EQBK - Earnings call transcript Q1 2024

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Operator

Hello, and welcome to the Equity Bancshares, Inc. Q1 2024 Earnings Conference Call. My name is Harry, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to your host, Brian Katzfey, Vice President, Director of Corporate Development and Investor Relations at Equity to begin. Please go ahead.

Brian Katzfey

morning. Good joining Equity for earnings first today call. us you Bancshares for quarter Thank

let that certain actual investor.equitybank.com, materially remind being we which could materials. me Before begin, cause forward-looking contains you and earnings and is those statements, from other via Today's that presentation our subject recorded available differ today's uncertainties webcast results with at to to along are release discussed. presentation risks, and is call factors

further allow turn will Brad you time to we discussion. presentation, and that, to Thank for questions like our the the us. With joining Following Elliott. CEO, all for over Chairman I'd and call

Brad Elliott

Good take interest overall XX earnings morning, earnings to you Bancshares through our Equity and the our announcement. income, strong completion results, you with is and net which for of Rockhold first Bancorp, joining record days today call. We're merger formal excited quarter's after thank including

our Slupkowski, to Officer. We Chris is organic today President; Navratil, Bank and me balance acquisitive our grow the Krzysztof CFO; streams entered and avenues. sheet Rick through Joining revenue both Credit Chief year Sems, our positioned

we $XXX quarter, deposits X acquisition The as locations of with North growth. the more commercial the Rockhold, core as During on well this of organic added Kirksville Missouri. Central Bank million loan executed in than positioning cash in over

communities. Bank team in Equity to a and franchise the to the members new of continue their Our excellent market be are to part excited provide service

the organic growth dividends organization, enhance pay focused year. while which on to our of the has the team Our throughout hard remainder through the culture remains initiatives completing transaction. Rick sales worked will

as Growth balance earnings thrive participation our us in share through program. and emphasize sheet under shareholder of as driven organization our by We Rick's that I operators growing well leaders dividends expect quarterly throughout have continuation return active to repurchase allowed our to in leadership. excellent

the shares we quarter, the XXX,XXX up repurchased million X of shares. current under authorization During to

well-positioned strategic a our continue take bank balance grow through economic advantage to with closes to uncertainty of the M&A. quarter in environment, the and opportunities sheet remains While to organically both

engaged are Chris proud meet members how let year of look momentum. I positive financial to results. will you team have our am our the we through I and our continuing started talk and forward tools of the to needs Our the community.

Chris Navratil

Thank night, million $X.XX the improved for reported income the of net to you, expenses Brad. while $XX.X up interest Bank per provision for or of day well Last share. as incurred performing from $X.XX share. we $XX.X Kirksville, margin merger Net related million Adjusting was acquired X per diluted to net was income interest X.XX%. X.XX% quarter, income linked million loans, diluted net or $X.X as

positive transaction. margin The detail repositioning assets in will as of well Kirksville in quarter. million in income, up of adjusted this on $X.X driven Bank acquisitions trend positive the the a on to by $X.X was million as gain We was related later more million in linked for investments of discuss loss $X.X QX Noninterest in outcomes call. dynamics special

card, items, the with $XX.X trust the X% Bank were of In saw wealth and based the modestly Kirksville million including linked debit by credit and we adjusted charges, revenue, these fee expenses addition during off onetime also service to and management timing card, on of rate in improved totaling charges for mortgage line quarter M&A service non-run quarter. Noninterest expectations closing.

announcement Kirksville to appear date improvement primarily finalizing of to on $X.XX. due estimates close. of the between process transaction, Bank continue in value for EPS the and is in still are of The acquisition line the portfolio accretion with XXXX original the bond accounting fair of in gain the we Kirksville, While the

which completed realized. during expected systems be to merger cost disclosed, of will fully saves previously be QX, As after are

entirely million. day Kirksville attributable $X.X net Bank the for quarter is X the credit portfolio. to provision adjustment The for of a to GAAP income of the loss included acquisition the Our reflect provision of

we to ACL seen continue through alone any let a I'll economic stop and however, is potential asset X.XX%. operating specific quarter. our have of not challenges, concerns March for for here hold to markets. reserve The for coverage the We Krzysztof XX moment date, in talk quality our

Krzysztof Slupkowski

Thanks, Chris.

circumstances of total and quarter, continue markets portfolio Asset asset we in interest resiliency test annualized specific borrowers. cycle scream acquisition levels, position. continue the incorporating X in strength not reviews negligible operate. Under a XX capital. our risk highlight rate total which have evidenced deterioration environment, on percentage portfolio of below we $XX and to been points. Net portfolios. to basis quality updated stress of of specific metrics have individual the a reflective that the low or the the to total at Through classified our credit latest X.XX% current acknowledge The any the affirm any evaluations local and charge-offs seen closing at Nonaccrual end we Kirksville, completed basis million the have first we were renewals, of of loans trends. Nevertheless, and had of as our the results remained the our by Bank operating related bank's of economies for problem of quality credits These not quarter. Recognized loans as historically remains. full in the charge-offs loans concern on with quarter points regulatory of impact a of the bank broader

and we special Bank specific are primarily $X.X driven As of selected resolution Brett Rieber of mentioned led assets Almena of income. This [indiscernible]. quarter X the assets recovery is result positive team and by by from the effort million and legal benefited previously, from and Chris? credits the totaling other State in acquisition our in the

Chris Navratil

of of loans $XX.X XX.X%, during into quarter the Average balance impact the rate added excluding average at Thanks, annualized an increased in million Krzysztof. the which Bank quarter. the of Kirksville,

headwinds not X.XX% QX quarter, X.XX%. XX Overall quarter to the impacting basis from results yields the the on as loan were yield loans During the during increased coupon X.XX% improved XXXX points to repeated.

XX.X%. rising as of costs. to decisioning totaled benefited million quarter, XX.X% driven portfolio. fourth Cost ratio $X.X period-end points X.XX%. was with was repositioning Kirksville income from to of the deposits the from noninterest-bearing contribution from trend the the a declined while improved The the the accretive of quarter bond previous during in interest-bearing Kirksville earnings XX.X%. Net portfolio of during the deposits purchase transaction on we to deposit by periods average addition average marks bond Bank XX Our interest mix funding the to quarter increased basis fourth accounting and to outpace streams Bank up number this quarter our from in the to continue quarter yield to The strategic X.XX% positive the closed X.XX% $XX.X million of

We borrowings. continue by which to carry are balances, wholesale excess cash offset

the addition due does We basis during Salaries the members $XX.X on to $X.X the quarter. have effect are quarter adjustments, margin. We by Kirksville of and points currently calculate positions, that expense current annual though of the merger these realized spread liquidity earning it compensation Noninterest was of front-loaded million reducing charges. increased for $X.X the margin in had X the excess payroll excluding a impact. million, team million positive and benefits tax reducing effect

in realized. Bank QX disclosed, fully be the transaction take of saves after Kirksville cost the following systems of place previously As will integration will which

includes both for includes forecast in the rate future deposit the second changes, outlook effects include still of well forecast as Our not year and full though as legging our quarter XXXX. our do repricing portfolios. the slide loan We

Our provision to loans. forecasted be average XX to points is approximately Rick? basis

Richard Sems

in our creation moving we forward markets. our with continue value and pleased are as I'm positioned start to to that emphasize all we XXXX to accomplish

incredible Our team the was result the possible a leadership and XX able environment. I in Julie with announcement, current to to merger working an close transaction full together. in team need successfully her accomplishment entire team an is following give the shout-out. This only days big Huber

through quarter some in We working and our closings customer legacy of our While loan base QX seen markets moved transaction, strong to expected the but the started QX. focus. remained have

In addition, strong to low-yielding our year. remain With said, we we to certain remainder advantage of take believe and prospects the that for of loans. credits exit opportunities continue the

end, we quarter, increasing to as move As we on strong, from sales culture look build our year we and forward. remained the of closed XX% pipelines

we Bergquist. seasoned and focus of As primary with have organic aligning team our we hired Sales the our of a Betty be growth. training, culture of will sales, drive executive, Betty Managing Director

balances, were added to our Bank that the municipality of customer billion. current moved in capable accounts Loans of excluding a be new XX.X%, and Kirksville deposit our During footprint. trended as in bank deposits QX positioning dollars excess quarter, closed as percentage lender were deposits out. Total at consistently at expectations customers $X.X with closed for a quarter the

expect remainder over the scale market our of marketplaces growing with growth focused of and through committed a position with come are of relationships, XXXX. the provide an teams goals banking have balance service the deepening receive high professionals expansion, bank. sheet team the Bank creation added of provided on ensures feedback of throughout their exceeding Early outlook high of expertise by will Kirksville, our shows excited focus, which team Our engaged and they have to and our the me for This contribute identifiable our to and opportunity application year. Partnering operating expectations. coupled tempo level our that value customers

to single-digit As high slide, drive loan indicated XXXX. in expect our growth continue to in we outlook to organic mid-

from team Service forward discipline, to revenues quarter-over-quarter, expectation. I and execution. strategy, tools increasing look people wealth contributions in improved to charges service trust card, and management, and the have place including We realize the this assisting in mortgage.

teams and in moving which of to beyond, business we forward. customer on expect XXXX focused Our lines are expansion value enhancing drive

of East markets. to extensive look Craig will and Western continue Finally, build including Missouri. the to in Community announce he I Craig us partnering and market, forward markets am joins CEO in the I to North overseen. experience with addition Dunn, we be to as pleased now these our Central look Regional with Craig

Our company is capitalized. well

in quality continue best equity. of asset the the Our be been history have metrics they to

Our times is this. like balance sheet positioned structure for

have granular a team base. experienced, deposit is and widespread Our we

than directives XXXX more for have me excited strategic been of since XXXX. Our beginning I the have

hitting initiatives Our Board's value. the forward build team are continuing running. look to customer has strategic to ground redeploy relationships into that We taken the franchise and assets

that see time and we will M&A are our conversations, as we momentum the resolve front and feel will your expect We to questions. opportunities, dilution happy to begin itself take several approach earn-back while in disciplined assessing continue. well. Equity the to We've value remain to that, distressed line. With these and positive to emphasizing on continue had controlling the market

Operator

of [Operator just Terry, Terry your repeat could first from if is be great. would that line Instructions] question question, the Stephens. Our of you today McEvoy

Terence McEvoy

Yes.

are that. will forecast? about of a your peak for and how when in Chris, Sorry you terms in longer where higher rate environment about deposit thinking rates

Chris Navratil

Yes.

of including our interest changes currently in Terry, isn't So any forecast kind rates.

any So or reductions increases. we're not factoring

where flat holding today. are it's we to So

maximum the beta. look think still I been thinking rates, we as sub-XX% at out today. between We're deposit is we've and XX% peaking about XX%

XX% of to about that our levels deposits of talked it far. I XX%, about kind beta XX that So the beta previously, which perspective. end we We're going is out what already We're the I'm see have I is to high and kind going to because is a above get not get but expect high our at thus optimistic. with we portfolio market. to meaningful do consider that's aspect of there of continuing opportunities that

reposition well. to some opportunities have We as

So the higher between we're in stay XX% think and we XX% the beta below -- world. on thinking above an to it, expect longer creep even but potentially about hit I all-in overall for still we'll

Terence McEvoy

investments incremental you like fee see and made income. are in on question Can where you once year? seems asked you've you where just fees the this growth remind me It

Chris Navratil

Yes.

management service our So we're revenues. in also incremental seeing wealth And seeing I treasury on side think then in management the growth it we're area. our

on of the new out kind a just some business rolled bundles product set we So side. with

expect continue to to that see growth area. we So some in

Brad Elliott

you our we couple that is card yet. of still business, remember, -- credit And not our if Terry, ago, years a mature corporate and started

of think which I lots income for corporate expansion so And creates interchange that still off room we business. of credit card have

Terence McEvoy

in. -- other one just And have much then I'll delayed announcement I maybe many for working on extended. to move deal What's successful. been closed, sauce? deals are to converted squeeze to longer been and get and special others one so because the announce Brad, a from the But haven't guess much, last next it close, XX days get one as what's just you is, question your my it

Brad Elliott

lots And working what of I be fits of footprint on, that regulators Well, it. the have that think our communication just box. what with our something and box you're some on it in around their having is issues doesn't

do I so with transactions. And to Washington, has what really think D.C. delegated outside authority it helps is of those

hasn't that, And so don't squash that in -- how happened somebody that. so to everybody the let's figured tell world out that

-- fingers our crossing and way. we're it -- just it's So that that happens happening --

Operator

Rabatin the next Brett Hovde Our question is today Group. of of from line

Brett Rabatin

year what's on loan to commercial the year? a the to the that have start of portfolio how yield estate portfolio perspective? And bar, might Wanted much to reset next on with this just you repricing and opportunity real just so some speak, from and

Richard Sems

Yes. This is Rick.

So average, I I longer, a X.X% -- And those so. put X.X% you as for month, coming on month. mean on on we're the know, kind putting up. But we the of to million rates actually you don't and $XXX we're have month, million are exact -- X.X% far get or I'll -- roughly, quite it repricing we have what's it average Chris, about if those that around still every single looks each each all stay as number $XXX as of bit, like

repricing. to still of there's So go piece that on room

get when giving can due. at it each how much it to the on look some -- for exact coming we numbers -- is we quarter, So

available. And then in So we get choose rate, we doing meaningful on can't business. that's to a if been those, is we relationships, that all we've of what some it's exit not if those choose

Brad Elliott

We floating. the cycle portfolio [indiscernible] was started our over

the now, didn't go years deals, less. on of and longer than X years go time X or X that's so and longer ago didn't -- And years were we we we commercial most

it's the know there, not that's in but don't significant. I dollar So left amount as

Richard Sems

can't I that. quarter, remember I think exactly to we I in get about total, we'll it but last the can't remember, talked

Brett Rabatin

year, optimistic to like Appreciate peers. maybe some growth much pipeline, to hear just sounds just pretty And that. are And wanted relative loan guys this on maybe how on then the are was it that maybe sheet their just some back from maybe organic your pulling customers cetera. balance growth versus of with that given market et constraints, take other to existing share opportunities banks you some

Richard Sems

we Yes. prospects. pushing out are really calling getting on on I mean and

that. seeing we're So

in that, to fourth we think benefit quarter, some I the that see starting of started the on we're kind and side. especially from C&I

growth C&I. to we a as little half So the of in see in first quarter second year. we the that into had more the We want move of

that at it of is business. a aspect new that we're of So looking that lot

going there's when the and with next on the and that new -- again, this pipeline, So following you the though, But get, as that's to a looks it's guarantee more more the -- absent it's year. year business, year close. opportunity know, for we for what and

Brett Rabatin

are consider the Is one, a I transactions to at. that that or here? if for there deals in a And one sneak Okay. could benchmark us way last with accretion too, think on guys you looking levels about you would from

Richard Sems

of detail Maybe that Brett. bit a little on

are In level, Or... to rate on terms to, referring running versus in accretion terms for we're like accretion of dilution? looking step willing of what you what what you're

Brett Rabatin

pricing some at deals looking the balance the you're is typical just -- so looking my relatively might might be Yes, at transactions if any that parameters and guess that you're a around bank's attractive. assets, have and sheet underwater

underwater. And extent, balance you're some someone's fixing so that's sheet to

as what opportunities, for be might accretion and be things? you'd come, perspective, from payback sort tangible for, an those thinking what of just those about so EPS they parameters looking And your

Brad Elliott

changed So back. earn I would our we say parameter haven't on

our -- parameters So haven't waters looking yield if transaction X-year than down quicker. standpoint. on has earn less in accretion is from we're back risk changed of at a than mean, still would that, or maybe be away any accretable we because equity, a that to some I there But even going we what it less

Richard Sems

Yes.

sheet to Brad, that done. The in after about other at of transactions, think thing as fair we're value I'd of terms the we're say those we look that trying balance

the of through marks process. kind are way the the when So all

look more what what pricing, on balance versus the we're conversations worth So today. as tangible value having, we of sheet we focused lot at a book is it's the at is as look

transactions. little So willing bit way to dilution accept of because we're a the those looking less typically, just structuring at

Operator

Our next line of Sandler. Andrew Liesch Piper question today from is of the

Andrew Liesch

at sheet Just the the Has Kirksville balance a of now the shifted with of closed. question much sensitivity Bank asset deal all?

Richard Sems

meaningfully, duration bit little are but of Not relatively Kirksville in assets there. The a short, there's Andrew.

loan kind overall. on have lot liabilities And still fixed X non-time you're based. a at They then term the of X So looking years side. of are long to don't predominantly their

in kind market behaves. the depends So but of on flexible, just completely theory, competition how and moves

Andrew Liesch

Okay.

rate still pretty changes? to neutral So

Brad Elliott

Yes.

talk the some seeing we're might it You about of there. already positives

Chris Navratil

deposit now. mean group Yes. folks. of seeing seeing We're a I we're growth engaged right really

digital it to so able for be continues products we we're of do what lot And bringing good have. deposits is market, a in a the really of source us. And to that that

kind bit just from little continue to deposits. on maybe -- there's side, clientele liking to think result, And really going see we're actually what serve so a we're -- a a to And of there we're the I doing. hold as want

think end year. of decent see growth we the some might I there continue to through the

Andrew Liesch

That client assets is led Got this loan to is the actually next year. for deposit fund Is might funding of there growth Or on that it question it my it. kind going of as remixing any into well? from come growth?

Richard Sems

get answer could think optimistically, via well borrowing growth could hope is funding as do you some all the the to I see we it. then that and to both we'll capacity and Andrew wholesale we loan because the that then have for

short. Kirksville bond is the Now our portfolio, very especially portfolio

flows coming So loans. opportunities you're to going give see reposition in some us into that to cash

as loans. kind liquidity also mentioned -- the cash we're you of as excess have phone some repositioned can on be we carrying. call We That that into

on. come opportunities and into the have goes to will through to as flows today relationships those we ideally redeploy cash assets customer So year continue

Chris Navratil

that add as gives us in I to decision move the funds, powder dry we've market. of given just discipline make it a things that would the cost And had on

Chris as has real we're So either strong to one. in said, there, we do point think a

Operator

Rulis of the next is from Our of Jeff Davidson. question D.A. line

Jeff Rulis

if questions, credit of I could. couple a Just

last on brought to was residence specifically? just on quarter, statistics, mortgage primary that encouraging movement linked credit or that, quarter maybe going that Some identified, any the back

Brad Elliott

Yes. get We sold were moved the that and note able to on. actually credit We that.

Jeff Rulis

I question existing talked chasing sort broader or gains the of a then about, were for -- legacy? that, from you've I from balance the as what successful acquired but of NPAs know recoveries Of the of down And I classifieds. we've Okay. blurs lines that acquired been versus in guess -- on even kind think loans.

get classifieds, -- NPAs bucket to and acquired sense of what for legacy? trying or a is underwritten of was what that of the Just

Krzysztof Slupkowski

Yes.

a to on going back few So look you're problem that basis, if acquired on assets our majority you are loans. years last the historical of find

half kind to what of see And a case on that's actually quarter-by-quarter part M&A And than and last that due more assets better issues focused is you teams space, is And seems slowdown on our is it. it have of assets problem few of these like years. of the tell, you our positions. special place resolving a on So flyer. legal our going the also in -- down just assets are for been our can our app some the and team but contracts execute in we and as

Jeff Rulis

-- for like you've to of what to to Just acquired date? at acquired Krzysztof, it get have that inning percent are sort the if down after. you're of of any you further if know don't a acquired, process all way a I in maybe where of -- seventh that those been least there's going sense position of And you've there trying recoveries, chased there's know you is recoveries, of what -- in potential we're you that? of think for do sounds

Krzysztof Slupkowski

recovery our I space. I going the would see have any on -- of losses further -- little but that assets say already there's reserved. well the much don't And would or wins I been they're and probably that loans left, bit problem not opportunity won side, recoveries big forward. less Yes. say there's in say it would I a today, whatever

Brad Elliott

have still We a large there. do that are chasing we out recovery

So there. substantial one that is still out

Jeff Rulis

even we of the I more Brad, appreciate are shares you do kind trading And or you kind I as the pivot view both of specifically, into do is M&A it. that term, at thoughts around the you had Got that the think I the or buyback. checking be, of that perspective? average be level do M&A increase kind feel that's where of can price on short weighing last mean just from to quarter, with steady to appetite like going your maybe buyback, or opportunities? going greater for least in a Or pretty

Brad Elliott

Yes.

market. like I the in think the was that in we were that make But have announced we we yet. couple transact -- building knew imminent remain hasn't had active we of cash to to that sure cash stopped And we'll coming Kirksville, M&A been quarters don't still buyback anything that. a or ago, buybacks we to -- enough as had we able be so the

conversations front, but On one M&A need that going, don't we the conversations did. have cash as big as would a have we have do for that

in be buyback to So we market. I think opportunistic will continue the

Operator

from Our line Damon next from the DelMonte question [indiscernible]. today is of

Damon Del Monte

hope margin. you well. guys My doing -- are all question the is question first I regarding

So was Chris, included was quarter's X.XX%. value margin, that? accretion this in How much fair

Chris Navratil

total loans there combine million when is than less of in BOK $XXX,XXX The in just was specifically, all there value bonds. as $X.X so our well you accretion as fair not transactions,

Damon Del Monte

Okay. about fair And think going value should projected we forward? a of accretion kind how

Chris Navratil

Yes.

So the underwater. was acquired bond $X portfolio million we

we're begin the is as years. relatively we million deal with life That mechanics between will come projecting $X with. north So of in the book currently loan create just a the what disclosed line we mark The fair bond went life, we're X.X-year over million. which a of X- and value portfolio $X through well to is to over X on on in X.X million $X to going

horizon. realized So time to be it's just going over that

Damon Del Monte

Got it.

And incorporate value? that the then projected the slide guidance the you provided Or that? does guys fair excluding deck Okay. is that in

Chris Navratil

It includes it.

Damon Del Monte

include. It does

sorry? regards Great. -- C&I Okay. then And the growth with to I'm

Chris Navratil

okay. be to reflective it's Yes. say just I'd

Damon Del Monte

to coming then on versus books? how this much increase And was utilization line growth the C&I credits of with quarter, in Great. that the Okay. regards new

Brad Elliott

credits. new were There

Damon Del Monte

Those all new credits.

kind you the utilization stands today have of of where a level and how more that's And recently? do Okay. line fared

Brad Elliott

front in of I can don't that We you. me. for that get have

Richard Sems

don't we Yes. a calculator. We yes, -- have

Damon Del Monte

maturities on color guys lastly the are the to that And you CRE, broader From forthcoming. perspective, in expected the kind to of are not problem. on proactive just have there's just borrowers are have a different that reset? kind kind having mature, the initial thanks with rates Like to a Okay. a conversations tap with you them that conversations position growth. you So know can solution that of a of or then be a the for No the quarter are going move it so handful whether of or have of you're one not kind the having up those off you -- exit to books have to and impacts overall come credits with on folks?

Chris Navratil

that rates that on being that been has it, raised done, has ahead can what performance rates at for of proactive into Yes. on to handle at and yield there very ones going conversations. I on like those his well their card absolutely the we now. team try doing those also be to those something We mean know and are credit. And on look then so not. up that or which Yes, minimum they we a if credit we're we're that committee, have just to quarter like, Krzysztof We being least discussions a don't has at in might them done to that's mean, work we're understand we're looking it on as if have are And that's that. based low ahead a I stress working that. why of lot testing ones advance bringing what in we then know at ahead, reset, as being

proactively. absolutely we're that doing So yes,

Operator

time. We further have in at no questions queue this the

this Conference the us will of the Call. all XXXX Inc. Equity So to QX end for Thank bring Earnings Bancshares, joining. you

You may now lines. disconnect your

Equity Bancshares (EQBK) 17 Apr 242024 Q1 Earnings call transcript