Registrant’s telephone number, including area code: ~~316.612.6000~~316.612.6000

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~~☒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 ~~August 1, 2022,~~April 28, 2023, the registrant had ~~16,091,406~~15,480,961 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,~~2023, 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.

For the Three ~~and Six~~ Months ended ~~June 30,~~March 31, 2023, and 2022 ~~and 2021~~

~~See accompanying condensed notes to interim consolidated financial statements.~~

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately ~~$878,436~~$795,161 at ~~June 30, 2022,~~March 31, 2023, and ~~$892,182~~$820,751 at December 31, ~~2021.~~2022.

The tables above present unrealized losses on available-for-sale and held-to-maturity securities since the date of purchase, independent of the impact associated with changes in cost basis upon transfer from the available-for-sale designation to the held-to-maturity designation. As of ~~June 30, 2022,~~March 31, 2023, the Company held ~~514~~409 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 and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated ~~recovery and the~~recovery. The decline in fair value is largely due to changes in interest ~~rates. The~~rates and the fair value is expected to recover as the securities approach maturity.

The Company's available-for-sale investments that carry some form of credit risk are the investments in private label residential mortgage-backed securities, corporate securities and state and political subdivisions securities.

All private label residential mortgage-backed securities held by the Company are senior in the capital structure, carry substantial credit enhancement and are 20% risk weighted by the Simplified Supervisory Formula Approach ("SSFA"). At March 31, 2023, the Company does not anticipate any credit losses in the private label residential mortgage-backed securities portfolio.

The Company's corporate debt exposure consists of 14 separate positions in U.S. financial institutions, all of which the Company has determined to be investment grade. Substantially all of the positions are subordinated debt issued by bank holding companies. The Company periodically reviews financial data of the issuers to ensure their continued investment grade status. At March 31, 2023, the Company does not anticipate any credit losses in the corporate debt securities portfolio.

The Company's portfolio of state and political subdivisions securities is comprised of 197 positions of which 86% of the positions are rated "A" or better by a Nationally Recognized Statistical Ratings Organization ("NRSRO"), and 70% of the overall

portfolio is made up of general obligation bonds. The Company periodically reviews financial data of the entities and regularly monitors credit ratings changes of the entities. At March 31, 2023, the Company does not anticipate any credit losses in the state and political subdivisions securities portfolio.

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

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

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

~~Agricultural~~: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: 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.

Included in the commercial and industrial loan balances at June 30, 2022, and December 31, 2021, are $7,440 and $44,783 of loans that were originated under the SBA PPP program. At June 30, 2022, and December 31, 2021, unamortized loan fees on these loans were $125 and $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 ~~six months~~quarters ended ~~June 30,~~March 31, 2023 and 2022, the Company ~~purchased 1 pool of residential mortgage loans totaling $795. During the first six months of 2021, the Company purchased 3~~did not purchase any pools of residential ~~real estate loans totaling $168,206.~~loans. As of ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, residential real estate loans include ~~$343,966~~$321,094 and ~~$372,069~~$327,309 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 ~~six months~~quarter ended ~~June 30, 2022,~~March 31, 2023, the Company purchased ~~$2,293~~$802 in loans guaranteed by governmental agencies. ~~Government~~During the first three months of 2022, the Company purchased $2,293 in loans guaranteed ~~loans totaling $3,861 were purchased in the six months ended June 30, 2021.~~by governmental agencies.

The unamortized discount of merger purchase accounting adjustments related to non-purchase credit deteriorated loans included in the loan totals above are ~~$4,548~~$3,314 with related loans of ~~$368,703~~$273,286 at ~~June 30, 2022,~~March 31, 2023, and ~~$6,649~~$3,632 with related loans of ~~$527,422~~$286,538 at December 31, ~~2021.~~2022.

Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled ~~$577~~$367 at ~~June 30, 2022,~~March 31, 2023, and ~~$886~~$475 at December 31, ~~2021.~~2022.

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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.

The following table presents information related to nonaccrual loans ~~and the level of collateral that supports the nonaccrual loans~~ at ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.

The table below presents average recorded investment and interest income related to nonaccrual loans for the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023, and ~~2021.~~2022. 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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, by portfolio and class of loans.

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 ~~June 30, 2022,~~March 31, 2023, is as follows.

June 30, 2022	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total

March 31, 2023																			2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	229,399	$	278,359	$	210,424	$	133,787	$	125,997	$	206,294	$	447,861	$	1,318	$	1,633,439	$	53,613	$	429,072	$	248,286	$	185,445	$	85,580	$	260,508	$	472,469	$	728	$	1,735,701
Special mention		294		220		—		—		—		576		—		—		1,090		—		3,304		122		—		—		413		—		—		3,839
Substandard		—		3,145		369		173		73		4,170		609		—		8,539		—		—		3,003		241		1,537		2,513		—		—		7,294
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	229,693	$	281,724	$	210,793	$	133,960	$	126,070	$	211,040	$	448,470	$	1,318	$	1,643,068	$	53,613	$	432,376	$	251,411	$	185,686	$	87,117	$	263,434	$	472,469	$	728	$	1,746,834
Commercial and industrial
Risk rating
Pass	$	113,838	$	108,123	$	79,707	$	46,546	$	8,109	$	14,022	$	177,644	$	2,027	$	550,016	$	49,592	$	157,541	$	75,736	$	62,241	$	37,381	$	14,295	$	180,636	$	6,581	$	584,003
Special mention		—		—		—		—		693		3,775		—		—		4,468		—		—		—		—		—		1,102		3,023		—		4,125
Substandard		148		4,215		2,913		10,162		1,480		831		4,666		—		24,415		—		6,516		241		2,131		4,166		2,226		2,168		—		17,448
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	113,986	$	112,338	$	82,620	$	56,708	$	10,282	$	18,628	$	182,311	$	2,026	$	578,899	$	49,592	$	164,057	$	75,977	$	64,372	$	41,547	$	17,623	$	185,827	$	6,581	$	605,576
Residential real estate
Risk rating
Pass	$	17,504	$	311,614	$	6,352	$	16,170	$	52,637	$	115,386	$	56,027	$	152	$	575,842	$	9,976	$	31,494	$	294,422	$	5,752	$	12,789	$	146,032	$	59,742	$	183	$	560,390
Special mention		—		—		—		—		—		24		—		—		24		—		—		—		—		—		—		—		—		—
Substandard		—		—		52		47		223		2,673		75		—		3,070		—		56		82		47		238		2,498		480		—		3,401
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total residential real estate	$	17,504	$	311,614	$	6,404	$	16,217	$	52,860	$	118,083	$	56,102	$	152	$	578,936	$	9,976	$	31,550	$	294,504	$	5,799	$	13,027	$	148,530	$	60,222	$	183	$	563,791
Agricultural real estate
Risk rating
Pass	$	18,490	$	24,251	$	30,299	$	20,000	$	9,169	$	23,511	$	67,465	$	300	$	193,485	$	5,227	$	32,617	$	19,959	$	23,646	$	12,115	$	22,955	$	68,888	$	289	$	185,696
Special mention		—		—		—		—		—		486		22		—		508		4,865		874		—		—		—		599		7,880		—		14,218
Substandard		107		1,519		—		117		467		1,292		443		—		3,945		—		—		194		—		114		2,015		37		—		2,360
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	18,597	$	25,770	$	30,299	$	20,117	$	9,636	$	25,289	$	67,930	$	300	$	197,938	$	10,092	$	33,491	$	20,153	$	23,646	$	12,229	$	25,569	$	76,805	$	289	$	202,274
Agricultural
Risk rating
Pass	$	14,040	$	14,438	$	13,361	$	3,702	$	2,641	$	2,575	$	65,845	$	75	$	116,677	$	7,511	$	12,644	$	6,312	$	8,132	$	1,829	$	4,131	$	59,182	$	75	$	99,816
Special mention		—		—		—		86		32		375		—		—		493		—		—		1		—		88		349		586		—		1,024
Substandard		—		1,724		1,925		2,086		388		251		1,209		—		7,583		—		—		1,003		1,839		1,888		194		405		—		5,329
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total agricultural	$	14,040	$	16,162	$	15,286	$	5,874	$	3,061	$	3,201	$	67,054	$	75	$	124,753	$	7,511	$	12,644	$	7,316	$	9,971	$	3,805	$	4,674	$	60,173	$	75	$	106,169
Consumer
Risk rating
Pass	$	39,242	$	23,191	$	11,006	$	4,740	$	2,264	$	4,234	$	14,907	$	1	$	99,585	$	29,191	$	34,984	$	15,295	$	7,307	$	2,560	$	4,128	$	12,093	$	1	$	105,559
Special mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		41		66		96		25		39		—		—		267		—		87		180		46		58		43		1		—		415
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total consumer	$	39,242	$	23,232	$	11,072	$	4,836	$	2,289	$	4,273	$	14,907	$	1	$	99,852	$	29,191	$	35,071	$	15,475	$	7,353	$	2,618	$	4,171	$	12,094	$	1	$	105,974
Total loans
Risk rating
Pass	$	432,513	$	759,976	$	351,149	$	224,945	$	200,817	$	366,022	$	829,749	$	3,873	$	3,169,044	$	155,110	$	698,352	$	660,010	$	292,523	$	152,254	$	452,049	$	853,010	$	7,857	$	3,271,165
Special mention		294		220		—		86		725		5,236		22		—		6,583		4,865		4,178		123		—		88		2,463		11,489		—		23,206
Substandard		255		10,644		5,325		12,681		2,656		9,256		7,002		—		47,819		—		6,659		4,703		4,304		8,001		9,489		3,091		—		36,247
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total loans	$	433,062	$	770,840	$	356,474	$	237,712	$	204,198	$	380,514	$	836,773	$	3,873	$	3,223,446	$	159,975	$	709,189	$	664,836	$	296,827	$	160,343	$	464,001	$	867,590	$	7,857	$	3,330,618

Based on the analysis performed at December 31, ~~2021,~~2022, the risk category of loans, by type and year of origination is as follows.


December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	432,196	$	252,616	$	188,897	$	92,290	$	114,415	$	171,498	$	462,140	$	741	$	1,714,793
Special mention		—		122		—		—		—		401		—		—		523
Substandard		—		3,049		244		144		—		2,515		—		—		5,952
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	432,196	$	255,787	$	189,141	$	92,434	$	114,415	$	174,414	$	462,140	$	741	$	1,721,268
Commercial and industrial
Risk rating
Pass	$	172,912	$	79,782	$	65,915	$	39,487	$	6,712	$	5,089	$	189,998	$	6,654	$	566,549
Special mention		—		—		—		—		674		3,851		—		—		4,525
Substandard		283		4,316		2,167		10,127		1,460		783		4,653		—		23,789
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	173,195	$	84,098	$	68,082	$	49,614	$	8,846	$	9,723	$	194,651	$	6,654	$	594,863
Residential real estate
Risk rating
Pass	$	34,705	$	299,840	$	5,939	$	13,073	$	47,986	$	102,871	$	62,494	$	271	$	567,179
Special mention		—		—		—		—		—		—		—		—		—
Substandard		58		86		48		209		239		2,633		98		—		3,371
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	34,763	$	299,926	$	5,987	$	13,282	$	48,225	$	105,504	$	62,592	$	271	$	570,550
Agricultural real estate
Risk rating
Pass	$	33,586	$	20,712	$	26,408	$	12,754	$	5,608	$	18,882	$	68,510	$	300	$	186,760
Special mention		874		—		2,493		—		—		604		5,983		—		9,954
Substandard		—		203		—		115		485		1,635		37		—		2,475
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	34,460	$	20,915	$	28,901	$	12,869	$	6,093	$	21,121	$	74,530	$	300	$	199,189
Agricultural
Risk rating
Pass	$	23,917	$	7,778	$	9,437	$	2,642	$	2,250	$	2,134	$	64,647	$	75	$	112,880
Special mention		—		—		—		92		22		375		556		—		1,045
Substandard		—		1,003		1,838		2,044		386		213		594		—		6,078
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	23,917	$	8,781	$	11,275	$	4,778	$	2,658	$	2,722	$	65,797	$	75	$	120,003
Consumer
Risk rating
Pass	$	56,497	$	17,460	$	8,415	$	3,235	$	1,370	$	3,396	$	14,955	$	—	$	105,328
Special mention		—		—		—		—		—		—		—		—		—
Substandard		17		148		54		81		13		34		—		—		347
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	56,514	$	17,608	$	8,469	$	3,316	$	1,383	$	3,430	$	14,955	$	—	$	105,675
Total loans
Risk rating
Pass	$	753,813	$	678,188	$	305,011	$	163,481	$	178,341	$	303,870	$	862,744	$	8,041	$	3,253,489
Special mention		874		122		2,493		92		696		5,231		6,539		—		16,047
Substandard		358		8,805		4,351		12,720		2,583		7,813		5,382		—		42,012
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	755,045	$	687,115	$	311,855	$	176,293	$	181,620	$	316,914	$	874,665	$	8,041	$	3,311,548

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

The following tables disclose the charge-off and recovery activity by loan type and year of origination for the periods ending March 31, 2023.


March 31, 2023	2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost			Revolving Loans Converted to Term		Total
Commercial real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	(1	)	$	—		$	—	$	(1	)
Gross recoveries		—			—			—			—			—			7			—			—		7
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	6		$	—		$	—	$	6
Commercial and industrial
Gross charge-offs	$	—		$	(1	)	$	—		$	—		$	(3	)	$	—		$	(431	)	$	—	$	(435	)
Gross recoveries		—			—			—			—			—			4			—			—		4
Net charge-offs	$	—		$	(1	)	$	—		$	—		$	(3	)	$	4		$	(431	)	$	—	$	(431	)
Residential real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	(1	)	$	(4	)	$	—	$	(5	)
Gross recoveries		—			—			—			—			—			16			—			—		16
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	15		$	(4	)	$	—	$	11
Agricultural real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Gross recoveries		—			—			—			—			—			—			—			—		—
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Agricultural
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Gross recoveries		—			—			—			—			—			155			—			—		155
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	155		$	—		$	—	$	155
Consumer
Gross charge-offs	$	(16	)	$	(51	)	$	(32	)	$	(12	)	$	(20	)	$	(53	)	$	(13	)	$	—	$	(197	)
Gross recoveries		—			4			34			5			3			29			3			—		78
Net charge-offs	$	(16	)	$	(47	)	$	2		$	(7	)	$	(17	)	$	(24	)	$	(10	)	$	—	$	(119	)
Total loans
Gross charge-offs	$	(16	)	$	(52	)	$	(32	)	$	(12	)	$	(23	)	$	(55	)	$	(448	)	$	—	$	(638	)
Gross recoveries		—			4			34			5			3			211			3			—		260
Net charge-offs	$	(16	)	$	(48	)	$	2		$	(7	)	$	(20	)	$	156		$	(445	)	$	—	$	(378	)

~~Consistent with~~and Vintage Disclosures, effective January 1, 2023, and this 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.~~

applied prospectively. The following table ~~summarizes~~presents the ~~Company’s TDRs~~amortized cost basis of loans at March 31, 2023 that were both experiencing financial difficulty and modified during the quarter ended March 31, 2023, by ~~accrual status at June 30, 2022,~~class and ~~December~~by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.

At March 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.~~

~~At June 30, 2022, and December 31, 2021,~~2023, there were 0$128 thousand in commitments to lend additional amounts on these loans.

The Company considers loans modified to borrowers in financial distress as loans that do not share similar risk characteristics with collectively evaluated loans at modification date for the ~~three and six month periods ending June 30, 2022, there were~~purposes of calculating the allowance for credit losses. These loans will be evaluated for credit losses based on either discounted cash flows or the fair value of collateral at modification date; however, subsequent to the modification date these loans will be evaluated for credit losses as part of the collectively evaluated pools after a ~~total~~period of ~~$2,412 and $8,743 in loan modifications considered~~ongoing performance under the terms of the modified loan.

The Company closely monitors the performance of loans that are modified to ~~be troubled debt restructurings. There were 0 loan modifications considered~~borrowers experiencing financial difficulty to ~~be troubled debt restructurings~~understand the effectiveness of its modification efforts. The following table presents the performance of such loans that ~~occurred~~have been modified during the ~~three or six month periods~~quarter ended ~~June 30, 2021. There was $15 in interest income recognized on loans modified as TDRs during~~March 31, 2023.

During the quarter ended March 31, 2023, there were no loans that had a payment ~~on outstanding loan balances of $36.3 million in connection with the COVID-19 relief provided by the CARES Act. These deferrals~~default and 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 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 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 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”)~~LIBOR plus a spread to this index and pays a fixed-rate cash flow equal to the customer loan rate. At ~~June 30,~~March 31, 2023, the portfolio of interest rate swaps had a weighted average maturity of 8.3 years, a weighted average pay rate of 4.53% and a weighted average rate received of 7.67%. At December 31, 2022, the portfolio of interest rate swaps had a weighted average maturity of ~~9.03~~8.5 years, a weighted average pay rate of ~~4.54%~~4.53% and a weighted average rate received of ~~3.01%~~7.13%. ~~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 has entered into cash flow hedges to hedge future cash flows related to subordinated notes interest expense and prime rate adjustable rate loans interest income. These agreements are designated as cash flow hedges and are marked to market through other comprehensive income.

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 ~~June 30,~~March 31, 2023, this portfolio of interest rate swaps had a weighted average maturity of 5.5 years, weighted average pay rate of 7.12% and a weighted average rate received of 7.23%. At December 31, 2022, this portfolio of interest rate swaps had a weighted average maturity of ~~8.4~~5.6 years, weighted average pay rate of ~~4.74% and a weighted average rate received of 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%~~6.96% and weighted average rate received of ~~4.16%~~7.06%.

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 table below lists designated and qualifying hedged items in fair value hedges at ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.

The Company reports hedging derivative gains (losses) as adjustments to loan interest income and loan interest expense along with the related net interest ~~settlements and the~~settlements. The non-hedging derivative gains (losses) and related net interest settlements for economic derivatives are reported in other income. For the three months period ended March 31, 2023, and ~~six month periods ended June 30,~~ 2022, ~~and 2021,~~ the Company recorded net gains (losses) on derivatives and hedging ~~activities.~~activities as shown in the table below.

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 ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The following table shows the recorded net gains or (losses) on derivatives and the related hedged items in ~~fair value~~cash flow hedging relationships and the impact of those derivatives on the ~~Company’s~~Company's net interest income for the ~~six month~~three-month periods ended ~~June 30, 2022~~March 31, 2023 and ~~2021.~~2022.

Operating lease costs for the three months ended March 31, 2023 and ~~six month periods ended June 30,~~ 2022, ~~and 2021,~~ are listed below.

There were no ~~sales~~sale and leaseback transactions, leverage leases, lease transactions with related parties or leases that had not yet commenced during the three ~~or six month periods~~months ended ~~June 30, 2022.~~March 31, 2023.

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 ~~$69,158~~$52,810 and ~~$55,605~~$55,289 at ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022. The agreements are on a day-to-day basis and can be terminated on demand.

Federal Home Loan Bank advances include both draws against the Company’s line of credit and fixed rate term advances.

Federal Home Loan Bank advances as of ~~June 30,~~March 31, 2023, and December 31, 2022, are as follows.

~~At June 30, 2022,~~2023, and December 31, ~~2021,~~2022, the Company had undisbursed advance commitments (letters of credit) with the Federal Home Loan Bank of ~~$17,455~~$45,275 and ~~$17,025.~~$18,305. 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 ~~$605,295~~$960,383 and securities of ~~$82,007~~$73,104 for a total of ~~$687,302~~$1,033,487 at ~~June 30, 2022,~~March 31, 2023, and qualifying loans of ~~$694,892~~$744,125 and securities of ~~$15,409~~$74,083 for a total of ~~$710,302~~$818,208 at December 31, ~~2021.~~2022. Based on this collateral and the Company’s holdings of Federal Home Loan Bank stock, the Company was eligible to borrow an additional ~~$587,800~~$875,813 and ~~$691,149~~$659,695 at ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.

At ~~June 30,~~March 31, 2023, and December 31, 2022, ~~to support~~ the ~~$366,864~~Company had a borrowing capacity ~~from the Federal Reserve Bank,~~of $452,773 and $330,077, for which the Company has pledged loans with an outstanding balance of ~~$399,753~~$526,349 and $390,102 and securities with a fair value of ~~$38,265. NaN~~$32,795 and $33,235. There was $140,000 in borrowings ~~were~~ secured from this facility under the Federal Reserve's Bank Term Funding Program with a rate of 4.38% and a term of one yearat ~~periods ended June 30, 2022,~~March 31, 2023. The Company can repay this borrowing at any time without penalties or fees. There were no outstanding borrowings at December 31, ~~2021.~~2022.

The Company entered into an agreement with an unaffiliated financial institution that provided for a maximum borrowing facility of ~~$40,000,~~$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.~~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%~~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.~~2023. With this amendment, the maximum borrowing amount was decreased from ~~$40,000~~$40,000 to ~~$25,000.~~$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%~~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.

The loan was renewed on February 10, 2023, with a new maturity date of February 10, 2024. With this renewal, the maximum borrowing amount will remain at $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 0no outstanding principal balances on the bank stock loan at ~~June 30, 2022, or~~March 31, 2023, and December 31, ~~2021.~~2022.

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.

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%~~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%~~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%~~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%~~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.

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~~$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.~~ 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%~~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.~~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.~~2025. On July 23, 2020, the Company closed on an additional ~~$33,000~~$33,000 of subordinated notes with the same terms as the June 29, 2020, issue.

The Company’s articles of incorporation provide for the issuance of shares of preferred stock. At ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, there was 0no 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~~$0.01 per share.

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%~~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 ~~$42~~$39 and ~~$78~~$36 was recorded for the three months ended March 31, 2023 and ~~six month periods ended June 30,~~March 31, 2022. ~~ESPP compensation expense of $30 and $55 was recorded for the three and six month periods ended June 30, 2021.The~~The following table presents the offering periods and costs associated with this program during the reporting period.

~~Treasury stock is stated at cost, determined by the first-in first-out method.~~

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 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~~years ended December 31, 2022 and 2021, the Company repurchased a total of ~~132,873~~1,000,000 shares of the Company’s outstanding common stock at an average price paid of ~~$32.99~~$32.11 per share. ~~During~~

In September of 2022, the ~~six months~~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 1, 2022, and concluding on September 30, 2023. 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 ~~June 30,~~December 31, 2022, the Company repurchased a total of ~~740,227~~163,727 shares of the Company’s outstanding common stock at an average price paid of ~~$31.89~~$33.33 per share. During the three months ended March 31, 2023, the Company repurchased a total of 320,050 shares of the Company's outstanding common stock at an average price paid of $29.97 per share. At ~~June 30, 2022,~~March 31, 2023, there are ~~126,900~~459,488 shares remaining available for repurchase under the program.

At ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, 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.

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~~judgements 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%~~6.5%, a total Tier 1 capital ratio of 8%8%, a total capital ratio of ~~10%~~10% and a leverage ratio of 5%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%~~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 ~~June 30, 2022,~~March 31, 2023, 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 ~~June 30, 2022,~~March 31, 2023, 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.

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

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.

There were 0no material transfers between levels during the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, or the year ended December 31, ~~2021.~~2022. 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.~~loans individually assessed for credit losses. The fair value of loans individually ~~evaluated securities is determined as discussed previously~~assessed for ~~available-for-sale securities. The fair values of individually evaluated loans~~credit losses 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.~~collateral. 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.

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 trial court ruling denying the requirement of arbitration is currently on appeal. 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 aone of our Missouri ~~customer~~customers alleging improperly collected overdraft fees. The plaintiff seeks to have the case certified as a class ~~action.~~action of Missouri customers only. 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.

Equity Bank is party to a lawsuit filed on February 18, 2023, in Saline County, Missouri District Court against the Bank on behalf of one of our Missouri customers alleging improperly collected overdraft fees. The plaintiff seeks to have the case certified as a class action for Missouri customers only. 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.

At the close of business on ~~October 1, 2021,~~June 24, 2022, the Company ~~acquired the 100%~~sold three branch locations located in Belleville, Clyde and Concordia, Kansas to United Bank and Trust (UBT). Results of the ~~outstanding common shares~~branch sale were included in the Company's results of ~~American State Bancshares, Inc. (“ASBI”), based~~operations beginning June 27, 2022. Branch sale costs were $18 ($14 on an after-tax basis) and are included in ~~Wichita, Kansas.~~merger expense in the Company's income statement for the year ended December 31, 2022. Costs related to this acquisition during the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2023 were ~~$87 and $274 ($65 and $206 on an after-tax basis)~~$0.

At the close of business on ~~December 3, 2021,~~November 10, 2022, the Company ~~acquired~~sold one branch location located in Cordell, Oklahoma to High Plains Bank (HPB). Results of the ~~assets and assumed~~branch sale were included in the ~~deposits and certain other liabilities~~Company's results of ~~3 bank locations in St. Joseph, Missouri, from Security Bank of Kansas City, based in Kansas City Kansas (“Security”). Costs~~operations beginning November 14, 2022. There were not branch sale related costs on the Company's income statement for the year ended December 31, 2022. At March 31, 2023, there were no 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).~~branch sale.

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. This transaction was completed on June 24, 2022. The completed transaction resulted in a net gain of $540.

~~The following table summarizes the carrying value of assets and liabilities sold on June 24, 2022.~~

~~The following tables present the carrying value of loans and deposits sold to UBT on 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,~~2023, 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:

* 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~~financial 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 6664 full-service banking sites located in Arkansas, Kansas, Missouri, and Oklahoma. As of ~~June 30, 2022,~~March 31, 2023, we had consolidated total assets of ~~$5.00~~$5.16 billion, total loans held for investment, net of allowance, of ~~$3.18~~$3.28 billion, total deposits of $4.29 billion, and total

stockholders’ equity of ~~$428.1~~$425.1 million. During the three ~~and six~~ month ~~periods~~period ended ~~June 30, 2022,~~March 31, 2023, the Company had net income of ~~$15.3 million and $30.9~~$12.3 million. The Company had net income of ~~$15.2 million and $30.2~~$15.7 million for the three ~~and six~~ month ~~periods~~period ended ~~June 30, 2021.~~ March 31, 2022.

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,~~2022, audited financial statements included in our Annual Report on Form 10-K filed with the SEC on March 9, ~~2022.~~2023. 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~~judgement by management about the effect of matters that are inherently uncertain. The actual realized facts and circumstances may be different than those currently estimated by management and may result in significant changes in the allowance for credit losses in future periods. 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 ~~June 30, 2022.~~March 31, 2023. 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 ~~June 30, 2022, based on~~March 31, 2023, management conducted the ~~improving market conditions~~quarterly qualitative assessment and ~~strong earnings performance by the Company, management~~ has determined there was ~~not~~no 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 and occupancy ~~expenses and technology.~~expenses.

Changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and ~~interest-bearing~~non-interest-bearing liabilities and stockholders’ equity, are usually 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,~~circumstances 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 consumer, commercial ~~consumer,~~ and real estate sectors within these markets.

Three months ended ~~June 30, 2022,~~March 31, 2023, compared with three months ended ~~June 30, 2021:~~March 31, 2022: Net ~~income and net~~ income allocable to common stockholders for the three months ended ~~June 30, 2022,~~March 31, 2023, was ~~$15.3~~$12.3 million, or $0.77 diluted earnings per share as compared to ~~a net income and net income allocable to common stockholders of $15.2~~$15.7 million, or $0.93 diluted earnings per share for the three months ended ~~June 30, 2021, an increase~~March 31, 2022, a decrease of ~~$100 thousand.~~$3.4 million. The ~~increase~~decrease during the three month period ended ~~June 30, 2022,~~March 31, 2023, was largely due to an increase in ~~loan interest income of $3.4 million, taxable securities interest income of $2.3 million. This increase was partially offset by an increase in~~ non-interest expense of ~~$5.6~~$4.3 million, offset by a decrease in income tax expense of $1.1 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 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 $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 $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 ~~June 30, 2022,~~March 31, 2023, compared with three months ended ~~June 30, 2021~~:March 31, 2022: 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 ~~June 30, 2022,~~March 31, 2023, and ~~2021.~~2022. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

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 periods ended ~~June 30, 2022,~~March 31, 2023, and ~~2021.~~2022.

(1)

Increase (Decrease) Due to:

Total
Increase /

(Dollars in thousands)

Volume⁽¹⁾

Yield/Rate⁽¹⁾

(Decrease)

Interest-earning assets:

Loans

Commercial and industrial

$
(3,127
)

$
(1,119
)

$
(4,246
)
Commercial real estate

2,614

474

3,088

Real estate construction

1,386

559

1,945

Residential real estate

1,202

(638
)

564

Agricultural real estate

917

39

956

Agricultural

457

52

509

Consumer

111

112

223

Total loans

3,560

(521
)

3,039

Taxable securities

1,425

636

2,061

Nontaxable securities

63

(102
)

(39
)
Total securities

1,488

534

2,022

Federal funds sold and other

37

208

245

Total interest-earning assets

5,085

221

5,306

Interest-bearing liabilities:

Interest-bearing demand deposits

84

258

342

Savings and money market

96

13

109

Demand, savings and money market

180

271

451

Certificates of deposit

78

(371
)

(293
)
Total interest-bearing deposits

258

(100
)

158

FHLB term and line of credit advances

93

3

96

Subordinated debt

143

(47
)

96

Other borrowings

10

10

20

Total interest-bearing liabilities

504

(134
)

370

Net Interest Income

$
4,581

$
355

$
4,936

rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each.

~~(1)~~

The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the prior year’s volume. The changes attributable to both volume and rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each.

Interest income on interest-earning assets increased ~~$5.3~~$13.5 million for the quarter ended ~~June 30, 2022,~~March 31, 2023, as compared to the quarter ended ~~June 30, 2021.~~March 31, 2022. Of this increase, ~~$3.6~~$12.1 million and ~~$1.5~~$0.6 million are attributable toto12.1 million increases in loan and taxable securities ~~volume.~~rate/yield. Yield on loans ~~decreased~~increased by 16133 basis points and yield on ~~total~~taxable securities increased by 1853 basis points for the quarter ended ~~June 30, 2022,~~March 31, 2023, as compared to ~~June 30, 2021.~~March 31, 2022. The ~~decrease~~increase in ~~yield~~interest income on loans ~~from the three months ended June 30, 2022 was~~is primarily due to ~~the forgiveness of PPP~~higher yields on commercial and industrial, commercial real estate, real estate construction and agricultural real estate loans, offset by decreases in volume and ~~the resulting recognition of the unamortized fees~~yield on ~~these loans during 2021.~~agricultural loans.

There was ~~a slight~~an increase in interest expense on Total interest-bearing deposits ~~primarily~~of $12.1 million due to a general increase in ~~the cost and volume of interest-bearing deposits, partially offset by a decrease~~market interest rates. The increase in the cost of ~~certificates of~~interest-bearing deposits from ~~0.77%~~0.22% for the quarter ended March 21, 2022 to ~~0.53%, a 24 basis point decrease. The reduction is reflective of~~1.73% for the ~~Company’s continued efforts~~quarter ended March 31, 2023, was primarily the result the Federal Reserve raising federal funds target rate in response to ~~attract and retain strong, low-cost deposit relationships, excess liquidity in the economy leading to higher carrying balances, and the depressed~~inflation concerns, with more interest rate ~~environment over the past year.~~increases expected.

When compared to the quarter ended ~~June 30, 2021,~~March 31, 2022, net interest margin ~~decreased 11~~increased 6 basis points during the quarter ended ~~June 30, 2022.~~March 31, 2023. Comparing the same periods, net interest spread decreased by 1130 basis points to ~~3.25%~~2.96% from ~~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~~:3.26%. 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.

~~Average Balance Sheets and Net Interest Analysis~~

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
%

~~Analysis of Changes in Net Interest Income~~

~~For the Six Months Ended June 30, 2022, and 2021~~

Increase (Decrease) Due to:

Total
Increase /

(Dollars in thousands)

Volume(1)

Yield/Rate(1)

(Decrease)

Interest-earning assets:

Loans

Commercial and industrial

$
(6,098
)

$
380

$
(5,718
)
Commercial real estate

5,098

1

5,099

Real estate construction

2,174

891

3,065

Residential real estate

3,446

(1,667
)

1,779

Agricultural real estate

1,715

207

1,922

Agricultural

1,207

580

1,787

Consumer

418

(8
)

410

Total loans

7,960

384

8,344

Taxable securities

3,370

283

3,653

Nontaxable securities

85

(193
)

(108
)
Total securities

3,455

90

3,545

Federal funds sold and other

(134
)

391

257

Total interest-earning assets

11,281

865

12,146

Interest-bearing liabilities:

Interest-bearing demand deposits

192

149

341

Savings and money market

184

(48
)

136

Demand, savings and money market

376

101

477

Certificates of deposit

126

(1,133
)

(1,007
)
Total interest-bearing deposits

502

(1,032
)

(530
)
FHLB term and line of credit advances

99

(59
)

40

Subordinated debt

283

(144
)

139

Other borrowings

17

14

31

Total interest-bearing liabilities

901

(1,221
)

(320
)
Net Interest Income

$
10,380

$
2,086

$
12,466

~~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 net interest ~~income is primarily due to increases in average loans and taxable securities volume, which~~margin 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 were responsible for $530 thousand of~~ the ~~decrease in interest expense, which was partially~~rate/yield earned on interest-earning asset, offset by an increase in the cost of ~~subordinated borrowings~~interest-bearing liabilities portfolio. While the net interest spread decreased over the comparative period as the re-pricing of ~~$139 thousand. Total cost~~our

interest-bearing liabilities and the increase in the average balance of interest-bearing liabilities ~~decreased by 10 basis points from~~outpaced the ~~six months ended June 30, 2021, to~~re-pricing of our interest-earning asset portfolio coupled with the ~~six months ended June 30, 2022.~~decrease in the average balance of the interest-earning asset portfolio.

When 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%.

Provision for Credit Losses

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~~next 12 months, ~~which is~~ considered the Company’s reasonable and supportable forecast period. As these factors change, the amount of the credit loss provision changes.

Three months ended ~~June 30, 2022,~~March 31, 2023, compared with three months ended ~~June 30, 2021:~~March 31, 2022: During the three months ended ~~June 30, 2022,~~March 31, 2023, there was a ~~provision~~reversal for credit losses of ~~$824~~$366 thousand compared to a reversal ~~of provision~~ for credit losses of ~~$1.7 million~~$412 thousand during the three months ended ~~June 30, 2021.~~March 31, 2022. The release of provision for the ~~second~~ quarter is the result of ~~2022 was due~~continued positive credit trends without realization of meaningful losses; however, the Company continues to ~~an increase in general reserves, driven by~~estimate the allowance for credit losses with assumptions that anticipate slowing prepayment ~~speeds,~~rates and ~~the perceived risk associated with current economic environment, including significant~~continued market disruption caused by elevated inflation, supply chain ~~concerns,~~issues and the 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.~~consumers and businesses. Net charge-offs for the three months ended ~~June 30, 2022,~~March 31, 2023, were ~~$176~~$378 thousand compared to net charge-offs of ~~$567~~$363 thousand for the three months ended ~~June 30, 2021.~~March 31, 2022. For the three months ended ~~June 30, 2022,~~March 31, 2023, gross charge-offs were ~~$382~~$638 thousand, offset by gross recoveries of ~~$206~~$260 thousand. In comparison, gross charge-offs were ~~$713~~$534 thousand for the three months ended ~~June 30, 2021,~~March 31, 2022, offset by gross recoveries of ~~$146~~$171 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 compared to a provision reversal of $7.4 million for the six months ended June 30, 2021. The increase in provision for the six months ending June 30, 2022, was largely due to the perceived economic risk due to recent periods of inflation, geopolitical uncertainty, and impacts of monetary policy. The large reversal of provision in the six months ended 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 six months ended June 30, 2022, were $539 thousand compared to net charge-offs of $632 thousand for the six months ended June 30, 2021. For the six months ended June 30, 2022, gross charge-offs were $916 thousand, offset by gross recoveries of $377 thousand. In comparison, gross charge-offs were $1.0 million for the six months ended June 30, 2021, offset by gross recoveries of $372 thousand.

Non-Interest Income

~~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.

Three months ended March 31, 2023, compared with three months ended March 31, 2022: The following table provides a comparison of the major components of non-interest income for the three months ended ~~June 30, 2022,~~March 31, 2023, and ~~2021.~~2022.

Non-Interest Income

For the Three Months Ended ~~June 30,~~March 31,


							2023 vs. 2022
(Dollars in thousands)	2023			2022			Change			%
Service charges and fees	$	2,545		$	2,522		$	23			0.9	%
Debit card income		2,554			2,628			(74	)		(2.8	)%
Mortgage banking		88	��		562			(474	)		(84.3	)%
Increase in value of bank-owned life insurance		1,583			865			718			83.0	%
Other
Investment referral income		89			143			(54	)		(37.8	)%
Trust income		240			294			(54	)		(18.4	)%
Insurance sales commissions		113			65			48			73.8	%
Recovery on zero-basis purchased loans		6			20			(14	)		(70.0	)%
Income (loss) from equity method investments		(55	)		(55	)		—			—	%
Other non-interest income		1,894			1,938			(44	)		(2.3	)%
Total other		2,287			2,405			(118	)		(4.9	)%
Subtotal		9,057			8,982			75			0.8	%
Net gain (loss) from securities transactions		32			40			(8	)		(20.0	)%
Total non-interest income	$	9,089		$	9,022		$	67			0.7	%

2022 vs. 2021

(Dollars in thousands)

2022

2021

Change

%

Service charges and fees

$
2,617

$
2,169

$
448

20.7
%
Debit card income

2,810

2,679

131

4.9
%
Mortgage banking

428

848

(420
)

(49.5
)%
Increase in value of bank-owned life insurance

736

676

60

8.9
%
Other

Investment referral income

140

194

(54
)

(27.8
)%
Trust income

264

336

(72
)

(21.4
)%
Insurance sales commissions

48

46

2

4.3
%
Recovery on zero-basis purchased loans

13

19

(6
)

(31.6
)%
Income (loss) from equity method investments

(56
)

(56
)

—

—
%
Other non-interest income

2,129

1,526

603

39.5
%
Total other

2,538

2,065

473

22.9
%
Subtotal

9,129

8,437

692

8.2
%
Net gain (loss) on acquisition and branch sales

540

663

(123
)

(18.6
)%
Net gain (loss) from securities transactions

(32
)

—

(32
)

(100.0
)%
Total non-interest income

$
9,637

$
9,100

$
537

5.9
%

~~Six months ended June 30, 2022, compared with six months ended June 30, 2021:~~51

~~Other~~

Total non-interest income increased ~~$537~~$67 thousand during the three months ended ~~June 30, 2022,~~March 31, 2023, as compared to the same period in ~~2021.~~2022. The increase is largely attributable to increases in ~~other non-interest~~bank-owned life insurance of $718 thousand, offset by a decrease in Mortgage banking income of $603 thousand and service charges and fees of $448 thousand. Included in service charges and fees were increases in non-sufficient funds fees of $422 thousand, with the remaining increase primarily from service charges.$474. 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 $124 thousand and increases in derivatives not designated as hedging relationships of $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.~~

~~Non-Interest Income~~

~~For the Six Months Ended June 30,~~

2022 vs. 2021

(Dollars in thousands)

2022

2021

Change

%

Service charges and fees

$
5,139

$
3,765

$
1,374

36.5
%
Debit card income

5,438

5,029

409

8.1
%
Mortgage banking

990

1,783

(793
)

(44.5
)%
Increase in value of bank-owned life insurance

1,601

1,277

324

25.4
%
Other

Investment referral income

283

317

(34
)

(10.7
)%
Trust income

557

496

61

12.3
%
Insurance sales commissions

113

106

7

6.6
%
Recovery on zero-basis purchased loans

33

53

(20
)

(37.7
)%
Income from equity method investments

(111
)

(111
)

—

—
%
Other non-interest income

4,068

2,495

1,573

63.0
%
Total other

4,943

3,356

1,587

47.3
%
Subtotal

18,111

15,210

2,901

19.1
%
Net gain (loss) on acquisition and branch sales

540

585

(45
)

(7.7
)%
Net gain (loss) from securities transactions

8

17

(9
)

(52.9
)%
Total non-interest income

$
18,659

$
15,812

$
2,847

18.0
%

~~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~~activity primarily due 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.interest rates.

Non-Interest Expense

Three months ended ~~June 30, 2022,~~March 31, 2023, compared with three months ended ~~June 30, 2021:~~March 31, 2022: For the three months ended ~~June 30, 2022,~~March 31, 2023, non-interest expense totaled ~~$31.4~~$33.7 million, an increase of ~~$5.6~~$4.3 million, when compared to the three months ended ~~June 30, 2021.~~March 31, 2022. Changes in the various components of non-interest expense for the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ are discussed in more detail in the following table.

Non-Interest Expense

For the Three Months Ended ~~June 30,~~March 31,


						2022 vs. 2021											2023 vs. 2022
(Dollars in thousands)	2022		2021			Change			%			2023		2022			Change			%
Salaries and employee benefits	$	15,383	$	12,769		$	2,614			20.5	%	$	16,692	$	15,068		$	1,624			10.8	%
Net occupancy and equipment		3,007		2,327			680			29.2	%		2,879		3,170			(291	)		(9.2	)%
Data processing		3,642		3,474			168			4.8	%		3,916		3,769			147			3.9	%
Professional fees		1,111		999			112			11.2	%		1,384		1,171			213			18.2	%
Advertising and business development		972		799			173			21.7	%		1,159		976			183			18.8	%
Telecommunications		442		512			(70	)		(13.7	)%		485		470			15			3.2	%
FDIC insurance		260		425			(165	)		(38.8	)%		360		180			180			100.0	%
Courier and postage		489		327			162			49.5	%		458		423			35			8.3	%
Free nationwide ATM cost		541		513			28			5.5	%		525		501			24			4.8	%
Amortization of core deposit intangible		1,111		1,030			81			7.9	%		918		1,050			(132	)		(12.6	)%
Loan expense		207		181			26			14.4	%		117		185			(68	)		(36.8	)%
Other real estate owned		14		(468	)		482			(103.0	)%		119		(1	)		120			(12000.0	)%
Other		4,169		2,458			1,711			69.6	%		4,706		2,174			2,532			116.5	%
Subtotal		31,348		25,346			6,002			23.7	%		33,718		29,136			4,582			15.7	%
Merger expenses		88		460			(372	)		(80.9	)%		—		323			(323	)		(100.0	)%
Total non-interest expense	$	31,436	$	25,806		$	5,630			21.8	%	$	33,718	$	29,459		$	4,259			14.5	%

Salaries and employee ~~benefits~~:benefits: There was a ~~$2.6~~$1.6 million increase in salaries for the period ended ~~June 30, 2022,~~March 31, 2023, 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~~2022. Employee salaries increased $824 thousand from March 31, 2022 and ~~the Security acquisition in December 2021.~~

~~Net occupancy and equipment: Net occupancy and equipment costs~~share-based compensation expense increased ~~$680~~by $444 thousand for the ~~period ended June 30, 2022, as compared to the~~ same period in 2021. The increase is primarily due to $117 thousand in building maintenance, $99 thousand in real-estate taxes, and $78 thousand in utilities. Increased occupancy expenses are due to additional locations from the ASBI acquisition in October 2021 and the Security acquisition in December 2021.period.

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 ~~$1.7~~$2.5 million increase, or ~~69.6%~~116.5%, between the quarters ending ~~June 30, 2022,~~March 31, 2023, 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.

~~Non-Interest Expense~~

~~For the Six Months Ended June 30,~~

2022 vs. 2021

(Dollars in thousands)

2022

2021

Change

%

Salaries and employee benefits

$
30,451

$
25,491

$
4,960

19.5
%
Net occupancy and equipment

6,177

4,695

1,482

31.6
%
Data processing

7,411

6,137

1,274

20.8
%
Professional fees

2,282

2,072

210

10.1
%
Advertising and business development

1,948

1,481

467

31.5
%
Telecommunications

912

1,092

(180
)

(16.5
)%
FDIC insurance

440

840

(400
)

(47.6
)%
Courier and postage

912

696

216

31.0
%
Free nationwide ATM cost

1,042

985

57

5.8
%
Amortization of core deposit intangibles

2,161

2,064

97

4.7
%
Loan expense

392

419

(27
)

(6.4
)%
Other real estate owned

13

(463
)

476

(102.8
)%
Other

6,343

4,566

1,777

38.9
%
Sub-Total

60,484

50,075

10,409

20.8
%
Merger expenses

411

612

(201
)

(32.8
)%
Total non-interest expense

$
60,895

$
50,687

$
10,208

20.1
%

~~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.~~2022. The increase was primarily due to ~~the addition of staff related to the ASBI acquisition~~ increases 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~~ credit 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.~~of $1.1 million, loss in solar tax credits of $609 thousand and ERMI premium expense of $488 thousand.

Efficiency Ratio

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 ~~64.4%~~70.0% for the three months ended ~~June 30, 2022,~~March 31, 2023, compared with ~~58.9%~~60.4% for the three months ended ~~June 30, 2021.~~March 31, 2022. The increase was primarily due to an increase in non-interest expense ~~partially offset by increases~~as well as a decrease in net interest income ~~and non-interest 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 anthe volume of interest-bearing liabilities and the increase in ~~non-interest expense, partially offset by increases~~the cost of interest-bearing liabilities outpacing the increase in ~~net interest income and non-interest income.~~yield of interest-bearing assets.

Income Taxes

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 &and 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.

Three months ended ~~June 30, 2022,~~March 31, 2023, compared with three months ended ~~June 30, 2021:~~March 31, 2022: The effective income tax rate for the three month period ended ~~June 30, 2022,~~March 31, 2023, was ~~9.9%~~17.0% as compared to ~~22.6%~~18.8% for the three month period ended ~~June 30, 2021.~~March 31, 2022. Income tax expense for the three month period ended ~~June 30, 2022,~~March 31, 2023, includes ~~$29~~$69 thousand of tax benefit attributable to the settlement in stock of restricted stock units and the exercise of options and ~~$2.6 million~~$686 thousand 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.

Financial Condition

Total assets ~~decreased $135 thousand~~increased $175.1 million from December 31, ~~2021,~~2022, to ~~$5.00~~$5.16 billion at ~~June 30, 2022.~~March 31, 2023. This variance was primarily due to ~~decreases~~increases of ~~$156.0~~$146.0 million in cash and due from banks and ~~$39.3~~a $19.8 million in ~~securities, partially offset by an increase of $67.9 million of~~ loans, net of allowance for credit losses. Total liabilities ~~decreased $63.0~~increased $160.0 million to ~~$4.57~~$4.73 billion at ~~June 30, 2022.~~March 31, 2023. The change in total liabilities is mostly due to ~~a decline~~an increase in Federal Reserve Bank borrowings of $140.0 million and total deposits of ~~$128.2~~$45.1 million, ~~and a $9.8 million reduction in interest payable and other liabilities,~~ partially offset by ~~an additional $80.0~~a decrease of $27.6 million in Federal Home Loan Bank advances. Total stockholders’ equity ~~decreased $72.5~~increased $15.1 million from ~~$500.6~~$410.1 million at December 31, ~~2021,~~2022, to ~~$428.1~~$425.1 million at ~~June 30, 2022,~~March 31, 2023, principally due to a decrease in unrealized holding losses, net of tax, in the investment securities ~~portfolio.~~portfolio and net income for three months ended March 31, 2023.

Loan Portfolio

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

Composition of Loan Portfolio


	June 30, 2022					December 31, 2021											March 31, 2023					December 31, 2022
	Amount		Percent			Amount		Percent			Change			%			Amount		Percent			Amount		Percent			Change			%
	(Dollars in thousands)																(Dollars in thousands)
Commercial and industrial	$	578,899		18.0	%	$	567,497		18.0	%	$	11,402			2.0	%	$	605,576		18.2	%	$	594,863		18.0	%	$	10,713			1.8	%
Real estate loans:
Commercial real estate		1,643,068		51.0	%		1,486,148		47.1	%		156,920			10.6	%		1,746,834		52.4	%		1,721,268		52.0	%		25,566			1.5	%
Residential real estate		578,936		18.0	%		638,087		20.2	%		(59,151	)		(9.3	)%		563,791		16.9	%		570,550		17.2	%		(6,759	)		(1.2	)%
Agricultural real estate		197,938		6.1	%		198,330		6.3	%		(392	)		(0.2	)%		202,274		6.1	%		199,189		6.0	%		3,085			1.5	%
Total real estate loans		2,419,942		75.1	%		2,322,565		73.6	%		97,377			4.2	%		2,512,899		75.4	%		2,491,007		75.2	%		21,892			0.9	%
Agricultural		124,753		3.9	%		166,975		5.3	%		(42,222	)		(25.3	)%		106,169		3.2	%		120,003		3.6	%		(13,834	)		(11.5	)%
Consumer		99,852		3.0	%		98,590		3.1	%		1,262			1.3	%		105,974		3.2	%		105,675		3.2	%		299			0.3	%
Total loans held for investment	$	3,223,446		100.0	%	$	3,155,627		100.0	%	$	67,819			2.1	%	$	3,330,618		100.0	%	$	3,311,548		100.0	%	$	19,070			0.6	%
Total loans held for sale	$	1,714		100.0	%	$	4,214		100.0	%	$	(2,500	)		(59.3	)%	$	648		100.0	%	$	349		100.0	%	$	299			85.7	%
Total loans held for investment (net of allowances)	$	3,175,208		100.0	%	$	3,107,262		100.0	%	$	67,946			2.2	%	$	3,285,515		100.0	%	$	3,265,701		100.0	%	$	19,814			0.6	%

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 ~~June 30,~~March 31, 2023, gross total loans, including loans held for sale, were 77.7% of deposits and 64.6% of total assets. At December 31, 2022, gross total loans, including loans held for sale, were ~~75.2%~~78.1% of deposits and ~~64.5%~~66.5% 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 ~~June 30, 2022,~~March 31, 2023, are summarized in the following table.

Loan Maturity and Sensitivity to Changes in Interest Rates


	As of June 30, 2022										As of March 31, 2023
	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	$	168,194	$	319,528	$	86,779	$	4,398	$	578,899	$	187,912	$	333,821	$	80,061	$	3,782	$	605,576
Real Estate:
Commercial real estate		341,452		905,751		329,682		66,183		1,643,068		329,469		1,053,825		291,554		71,986		1,746,834
Residential real estate		2,820		10,575		119,555		445,986		578,936		843		9,792		120,323		432,833		563,791
Agricultural real estate		59,387		94,251		35,890		8,410		197,938		51,425		113,558		29,663		7,628		202,274
Total real estate		403,659		1,010,577		485,127		520,579		2,419,942		381,737		1,177,175		441,540		512,447		2,512,899
Agricultural		82,978		32,937		4,230		4,608		124,753		70,772		27,776		3,201		4,420		106,169
Consumer		33,599		42,060		21,278		2,915		99,852		31,944		48,174		23,654		2,202		105,974
Total	$	688,430	$	1,405,102	$	597,414	$	532,500	$	3,223,446	$	672,365	$	1,586,946	$	548,456	$	522,851	$	3,330,618
Loans with a predetermined fixed interest rate	$	279,364	$	820,528	$	205,989	$	317,958	$	1,623,839	$	226,816	$	768,934	$	161,984	$	304,333	$	1,462,067
Loans with an adjustable/floating interest rate		409,066		584,574		391,425		214,542		1,599,607		445,549		818,012		386,472		218,518		1,868,551
Total	$	688,430	$	1,405,102	$	597,414	$	532,500	$	3,223,446	$	672,365	$	1,586,946	$	548,456	$	522,851	$	3,330,618

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,~~2022, are summarized in the following table.

Loan Maturity and Sensitivity to Changes in Interest Rates


	As of December 31, 2021										As of December 31, 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	$	172,409	$	300,312	$	88,124	$	6,652	$	567,497	$	194,487	$	310,839	$	84,930	$	4,607	$	594,863
Real Estate:
Commercial real estate		247,339		834,277		355,479		49,053		1,486,148		331,226		1,042,683		279,759		67,600		1,721,268
Residential real estate		6,594		14,066		136,994		480,433		638,087		1,293		9,647		122,509		437,101		570,550
Agricultural real estate		53,703		83,861		47,176		13,590		198,330		47,696		112,387		31,295		7,811		199,189
Total real estate		307,636		932,204		539,649		543,076		2,322,565		380,215		1,164,717		433,563		512,512		2,491,007
Agricultural		113,138		41,003		6,809		6,025		166,975		79,055		32,688		3,714		4,546		120,003
Consumer		36,714		40,361		18,352		3,163		98,590		35,026		45,258		23,091		2,300		105,675
Total	$	629,897	$	1,313,880	$	652,934	$	558,916	$	3,155,627	$	688,783	$	1,553,502	$	545,298	$	523,965	$	3,311,548
Loans with a predetermined fixed interest rate	$	258,334	$	875,796	$	235,609	$	334,122	$	1,703,861	$	218,417	$	771,980	$	181,239	$	306,537	$	1,478,173
Loans with an adjustable/floating interest rate		371,563		438,084		417,325		224,794		1,451,766		470,366		781,522		364,059		217,428		1,833,375
Total	$	629,897	$	1,313,880	$	652,934	$	558,916	$	3,155,627	$	688,783	$	1,553,502	$	545,298	$	523,965	$	3,311,548

Credit Quality Indicators

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.

Nonperforming Assets

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

Nonperforming Assets


	June 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
	(Dollars in thousands)						(Dollars in thousands)
Nonaccrual loans	$	18,860		$	29,361		$	16,550		$	17,601
Accruing loans 90 or more days past due		386			256			23			—
OREO acquired through foreclosure, net		8,838			7,582			420			600
Other repossessed assets		8,888			28,799			57			47
Total nonperforming assets	$	36,972		$	65,998		$	17,050		$	18,248
Ratios:
Nonperforming assets to total assets		0.74	%		1.28	%		0.33	%		0.37	%
Nonperforming assets to total loans plus OREO and repossessed assets		1.14	%		2.07	%		0.51	%		0.55	%

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 ~~June 30, 2022,~~March 31, 2023, consisted of ~~165~~172 separate credits and ~~127~~151 separate borrowers. We had 65 non-performing loan relationships, totaling ~~$8.9~~$7.1 million, with an outstanding balance in excess of $1.0 million as of ~~June 30, 2022.~~March 31, 2023.

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

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 ~~June 30, 2022,~~March 31, 2023, the Company had ~~$29.0~~$40.1 million in potential problem loans which were not included in either non-accrual or 90 days past due categories, compared to ~~$32.6~~$37.6 million at December 31, ~~2021.~~2022.

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.

Allowance for Credit Losses

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.

•

Commercial and industrial loans are dependent on the strength of the industries of the related borrowers and the success of their businesses. Commercial and industrial loans are advanced for equipment purchases, to provide working capital, or to meet other financing needs of the business. These loans may be secured by accounts receivable, inventory, equipment, or other business assets. Financial information is obtained from the borrower to evaluate the debt service coverage and ability to repay the loans.

•

Commercial real estate loans are dependent on the industries tied to these loans as well as the local commercial real estate market. The loans are secured by the real estate, and appraisals are obtained to support the loan amount. An evaluation of the project’s cash flows is performed to evaluate the borrower’s ability to repay the loan at the time of origination and is periodically updated during the life of the loan.

•

Residential real estate loans are affected by the local residential real estate market, the local economy, and movement in interest rates. We evaluate the borrower’s repayment ability through a review of credit reports and debt to income ratios. Appraisals are obtained to support the loan amount.

•

Agricultural real estate loans are real estate loans related to farmland and are affected by the value of farmland. We evaluate the borrower’s ability to repay based on cash flows from farming operations.

•

Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced and market pricing at the time of sale.

•

Consumer loans are dependent on the local economy. Consumer loans are generally secured by consumer assets but may be unsecured. We evaluate the borrower’s repayment ability through a review of credit scores and an evaluation of debt to income ratios.

•

~~Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced and market pricing at the time of sale.~~

•

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)
March 31, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	16,611		$	15,620		$	8,751		$	586		$	1,547		$	1,988		$	45,103
Total loans outstanding (1)		1,746,834			605,576			563,791			202,274			106,169			105,974			3,330,618
Net (charge-offs) recoveries QTD		6			(431	)		11			—			155			(119	)		(378	)
Average loan balance (1) QTD		1,748,743			577,452			569,732			202,901			100,251			106,193			3,305,272
Non-accrual loan balance		2,703			5,482			3,088			1,937			2,923			417			16,550
Loans to total loans outstanding		52.4	%		18.2	%		16.9	%		6.1	%		3.2	%		3.2	%		100.0	%
ACL to total loans		1.0	%		2.6	%		1.6	%		0.3	%		1.5	%		1.9	%		1.4	%
Net charge-offs to average loans QTD		0.0	%		(0.1	)%		0.0	%		0.0	%		0.2	%		(0.1	)%		0.0	%
Non-accrual loans to total loans		0.2	%		0.9	%		0.5	%		1.0	%		2.8	%		0.4	%		0.5	%
ACL to non-accrual loans		614.5	%		284.9	%		283.4	%		30.3	%		52.9	%		476.7	%		272.5	%


March 31, 2022	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	21,764		$	13,814		$	5,960		$	1,542		$	2,472		$	2,038		$	47,590
Total loans outstanding (1)		1,552,134			629,181			613,928			198,844			150,077			98,413			3,242,577
Net (charge-offs) recoveries QTD		(222	)		(6	)		(2	)		7			—			(140	)		(363	)
Average loan balance (1) QTD		1,532,664			575,563			630,387			202,145			149,676			103,158			3,193,593
Non-accrual loan balance		3,640			3,712			4,522			4,078			4,386			358			20,696
Loans to total loans outstanding		48.0	%		19.4	%		18.9	%		6.1	%		4.6	%		3.0	%		100.0	%
ACL to total loans		1.4	%		2.2	%		1.0	%		0.8	%		1.6	%		2.1	%		1.5	%
Net charge-offs to average loans QTD		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		(0.1	)%		0.0	%
Non-accrual loans to total loans		0.2	%		0.6	%		0.7	%		2.1	%		2.9	%		0.3	%		0.6	%
ACL to non-accrual loans		597.9	%		372.1	%		131.8	%		37.8	%		56.4	%		569.3	%		229.9	%

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
%

(1)

Excluding loans held for sale.

Management believes that the allowance for credit losses at ~~June 30, 2022,~~March 31, 2023, 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 ~~June 30, 2022.~~March 31, 2023.

The allowance for credit losses on loans measured on a collective basis totaled ~~$43.0~~$41.4 million, or ~~1.34%~~1.2% of the ~~$3.20~~$3.31 billion in loans measured on a collective basis at ~~June 30, 2022,~~March 31, 2023, compared to an allowance for credit losses of ~~$34.3~~$40.9 million, or ~~1.12%~~1.2%, of the ~~$3.06~~$3.29 billion in loans measured on a collective basis at December 31, ~~2021.~~2022. The total reserve percentage ~~held constant~~was 1.4% at ~~1.5% from~~March 31, 2023 and December 31, ~~2021, to June 30,~~ 2022.

Securities

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 ~~June 30, 2022,~~March 31, 2023, securities represented ~~25.8%~~23.0% of total assets, ~~staying consistent with 25.8%~~slightly decreasing from 23.8% at December 31, ~~2021~~.2022.

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.

Available-For-Sale Securities


	June 30, 2022				December 31, 2021				March 31, 2023				December 31, 2022
	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	$	123,550	$	111,392	$	124,898	$	123,407	$	123,019	$	108,414	$	123,196	$	106,406
U.S. Treasury securities		257,329		238,566		157,289		155,602		259,664		238,045		257,690		232,158
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		599,868		558,472		661,584		664,887		547,198		492,414		560,776		498,606
Private label residential mortgage-backed securities		198,447		179,457		173,717		171,688		186,924		161,180		190,889		163,560
Corporate		56,598		55,043		52,555		53,777		56,662		50,931		56,642		52,374
Small Business Administration loan pools		14,864		14,311		16,568		16,475		12,327		11,679		12,915		12,181
State and political subdivisions		139,877		130,939		138,404		141,606		129,464		120,584		130,311		119,105
Total available-for-sale securities	$	1,390,533	$	1,288,180	$	1,325,015	$	1,327,442	$	1,315,258	$	1,183,247	$	1,332,419	$	1,184,390

Held-To-Maturity Securities


	March 31, 2023				December 31, 2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities	$	1,104	$	1,118	$	1,108	$	1,108
State and political subdivisions		840		877		840		865
Total held-to-maturity securities	$	1,944	$	1,995	$	1,948	$	1,973

At ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021, we did not own any securities classified as held-to-maturity.~~

~~At 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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022. 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.~~value and held-to-maturity securities are shown at cost, adjusted for the amortization of premiums and the accretion of discounts.


	March 31, 2023
	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
	(Dollars in thousands)
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		—	%	$	50,020		0.74	%	$	55,887		1.52	%	$	2,507		1.99	%	$	108,414		1.17	%
U.S. Treasury securities		1,796		4.73	%		235,137		1.19	%		1,112		1.27	%		—	—%				238,045		1.22	%
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		92,875		1.47	%		165,318		1.88	%		234,221		2.57	%		492,414		2.13	%
Private label residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		161,180		2.23	%		161,180		2.23	%
Corporate		—		—	%		7,858		6.69	%		43,073		4.66	%		—		—	%		50,931		4.98	%
Small Business Administration loan pools		—		—	%		—		—	%		7,972		4.36	%		3,707		1.85	%		11,679		3.56	%
State and political subdivisions(1)		6,533		2.27	%		17,188		2.49	%		44,105		2.30	%		52,758		2.50	%		120,584		2.41	%
Total available-for-sale securities		8,329		2.80	%		403,078		1.36	%		317,467		2.31	%		454,373		2.43	%		1,183,247		2.04	%
Held-to-maturity securities:
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		1,104		4.95	%		1,104		4.95	%
State and political subdivisions(1)		—		—	%		—		—	%		—		—	%		840		4.57	%		840		4.57	%
Total held-to-maturity securities		—		—	%		—		—	%		—		—	%		1,944		4.78	%		1,944		4.78	%
Total debt securities	$	8,329		2.80	%	$	403,078		1.36	%	$	317,467		2.31	%	$	456,317		2.44	%	$	1,185,191		2.04	%

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

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

(Dollars in thousands)

Available-for-sale securities:

U.S. Government-sponsored entities

$
—

—
%

$
48,855

0.72
%

$
55,719

1.49
%

$
6,819

1.89
%

$
111,393

1.18
%
U.S. Treasury securities

—

—
%

158,534

1.21
%

80,031

1.15
%

—

—%

238,565

1.19%

Mortgage-backed securities

Government-sponsored residential
   mortgage-backed securities

—

—
%

72,474

1.44
%

193,430

1.79
%

292,568

2.35
%

558,472

2.04
%
Private label residential
   mortgage-backed securities

—

—
%

—

—
%

—

—
%

179,457

2.11
%

179,457

2.11
%
Corporate

—

—
%

17,927

4.44
%

37,116

4.29
%

—

—
%

55,043

4.34
%
Small Business
   Administration loan pools

—

—
%

—

—
%

9,127

1.20
%

5,184

1.76
%

14,311

1.41
%
State and political subdivisions⁽¹⁾

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

6,978

2.61
%

316,692

1.44
%

418,533

1.88
%

545,977

2.28
%

1,288,180

1.94
%
Total debt securities

$
6,978

2.61
%

$
316,692

1.44
%

$
418,533

1.88
%

$
545,977

2.28
%

$
1,288,180

1.94
%
(1)

The calculated yield is not presented on a tax equivalent basis.


	December 31, 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
	Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield
	(Dollars in thousands)
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		—	%	$	49,100		0.74	%	$	54,094		1.51	%	$	3,212		1.96	%	$	106,406		1.17	%
U.S. Treasury securities		—		—	%		222,552		1.18	%		9,606		1.32	%		—		—	%		232,158		1.19	%
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		89,698		1.44	%		161,354		1.86	%		247,554		2.50	%		498,606		2.10	%
Private label residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		163,560		2.21	%		163,560		2.21	%
Corporate		—		—	%		7,904		6.20	%		44,470		4.65	%		—		—	%		52,374		4.88	%
Small Business Administration loan pools		—		—	%		—		—	%		7,676		3.53	%		4,505		1.79	%		12,181		2.89	%
State and political subdivisions(1)		4,958		2.61	%		18,601		2.42	%		42,088		2.31	%		53,458		2.50	%		119,105		2.43	%
Total available-for-sale securities		4,958		2.61	%		387,855		1.35	%		319,288		2.27	%		472,289		2.39	%		1,184,390		2.02	%
Held-to-maturity securities:
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		1,108		4.96	%		1,108		4.96	%
State and political subdivisions(1)		—		—	%		—		—	%		—		—	%		840		4.57	%		840		4.57	%
Total held-to-maturity securities		—		—	%		—		—	%		—		—	%		1,948		4.79	%		1,948		4.79	%
Total debt securities	$	4,958		2.61	%	$	387,855		1.35	%	$	319,288		2.27	%	$	474,237		2.40	%	$	1,186,338		2.02	%

(1)

The calculated yield is not presented on a tax equivalent basis.

⁽¹⁾

~~The calculated yield is not presented on a tax equivalent basis.~~

December 31, 2021

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

(Dollars in thousands)

Available-for-sale securities:

U.S. Government-sponsored entities

$
1,001

2.78
%

$
29,524

0.50
%

$
84,810

1.37
%

$
8,072

1.89
%

$
123,407

1.21
%
U.S. Treasury securities

—

—
%

48,008

1.14
%

107,594

1.10
%

—

—
%

155,602

1.11
%
Mortgage-backed securities

Government-sponsored residential
   mortgage-backed securities

—

—
%

69,734

1.35
%

211,965

1.65
%

383,188

2.05
%

664,887

1.85
%
Private label residential
   mortgage-backed securities

—

—
%

—

—
%

—

—
%

171,688

1.62
%

171,688

1.62
%
Corporate

—

—
%

—

—
%

53,777

4.18
%

—

—
%

53,777

4.18
%
Small Business
   Administration loan pools

—

—
%

—

—
%

9,669

0.93
%

6,806

1.76
%

16,475

1.27
%
State and political subdivisions⁽¹⁾

7,259

2.60
%

21,038

2.43
%

44,640

2.26
%

68,669

2.36
%

141,606

2.35
%
Total available-for-sale securities

8,260

2.62
%

168,304

1.28
%

512,455

1.79
%

638,423

1.96
%

1,327,442

1.81
%
Total debt securities

$
8,260

2.62
%

$
168,304

1.28
%

$
512,455

1.79
%

$
638,423

1.96
%

$
1,327,442

1.81
%

⁽¹⁾	~~The calculated yield is not presented on a tax equivalent basis.~~

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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021, 64.0%~~2022, 60.6% and ~~66.3%~~62.1% of the residential mortgage-backed securities held by us had contractual final maturities of more than ten years, with a weighted average life of ~~5.2~~5.1 years and ~~4.4~~5.1 years and a modified duration of ~~4.5~~4.3 years and ~~4.1~~4.3 years.

Goodwill Impairment Assessment

At ~~June 30, 2022,~~March 31, 2023, we performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired.

Deposits

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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.

Composition of Deposits


	June 30, 2022					December 31, 2021					March 31, 2023					December 31, 2022
	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	$	1,194,863		27.8	%	$	1,244,117		28.1	%	$	1,012,671		23.6	%	$	1,097,899		25.9	%
Interest-bearing demand and NOW accounts		1,112,659		25.9	%		1,202,408		27.2	%
Interest-bearing demand												992,736		23.2	%		1,061,264		25.0	%
Savings and money market		1,332,886		31.1	%		1,319,881		29.9	%		1,341,727		31.3	%		1,268,320		29.9	%
Time		651,363		15.2	%		653,598		14.8	%		939,799		21.9	%		814,324		19.2	%
Total deposits	$	4,291,771		100.0	%	$	4,420,004		100.0	%	$	4,286,933		100.0	%	$	4,241,807		100.0	%

Total deposits at ~~June 30, 2022,~~March 31, 2023, were $4.29 billion, ~~a decrease~~an increase of ~~$128.2~~$45.1 million, or ~~2.9%~~1.1%, compared to total deposits of ~~$4.42~~$4.24 billion at December 31, ~~2021.~~2022.

Equity Bank participates in the Insured Cash Sweep (“ICS”) service that allows the ~~bank~~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~~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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.


	June 30, 2022		December 31, 2021		March 31, 2023		December 31, 2022
Interest-bearing demand
Reciprocal	$	240,814	$	308,374	$	38,359	$	17,717
Total interest-bearing demand		240,814		308,374		38,359		17,717
Savings and money market
Reciprocal		11,389		52,173		257,859		282,705
Total savings and money market		11,389		52,173		257,859		282,705
Time
Reciprocal		17,635		2,969		27,605		11,764
Non-reciprocal brokered		81,000		10,000		301,792		251,799
Total time		98,635		12,969		329,397		263,563
Total reciprocal and brokered deposits	$	350,838	$	373,516	$	625,615	$	563,985

The following table provides information on the maturity distribution of time deposits of $250 thousand or more as of ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021.~~2022.


	June 30, 2022		December 31, 2021		Change			%			March 31, 2023		December 31, 2022		Change			%
	(Dollars in thousands)										(Dollars in thousands)
3 months or less	$	72,434	$	88,969	$	(16,535	)		(18.6	)%	$	54,325	$	40,578	$	13,747			33.9	%
Over 3 through 6 months		18,861		115,063		(96,202	)		(83.6	)%		37,907		51,365		(13,458	)		(26.2	)%
Over 6 through 12 months		45,268		14,047		31,221			222.3	%		65,541		19,191		46,350			241.5	%
Over 12 months		31,036		15,381		15,655			101.8	%		44,161		34,586		9,575			27.7	%
Total Time Deposits	$	167,599	$	233,460	$	(65,861	)		(28.2	)%	$	201,934	$	145,720	$	56,214			38.6	%

Other Borrowed Funds

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,~~borrowings, a bank stock loan, and subordinated debt. For additional information see “NOTE 6 – BORROWINGS” in the Condensed Notes to Interim Consolidated Financial Statement.

Liquidity and Capital Resources

Liquidity

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. With the recent issues in the banking sector that stem from the failures of several banks has caused banks to increase available liquidity sources and more closely monitor deposit runoff. Prior to the end of the quarter, Equity Bank pledged additional investments to the FRB and borrowed $140 million under the Bank Term Funding Program as a precaution; however, the Company did not experience the same level of deposit runoff which, the Company believes, is due to the difference in the types of deposits being offered, deposit concentration and ALM management practices as compared to the recent failed financial institutions.

During the ~~six~~three months ended ~~June 30,~~March 31, 2023, and 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.~~Bank borrowings.

Our largest sources of funds are deposits, Federal Reserve Bank borrowings and FHLB borrowings and largest uses of funds are loans, securities and ~~securities.~~debt repayment. Average loans were ~~$3.21~~$3.31 billion for the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, an increase of ~~11.3%~~0.93% over the December 31, ~~2021,~~2022, 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 ~~5.3~~5.1 years and a modified duration of ~~4.7~~4.3 years at ~~June 30, 2022.~~March 31, 2023.

Cash and cash equivalents were ~~$103.6~~$250.4 million at ~~June 30, 2022, a decrease~~March 31, 2023, an increase of ~~$156.4~~$145.9 million from the ~~$260.0~~$104.4 million cash and cash equivalents at December 31, ~~2021.~~2022. The ~~decrease~~increase in cash and cash equivalents is driven primarily by ~~$173.1~~$145.1 million net cash provided by financing activities and $19.1 million net cash provided by operating activities, partially offset by $18.2 million net cash used in investing ~~activities and $26.4 million used in financing activities, partially offset by $43.1 million provided by operating~~ activities. Cash and cash equivalents at January 1, ~~2022,~~2023, plus liquidity provided by operating activities, pay downs, sales, and maturities of investment securities, FRB borrowings and FHLB borrowings during the first ~~six~~three months of ~~2022~~2023 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.

Off-Balance-Sheet Items

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 Resources

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~~financial 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~~judgements by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, 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 ~~June 30, 2022,~~March 31, 2023, 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.

Non-GAAP Financial Measures

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~~: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
	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
			(Dollars in thousands, except per share data)								(Dollars in thousands, except per share data)
Total stockholders’ equity	$	428,115	$	452,015	$	500,631	$	417,749	$	412,995	$	425,123	$	410,058	$	395,806	$	428,115	$	452,015
Less: goodwill		53,101		54,465		54,465		31,601		31,601		53,101		53,101		53,101		53,101		54,465
Less: core deposit intangibles, net		12,554		13,830		14,879		12,963		13,993		9,678		10,596		11,598		12,554		13,830
Less: mortgage servicing asset, net		226		251		276		—		—		151		176		201		226		251
Less: naming rights, net		1,065		1,076		1,087		1,098		1,109		1,033		1,044		1,054		1,065		1,076
Tangible common equity	$	361,169	$	382,393	$	429,924	$	372,087	$	366,292	$	361,160	$	345,141	$	329,852	$	361,169	$	382,393
Common shares issued at period end		16,106,818		16,454,966		16,760,115		14,365,785		14,360,172		15,730,257		15,930,112		16,017,834		16,106,818		16,454,966
Diluted common shares outstanding at period end		16,289,635		16,662,779		17,050,115		14,637,306		14,664,603		15,822,536		16,163,253		16,225,591		16,289,635		16,662,779
Book value per common share	$	26.58	$	27.47	$	29.87	$	29.08	$	28.76	$	27.03	$	25.74	$	24.71	$	26.58	$	27.47
Tangible book value per common share	$	22.42	$	23.24	$	25.65	$	25.90	$	25.51	$	22.96	$	21.67	$	20.59	$	22.42	$	23.24
Tangible book value per diluted common share	$	22.17	$	22.95	$	25.22	$	25.42	$	24.98	$	22.83	$	21.35	$	20.33	$	22.17	$	22.95

Tangible Common Equity to Tangible ~~Assets~~: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
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
				(Dollars in thousands)												(Dollars in thousands)
Total stockholders’ equity	$	428,115		$	452,015		$	500,631		$	417,749		$	412,995		$	425,123		$	410,058		$	395,806		$	428,115		$	452,015
Less: goodwill		53,101			54,465			54,465			31,601			31,601			53,101			53,101			53,101			53,101			54,465
Less: core deposit intangibles, net		12,554			13,830			14,879			12,963			13,993			9,678			10,596			11,598			12,554			13,830
Less: mortgage servicing asset, net		226			251			276			—			—			151			176			201			226			251
Less: naming rights, net		1,065			1,076			1,087			1,098			1,109			1,033			1,044			1,054			1,065			1,076
Tangible common equity	$	361,169		$	382,393		$	429,924		$	372,087		$	366,292		$	361,160		$	345,141		$	329,852		$	361,169		$	382,393
Total assets	$	5,002,156		$	5,078,623		$	5,137,631		$	4,263,268		$	4,268,216		$	5,156,716		$	4,981,651		$	5,000,415		$	5,002,156		$	5,078,623
Less: goodwill		53,101			54,465			54,465			31,601			31,601			53,101			53,101			53,101			53,101			54,465
Less: core deposit intangibles, net		12,554			13,830			14,879			12,963			13,993			9,678			10,596			11,598			12,554			13,830
Less: mortgage servicing asset, net		226			251			276			—			—			151			176			201			226			251
Less: naming rights, net		1,065			1,076			1,087			1,098			1,109			1,033			1,044			1,054			1,065			1,076
Tangible assets	$	4,935,210		$	5,009,001		$	5,066,924		$	4,217,606		$	4,221,513		$	5,092,753		$	4,916,734		$	4,934,461		$	4,935,210		$	5,009,001
Equity to assets		8.56	%		8.90	%		9.74	%		9.80	%		9.68	%		8.24	%		8.23	%		7.92	%		8.56	%		8.90	%
Tangible common equity to tangible assets		7.32	%		7.63	%		8.48	%		8.82	%		8.68	%		7.09	%		7.02	%		6.68	%		7.32	%		7.63	%

Return on Average Tangible Common ~~Equity~~: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

June 30,
2022

March 31,
2022

December 31,
2021

September 30,
2021

June 30,
2021

(Dollars in thousands)

Total average stockholders’ equity

$
437,483

$
492,599

$
563,046

$
422,879

$
404,039

Less: average intangible assets

68,978

70,181

61,186

46,335

47,334

Average tangible common equity

$
368,505

$
422,418

$
501,860

$
376,544

$
356,705

Net income (loss) allocable to common stockholders

$
15,259

$
15,650

$
10,466

$
11,773

$
15,166

Amortization of intangible assets

1,148

1,085

1,116

1,040

1,041

Less: tax effect

241

228

234

218

219

Adjusted net income allocable to common
   stockholders

$
16,166

$
16,507

$
11,348

$
12,595

$
15,988

Return on total average stockholders’ equity
   (ROAE) annualized

13.99
%

12.88
%

7.37
%

11.05
%

15.06
%
Return on average tangible common equity
   (ROATCE) annualized

17.60
%

15.85
%

8.97
%

13.27
%

17.98
%


	For the three months ended
	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
	(Dollars in thousands)
Total average stockholders’ equity	$	420,500		$	398,270		$	436,191		$	437,483		$	492,599
Less: average intangible assets		64,447			65,450			66,445			68,978			70,181
Average tangible common equity	$	356,053		$	332,820		$	369,746		$	368,505		$	422,418
Net income (loss) allocable to common stockholders	$	12,323		$	11,608		$	15,171		$	15,259		$	15,650
Amortization of intangible assets		954			961			992			1,148			1,085
Less: tax effect		200			202			208			241			228
Adjusted net income allocable to common stockholders	$	13,077		$	12,367		$	15,955		$	16,166		$	16,507
Return on total average stockholders’ equity (ROAE) annualized		11.89	%		11.57	%		13.80	%		13.99	%		12.88	%
Return on average tangible common equity (ROATCE) annualized		14.89	%		14.74	%		17.12	%		17.60	%		15.85	%

Efficiency ~~Ratio~~: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,~~judgement, 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.~~transactions, and net gain in acquisition and branch sales.

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
	June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
				(Dollars in thousands)												(Dollars in thousands)
Non-interest expense	$	31,436		$	29,459		$	38,089		$	30,689		$	25,806		$	33,718		$	35,249		$	32,236		$	31,436		$	29,459
Less: loss on debt extinguishment		—			—			—			372			—
Less: merger expense		88			323			4,562			4,015			460			—			68			115			88			323
Non-interest expense, excluding loss on debt extinguishment and merger expense	$	31,348		$	29,136		$	33,527		$	26,302		$	25,346		$	33,718		$	35,181		$	32,121		$	31,348		$	29,136
Net interest income	$	39,566		$	39,289		$	37,215		$	38,975		$	34,630		$	39,110		$	42,031		$	41,944		$	39,566		$	39,289
Non-interest income	$	9,637		$	9,022		$	9,199		$	7,831		$	9,100		$	9,089		$	8,329		$	8,969		$	9,637		$	9,022
Less: net gain on acquisition and branch sales		540			—			—			—			663			—			422			—			540			—
Less: net gain (loss) from securities transactions		(32	)		40			8			381			—			32			14			(17	)		(32	)		40
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		$	9,057		$	7,893		$	8,986		$	9,129		$	8,982
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		$	48,167		$	49,924		$	50,930		$	48,695		$	48,271
Non-interest expense to net interest income plus non-interest income		63.89	%		60.98	%		82.06	%		65.57	%		59.01	%		69.96	%		69.99	%		63.32	%		63.89	%		60.98	%
Efficiency Ratio		64.38	%		60.36	%		72.25	%		56.65	%		58.85	%		70.00	%		70.47	%		63.07	%		64.38	%		60.36	%

Item 3: Quantitative and Qualitative Disclosures about Market Risk

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 purchased and sale activities, commitments to originate loans and the maturities of investment securities and borrowings. Additionally, the 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. All assumptions are as of the base period without consideration of preceding market rate changes and any lag in impact to NII. The depicted expectations are management's estimate exclusive of any non-contractual lagging impacts that have not yet been realized in income from preceding changes to interest rates. 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 ~~June 30, 2022,~~March 31, 2023, and December 31, ~~2021,~~2022, 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~~positive 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~~adjustable rate ~~investments and~~ loans receivable that will ~~not~~ reprice to higher ~~rates; advances; the variable rate subordinated debentures and the~~interest rates[EK1] , non-term deposits that ~~are assumed not~~will adjust to ~~migrate~~higher rates but at a slower pace, the use of derivatives to ~~term deposits that are variable rate~~hedge borrowing costs, and ~~will reprice~~elevated levels of cash on the balance sheet compared 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.previous quarter. These factors result in the ~~negative~~positive 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 prepayrepricing; and the assumed ~~reinvestment will be at lower interest rates. Similar to our mortgage-backed securities, the model assumes that our~~prepayment and scheduled repayment of existing fixed rate loans receivable ~~will prepay at a faster~~and fixed 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.investments. Term deposits repricing will only decrease the average cost paid by ~~a minimal~~some 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~~economic value of equity from the base case for ~~June 30, 2022,~~March 31, 2023 and December 31, ~~2021,~~2022 is due to being in a liability sensitive position and the level of convexity in our pre-payable assets. Generally, with a liability sensitive position, as interest rates increase, the value of your assets decrease faster than the value of liabilities and, as interest rates decrease, the value of your assets increase at a faster rate than liabilities. ~~However, due~~Due to the level of convexity in our fixed rate ~~pre-payable~~prepayable assets, we do not experience a similar change in the value of assets in a down interest rate shock ~~scenario.~~scenario; however, due to the current level of convexity in our fixed

rate prepayable assets becoming less negative and positive, in some cases, on a portion of or portfolio has resulted in the overall value of assets increasing more than liabilities. 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 ~~June 30, 2022,~~March 31, 2023, non-interest-bearing deposits were approximately ~~$49.3~~$85.2 million, or ~~4.0%~~7.8%, lower than that deposit type at December 31, ~~2021.~~2022. Substantially all investments and approximately ~~50.4%~~43.9% of loans are ~~pre-payable~~prepayable 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.~~economic value of equity.

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.

Market Risk


	Impact on Net Interest Income						Impact on Net Interest Income
Change in prevailing interest rates	June 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
+300 basis points		(4.4	)%		(4.4	)%		8.8	%		5.0	%
+200 basis points		(2.7	)%		(2.4	)%		5.8	%		3.3	%
+100 basis points		(1.2	)%		(1.0	)%		2.9	%		1.6	%
0 basis points		—			—			—			—
-100 basis points		(3.6	)%		(4.4	)%		(2.7	)%		(2.3	)%
-200 basis points								(5.5	)%		(6.0	)%

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	June 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
+300 basis points		(14.0	)%		(2.8	)%		(11.3	)%		(10.7	)%
+200 basis points		(8.9	)%		0.7	%		(6.8	)%		(6.6	)%
+100 basis points		(4.6	)%		2.7	%		(3.4	)%		(3.3	)%
0 basis points		—			—			—			—
-100 basis points		0.5	%		(14.8	)%		1.2	%		0.7	%
-200 basis points								0.7	%		(0.5	)%

Item 4: Controls and Procedures

Evaluation of disclosure controls and procedures

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.

Changes in internal control over financial reporting

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.

PART II—OTHER INFORMATION

Item 1: Legal Proceedings

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.

Item 1A: Risk Factors

~~There~~Other than the risk factors set forth below, 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.~~2023.

Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.

The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank and First Republic Bank have generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks like Equity Bank. These market developments have negatively impacted customer confidence in the safety and soundness of regional banks. As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact Equity Bank's liquidity, loan funding capacity, net interest margin, capital and results of operations. While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.

Any regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company’s expenses and affect the Company’s operations.

The Company and Equity Bank anticipate increased regulatory scrutiny and new regulations directed towards banks of similar size to the Bank, designed to address the recent negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. Among other things, there may be an increased focus by both regulators and investors on deposit composition and the level of uninsured deposits. As a result, the Bank could face increased scrutiny or be viewed as higher risk by regulators and the investor community. Equity Bank's level of uninsured deposits as a percentage of non-brokered deposits was 23.4% at March 31, 2023 and 25.3% at December 31, 2022.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Repurchase of Common Stock

In September of 2021, the Company’s Board of Directors authorized ~~an additional~~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 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 years ended December 31, 2022 and 2021, the Company repurchased a total of 1,000,000 shares of the Company’s outstanding common stock at an average price paid of $32.11 per share.

In September of 2022, 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 1, 2022, and concluding on September 30, 2023. 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,~~Under this program, during the ~~Federal Reserve Bank of Kansas City advised~~years ended December 31, 2022, the Company ~~that it had no objection to the Company’s authorization to repurchase~~repurchased a total of ~~up to an additional 1,000,000~~163,727 shares of the Company’s ~~Class A Voting Common Stock.~~outstanding common stock at an average price paid of $33.33 per share. During the three months ended March 31, 2023, the Company repurchased a total of 320,050 shares of the Company's outstanding common stock at an average price paid of $29.97 per share. At March 31, 2023, there are 516,223 shares remaining available for repurchase under the program.

The following table presents shares that have been repurchased under the program during the ~~second~~first quarter of ~~2022.~~2023.

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

April 1, 2022 through April 30, 2022

178,581

$
31.57

178,581

304,163

May 1, 2022 through May 31, 2022

177,263

$
31.50

177,263

126,900

June 1, 2022 through June 30, 2022

—

$
—

—

126,900

Total

355,844

$
31.54

355,844

126,900


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, 2023 through January 31, 2023		—	$	—		—		836,273
February 1, 2022 through February 28, 2023		218,700	$	30.77		218,700		617,573
March 1, 2023 through March 31, 2023		101,350	$	28.25		101,350		516,223
Total		320,050	$	29.97		320,050		516,223

Item 3: Defaults Upon Senior Securities

None

Item 4: Mine Safety Disclosures

Not ~~applicable.~~applicable.6

Item 5: Other Information

~~None~~

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Hire of Richard M. Sems as President of Equity Bank

On May 2, 2023, Equity Bancshares, Inc. (the “Company”) announced the hire of Richard M. Sems as President of Equity Bank effective May 15, 2023. Mr. Sems will also join the board of directors of Equity Bank.

Mr. Sems, age 51, joins the Company from First Bank of St. Louis, Missouri where he most recently served as Chief Banking Officer and previously served as President of First Bank’s Midwest Region since 2016. Mr. Sems holds a Master of Business Administration from the University of Michigan and is a graduate of Grove City College.

In connection with his appointment, Mr. Sems entered into an employment agreement, dated May 2, 2023, by and among the Company, Equity Bank and Mr. Sems. The initial term of the employment agreement is three years and will automatically renew for successive one-year periods thereafter, unless the agreement is terminated in accordance with its terms. Under the terms of the employment agreement, Mr. Sems will receive a base salary of $600,000 and a target annual incentive bonus of 65% of his base salary, which shall be payable in cash. Mr. Sems will also be eligible to receive an annual equity award with a target grant date fair value equal to 55% of his base salary, which may be subject to certain vesting, performance and other conditions.

Mr. Sems will receive an equity award in connection with his hire with a target grant date fair value equal to approximately $500,000, which will be comprised of time-based stock options that will vest in five equal annual installments, subject to his continuing employment through each such vesting date. He will also be paid a $250,000 signing bonus that is subject to repayment on a pro rata basis if his employment is terminated within the initial three-year term of the employment agreement.

Mr. Sems’s employment agreement provides that upon the termination of his employment by Mr. Sems for good reason or by Equity Bank without cause, Mr. Sems will be entitled to receive his base salary for a period of twelve months following such termination, subject to compliance with the terms of the employment agreement and execution of a general release in favor of the Company and Equity Bank.

Mr. Sems’s employment agreement contains a change in control provision that provides for a payment to him if his employment is terminated by Mr. Sems for good reason, by Equity Bank (or its successor) without cause, or due to Equity Bank’s (or its successor’s) nonrenewal of the employment agreement within twelve months after a qualifying change in control. Upon a qualifying change in control and termination of his employment, Mr. Sems would be entitled to a payment equal to 2.99 times the sum of (i) his prior year’s base salary and (ii) all other cash compensation paid to him and received during such year. Any payments pursuant to the change in control provision are subject to compliance with restrictions imposed by the Internal Revenue Code. Additionally, Mr. Sems is bound by the restrictive covenants set forth in his employment agreement.

There are no family relationships between Mr. Sems and any director or other executive officer of the Company, or with any person selected to become an officer or a director of the Company, nor are there any arrangements or understandings between Mr. Sems and other persons pursuant to which he was appointed as an executive officer of the Company. The Company has had no

transactions since the beginning of its last fiscal year, and has no transactions proposed, in which Mr. Sems, or any member of his immediate family, has a direct or indirect material interest.

The foregoing description of Mr. Sem’s employment agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the employment agreement, which is attached hereto as Exhibits 10.2 and is incorporated herein by reference.

Resignation of Craig L. Anderson as President of Equity Bank

On May 3, 2023, the Company also announced that Craig L. Anderson resigned from his role as the President of Equity Bank effective June 2, 2023.

Item 6: Exhibits


Exhibit No.		Description
31.1*10.1		Sixth Amendment to Loan and Security Agreement dated February 10, 2023, by and between Equity Bancshares, Inc. and Servis First Bank (incorporated by reference to Exhibit 10.1 to Equity Bancshares, Inc. Current Report on Form 8-K, filed with the SEC on March 6, 2023).
10.2†*		Employment Agreement, dated May 2, 2023, by and between Equity Bank and Richard M. Sems.
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.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

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).

*	~~Filed herewith.~~

**	These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

~~SIGNATURES~~* Filed herewith.

** These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

† Represents a management contract or a compensatory plan or arrangement.

SIGNATURES

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.


	Equity Bancshares, Inc.

~~August 8, 2022~~	~~By:~~
May 4, 2023	By:	/s/ Brad S. Elliott
Date		Brad S. Elliott
		Chairman and Chief Executive Officer

~~August 8, 2022~~	~~By:~~
May 4, 2023	By:	/s/ Eric R. Newell
Date		Eric R. Newell
		Executive Vice President and Chief Financial Officer


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	109
	Condensed Notes to Interim Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4445
	Overview	46
	Critical Accounting Policies	4647
	Results of Operations	4748
	Financial Condition	5853
	Liquidity and Capital Resources	6661
	Non-GAAP Financial Measures	6763
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7066
Item 4.	Controls and Procedures	7267
Part II	Other Information	7368
Item 1.	Legal Proceedings	7368
Item 1A.	Risk Factors	7368
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7368
Item 3.	Defaults Upon Senior Securities	7369
Item 4.	Mine Safety Disclosures	7369
Item 5.	Other Information	7369
Item 6.	Exhibits	7371


	(Unaudited) June 30,			December 31,			(Unaudited) March 31,			December 31,
	2022			2021			2023			2022
ASSETS
Cash and due from banks	$	103,126		$	259,131		$	249,982		$	104,013
Federal funds sold		458			823			384			415
Cash and cash equivalents		103,584			259,954			250,366			104,428
Available-for-sale securities		1,288,180			1,327,442			1,183,247			1,184,390
Held-to-maturity securities, fair value of $1,995 and $1,973								1,944			1,948
Loans held for sale		1,714			4,214			648			349
Loans, net of allowance for credit losses of $48,238 and $48,365		3,175,208			3,107,262
Loans, net of allowance for credit losses of $45,103 and $45,847								3,285,515			3,265,701
Other real estate owned, net		12,969			9,523			4,171			4,409
Premises and equipment, net		101,212			104,038			104,789			101,492
Bank-owned life insurance		121,665			120,787			122,971			123,176
Federal Reserve Bank and Federal Home Loan Bank stock		21,479			17,510			33,359			21,695
Interest receivable		16,519			18,048			20,461			20,630
Goodwill		53,101			54,465			53,101			53,101
Core deposit intangibles, net		12,554			14,879			9,678			10,596
Other		93,971			99,509			86,466			89,736
Total assets	$	5,002,156		$	5,137,631		$	5,156,716		$	4,981,651
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	1,194,863		$	1,244,117		$	1,012,671		$	1,097,899
Total non-interest-bearing deposits		1,194,863			1,244,117			1,012,671			1,097,899
Demand, savings and money market		2,445,545			2,522,289			2,334,463			2,329,584
Time		651,363			653,598			939,799			814,324
Total interest-bearing deposits		3,096,908			3,175,887			3,274,262			3,143,908
Total deposits		4,291,771			4,420,004			4,286,933			4,241,807
Federal funds purchased and retail repurchase agreements		52,750			56,006			45,098			46,478
Federal Home Loan Bank advances		80,000			—			111,222			138,864
Federal Reserve Bank borrowings								140,000			—
Subordinated debt		96,135			95,885			96,522			96,392
Contractual obligations		15,813			17,692			19,372			15,218
Interest payable and other liabilities		37,572			47,413			32,446			32,834
Total liabilities		4,574,041			4,637,000			4,731,593			4,571,593
Commitments and contingent liabilities, see Notes 11 and 12
Stockholders’ equity, see Note 7
Common stock		204			203			206			205
Additional paid-in capital		480,897			478,862			486,658			484,989
Retained earnings		116,576			88,324			150,810			140,095
Accumulated other comprehensive income (loss), net of tax		(77,426	)		1,776
Accumulated other comprehensive income (loss)								(101,238	)		(113,511	)
Treasury stock		(92,136	)		(68,534	)		(111,313	)		(101,720	)
Total stockholders’ equity		428,115			500,631			425,123			410,058
Total liabilities and stockholders’ equity	$	5,002,156		$	5,137,631		$	5,156,716		$	4,981,651


	(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,						(Unaudited) Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
Net income	$	15,259		$	15,166		$	30,909		$	30,241		$	12,323		$	15,650
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period on available-for-sale securities		(35,364	)		1,911			(104,703	)		(8,458	)		16,018			(69,339	)
Less: reclassification for net gains included in net income		2			—			(77	)		—
Reclassification for net gains included in net income														—			(79	)
Unrealized holding gains (losses) arising during the period on cash flow hedges		(1,065	)		—			(467	)		—			799			598
Total other comprehensive income (loss)		(36,427	)		1,911			(105,247	)		(8,458	)		16,817			(68,820	)
Tax effect		9,013			(480	)		26,045			2,127			(4,544	)		17,032
Other comprehensive income (loss), net of tax		(27,414	)		1,431			(79,202	)		(6,331	)		12,273			(51,788	)
Comprehensive income (loss)	$	(12,155	)	$	16,597		$	(48,293	)	$	23,910		$	24,596		$	(36,138	)


EQUITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 2023, and 2022
(Dollar amounts in thousands)
	(Unaudited) March 31,
	2023			2022
Cash flows from operating activities
Net income	$	12,323		$	15,650
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation		1,212			804
Depreciation		1,087			1,172
Amortization of operating lease right-of-use asset		166			175
Amortization of cloud computing implementation costs		47			47
Provision (reversal) for credit losses		(366	)		(412	)
Net amortization (accretion) of purchase valuation adjustments		(163	)		(1,430	)
Amortization (accretion) of premiums and discounts on securities		1,172			1,926
Amortization of intangible assets		954			1,085
Deferred income taxes		(255	)		(226	)
Federal Home Loan Bank stock dividends		(140	)		(18	)
Loss (gain) on sales and valuation adjustments on other real estate owned		34			(172	)
Net loss (gain) on sales and settlements of securities		—			(79	)
Change in unrealized (gains) losses on equity securities		(32	)		39
Loss (gain) on disposal of premises and equipment		(15	)		(43	)
Loss (gain) on sales of foreclosed assets		(3	)		(49	)
Loss (gain) on sales of loans		(62	)		(463	)
Originations of loans held for sale		(3,391	)		(16,193	)
Proceeds from the sale of loans held for sale		3,154			19,295
Increase in the value of bank-owned life insurance		(1,583	)		(865	)
Change in fair value of derivatives recognized in earnings		176			(810	)
Payments on operating lease payable		(262	)		(205	)
Net change in:
Interest receivable		169			1,125
Other assets		4,216			(101	)
Interest payable and other liabilities		694			(12,448	)
Net cash provided by operating activities		19,132			7,804
Cash flows (to) from investing activities
Purchases of available-for-sale securities		(1,840	)		(153,850	)
Proceeds from sales, calls, pay-downs and maturities of available-for-sale securities		17,828			57,134
Proceeds from calls, pay-downs and maturities of held-to-maturity securities		4			—
Net change in loans		(18,019	)		(85,273	)
Purchase of USDA guaranteed loans		(802	)		(2,293	)
Purchase of premises and equipment		(4,408	)		(309	)
Proceeds from sale of premises and equipment		39			50
Proceeds from sale of foreclosed assets		38			20,063
Net redemptions (purchases) of Federal Home Loan Bank and Federal Reserve Bank stock		(11,524	)		(2,362	)
Net redemptions (purchases) of correspondent and miscellaneous other stock		(1,526	)		—
Proceeds from sale of other real estate owned		172			205
Proceeds from bank-owned life insurance death benefits		1,794			723
Net cash (used in) provided by investing activities		(18,244	)		(165,912	)
Cash flows (to) from financing activities
Net increase (decrease) in deposits		45,095			(40,311	)
Net change in federal funds purchased and retail repurchase agreements		(1,380	)		(7,807	)
Net borrowings (repayments) on Federal Home Loan Bank line of credit		(127,642	)		20,000
Proceeds from Federal Home Loan Bank term advances		466,091			122,128
Principal repayments on Federal Home Loan Bank term advances		(366,091	)		(92,128	)
Proceeds from Federal Reserve Bank borrowings		141,000			1,000
Principal payments on Federal Reserve Bank borrowings		(1,000	)		(1,000	)


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

	Common Stock					Additional					Accumulated Other						Total
	Shares Outstanding			Amount		Paid-In Capital		Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Stockholders’ Equity			Common Stock					Additional						Accumulated Other						Total
Balance at April 1, 2021		14,383,913		$	175	$	387,939	$	53,459		$	12,019		$	(55,777	)	$	397,815
																				Shares Outstanding			Amount		Paid-In Capital			Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Stockholders’ Equity
Balance at January 1, 2022																					16,760,115		$	203	$	478,862		$	88,324		$	1,776		$	(68,534	)	$	500,631
Net income		—			—		—		15,166			—			—			15,166			—			—		—			15,650			—			—			15,650
Other comprehensive income (loss), net of tax effects		—			—		—		—			1,431			—			1,431			—			—		—			—			(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		9,351			—		948		—			—			—			948			—			—		804			—			—			—			804
Common stock issued upon exercise of stock options		37,753			1		507		—			—			—			508			3,500			—		50			—			—			—			50
Common stock issued under stock-based incentive plan		25,159			—		—		—			—			—			—			61,460			1		(1	)		—			—			—			—
Common stock issued under employee stock purchase plan																					14,274			—		391			—			—			—			391
Treasury stock purchase		(96,004	)		—		—		—			—			(2,873	)		(2,873	)		(384,383	)		—		—			—			—			(12,381	)		(12,381	)
Balance at June 30, 2021		14,360,172		$	176	$	389,394	$	68,625		$	13,450		$	(58,650	)	$	412,995
Balance at March 31, 2022																					16,454,966		$	204	$	480,106		$	102,632		$	(50,012	)	$	(80,915	)	$	452,015

Balance at April 1, 2022		16,454,966		$	204	$	480,106	$	102,632		$	(50,012	)	$	(80,915	)	$	452,015
Balance at January 1, 2023																					15,930,112		$	205	$	484,989		$	140,095		$	(113,511	)	$	(101,720	)	$	410,058
Net income		—			—		—		15,259			—			—			15,259			—			—		—			12,323			—			—			12,323
Other comprehensive income (loss), net of tax effects		—			—		—		—			(27,414	)		—			(27,414	)		—			—		—			—			12,273			—			12,273
Cash dividends - common stock, $0.08 per share		—			—		—		(1,290	)		—			—			(1,290	)
Dividend equivalents - restricted stock units, $0.08 per share		—			—		—		(25	)		—			—			(25	)
Cash dividends - common stock, $0.10 per share																					—			—		—			(1,573	)		—			—			(1,573	)
Dividend equivalents- restricted stock units, $0.10 per share																					—			—		—			(35	)		—			—			(35	)
Stock-based compensation		624			—		744		—			—			—			744			—			—		1,212			—			—			—			1,212
Common stock issued upon exercise of stock options		3,656			—		47		—			—			—			47
Common stock issued under stock-based incentive plan		3,416			—		—		—			—			—			—			102,687			1		(1	)		—			—			—			—
Common stock issued under employee stock purchase plan																					17,508			—		458												458
Treasury stock purchases		(355,844	)		—		—		—			—			(11,221	)		(11,221	)		(320,050	)		—		—			—			—			(9,593	)		(9,593	)
Balance at June 30, 2022		16,106,818		$	204	$	480,897	$	116,576		$	(77,426	)	$	(92,136	)	$	428,115
Balance at March 31, 2023																					15,730,257		$	206	$	486,658		$	150,810		$	(101,238	)	$	(111,313	)	$	425,123


Proceeds from the exercise of employee stock options		—			50
Proceeds from employee stock purchase plan		458			391
Purchase of treasury stock		(9,593	)		(12,381	)
Net change in contractual obligations		(246	)		(385	)
Dividends paid on common stock		(1,642	)		(1,353	)
Net cash (used in) provided by financing activities		145,050			(11,796	)
Net change in cash and cash equivalents		145,938			(169,904	)
Cash and cash equivalents, beginning of period		104,428			259,954
Ending cash and cash equivalents	$	250,366		$	90,050
Supplemental cash flow information:
Interest paid	$	12,966		$	4,739
Income taxes paid, net of refunds		27			82
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans		27			555
Other repossessed assets acquired in settlement of loans		46			20
Purchase of investment in tax credit structures		4,400		—

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		403,501			70,000
Principal repayments on Federal Home Loan Bank term advances		(323,501	)		(70,929	)
Proceeds from Federal Reserve Bank discount window		1,000			1,000
Principal payments on Federal Reserve Bank discount window		(1,000	)		(1,000	)
Principal payments on employee stock loans	—				43
Proceeds from the exercise of employee stock options		97			675
Proceeds from employee stock purchase plan		391			241
Debt issuance cost	—				(16	)
Purchase of treasury stock		(23,602	)		(8,780	)
Net change in contractual obligations		(1,879	)		(720	)
Dividends paid on common stock		(2,672	)		—
Net cash provided by (used in) financing activities		(26,391	)		241,622
Net change in cash and cash equivalents		(156,370	)		(141,377	)
Cash and cash equivalents, beginning of period		259,954			280,698
Ending cash and cash equivalents	$	103,584		$	139,321
Supplemental cash flow information:
Interest paid	$	7,295		$	8,157
Income taxes paid, net of refunds		196			6,920
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans		2,208			705
Other repossessed assets acquired in settlement of loans		436			67
Other real estate owned recorded as a result of transferring non-operational branch right-of-use-asset	$	2,210		$	—


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
March 31, 2023
Available-for-sale securities
U.S. Government-sponsored entities	$	123,019	$	—	$	(14,605	)	$	—	$	108,414
U.S. Treasury securities		259,664		2		(21,621	)		—		238,045
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		547,198		—		(54,784	)		—		492,414
Private label residential mortgage-backed securities		186,924		5		(25,749	)		—		161,180
Corporate		56,662		—		(5,731	)		—		50,931
Small Business Administration loan pools		12,327		—		(648	)		—		11,679
State and political subdivisions		129,464		165		(9,045	)		—		120,584
	$	1,315,258	$	172	$	(132,183	)	$	—	$	1,183,247


	Available-for-Sale				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	6,955	$	6,978	$	8,359	$	8,329	$	—	$	—
One to five years		258,317		244,218		336,533		310,203		—		—
Five to ten years		244,867		225,103		170,171		152,150		—		—
After ten years		82,079		73,952		66,073		58,971		840		877
Mortgage-backed securities		798,315		737,929		734,122		653,594		1,104		1,118
Total debt securities	$	1,390,533	$	1,288,180	$	1,315,258	$	1,183,247	$	1,944	$	1,995

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Less Than 12 Months					12 Months or More					Total
June 30, 2022
																Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
March 31, 2023
Available-for-sale securities
U.S. Government-sponsored entities	$	111,392	$	(12,158	)	$	—	$	—		$	111,392	$	(12,158	)	$	—	$	—		$	108,414	$	(14,605	)	$	108,414	$	(14,605	)
U.S. Treasury securities		238,566		(18,763	)		—		—			238,566		(18,763	)		—		—			236,248		(21,621	)		236,248		(21,621	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		433,909		(27,821	)		115,996		(13,631	)		549,905		(41,452	)		55,546		(2,277	)		436,868		(52,507	)		492,414		(54,784	)
Private label residential mortgage-backed securities		168,463		(17,623	)		10,994		(1,367	)		179,457		(18,990	)		—		—			157,781		(25,749	)		157,781		(25,749	)
Corporate		52,510		(1,588	)							52,510		(1,588	)		27,816		(1,846	)		23,115		(3,885	)		50,931		(5,731	)
Small Business Administration loan pools		5,898		(531	)		8,413		(22	)		14,311		(553	)		6,734		(8	)		4,945		(640	)		11,679		(648	)
State and political subdivisions		83,381		(9,204	)							83,381		(9,204	)		42,911		(268	)		53,386		(8,778	)		96,297		(9,045	)
Total temporarily impaired securities	$	1,094,119	$	(87,688	)	$	135,403	$	(15,020	)	$	1,229,522	$	(102,708	)	$	133,007	$	(4,399	)	$	1,020,757	$	(127,785	)	$	1,153,764	$	(132,183	)
December 31, 2021
December 31, 2022
Available-for-sale securities
U.S. Government-sponsored entities	$	117,618	$	(1,504	)	$	—	$	—		$	117,618	$	(1,504	)	$	3,936	$	(913	)	$	102,470	$	(15,877	)	$	106,406	$	(16,790	)
U.S. Treasury securities		155,601		(1,687	)		—		—			155,601		(1,687	)		92,896		(6,866	)		139,262		(18,666	)		232,158		(25,532	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		378,057		(6,860	)		2,868		(52	)		380,925		(6,912	)		203,416		(15,511	)		295,190		(46,659	)		498,606		(62,170	)
Private label residential mortgage-backed securities		159,381		(1,978	)		2,208		(51	)		161,589		(2,029	)		43,610		(7,227	)		116,410		(20,119	)		160,020		(27,346	)
Corporate		4,785		(215	)		—		—			4,785		(215	)		48,199		(3,443	)		4,175		(825	)		52,374		(4,268	)
Small Business Administration loan pools		15,459		(106	)		—		—			15,459		(106	)		7,676		(60	)		4,505		(674	)		12,181		(734	)
State and political subdivisions		28,443		(416	)		—		—			28,443		(416	)		88,713		(5,463	)		19,671		(5,798	)		108,384		(11,261	)
Total temporarily impaired securities	$	859,344	$	(12,766	)	$	5,076	$	(103	)	$	864,420	$	(12,869	)	$	488,446	$	(39,483	)	$	681,683	$	(108,618	)	$	1,170,129	$	(148,101	)


	Three Months Ended March 31,
	2023		2022
Proceeds	$	—	$	3,265
Gross gain		—		115
Gross losses		—		36
Income tax expense on net realized gains		—		20


	March 31, 2023		December 31, 2022
Investments in stocks
Accounted for at fair value through net income	$	602	$	570
Accounted for at amortized cost assessed for impairment		1,397		1,398
Total investments in stocks		1,999		1,968
Investments in partnerships
Accounted for at equity method		1,807		1,816
Accounted for at hypothetical liquidation book value		1,440		980
Accounted for at proportional amortization		23,608		19,794
Total investments in partnerships		26,855		22,590
Total other investments	$	28,854	$	24,558

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

June 30, 2022	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	21,764		$	13,814		$	5,960		$	1,542		$	2,472		$	2,038		$	47,590
Provision for credit losses		911			(650	)		870			(535	)		(182	)		410			824
Loans charged-off		(11	)		(35	)		(46	)		—			(1	)		(289	)		(382	)
Recoveries		1			80			34			—			—			91			206
Total ending allowance balance	$	22,665		$	13,209		$	6,818		$	1,007		$	2,289		$	2,250		$	48,238

June 30, 2021	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total

March 31, 2023																						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	$	15,118		$	19,965		$	11,511		$	1,900		$	4,349		$	2,682		$	55,525
Cumulative effect adjustment of adopting ASC 326		72			52			(11	)		(1	)		—			3			115
Impact of adopting ASC 326 - PCD loans		(56	)		(1,898	)		(1	)		(226	)		599			—			(1,582	)
Beginning balance																						$	16,731		$	14,951		$	8,608		$	819		$	2,457		$	2,281		$	45,847
Provision for credit losses		91			578			(1,692	)		(354	)		(253	)		(27	)		(1,657	)		(126	)		1,100			132			(233	)		(1,065	)		(174	)		(366	)
Loans charged-off		—			(54	)		(3	)		(490	)		(1	)		(165	)		(713	)		(1	)		(435	)		(5	)		—			—			(197	)		(638	)
Recoveries		—			47			4			18			1			76			146			7			4			16			—			155			78			260
Total ending allowance balance	$	15,225		$	18,690		$	9,808		$	847		$	4,695		$	2,569		$	51,834		$	16,611		$	15,620		$	8,751		$	586		$	1,547		$	1,988		$	45,103


	March 31, 2023
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	2,443	$	1,844	$	—
Commercial and industrial		24		—		—
Residential real estate		27		—		—
Agricultural real estate		1,535		565		—
Agricultural		2,303		—		—
Consumer		4		—		—
Subtotal		6,336		2,409		—
With an allowance recorded:
Commercial real estate		1,060		859		215
Commercial and industrial		10,829		5,482		839
Residential real estate		3,375		3,088		763
Agricultural real estate		1,899		1,372		106
Agricultural		3,861		2,923		1,054
Consumer		485		417		103
Subtotal		21,509		14,141		3,080
Total	$	27,845	$	16,550	$	3,080


	As of and for the three months ended								As of and for the three months ended
	June 30, 2022				June 30, 2021				March 31, 2023				March 31, 2022
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,572	$	—	$	—	$	2	$	1,855	$	—	$	409	$	—
Commercial and industrial		982		—		—		—		—		—		982		—
Residential real estate		553		—		11		—		13		—		767		1
Agricultural real estate		1,400		—		3,210		83		573		—		1,660		—
Agricultural		—		—		2,066		33
Consumer		—		—		—		1		—		—		24		—
Subtotal		4,507		—		5,287		119		2,441		—		3,842		1
With an allowance recorded:
Commercial real estate		2,800		—		8,010		3		841		—		4,827		—
Commercial and industrial		2,549		—		29,034		11		5,660		—		4,152		—
Residential real estate		3,160		1		2,752		2		3,135		—		4,031		—
Agricultural real estate		2,378		3		3,787		—		1,421		1		2,579		—
Agricultural		4,072		—		8,033		10		3,195		—		5,281		—
Consumer		312		—		253		1		382		—		316		—
Subtotal		15,271		4		51,869		27		14,634		1		21,186		—
Total	$	19,778	$	4	$	57,156	$	146	$	17,075	$	1	$	25,028	$	1

	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

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

March 31, 2023													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	$	598	$	249	$	386	$	5,105	$	1,636,730	$	1,643,068	$	836	$	276	$	—	$	2,703	$	1,743,019	$	1,746,834
Commercial and industrial		655		2,923		—		3,351		571,970		578,899		659		203		—		5,482		599,232		605,576
Residential real estate		623		357		—		2,903		575,053		578,936		1,245		104		23		3,088		559,331		563,791
Agricultural real estate		7		—		—		3,477		194,454		197,938		552		—		—		1,937		199,785		202,274
Agricultural		1		95		—		3,757		120,900		124,753		1,098		—		—		2,923		102,148		106,169
Consumer		466		47		—		267		99,072		99,852		354		55		—		417		105,148		105,974
Total	$	2,350	$	3,671	$	386	$	18,860	$	3,198,179	$	3,223,446	$	4,744	$	638	$	23	$	16,550	$	3,308,663	$	3,330,618


March 31, 2023	Payment Delay		Term Extension		Combination Rate Change and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	—	$	—	$	14	$	14		0.00	%
Commercial and industrial		—		258		—		8,794		9,052		1.49	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		23		—		—		23		0.01	%
Agricultural		122		—		—		—		122		0.11	%
Consumer		—		—		25		—		25		0.02	%
Total	$	122	$	281	$	25	$	8,808	$	9,236		0.28	%

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	$	4,045	$	688	$	4,226	$	251	$	8,271	$	939
Commercial and industrial		2,321		109		1,813		223		4,134		332
Residential real estate		—		—		—		—		—		—
Agricultural real estate		1,181		602		1,650		284		2,831		886
Agricultural		2,956		189		—		—		2,956		189
Total troubled debt restructurings	$	10,503	$	1,588	$	7,689	$	758	$	18,192	$	2,346


March 31, 2023	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 89 days Past Due		Total Past Due
Commercial real estate	$	—	$	—	$	—	$	—
Commercial and industrial		—		—		—		—
Residential real estate		—		—		—		—
Agricultural real estate		—		23		—		23
Agricultural		—		—		—		—
Consumer		—		—		—		—
Total	$	—	$	23	$	—	$	23



March 31, 2023	Principal Forgiveness		Weighted Average Interest Rate Reduction				Weighted Average Term Extension in Years
Commercial real estate	$	—		—		%		0.25
Commercial and industrial		—		—		%		0.14
Residential real estate		—		—		%		—
Agricultural real estate		—		—		%		6.20
Agricultural		—		—		%		—
Consumer		—		(0.24	)	%		2.16
Total loans	$	—		(0.24	)	%		0.16

	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


	Allowance for Credit Losses
		March 31, 2023		December 31, 2022
Commercial real estate		$	348	$	336
Commercial and industrial			821		700
Residential real estate			43		45
Agricultural			5		3
Consumer			268		269
Total allowance for credit losses		$	1,485	$	1,353


	March 31, 2023								December 31, 2022
	Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	$	21,092	$	2,078		$	—		$	21,528	$	2,425		$	—
Derivatives designated as cash flow hedges:
Interest rate swaps		250,000		1,873			3,405			157,500		2,120			4,457
Total derivatives designated as hedging relationships		271,092		3,951			3,405			179,028		4,545			4,457
Derivatives not designated as hedging instruments:
Interest rate swaps		197,178		3,529			3,105			184,277		4,191			3,555
Total derivatives not designated as hedging instruments		197,178		3,529			3,105			184,277		4,191			3,555
Total	$	468,270		7,480			6,510		$	363,305		8,736			8,012
Cash collateral				—			2,285					—			2,860
Netting adjustments				(6,043	)		(6,043	)				(7,336	)		(7,336	)
Net amount presented in Balance Sheet			$	1,437		$	2,752				$	1,400		$	3,536


	March 31, 2023							December 31, 2022
	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	$	17,158	$	(2,008	)	$	—	$	17,202	$	(2,384	)	$	—
Total	$	17,158	$	(2,008	)	$	—	$	17,202	$	(2,384	)	$	—


	March 31, 2023
	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	$	(367	)	$	375	$	8	$	149
Total	$	(367	)	$	375	$	8	$	149


	March 31, 2023
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based receivable loan hedges	$	923		$	686		$	(780	)
FHLB advance hedges		123			92			33
Subordinated note hedges		(247	)		(185	)		71
Total	$	799		$	593		$	(676	)

	March 31, 2022
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based receivable loan hedges	$	—		$	—		$	—
FHLB advance hedges		—			—			—
Subordinated note hedges		—			—			—

	June 30, 2022
March 31, 2023										Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate
Operating Leases	Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate
Land and building leases	$	5,627	$	5,669		16.0		2.79	%	$	5,090	$	5,062		13.1		2.32	%
Total operating leases	$	5,627	$	5,669		16.0		2.79	%	$	5,090	$	5,062		13.1		2.32	%

Right-of-use-asset reported in premise and equipment	$	3,437
Right-of-use-asset reported in other assets										$	3,078
Right-of-use-asset not in operation, reported in other real estate owned		2,190									2,012
Total	$	5,627								$	5,090


Lease Payments	March 31, 2023
Due in one year or less	$	568
Due after one year through two years		550
Due after two years through three years		554
Due after three years through four years		553
Due after four years through five years		553
Thereafter		3,316
Total undiscounted cash flows		6,094
Discount on cash flows		(1,032	)
Total operating lease liability	$	5,062


	June 30, 2022		Weighted Average Rate			Weighted Average Term in Years	March 31, 2023		December 31, 2022
Federal Home Loan Bank line of credit advances	$	—		—		—	$	11,222	$	138,864
Federal Home Loan Bank fixed-rate term advances		80,000		1.50	%	—		100,000		—
Total principal outstanding								111,222		138,864
Total Federal Home Loan Bank advances	$	80,000					$	111,222	$	138,864


	Retail Repurchase Agreements		FHLB Advances		Subordinated Debentures		Subordinated Notes		FRB Borrowings		Total
Due in one year or less	$	45,098	$	111,222	$	—	$	—	$	140,000	$	296,320
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
Total	$	45,098	$	111,222	$	28,352	$	75,000	$	140,000	$	399,672