ~~March 31,~~June 30, 2022, and 2021, our liquidity needs have primarily been met by core deposits, security and loan maturities, and amortizing investment and loan portfolios. Other funding sources include federal funds purchased, brokered certificates of deposit, borrowings from the FHLB, and the Federal Reserve discount window.

Our largest sources of funds are deposits and FHLB borrowings and largest uses of funds are loans and securities. Average loans were ~~$3.20~~$3.21 billion for the ~~three~~six months ended ~~March 31,~~June 30, 2022, an increase of ~~0.5%~~11.3% over the December 31, 2021, average balance. Excess deposits are primarily invested in our interest-bearing deposit account with the Federal Reserve Bank of Kansas City,

investment securities, federal funds sold or other short-term liquid investments until the funds are needed to fund loan growth. Our securities portfolio has a weighted average life of ~~5.2~~5.3 years and a modified duration of 4.7 years at ~~March 31,~~June 30, 2022.

Cash and cash equivalents were ~~$90.1~~$103.6 million at ~~March 31,~~June 30, 2022, a decrease of ~~$169.9~~$156.4 million from the $260.0 million cash and cash equivalents at December 31, 2021. The decrease in cash and cash equivalents is driven primarily by ~~$165.9~~$173.1 million net cash used in investing activities and ~~$11.8~~$26.4 million used in financing activities, partially offset by ~~$7.8~~$43.1 million provided by operating activities. Cash and cash equivalents at January 1, 2022, plus liquidity provided by operating activities, pay downs, sales, and maturities of investment securities and FHLB borrowings during the first ~~three~~six months of 2022 were used to originate or purchase loans and to purchase investment securities. We believe that our daily funding needs can be met through cash provided by operating activities, payments and maturities on loans and investment securities, the core deposit base and FHLB advances and other borrowing relationships.

In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Our exposure to credit loss is

represented by the contractual amounts of these commitments. The same credit policies and procedures are used in making these commitments as for on-balance sheet instruments.

Standby and Performance Letters of Credit: For additional information see “NOTE 11 – COMMITMENTS AND CREDIT RISK” in the Condensed Notes to Interim Consolidated Financial Statement.

Commitments to Extend Credit: For additional information see “NOTE 11 – COMMITMENTS AND CREDIT RISK” in the Condensed Notes to Interim Consolidated Financial Statement.

Capital management consists of providing equity to support our current and future operations. The federal bank regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. As a bank holding company and a state-chartered-Fed-member bank, the Company and Equity Bank are subject to regulatory capital requirements.

Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of ~~March 31,~~June 30, 2022, and December 31, 2021, the Company and Equity Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized; although, these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as are asset growth and acquisitions, and capital restoration plans are required.

Failure to meet capital guidelines could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including termination of deposit insurance by the FDIC, restrictions on certain business activities and appointment of the FDIC as conservator or receiver. As of ~~March 31,~~June 30, 2022, the most recent notifications from the federal regulatory agencies categorized Equity Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Equity Bank must maintain minimum Total capital, Tier 1 capital, Common Equity Tier 1 capital, and Tier 1 leverage ratios. For additional information, see “NOTE 8 – REGULATORY MATTERS” in the Condensed Notes to Interim Consolidated Financial Statements. There are no conditions or events since that notification that management believes have changed Equity Bank’s category.

We identify certain financial measures discussed in this Quarterly Report as being “non-GAAP financial measures.” In accordance with SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect

from time to time in the United States in our statements of income, balance sheet or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios, or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

The non-GAAP financial measures that we discuss in this Quarterly Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the way we calculate the non-GAAP financial measures that we discuss in this Quarterly Report may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar to, or with names like, the non-GAAP financial measures we have discussed in this Quarterly Report when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share and Tangible Book Value Per Diluted Common Share: Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less preferred stock, goodwill, core deposit intangibles (net of accumulated amortization), and other intangible assets (net of accumulated amortization); (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by shares of common stock outstanding; and (c) tangible book value per diluted

common share as tangible common equity (as described in clause (a)) divided by diluted shares of common stock outstanding. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value.

Management believes that these measures are important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity, tangible book value per common share, and tangible book value per diluted common share and compares these values with book value per common share.

	As of the period ended										As of the period ended
	March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021
	(Dollars in thousands, except per share data)												(Dollars in thousands, except per share data)
Total stockholders’ equity	$	452,015	$	500,631	$	417,749	$	412,995	$	397,815	$	428,115	$	452,015	$	500,631	$	417,749	$	412,995
Less: goodwill		54,465		54,465		31,601		31,601		31,601		53,101		54,465		54,465		31,601		31,601
Less: core deposit intangibles, net		13,830		14,879		12,963		13,993		15,023		12,554		13,830		14,879		12,963		13,993
Less: mortgage servicing asset, net		251		276		—		—		—		226		251		276		—		—
Less: naming rights, net		1,076		1,087		1,098		1,109		1,119		1,065		1,076		1,087		1,098		1,109
Tangible common equity	$	382,393	$	429,924	$	372,087	$	366,292	$	350,072	$	361,169	$	382,393	$	429,924	$	372,087	$	366,292
Common shares issued at period end		16,454,966		16,760,115		14,365,785		14,360,172		14,383,913		16,106,818		16,454,966		16,760,115		14,365,785		14,360,172
Diluted common shares outstanding at period end		16,662,779		17,050,115		14,637,306		14,664,603		14,668,287		16,289,635		16,662,779		17,050,115		14,637,306		14,664,603
Book value per common share	$	27.47	$	29.87	$	29.08	$	28.76	$	27.66	$	26.58	$	27.47	$	29.87	$	29.08	$	28.76
Tangible book value per common share	$	23.24	$	25.65	$	25.90	$	25.51	$	24.34	$	22.42	$	23.24	$	25.65	$	25.90	$	25.51
Tangible book value per diluted common share	$	22.95	$	25.22	$	25.42	$	24.98	$	23.87	$	22.17	$	22.95	$	25.22	$	25.42	$	24.98

Tangible Common Equity to Tangible Assets: Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate (a) tangible common equity as total stockholders’ equity less preferred stock, goodwill, core deposit intangibles (net of accumulated amortization), and other intangible assets (net of accumulated amortization); (b) tangible assets as total assets less goodwill, core deposit intangibles (net of accumulated amortization), and other intangible assets (net of accumulated amortization); and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

Management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and total assets while not increasing tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets.

	As of the period ended															As of the period ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
	(Dollars in thousands)																		(Dollars in thousands)
Total stockholders’ equity	$	452,015		$	500,631		$	417,749		$	412,995		$	397,815		$	428,115		$	452,015		$	500,631		$	417,749		$	412,995
Less: goodwill		54,465			54,465			31,601			31,601			31,601			53,101			54,465			54,465			31,601			31,601
Less: core deposit intangibles, net		13,830			14,879			12,963			13,993			15,023			12,554			13,830			14,879			12,963			13,993
Less: mortgage servicing asset, net		251			276			—			—			—			226			251			276			—			—
Less: naming rights, net		1,076			1,087			1,098			1,109			1,119			1,065			1,076			1,087			1,098			1,109
Tangible common equity	$	382,393		$	429,924		$	372,087		$	366,292		$	350,072		$	361,169		$	382,393		$	429,924		$	372,087		$	366,292
Total assets	$	5,078,623		$	5,137,631		$	4,263,268		$	4,268,216		$	4,196,184		$	5,002,156		$	5,078,623		$	5,137,631		$	4,263,268		$	4,268,216
Less: goodwill		54,465			54,465			31,601			31,601			31,601			53,101			54,465			54,465			31,601			31,601
Less: core deposit intangibles, net		13,830			14,879			12,963			13,993			15,023			12,554			13,830			14,879			12,963			13,993
Less: mortgage servicing asset, net		251			276			—			—			—			226			251			276			—			—
Less: naming rights, net		1,076			1,087			1,098			1,109			1,119			1,065			1,076			1,087			1,098			1,109
Tangible assets	$	5,009,001		$	5,066,924		$	4,217,606		$	4,221,513		$	4,148,441		$	4,935,210		$	5,009,001		$	5,066,924		$	4,217,606		$	4,221,513
Equity to assets		8.90	%		9.74	%		9.80	%		9.68	%		9.48	%		8.56	%		8.90	%		9.74	%		9.80	%		9.68	%
Tangible common equity to tangible assets		7.63	%		8.48	%		8.82	%		8.68	%		8.44	%		7.32	%		7.63	%		8.48	%		8.82	%		8.68	%

Return on Average Tangible Common Equity: Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate (a) average tangible common equity as total average stockholders’ equity less average goodwill, core deposit intangibles (net of accumulated amortization), and other intangible assets (net of accumulated amortization); (b) adjusted net income allocable to common stockholders as net income allocable to common stockholders plus intangible asset amortization (net of taxes); and (c) return on average tangible common equity as annualized adjusted net income allocable to common stockholders (as described in clause (b)) divided by average tangible common equity (as described in clause (a)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

Management believes that this measure is important to many investors in the marketplace who are interested in earnings quality on tangible common equity. Goodwill and other intangible assets have the effect of increasing total stockholders’ equity while not increasing tangible common equity.

The following table reconciles, as of the dates set forth below, return on average stockholders’ equity and return on average tangible common equity.

	For the three months ended															For the three months ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
	(Dollars in thousands)																		(Dollars in thousands)
Total average stockholders’ equity	$	492,599		$	563,046		$	422,879		$	404,039		$	395,638		$	437,483		$	492,599		$	563,046		$	422,879		$	404,039
Less: average intangible assets		70,181			61,186			46,335			47,334			48,376			68,978			70,181			61,186			46,335			47,334
Average tangible common equity	$	422,418		$	501,860		$	376,544		$	356,705		$	347,262		$	368,505		$	422,418		$	501,860		$	376,544		$	356,705
Net income (loss) allocable to common stockholders	$	15,650		$	10,466		$	11,773		$	15,166		$	15,075		$	15,259		$	15,650		$	10,466		$	11,773		$	15,166
Amortization of intangible assets		1,085			1,116			1,040			1,041			1,045			1,148			1,085			1,116			1,040			1,041
Less: tax effect		228			234			218			219			219			241			228			234			218			219
Adjusted net income allocable to common stockholders	$	16,507		$	11,348		$	12,595		$	15,988		$	15,901		$	16,166		$	16,507		$	11,348		$	12,595		$	15,988
Return on total average stockholders’ equity (ROAE) annualized		12.88	%		7.37	%		11.05	%		15.06	%		15.45	%		13.99	%		12.88	%		7.37	%		11.05	%		15.06	%
Return on average tangible common equity (ROATCE) annualized		15.85	%		8.97	%		13.27	%		17.98	%		18.57	%		17.60	%		15.85	%		8.97	%		13.27	%		17.98	%

Efficiency Ratio: The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate the efficiency ratio by dividing non-interest expense, excluding merger expenses and loss on debt extinguishment, by the sum of net interest income and non-interest income, excluding net gain on acquisition and branch

sales, and net gain (loss) from securities transactions. The GAAP-based efficiency ratio is non-interest expense divided by net interest income plus non-interest income.

In management’s judgment, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess operating expenses in relation to operating revenue by removing merger expenses and net gain (loss) from securities transactions.

The following table reconciles, as of the dates set forth below, the efficiency ratio to the GAAP-based efficiency ratio.

	For the three months ended															For the three months ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
	(Dollars in thousands)																		(Dollars in thousands)
Non-interest expense	$	29,459		$	38,089		$	30,689		$	25,806		$	24,881		$	31,436		$	29,459		$	38,089		$	30,689		$	25,806
Less: loss on debt extinguishment		—			—			372			—			—			—			—			—			372			—
Less: merger expense		323			4,562			4,015			460			152			88			323			4,562			4,015			460
Non-interest expense, excluding loss on debt extinguishment and merger expense	$	29,136		$	33,527		$	26,302		$	25,346		$	24,729		$	31,348		$	29,136		$	33,527		$	26,302		$	25,346
Net interest income	$	39,289		$	37,215		$	38,975		$	34,630		$	31,759		$	39,566		$	39,289		$	37,215		$	38,975		$	34,630
Non-interest income	$	9,022		$	9,199		$	7,831		$	9,100		$	6,712		$	9,637		$	9,022		$	9,199		$	7,831		$	9,100
Less: net gain on acquisition		—			—			—			663			(78	)
Less: net gain on acquisition and branch sales																	540			—			—			—			663
Less: net gain (loss) from securities transactions		40			8			381			—			17			(32	)		40			8			381			—
Non-interest income, excluding net gain (loss) from securities transactions and net gain on acquisition	$	8,982		$	9,191		$	7,450		$	8,437		$	6,773
Net interest income plus non-interest income, excluding net gain on acquisition and net gain (loss) from securities transactions	$	48,271		$	46,406		$	46,425		$	43,067		$	38,532
Non-interest income, excluding net gain (loss) from securities transactions and net gain on acquisition and branch sales																$	9,129		$	8,982		$	9,191		$	7,450		$	8,437
Net interest income plus non-interest income, excluding net gain on acquisition and branch sales and net gain (loss) from securities transactions																$	48,695		$	48,271		$	46,406		$	46,425		$	43,067
Non-interest expense to net interest income plus non-interest income		60.98	%		82.06	%		65.57	%		59.01	%		64.67	%		63.89	%		60.98	%		82.06	%		65.57	%		59.01	%
Efficiency Ratio		60.36	%		72.25	%		56.65	%		58.85	%		64.18	%		64.38	%		60.36	%		72.25	%		56.65	%		58.85	%

Our asset-liability policy provides guidelines for effective funds management and management has established a measurement system for monitoring net interest rate sensitivity position within established guidelines.

As a financial institution, the primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, other than those which have a short-term maturity. Interest rate risk is the potential of economic gains or losses due to future interest rate changes. These changes can be reflected in future net interest income and/or fair market values. The objective is to measure the effect on net interest income (“NII”) and economic value of equity (“EVE”) and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

We manage interest rate exposure by structuring the balance sheet in the ordinary course of business. We have the ability to enter into instruments such as leveraged derivatives, interest rate swaps, financial options, financial futures contracts or forward delivery contracts for the purpose of reducing interest rate risk. Currently, we do not have a material exposure to these instruments. We also have the ability to enter into interest rate swaps as an accommodation to our customers in connection with an interest rate swap program. Based upon the nature of our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.

Our exposure to interest rate risk is managed by the Asset Liability Committee (“ALCO”), which is composed of certain members of senior management, in accordance with policies approved by the Board of Directors. ALCO formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, ALCO considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business

strategies and other factors. ALCO meets monthly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, securities ~~purchase~~purchased and sale activities, commitments to originate loans and the maturities of investment securities and borrowings. Additionally, ALCO reviews liquidity, projected cash flows, maturities of deposits and consumer and commercial deposit activity.

ALCO uses a simulation analysis to monitor and manage the pricing and maturity of assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The simulation tests the sensitivity of NII and EVE. Contractual maturities and repricing opportunities of loans are incorporated in the simulation model as are prepayment assumptions, maturity data and call options within the investment securities portfolio. Assumptions based on past experience are incorporated into the model for non-maturity deposit accounts. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the future NII and EVE. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

The change in the impact of net interest income from the base case for ~~March 31,~~June 30, 2022, and December 31, 2021, was primarily driven by the rate and mix of variable and fixed rate financial instruments, the underlying duration of the financial instruments and the level of response to changes in the interest rate environment. The increase in the level of negative impact to net interest income in the up interest rate shock scenarios is due to the assumed migration of non-term deposit liabilities to higher rate term deposits; the level of fixed rate investments and loans receivable that will not reprice to higher rates; advances; the variable rate subordinated debentures and the non-term deposits that are assumed not to migrate to term deposits that are variable rate and will reprice to the higher rates; and a portion of our portfolio of variable rate loans contain restrictions on the amount of repricing and frequency of repricing that limit the amount of repricing to the current higher rates. These factors result in the negative impacts to net interest income in the up interest rate shock scenarios that are detailed in the table below. In the down interest rate shock scenario, the main drivers of the negative impact on net interest income are the decrease in investment income due to the negative convexity features of the fixed rate mortgage-backed securities, assumed prepayment of existing fixed rate loans receivable, the downward pricing of variable rate loans receivable, the constraint of the shock on non-term deposits and the level of term deposit repricing. Our mortgage-backed security portfolio is primarily comprised of fixed rate investments and as rates decrease, the level of prepayments is assumed to increase and cause the current higher rate investments to prepay and the assumed reinvestment will be at lower interest rates. Similar to our mortgage-backed securities, the model assumes that our fixed rate loans receivable will prepay at a faster rate and reinvestment will occur at lower rates. The level of downward shock on the non-term deposits is constrained to limit the downward shock to a non-zero rate which results in a minimal reduction in the average rate paid. Term deposits repricing will only decrease the average cost paid by a minimal amount due to the assumed repricing occurring at maturity. These factors result in the negative impact to net interest income in the down interest rate shock scenario.

The change in the EVE from the base case for ~~March 31,~~June 30, 2022, and December 31, 2021, is due to being in a liability sensitive position and the level of convexity in pre-payable assets. Generally, with a liability sensitive position, as interest rates increase, the value of assets decrease faster than the value of liabilities and as interest rates decrease, the value of assets increase at a faster rate than liabilities. However, due to the level of convexity in fixed rate pre-payable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario. In addition, the mix of interest-bearing deposit and non-interest-bearing deposits impact the level of deposit decay and the resulting benefit of discounting from the non-interest-bearing deposits. At ~~March 31,~~June 30, 2022, non-interest-bearing deposits were approximately ~~$11.7~~$49.3 million or ~~1.0% higher~~4.0% lower than that deposit type at December 31, 2021. Substantially all investments and approximately ~~53.1%~~50.4% of loans are pre-payable and fixed rate and as rates decrease, the level of modeled prepayments increase. The prepaid principal is assumed to reprice at the assumed current rates resulting in a smaller positive impact to the EVE.

Management utilizes static balance sheet rate shocks to estimate the potential impact on various rate scenarios. This analysis estimates a percentage of change in the metric from the stable rate base scenario versus alternative scenarios of rising and falling market interest rates by instantaneously shocking a static balance sheet. The following table summarizes the simulated immediate change in net interest income for twelve months as of the dates indicated.

	Impact on Net Interest Income						Impact on Net Interest Income
Change in prevailing interest rates	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
+300 basis points		(5.1	)%		(4.4	)%		(4.4	)%		(4.4	)%
+200 basis points		(3.1	)%		(2.4	)%		(2.7	)%		(2.4	)%
+100 basis points		(1.5	)%		(1.0	)%		(1.2	)%		(1.0	)%
0 basis points		—			—			—			—
-100 basis points		(2.7	)%		(4.4	)%		(3.6	)%		(4.4	)%

The following table summarizes the simulated immediate impact on economic value of equity as of the dates indicated.

	Impact on Economic Value of Equity						Impact on Economic Value of Equity
Change in prevailing interest rates	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
+300 basis points		(10.1	)%		(2.8	)%		(14.0	)%		(2.8	)%
+200 basis points		(4.3	)%		0.7	%		(8.9	)%		0.7	%
+100 basis points		(1.9	)%		2.7	%		(4.6	)%		2.7	%
0 basis points		—			—			—			—
-100 basis points		(4.3	)%		(14.8	)%		0.5	%		(14.8	)%

An evaluation of the effectiveness of the design and operation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management was required to apply judgement in evaluating its controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC rules and forms.

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

From time to time, we are a party to various litigation matters incidental to the conduct of our business. See “NOTE 12 – LEGAL MATTERS” of the Condensed Notes to Interim Consolidated Financial Statements under Item 1 to this Quarterly report for a complete discussion of litigation matters.

There have been no material changes in the Company’s risk factors previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 9, 2022.

In September of 2021, the Company’s Board of Directors authorized an additional repurchase of up to 1,000,000 shares of the Company’s outstanding common stock, from time to time, beginning October 29, 2021, and concluding October 28, 2022. The repurchase program does not obligate the Company to acquire a specific dollar amount or number of shares and it could be extended, modified or discontinued at any time without notice. On October 20, 2021, the Federal Reserve Bank of Kansas City advised the Company that it had no objection to the Company’s authorization to repurchase of up to an additional 1,000,000 shares of the Company’s Class A Voting Common Stock.

The following table presents shares that have been repurchased under the program during the ~~first~~second quarter of 2022.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Kansas		72-1532188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7701 East Kellogg Drive, Suite 300 Wichita, KS		67207
(Address of principal executive offices)		(Zip Code)

Part I	Financial Information	5
Item 1.	Financial Statements	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Stockholders’ Equity	8
	Consolidated Statements of Cash Flows	910
	Condensed Notes to Interim Consolidated Financial Statements	1112
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3944
	Overview	4146
	Critical Accounting Policies	4146
	Results of Operations	4247
	Financial Condition	4758
	Liquidity and Capital Resources	5566
	Non-GAAP Financial Measures	5667
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5970
Item 4.	Controls and Procedures	6172
Part II	Other Information	6273
Item 1.	Legal Proceedings	6273
Item 1A.	Risk Factors	6273
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6273
Item 3.	Defaults Upon Senior Securities	6273
Item 4.	Mine Safety Disclosures	6273
Item 5.	Other Information	6273
Item 6.	Exhibits	6273


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

	As of and for the three months ended
	June 30, 2022				June 30, 2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,572	$	—	$	—	$	2
Commercial and industrial		982		—		—		—
Residential real estate		553		—		11		—
Agricultural real estate		1,400		—		3,210		83
Agricultural		—		—		2,066		33
Consumer		—		—		—		1
Subtotal		4,507		—		5,287		119
With an allowance recorded:
Commercial real estate		2,800		—		8,010		3
Commercial and industrial		2,549		—		29,034		11
Residential real estate		3,160		1		2,752		2
Agricultural real estate		2,378		3		3,787		—
Agricultural		4,072		—		8,033		10
Consumer		312		—		253		1
Subtotal		15,271		4		51,869		27
Total	$	19,778	$	4	$	57,156	$	146

	As of and for the six months ended
	June 30, 2022				June 30, 2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,048	$	—	$	561	$	3
Commercial and industrial		1,309		—		214		—
Residential real estate		512		1		67		—
Agricultural real estate		1,487		—		2,504		83
Agricultural		—		—		2,874		33
Consumer		16		—		—		1
Subtotal		4,372		1		6,220		120
With an allowance recorded:
Commercial real estate		4,144		—		7,306		18
Commercial and industrial		3,231		—		26,961		119
Residential real estate		3,655		1		2,760		2
Agricultural real estate		2,498		3		3,531		20
Agricultural		4,773		—		5,629		44
Consumer		299		—		260		1
Subtotal		18,600		4		46,447		204
Total	$	22,972	$	5	$	52,667	$	324

	December 31, 2021
	Unclassified		Classified		Total
Commercial real estate	$	32,855	$	—	$	32,855
Commercial and industrial		3,450		—		3,450
Total loans	$	36,305	$	—	$	36,305

	June 30, 2022								December 31, 2021
	Weighted average Maturity in years		Weighted average pay rate			Weighted average rate received			Weighted average Maturity in years		Weighted average pay rate			Weighted average rate received
Subordinated note hedges		13.2		2.81	%		1.80	%		13.7		2.81	%		1.92	%
Fixed rate loan hedges		1.8		4.00			5.60			—		—			—
Total cash flow hedges		2.3		3.94	%		5.42	%		13.7		2.81	%		1.92	%

Offering Period	Shares Purchased		Cost Per Share		Compensation Expense
August 15, 2020 to February 14, 2021		17,621	$	13.68	$	42
February 15, 2021 to August 14, 2021		16,034		20.50		58
August 15, 2021 to February 14, 2022		14,274		27.37		69

Summary of assets sold and liabilities
assumed by UBT:
Cash and due from banks	$	508
Loans		26,110
Premises and equipment		1,225
Goodwill		1,364
Core deposit intangible		164
Other assets		391
Total assets sold		29,762
Deposits		52,714
Interest payable and other liabilities		19
Total liabilities assumed by UBT		52,733
Total net assets		(22,971	)

Cash paid		22,431
Gain on Branch Sale	$	(540	)

Demand	$	15,817
Total non-interest-bearing deposits		15,817
Demand, savings and money markets		28,615
Time		8,282
Total interest-bearing deposits		36,897
Total deposits	$	52,714

	As of December 31, 2021
	One year or less		After one year through five years		After five years through fifteen years		After fifteen years		Total
	(Dollars in thousands)
Commercial and industrial	$	172,409	$	300,312	$	88,124	$	6,652	$	567,497
Real Estate:
Commercial real estate		247,339		834,277		355,479		49,053		1,486,148
Residential real estate		6,594		14,066		136,994		480,433		638,087
Agricultural real estate		53,703		83,861		47,176		13,590		198,330
Total real estate		307,636		932,204		539,649		543,076		2,322,565
Agricultural		113,138		41,003		6,809		6,025		166,975
Consumer		36,714		40,361		18,352		3,163		98,590
Total	$	629,897	$	1,313,880	$	652,934	$	558,916	$	3,155,627
Loans with a predetermined fixed interest rate	$	258,334	$	875,796	$	235,609	$	334,122	$	1,703,861
Loans with an adjustable/floating interest rate		371,563		438,084		417,325		224,794		1,451,766
Total	$	629,897	$	1,313,880	$	652,934	$	558,916	$	3,155,627

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs
January 1, 2022 through January 31, 2022		80,864	$	33.50		80,864		786,263
February 1, 2022 through February 28, 2022		113,659	$	32.04		113,659		672,604
March 1, 2022 through March 31, 2022		189,860	$	31.76		189,860		482,744
Total		384,383	$	32.21		384,383		482,744

Exhibit No.		Description
~~10.1~~		Fifth Amendment to Loan and Security Agreement, dated February 11, 2022, by and between Equity Bancshares, Inc and ServisFirst Bank (incorporated by reference to Exhibit 10.1 to Equity Bancshares, Inc.’s Current Report on Form 8-K, filed with the SEC on February 18, 2022).
~~10.2~~		Equity Bancshares, Inc 2022 Omnibus Equity Incentive Plan (incorporated by reference to Appendix A to Equity Bancshares, Inc.’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 17, 2022).
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	Equity Bancshares, Inc.

~~May 5,~~August 8, 2022	By:	/s/ Brad S. Elliott
Date		Brad S. Elliott
		Chairman and Chief Executive Officer

~~May 5,~~August 8, 2022	By:	/s/ Eric R. Newell
Date		Eric R. Newell
		Executive Vice President and Chief Financial Officer