10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-37624

EQUITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


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		67207L
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 316.612.6000

Securities registered pursuant to Section 12(b) of the Act:

    Title of each class
Class A, Common Stock, par value $0.01 per share

    Trading Symbol
EQBK

    Name of each exchange on which registered
New York Stock Exchange

   

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

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

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


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

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 October 31, 2024, the registrant had 15,289,559 shares of Class A common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS


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	10
	Condensed Notes to Interim Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
	Overview	58
	Critical Accounting Policies	59
	Results of Operations	60
	Financial Condition	69
	Liquidity and Capital Resources	79
	Non-GAAP Financial Measures	80
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	84
Item 4.	Controls and Procedures	86
Part II	Other Information	87
Item 1.	Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88

Important Notice about Information in this Quarterly Report

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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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 7, 2024, 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:

•

external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System, or the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits which may have an adverse impact on our financial condition;

•

losses resulting from a decline in the credit quality of the assets that we hold;

•

the occurrence of various events that negatively impact the real estate market, since a significant portion of our loan portfolio is secured by real estate;

•

inaccuracies or changes in the appraised value of real estate securing the loans we originate that could lead to losses if the real estate collateral is later foreclosed upon and sold at a price lower than the appraised value;

•

the loss of our largest loan and depositor relationships;

•

limitations on our ability to lend and to mitigate the risks associated with our lending activities as a result of our size and capital position;

•

differences in our qualitative factors used in our calculation of the allowance for credit losses from actual results;

•

inadequacies in our allowance for credit losses which could require us to take a charge to earnings and thereby adversely affect our financial condition;

•

interest rate fluctuations which could have an adverse effect on our profitability;

•

a continued economic downturn related to a pandemic, especially one affecting our core market areas;

•

potential fraud related to Small Business Administration (“SBA”) loan applications through the Paycheck Protection Program (“PPP”) as part of the U.S. Coronavirus Aid, Relief and Economic Security Act (“CARES Act”);

•

the effects of a pandemic or other widespread public health emergencies;

•

the costs of integrating the businesses we acquire, which may be greater than expected;

•

the departure of key members of our management personnel or our inability to hire qualified management personnel;

•

challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;

•

a lack of liquidity resulting from decreased loan repayment rates, lower deposit balances, or other factors;

•

inaccuracies in our assumptions about future events which could result in material differences between our financial projections and actual financial performance;

•

an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies;

•

disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems;

•

unauthorized access to nonpublic personal information of our customers, which could expose us to litigation or reputational harm;

•

disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions;

•

required implementation of new accounting standards that significantly change our existing recognition practices;

•

additional regulatory requirements and restrictions on our business, which could impose additional costs on us;

•

an increase in FDIC deposit insurance assessments, which could adversely affect our earnings;

•

increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;

•

restraints on the ability of Equity Bank to pay dividends to us, which could limit our liquidity;

•

a failure in the internal controls we have implemented to address the risks inherent to the banking industry;

•

continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are;

•

costs arising from the environmental risks associated with making loans secured by real estate;

•

the occurrence of adverse weather or manmade events, which could negatively affect our core markets or disrupt our operations;

•

the effects of new federal tax laws, or changes to existing federal tax laws;

•

the obligation associated with being a public company requires significant resources and management attention;

•

effect of pending and future litigation, including the results of the overdraft fee litigation against the Company that is described in this quarterly report;

•

other factors that are discussed in “Item 1A - Risk Factors.”

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.

PART I

Item 1: Financial Statements

EQUITY BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2024, and December 31, 2023

(Dollar amounts in thousands)

See accompanying condensed notes to interim consolidated financial statements.


	(Unaudited) September 30,			December 31,
	2024			2023
ASSETS
Cash and due from banks	$	217,681		$	363,289
Federal funds sold		17,802			15,810
Cash and cash equivalents		235,483			379,099
Available-for-sale securities		1,041,000			919,648
Held-to-maturity securities, fair value of $5,610 and $2,250		5,408			2,209
Loans held for sale		901			476
Loans, net of allowance for credit losses of $43,490 and $43,520		3,557,435			3,289,381
Other real estate owned, net		2,786			1,833
Premises and equipment, net		117,013			112,632
Bank-owned life insurance		131,670			124,865
Federal Reserve Bank and Federal Home Loan Bank stock		34,429			20,608
Interest receivable		28,398			25,497
Goodwill		53,101			53,101
Core deposit intangibles, net		16,029			7,222
Other		131,580			98,021
Total assets	$	5,355,233		$	5,034,592
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	967,858		$	898,129
Total non-interest-bearing deposits		967,858			898,129
Demand, savings and money market		2,468,956			2,483,807
Time		926,130			763,519
Total interest-bearing deposits		3,395,086			3,247,326
Total deposits		4,362,944			4,145,455
Federal funds purchased and retail repurchase agreements		38,196			43,582
Federal Home Loan Bank advances		295,997			100,000
Federal Reserve Bank borrowings		—			140,000
Subordinated debt		97,336			96,921
Contractual obligations		19,683			19,315
Interest payable and other liabilities		37,039			36,459
Total liabilities		4,851,195			4,581,732
Commitments and contingent liabilities, see Notes 11 and 12
Stockholders’ equity, see Note 7
Common stock		209			207
Additional paid-in capital		494,763			489,187
Retained earnings		180,588			141,006
Accumulated other comprehensive income (loss)		(40,012	)		(57,920	)
Treasury stock		(131,510	)		(119,620	)
Total stockholders’ equity		504,038			452,860
Total liabilities and stockholders’ equity	$	5,355,233		$	5,034,592

EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months ended September 30, 2024, and 2023

(Dollar amounts in thousands, except per share data)


	(Unaudited) Three Months Ended September 30,						(Unaudited) Nine Months Ended September 30,
	2024			2023			2024			2023
Interest and dividend income
Loans, including fees	$	62,089		$	55,152		$	182,436		$	156,281
Securities, taxable		9,809			5,696			29,862			17,456
Securities, nontaxable		400			369			1,192			1,606
Federal funds sold and other		2,667			3,822			8,374			7,075
Total interest and dividend income		74,965			65,039			221,864			182,418
Interest expense
Deposits		23,679			19,374			69,196			50,399
Federal funds purchased and retail repurchase agreements		261			246			893			633
Federal Home Loan Bank advances		3,089			968			8,022			2,939
Federal Reserve Bank borrowings		—			1,546			1,361			3,209
Subordinated debt		1,905			1,893			5,703			5,687
Total interest expense		28,934			24,027			85,175			62,867
Net interest income		46,031			41,012			136,689			119,551
Provision (reversal) for credit losses		1,183			1,230			2,448			1,162
Net interest income after provision (reversal) for credit losses		44,848			39,782			134,241			118,389
Non-interest income
Service charges and fees		2,424			2,690			7,534			7,888
Debit card income		2,665			2,591			7,733			7,798
Mortgage banking		287			226			720			527
Increase in value of bank-owned life insurance		1,344			794			3,083			3,134
Net gain on acquisition and branch sales		831			—			2,131			—
Net gain (loss) from securities transactions		206			(1	)		222			(1,291	)
Other		1,560			2,435			8,583			6,229
Total non-interest income		9,317			8,735			30,006			24,285
Non-interest expense
Salaries and employee benefits		18,494			15,857			54,418			47,786
Net occupancy and equipment		3,478			3,262			10,800			9,081
Data processing		5,152			4,553			15,016			12,962
Professional fees		1,487			1,312			4,657			4,341
Advertising and business development		1,368			1,419			3,897			3,827
Telecommunications		660			502			1,887			1,503
FDIC insurance		660			660			1,821			1,535
Courier and postage		686			548			1,912			1,469
Free nationwide ATM cost		544			516			1,569			1,565
Amortization of core deposit intangibles		1,112			799			3,229			2,635
Loan expense		143			132			447			385
Other real estate owned		(7,719	)		128			(7,786	)		318
Merger expenses		618			—			4,461			—
Other		3,645			4,556			10,023			13,196
Total non-interest expense		30,328			34,244			106,351			100,603
Income (loss) before income tax		23,837			14,273			57,896			42,071
Provision (benefit) for income taxes		3,986			1,932			12,261			5,951
Net income (loss) and net income (loss) allocable to common stockholders	$	19,851		$	12,341		$	45,635		$	36,120
Basic earnings (loss) per share	$	1.30		$	0.80		$	2.98		$	2.32
Diluted earnings (loss) per share	$	1.28		$	0.80		$	2.95		$	2.30

See accompanying condensed notes to interim consolidated financial statements.

EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months ended September 30, 2024, and 2023

(Dollar amounts in thousands)


	(Unaudited) Three Months Ended September 30,						(Unaudited) Nine Months Ended September 30,
	2024			2023			2024			2023
Net income	$	19,851		$	12,341		$	45,635		$	36,120
Other comprehensive income (loss):
Unrealized holding gains (losses) arising during the period on available-for-sale securities		30,892			(17,654	)		23,559			(16,982	)
Reclassification for net (gains) losses included in net income		16			—			268			1,330
Unrealized holding gains (losses) arising during the period on cash flow hedges		(2,113	)		1,994			211			4,908
Total other comprehensive income (loss)		28,795			(15,660	)		24,038			(10,744	)
Tax effect		(6,802	)		3,838			(6,130	)		2,208
Other comprehensive income (loss), net of tax		21,993			(11,822	)		17,908			(8,536	)
Comprehensive income (loss)	$	41,844		$	519		$	63,543		$	27,584

See accompanying condensed notes to interim consolidated financial statements.

EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Three Months ended September 30, 2024, and 2023

(Unaudited)

(Dollar amounts in thousands, except share and per share data)


	Common Stock				Additional					Accumulated Other						Total
	Shares Outstanding		Amount		Paid-In Capital		Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Stockholders’ Equity
Balance at July 1, 2023		15,412,139	$	207	$	487,225	$	160,715		$	(110,225	)	$	(119,487	)	$	418,435
Net income		—		—		—		12,341			—			—			12,341
Other comprehensive income (loss), net of tax effects		—		—		—		—			(11,822	)		—			(11,822	)
Cash dividends - common stock, $0.12 per share		—		—		—		(1,851	)		—			—			(1,851	)
Dividend equivalents- restricted stock units and restricted stock awards, $0.12 per share		—		—		—		(17	)		—			—			(17	)
Stock-based compensation		—		—		571		—			—			—			571
Common stock issued upon exercise of stock options		657		—		15		—			—			—			15
Common stock issued under stock-based incentive plan		1,120		—		—		—			—			—			—
Common stock issued under employee stock purchase plan		14,548		—		326		—			—			—			326
Treasury stock purchase		—		—		—		—			—			132			132
Balance at September 30, 2023		15,428,464	$	207	$	488,137	$	171,188		$	(122,047	)	$	(119,355	)	$	418,130

Balance at July 1, 2024		15,207,962	$	208	$	491,709	$	163,068		$	(62,005	)	$	(131,545	)	$	461,435
Net income		—		—		—		19,851			—			—			19,851
Other comprehensive income (loss), net of tax effects		—		—		—		—			21,993			—			21,993
Cash dividends - common stock, $0.15 per share		—		—		—		(2,295	)		—			—			(2,295	)
Dividend equivalents- restricted stock units and restricted stock awards, $0.15 per share		—		—		—		(36	)		—			—			(36	)
Stock-based compensation				—		996		—			—			—			996
Common stock issued upon exercise of stock options		73,368		1		1,699		—			—			—			1,700
Common stock issued under stock-based incentive plan		2,166		—		—		—			—			—			—
Common stock issued under employee stock purchase plan		12,581		—		359		—			—			—			359
Treasury stock purchases		—		—		—		—			—			35			35
Balance at September 30, 2024		15,296,077	$	209	$	494,763	$	180,588		$	(40,012	)	$	(131,510	)	$	504,038

See accompanying condensed notes to interim consolidated financial statements.

EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months ended September 30, 2024, and 2023

(Unaudited)

(Dollar amounts in thousands, except share and per share data)


	Common Stock					Additional						Accumulated Other						Total
	Shares Outstanding			Amount		Paid-In Capital			Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Stockholders’ Equity
Balance at January 1, 2023		15,930,112		$	205	$	484,989		$	140,095		$	(113,511	)	$	(101,720	)	$	410,058
Net income		—			—		—			36,120			—			—			36,120
Other comprehensive income (loss), net of tax effects		—			—		—			—			(8,536	)		—			(8,536	)
Cash dividends - common stock, $0.32 per share		—			—		—			(4,965	)		—			—			(4,965	)
Dividend equivalents- restricted stock units and restricted stock awards, $0.32 per share		—			—		—			(62	)		—			—			(62	)
Stock-based compensation		—			—		2,351			—			—			—			2,351
Common stock issued upon exercise of stock options		657			—		15			—			—			—			15
Common stock issued under stock-based incentive plan		134,805			2		(2	)		—			—			—			—
Common stock issued under employee stock purchase plan		32,056			—		784			—			—			—			784
Treasury stock purchases		(669,166	)		—		—			—			—			(17,635	)		(17,635	)
Balance at September 30, 2023		15,428,464		$	207	$	488,137		$	171,188		$	(122,047	)	$	(119,355	)	$	418,130

Balance at January 1, 2024		15,443,651		$	207	$	489,187		$	141,006		$	(57,920	)	$	(119,620	)	$	452,860
Net income		—			—		—			45,635			—			—			45,635
Other comprehensive income (loss), net of tax effects		—			—		—			—			17,908			—			17,908
Cash dividends - common stock, $0.39 per share		—			—		—			(5,961	)		—			—			(5,961	)
Dividend equivalents- restricted stock units and restricted stock awards, $0.39 per share		—			—		—			(92	)		—			—			(92	)
Stock-based compensation		—			—		2,859			—			—			—			2,859
Common stock issued upon exercise of stock options		83,618			1		1,991			—			—			—			1,992
Common stock issued under stock-based incentive plan		101,916			1		(1	)		—			—			—			—
Common stock issued under employee stock purchase plan		29,465			—		727			—			—			—			727
Treasury stock purchases		(362,573	)		—		—			—			—			(11,890	)		(11,890	)
Balance at September 30, 2024		15,296,077		$	209	$	494,763		$	180,588		$	(40,012	)	$	(131,510	)	$	504,038


EQUITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months ended September 30, 2024, and 2023
(Dollar amounts in thousands)
	(Unaudited) September 30,
	2024			2023
Cash flows from operating activities
Net income	$	45,635		$	36,120
Adjustments to reconcile net income to net cash from operating activities:
Stock-based compensation		2,859			2,351
Depreciation		3,985			3,338
Amortization of operating lease right-of-use asset		346			472
Amortization of cloud computing implementation costs		104			141
Provision (reversal) for credit losses		2,448			1,162
Net amortization (accretion) of purchase valuation adjustments		(1,457	)		(649	)
Amortization (accretion) of premiums and discounts on securities		(2,056	)		3,384
Amortization of intangible assets		3,337			2,743
Deferred income taxes		(2,957	)		953
Federal Home Loan Bank stock dividends		(812	)		(446	)
Loss (gain) on sales and valuation adjustments on other real estate owned		(7,876	)		44
Net loss (gain) on sales and settlements of securities		268			1,330
Change in unrealized (gains) losses on equity securities		(490	)		(39	)
Loss (gain) on disposal of premises and equipment		(210	)		(16	)
Loss (gain) on sales of foreclosed assets		52			14
Loss (gain) on sales of loans		161			(385	)
Originations of loans held for sale		(29,500	)		(20,279	)
Proceeds from the sale of loans held for sale		31,940			20,387
Increase in the value of bank-owned life insurance		(3,083	)		(3,134	)
Change in fair value of derivatives recognized in earnings		(7	)		334
Gain on acquisition		(2,131	)		—
Payments on operating lease payable		(455	)		(588	)
Net change in:
Interest receivable		(99	)		(2,991	)
Other assets		11,973			13,727
Interest payable and other liabilities		172			5,582
Net cash provided by operating activities		52,147			63,555
Cash flows (to) from investing activities
Purchases of available-for-sale securities		(141,239	)		(2,249	)
Purchases of held-to-maturity securities		(3,189	)		(275	)
Proceeds from sales, calls, pay-downs and maturities of available-for-sale securities		229,798			109,261
Proceeds from calls, pay-downs and maturities of held-to-maturity securities		16			13
Net change in loans		(95,958	)		28,380
Purchase of government guaranteed loans		(32,248	)		(1,235	)
Capitalized construction cost of other real estate owned		—			(561	)
Purchase of premises and equipment		(6,645	)		(12,141	)
Proceeds from sale of premises and equipment		2,334			40
Proceeds from sale of foreclosed assets		719			141
Net redemptions (purchases) of Federal Home Loan Bank and Federal Reserve Bank stock		(12,687	)		1,361
Net redemptions (purchases) of correspondent and miscellaneous other stock		(493	)		(6,033	)
Proceeds from sale of other real estate owned		9,397			1,833
Purchase of bank owned life insurance		(60,000	)		—
Proceeds from surrender of bank owned life insurance policies		16,174			—
Proceeds from bank-owned life insurance death benefits		—			2,071
Purchase of Net Assets of Rockhold BanCorp, net of cash acquired		60,914			—
Purchase of Net Assets of KansasLand Bancshares, Inc., net of cash acquired		1,261			—
Net cash (used in) provided by investing activities		(31,846	)		120,606
Cash flows (to) from financing activities
Net increase (decrease) in deposits		(174,820	)		(159,734	)


Net change in federal funds purchased and retail repurchase agreements		(14,984	)		(6,777	)
Net borrowings (repayments) on Federal Home Loan Bank line of credit		189,947			(138,864	)
Proceeds from Federal Home Loan Bank term advances		900,000			1,066,091
Principal repayments on Federal Home Loan Bank term advances		(901,000	)		(966,091	)
Proceeds from Federal Reserve Bank borrowings		1,000			141,000
Principal payments on Federal Reserve Bank borrowings		(141,000	)		(1,000	)
Principal payments on bank stock loan		(691	)		—
Proceeds from the exercise of employee stock options		1,992			15
Proceeds from employee stock purchase plan		727			784
Purchase of treasury stock		(11,859	)		(17,635	)
Net change in contractual obligations		(7,632	)		(2,599	)
Dividends paid on common stock		(5,597	)		(4,762	)
Net cash (used in) provided by financing activities		(163,917	)		(89,572	)
Net change in cash and cash equivalents		(143,616	)		94,589
Cash and cash equivalents, beginning of period		379,099			104,428
Ending cash and cash equivalents	$	235,483		$	199,017
Supplemental cash flow information:
Interest paid	$	86,728		$	52,730
Income taxes paid, net of refunds		4,495			3,406
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans		669			476
Other repossessed assets acquired in settlement of loans		633			176
Purchase of investments in tax credit structures and resulting contractual obligations		8,000			16,400
Redemption of BOLI and other related noncash items		40,104			—
Total fair value of assts acquired in purchase of Rockhold BanCorp, net of cash		301,018			—
Total fair value of liabilities assumed in purchase of Rockhold BanCorp		360,632			—
Total fair value of assts acquired in purchase of KansasLand Bancshares, Inc., net of cash		50,572		—
Total fair value of liabilities assumed in purchase of KansasLand Bancshares, Inc.		51,002		—

See accompanying condensed notes to interim consolidated financial statements.

EQUITY BANCSHARES, INC.

CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

(Unaudited)

(Dollar amounts in thousands, except per share data)

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements include the accounts of Equity Bancshares, Inc., its wholly-owned subsidiaries, Equity Bank (“Equity Bank”), EBAC, LLC (“EBAC”) and Equity Risk Management, Inc. ("ERMI"). ERMI provides property and casualty insurance coverage to Equity Bancshares and Equity Bank and reinsurance to other third party insurance captives for which insurance may not be currently available or economically feasible in today's insurance marketplace. The wholly-owned subsidiaries of Equity Bank are comprised of SA Holdings, Inc. ("SA Holdings"), SA Property LLC ("SA Property"), and EQBK Investments, LLC. ("EQBK Investments"). SA Holdings and SA Property were established for the purpose of holding and selling other real estate owned. EQBK Investments was established for the purpose to hold Equity Bank's investment in a real estate investment trust. These entities are collectively referred to as the “Company”. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial information. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 7, 2024. Operating results for the nine months ended September 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other period.

Reclassifications

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

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 provide for new disclosures which: (1) require that a public entity disclose on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment's profit or loss and assets currently required by Topic 280 in interim periods; (4) allows more than one measure of segment profit or loss used by the CODM when assessing segment performance and deciding how to allocate resources to be disclosed; (5) require disclosure of title and position of CODM and explain how the CODM uses the disclosed reported measures to assess segment performance; and (6) require that a public entity that has a single reportable segment provide all the disclosures required by the amended Topic 280. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments in this update are required to be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories and the amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company adopted this accounting standard effective January 1, 2024, and the Company's financial condition, results of operations and cash flows were not impacted by this guidance. The Company has provided the required disclosures for its single reportable segment.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 require public business entities on an annual basis to disclose: (1) specific categories in the rate reconciliation; (2) provide additional information for reconciling items that meet a quantitative threshold of five percent of pretax income multiplied by the statutory rate; (3) provide a qualitative description of the state and local jurisdictions that make up a majority of the state and local income tax category; (4) requires the entity to provide an explanation of the nature, effect and underlying causes of the reconciling items disclosed and the judgment used in categorizing the reconciling items; (5) requires that all entities disclose on an annual basis income taxes paid (net of refunds received) disaggregated by federal, state and foreign taxes, and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds); (6) requires disclosure of income from continuing operations before income tax expense to be disaggregated between domestic and foreign, and income tax expense disaggregated by federal, state and foreign; and (7) removes the disclosures of estimating the range of reasonably possible change in unrecognized tax benefits balance in the next 12 months and removes the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. The amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis; however, retrospective application is permitted. The Company's financial condition, results of operations and cash flows will not be impacted by this guidance; however, this guidance will impact the Company's financial statement disclosures.

NOTE 2 – INVESTMENTS

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


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
September 30, 2024
Available-for-sale securities
U.S. Government-sponsored entities	$	79,529	$	507	$	(4,846	)	$	—	$	75,190
U.S. Treasury securities		85,068		325		(248	)		—		85,145
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		626,955		6,592		(26,821	)		—		606,726
Private label residential mortgage-backed securities		148,117		—		(17,714	)		—		130,403
Corporate		61,910		198		(3,820	)		—		58,288
Small Business Administration loan pools		6,792		—		(231	)		—		6,561
State and political subdivisions		86,350		96		(7,759	)		—		78,687
	$	1,094,721	$	7,718	$	(61,439	)	$	—	$	1,041,000


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
December 31, 2023
Available-for-sale securities
U.S. Government-sponsored entities	$	39,103	$	—	$	(6,016	)	$	—	$	33,087
U.S. Treasury securities		89,999		28		(771	)		—		89,256
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		560,674		3,872		(35,403	)		—		529,143
Private label residential mortgage-backed securities		161,174		—		(23,333	)		—		137,841
Corporate		56,722		—		(7,039	)		—		49,683
Small Business Administration loan pools		8,066		—		(339	)		—		7,727
State and political subdivisions		81,458		74		(8,621	)		—		72,911
	$	997,196	$	3,974	$	(81,522	)	$	—	$	919,648

The amortized cost and fair value of held-to-maturity securities and the related gross unrecognized gains and losses are listed in the following tables.


	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Allowance for Credit Losses		Fair Value
September 30, 2024
Held-to-maturity securities
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities	$	4,122	$	158	$	—		$	—	$	4,280
State and political subdivisions		1,286		45		(1	)		—		1,330
	$	5,408	$	203	$	(1	)	$	—	$	5,610


	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Allowance for Credit Losses		Fair Value
December 31, 2023
Held-to-maturity securities
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities	$	1,094	$	3	$	—	$	—	$	1,097
State and political subdivisions		1,115		38		—		—		1,153
	$	2,209	$	41	$	—	$	—	$	2,250

The fair value and amortized cost of debt securities at September 30, 2024, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.


	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	87,201	$	87,057	$	—	$	—
One to five years		62,988		63,603		—		—
Five to ten years		129,268		118,278		173		172
After ten years		40,192		34,933		1,113		1,158
Mortgage-backed securities		775,072		737,129		4,122		4,280
Total debt securities	$	1,094,721	$	1,041,000	$	5,408	$	5,610

The following table shows the carrying value and fair value of securities pledged as collateral to secure public fund deposits, borrowings from the Federal Home Loan Bank and Federal Reserve Bank and retail repurchase obligations at September 30, 2024, and December 31, 2023.


	September 30, 2024				December 31, 2023
	Book Value		Fair Value		Book Value		Fair Value
Public fund deposits	$	736,537	$	712,400	$	509,010	$	488,270
Federal Home Loan Bank pledging		107,141		94,597		84,421		72,293
Federal Reserve Bank borrowings		12,028		11,881		158,382		141,125
Retail repurchase agreements		42,379		40,070		51,548		47,282
Total securities pledged	$	898,085	$	858,948	$	803,361	$	748,970

The following tables show gross unrealized or unrecognized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous loss position at September 30, 2024, and December 31, 2023.


	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
September 30, 2024
Available-for-sale securities
U.S. Government-sponsored entities	$	—	$	—		$	33,644	$	(4,846	)	$	33,644	$	(4,846	)
U.S. Treasury securities		—		—			19,813		(248	)		19,813		(248	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		24,152		(99	)		284,249		(26,722	)		308,401		(26,821	)
Private label residential mortgage-backed securities		—		—			130,403		(17,714	)		130,403		(17,714	)
Corporate		3,213		(48	)		46,684		(3,772	)		49,897		(3,820	)
Small Business Administration loan pools		4,156		—			2,405		(231	)		6,561		(231	)
State and political subdivisions		2,187		(12	)		66,003		(7,747	)		68,190		(7,759	)
Total	$	33,708	$	(159	)	$	583,201	$	(61,280	)	$	616,909	$	(61,439	)
December 31, 2023
Available-for-sale securities
U.S. Government-sponsored entities	$	—	$	—		$	33,087	$	(6,016	)	$	33,087	$	(6,016	)
U.S. Treasury securities		—		—			19,413		(771	)		19,413		(771	)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		7,799		(5	)		306,858		(35,398	)		314,657		(35,403	)
Private label residential mortgage-backed securities		—		—			137,841		(23,333	)		137,841		(23,333	)
Corporate		—		—			49,683		(7,039	)		49,683		(7,039	)
Small Business Administration loan pools		5,097		(14	)		2,630		(325	)		7,727		(339	)
State and political subdivisions		11,386		(768	)		57,326		(7,853	)		68,712		(8,621	)
Total	$	24,282	$	(787	)	$	606,838	$	(80,735	)	$	631,120	$	(81,522	)

	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss			Fair Value		Unrecognized Loss
September 30, 2024
Held-to-maturity securities
Residential mortgage-backed (issued by government-sponsored entities)	$	—	$	—		$	—	$	—		$	—	$	—
State and political subdivisions		172		(1	)		—		—			172		(1	)
Total	$	172	$	(1	)	$	—	$	—		$	172	$	(1	)
December 31, 2023
Held-to-maturity securities
Residential mortgage-backed (issued by government-sponsored entities)	$	—	$	—		$	—	$	—		$	—	$	—
State and political subdivisions		—		—			—		—			—		—
Total	$	—	$	—		$	—	$	—		$	—	$	—

The tables above present unrealized losses on available-for-sale securities and unrecognized losses on 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 September 30, 2024, the Company held 427 available-for-sale in an unrealized loss position and one held-to-maturity security in an unrecognized loss position.

Unrealized losses on available-for-sale securities and unrecognized losses on held-to-maturity 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. The decline in fair value is largely due to changes in interest rates and the fair value is expected to recover as the securities approach maturity.

The Company's available-for-sale and held-to-maturity investments that carry some form of credit risk are the investments in private label residential mortgage-backed, corporate 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 September 30, 2024, 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 19 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 September 30, 2024, 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 174 positions of which 87% of the positions are rated "A" or better by a Nationally Recognized Statistical Ratings Organization ("NRSRO"), and 63% 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 September 30, 2024, the Company does not anticipate any credit losses in the state and political subdivisions securities portfolio.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023
Proceeds	$	15,407	$	—	$	16,133		$	49,258
Gross gain		164		—		167			—
Gross losses		180		—		435			1,330
Income tax expense/(benefit)		—		—		(62	)		(325	)

The Company also invests in several other investments, including investments in stocks and partnerships, which are included in other assets. The following table shows the various investment balances and method of accounting at September 30, 2024, and December 31, 2023.


	September 30, 2024		December 31, 2023
Investments in stocks
Accounted for at fair value through net income	$	675	$	674
Accounted for at amortized cost assessed for impairment		2,268		1,397
Total investments in stocks		2,943		2,071
Investments in partnerships
Accounted for under the equity method		2,500		2,345
Accounted for under the hypothetical liquidation book value		2,101		2,403
Accounted for under proportional amortization		24,276		24,296
Total investments in partnerships		28,877		29,044
Total other investments	$	31,820	$	31,115

The following table discloses the financial statement impact of tax credit investments for the three month periods ended September 30, 2024, and 2023.


	Income Tax Credits Recognized During Period (a)			Other Income Tax Benefits (a)			Total Tax Benefits			Investment Amortization Included in Income Tax Expense
September 30, 2024
Investments and tax credit structures:
Included in proportional amortization	$	(7,424	)	$	(759	)	$	(8,183	)	$	7,096
Not included in proportional amortization	$	—		$	151		$	151		$	—

September 30, 2023
Investments and tax credit structures:
Included in proportional amortization	$	(2,950	)	$	(274	)	$	(3,224	)	$	2,805
Not included in proportional amortization	$	(945	)	$	(186	)	$	(1,131	)	$	—
(a) Reported in income tax expense on statements of income and reported in net change in other assets on statements of cash flows.

The following table discloses the financial statement impact of tax credit investments for the nine month periods ended September 30, 2024, and 2023.


	Income Tax Credits Recognized During Period (a)			Other Income Tax Benefits (a)			Total Tax Benefits			Investment Amortization Included in Income Tax Expense
September 30, 2024
Investments and tax credit structures:
Included in proportional amortization	$	(8,251	)	$	(984	)	$	(9,235	)	$	8,021
Not included in proportional amortization	$	—		$	174		$	174		$	—

September 30, 2023
Investments and tax credit structures:
Included in proportional amortization	$	(8,901	)	$	(1,247	)	$	(10,148	)	$	8,966
Not included in proportional amortization	$	(2,617	)	$	(641	)	$	(3,258	)	$	—
(a) Reported in income tax expense on statements of income and reported in net change in other assets on statements of cash flows.

Contingent contributions for investment tax credit structures not subject to proportional amortization were zero and $3.0 million for the nine month period ended September 30, 2024, and 2023.

NOTE 3 – LOANS AND ALLOWANCE FOR CREDIT LOSSES

Types of loans and normal collateral securing those loans are listed below.

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

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

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

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

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

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

The following table lists categories of loans at September 30, 2024, and December 31, 2023.


	September 30, 2024			December 31, 2023
Commercial real estate	$	1,916,863		$	1,759,855
Commercial and industrial		670,665			598,327
Residential real estate		567,063			556,328
Agricultural real estate		259,587			196,114
Agricultural		89,529			118,587
Consumer		97,218			103,690
Total loans		3,600,925			3,332,901
Allowance for credit losses		(43,490	)		(43,520	)
Net loans	$	3,557,435		$	3,289,381

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 three and nine months ended September 30, 2024, and 2023, the Company did not purchase any pools of residential loans. As of September 30, 2024, and December 31, 2023, residential real estate loans include $280,919 and $299,448 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 three and nine months ended September 30, 2024, the Company purchased $25,145 and $32,248 in loans guaranteed by governmental agencies. During the three and nine months ended September 30, 2023, the Company purchased $0 and $1,235 in loans guaranteed by governmental agencies.

The unamortized purchase accounting discounts related to non-purchase credit deteriorated loans included in the loan totals above are $5,067 with related loans of $269,044 at September 30, 2024, and $2,424 with related loans of $209,662 at December 31, 2023.

Overdraft deposit accounts are reclassified and included in consumer loans above. These accounts totaled $374 at September 30, 2024, and $387 at December 31, 2023.

The following tables present the activity in the allowance for credit losses by class for the three month periods ended September 30, 2024, and 2023.


September 30, 2024	Commercial Real Estate		Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	14,492	$	16,407		$	8,066		$	2,254		$	522		$	1,746		$	43,487
Provision for credit losses		737		247			(59	)		(40	)		(43	)		341			1,183
Initial PCD on Acquired loans		—		9			43			330			22			—			404
Loans charged-off		—		(930	)		(352	)		(23	)		(1	)		(474	)		(1,780	)
Recoveries		7		76			22			14			22			55			196
Total ending allowance balance	$	15,236	$	15,809		$	7,720		$	2,535		$	522		$	1,668		$	43,490


September 30, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural		Consumer			Total
Allowance for credit losses:
Beginning balance	$	16,652		$	15,194		$	8,855		$	583		$	1,289	$	1,971		$	44,544
Provision for credit losses		(2,954	)		5,163			(1,521	)		620			35		(113	)		1,230
Loans charged-off		(8	)		(1,399	)		—			(4	)		—		(242	)		(1,653	)
Recoveries		6			2			2			1			—		54			65
Total ending allowance balance	$	13,696		$	18,960		$	7,336		$	1,200		$	1,324	$	1,670		$	44,186

The following tables present the activity in the allowance for credit losses by class for the nine month periods ended September 30, 2024, and 2023.


September 30, 2024	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	13,476		$	17,954		$	7,784		$	1,718		$	995		$	1,593		$	43,520
Provision for credit losses		1,741			227			53			495			(774	)		706			2,448
Initial PCD on Acquired loans		—			128			227			330			306			9			1,000
Loans charged-off		(19	)		(2,772	)		(385	)		(24	)		(28	)		(814	)		(4,042	)
Recoveries		38			272			41			16			23			174			564
Total ending allowance balance	$	15,236		$	15,809		$	7,720		$	2,535		$	522		$	1,668		$	43,490


September 30, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses:
Beginning balance	$	16,731		$	14,951		$	8,608		$	819		$	2,457		$	2,281		$	45,847
Provision for credit losses		(3,100	)		6,430			(1,275	)		381			(1,180	)		(94	)		1,162
Loans charged-off		(18	)		(2,474	)		(57	)		(4	)		(108	)		(698	)		(3,359	)
Recoveries		83			53			60			4			155			181			536
Total ending allowance balance	$	13,696		$	18,960		$	7,336		$	1,200		$	1,324		$	1,670		$	44,186

The following tables present the recorded investment in loans and the balance in the allowance for credit losses by portfolio and class based on the method to determine allowance for credit loss as of September 30, 2024, and December 31, 2023.


September 30, 2024	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
Allowance for credit losses:
Individually evaluated for credit losses	$	1,006	$	2,373	$	1,143	$	815	$	241	$	149	$	5,727
Collectively evaluated for credit losses		14,230		13,436		6,577		1,720		281		1,519		37,763
Total	$	15,236	$	15,809	$	7,720	$	2,535	$	522	$	1,668	$	43,490
Loan Balance:
Individually evaluated for credit losses	$	8,956	$	10,246	$	4,896	$	7,106	$	1,769	$	618	$	33,591
Collectively evaluated for credit losses		1,907,907		660,419		562,167		252,481		87,760		96,600		3,567,334
Total	$	1,916,863	$	670,665	$	567,063	$	259,587	$	89,529	$	97,218	$	3,600,925


December 31, 2023	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Agricultural		Consumer		Total
Allowance for credit losses:
Individually evaluated for credit losses	$	582	$	1,644	$	1,113	$	674	$	598	$	154	$	4,765
Collectively evaluated for credit losses		12,894		16,310		6,671		1,044		397		1,439		38,755
Total	$	13,476	$	17,954	$	7,784	$	1,718	$	995	$	1,593	$	43,520
Loan Balance:
Individually evaluated for credit losses	$	6,031	$	5,498	$	7,495	$	4,672	$	3,598	$	669	$	27,963
Collectively evaluated for credit losses		1,753,824		592,829		548,833		191,442		114,989		103,021		3,304,938
Total	$	1,759,855	$	598,327	$	556,328	$	196,114	$	118,587	$	103,690	$	3,332,901

The following tables present information related to nonaccrual loans at September 30, 2024, and December 31, 2023.


	September 30, 2024
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	5,104	$	4,533	$	—
Commercial and industrial		1		—		—
Residential real estate		359		—		—
Agricultural real estate		3,641		3,027		—
Agricultural		—		—		—
Consumer		35		—		—
Subtotal		9,140		7,560		—
With an allowance recorded:
Commercial real estate		4,474		4,248		988
Commercial and industrial		14,039		9,772		2,246
Residential real estate		5,126		4,594		1,126
Agricultural real estate		5,844		3,990		810
Agricultural		892		538		64
Consumer		636		576		143
Subtotal		31,011		23,718		5,377
Total	$	40,151	$	31,278	$	5,377


	December 31, 2023
	Unpaid Principal Balance		Recorded Investment		Allowance for Credit Losses Allocated
With no related allowance recorded:
Commercial real estate	$	3,948	$	3,376	$	—
Commercial and industrial		2,925		—		—
Residential real estate		21		—		—
Agricultural real estate		1,342		948		—
Agricultural		2,303		—		—
Consumer		23		—		—
Subtotal		10,562		4,324		—
With an allowance recorded:
Commercial real estate		2,297		2,071		455
Commercial and industrial		8,452		5,041		1,335
Residential real estate		7,605		7,251		1,086
Agricultural real estate		4,753		3,266		660
Agricultural		2,946		2,470		481
Consumer		689		603		150
Subtotal		26,742		20,702		4,167
Total	$	37,304	$	25,026	$	4,167

The tables below present average recorded investment and interest income related to nonaccrual loans for the three and nine months ended September 30, 2024, and 2023. 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.


	As of and for the three months ended
	September 30, 2024				September 30, 2023
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	3,948	$	—	$	1,749	$	—
Commercial and industrial		—		—		628		—
Residential real estate		—		—		—		—
Agricultural real estate		3,068		—		1,301		—
Agricultural		273		—		—		—
Consumer		—		—		1		—
Subtotal		7,289		—		3,679		—
With an allowance recorded:
Commercial real estate		3,892		52		1,158		14
Commercial and industrial		8,104		110		4,467		19
Residential real estate		4,683		15		3,020		8
Agricultural real estate		3,656		4		1,822		—
Agricultural		605		—		2,548		2
Consumer		687		5		507		11
Subtotal		21,627		186		13,522		54
Total	$	28,916	$	186	$	17,201	$	54


	As of and for the nine months ended
	September 30, 2024				September 30, 2023
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	3,660	$	55	$	1,802	$	—
Commercial and industrial		498		—		314		1
Residential real estate		—		1		6		1
Agricultural real estate		2,007		122		937		—
Agricultural		136		5		—		—
Consumer		—		—		—		—
Subtotal		6,301		183		3,059		2
With an allowance recorded:
Commercial real estate		3,131		61		1,000		14
Commercial and industrial		6,501		116		5,064		21
Residential real estate		5,096		25		3,077		12
Agricultural real estate		3,465		5		1,621		1
Agricultural		1,590		1		2,872		2
Consumer		687		7		445		11
Subtotal		20,470		215		14,079		61
Total	$	26,771	$	398	$	17,138	$	63

The following tables present the aging of the recorded investment in past due loans as of September 30, 2024, and December 31, 2023, by portfolio and class of loans.


September 30, 2024	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	$	3,679	$	622	$	49	$	8,781	$	1,903,732	$	1,916,863
Commercial and industrial		1,106		360		—		9,772		659,427		670,665
Residential real estate		1,745		599		—		4,594		560,125		567,063
Agricultural real estate		904		390		157		7,017		251,119		259,587
Agricultural		188		96		—		538		88,707		89,529
Consumer		579		238		—		576		95,825		97,218
Total	$	8,201	$	2,305	$	206	$	31,278	$	3,558,935	$	3,600,925


December 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	$	2,397	$	198	$	189	$	5,447	$	1,751,624	$	1,759,855
Commercial and industrial		1,853		2,713		71		5,041		588,649		598,327
Residential real estate		1,444		676		—		7,251		546,957		556,328
Agricultural real estate		949		—		—		4,214		190,951		196,114
Agricultural		559		65		19		2,470		115,474		118,587
Consumer		443		118		—		603		102,526		103,690
Total	$	7,645	$	3,770	$	279	$	25,026	$	3,296,181	$	3,332,901

Credit Quality Indicators

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. 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 analysis performed at September 30, 2024, the risk category of loans by type and year of origination is as follows.


September 30, 2024	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	292,926	$	217,178	$	353,776	$	177,713	$	165,943	$	212,452	$	482,690	$	774	$	1,903,452
Special mention		117		—		—		—		—		380		141		—		638
Substandard		248		461		2,723		3,905		581		4,467		352		36		12,773
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	293,291	$	217,639	$	356,499	$	181,618	$	166,524	$	217,299	$	483,183	$	810	$	1,916,863
Commercial and industrial
Risk rating
Pass	$	90,369	$	90,257	$	80,228	$	40,290	$	64,923	$	29,131	$	255,361	$	1,760	$	652,319
Special mention		12		—		135		—		—		884		100		—		1,131
Substandard		1,633		1,485		291		340		3,350		1,863		8,175		—		17,137
Doubtful		—		—		—		—		—		78		—		—		78
Total commercial and industrial	$	92,014	$	91,742	$	80,654	$	40,630	$	68,273	$	31,956	$	263,636	$	1,760	$	670,665
Residential real estate
Risk rating
Pass	$	16,826	$	34,985	$	36,903	$	266,444	$	8,078	$	136,362	$	61,172	$	631	$	561,401
Special mention		—		—		—		—		—		305		72		—		377
Substandard		—		149		201		355		125		3,582		828		45		5,285
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	16,826	$	35,134	$	37,104	$	266,799	$	8,203	$	140,249	$	62,072	$	676	$	567,063
Agricultural real estate
Risk rating
Pass	$	37,491	$	19,174	$	29,675	$	15,011	$	19,884	$	38,148	$	91,335	$	275	$	250,993
Special mention		1,683		—		150		—		—		—		494		—		2,327
Substandard		—		2,175		16		266		85		3,486		239		—		6,267
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	39,174	$	21,349	$	29,841	$	15,277	$	19,969	$	41,634	$	92,068	$	275	$	259,587
Agricultural
Risk rating
Pass	$	11,328	$	4,755	$	5,725	$	3,337	$	7,426	$	2,816	$	52,693	$	52	$	88,132
Special mention		—		—		—		—		—		32		—		—		32
Substandard		34		160		2		427		414		155		173		—		1,365
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	11,362	$	4,915	$	5,727	$	3,764	$	7,840	$	3,003	$	52,866	$	52	$	89,529
Consumer
Risk rating
Pass	$	34,513	$	19,923	$	16,266	$	6,719	$	3,128	$	2,934	$	13,156	$	—	$	96,639
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		126		214		154		50		35		—		—		579
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	34,513	$	20,049	$	16,480	$	6,873	$	3,178	$	2,969	$	13,156	$	—	$	97,218
Total loans
Risk rating
Pass	$	483,453	$	386,272	$	522,573	$	509,514	$	269,382	$	421,843	$	956,407	$	3,492	$	3,552,936
Special mention		1,812		—		285		—		—		1,601		807		—		4,505
Substandard		1,915		4,556		3,447		5,447		4,605		13,588		9,767		81		43,406
Doubtful		—		—		—		—		—		78		—		—		78
Total loans	$	487,180	$	390,828	$	526,305	$	514,961	$	273,987	$	437,110	$	966,981	$	3,573	$	3,600,925

Based on the analysis performed at December 31, 2023, the risk category of loans by type and year of origination is as follows.


December 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost		Revolving Loans Converted to Term		Total
Commercial real estate
Risk rating
Pass	$	212,229	$	379,233	$	253,837	$	179,935	$	75,472	$	186,073	$	461,346	$	753	$	1,748,878
Special mention		257		—		119		—		—		399		—		—		775
Substandard		84		2,501		3,481		256		1,463		2,336		81		—		10,202
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial real estate	$	212,570	$	381,734	$	257,437	$	180,191	$	76,935	$	188,808	$	461,427	$	753	$	1,759,855
Commercial and industrial
Risk rating
Pass	$	128,598	$	110,817	$	54,416	$	49,557	$	29,931	$	7,293	$	204,237	$	1,780	$	586,629
Special mention		—		—		15		—		—		992		—		—		1,007
Substandard		1,317		468		230		2,922		237		2,171		3,346		—		10,691
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial	$	129,915	$	111,285	$	54,661	$	52,479	$	30,168	$	10,456	$	207,583	$	1,780	$	598,327
Residential real estate
Risk rating
Pass	$	35,040	$	29,766	$	277,611	$	5,183	$	12,506	$	130,144	$	57,699	$	1,065	$	549,014
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		213		187		22		156		1,960		4,710		66		7,314
Doubtful		—		—		—		—		—		—		—		—		—
Total residential real estate	$	35,040	$	29,979	$	277,798	$	5,205	$	12,662	$	132,104	$	62,409	$	1,131	$	556,328
Agricultural real estate
Risk rating
Pass	$	22,368	$	26,762	$	17,987	$	18,551	$	10,653	$	20,039	$	74,010	$	289	$	190,659
Special mention		903		158		—		—		—		164		605		—		1,830
Substandard		40		—		24		—		101		3,423		37		—		3,625
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural real estate	$	23,311	$	26,920	$	18,011	$	18,551	$	10,754	$	23,626	$	74,652	$	289	$	196,114
Agricultural
Risk rating
Pass	$	12,424	$	7,363	$	4,815	$	7,148	$	1,385	$	3,809	$	78,285	$	55	$	115,284
Special mention		—		—		—		—		—		33		9		—		42
Substandard		39		10		464		629		1,861		52		206		—		3,261
Doubtful		—		—		—		—		—		—		—		—		—
Total agricultural	$	12,463	$	7,373	$	5,279	$	7,777	$	3,246	$	3,894	$	78,500	$	55	$	118,587
Consumer
Risk rating
Pass	$	47,019	$	24,620	$	10,384	$	4,841	$	1,281	$	2,885	$	12,035	$	1	$	103,066
Special mention		—		—		—		—		—		—		—		—		—
Substandard		50		241		163		98		49		23		—		—		624
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer	$	47,069	$	24,861	$	10,547	$	4,939	$	1,330	$	2,908	$	12,035	$	1	$	103,690
Total loans
Risk rating
Pass	$	457,678	$	578,561	$	619,050	$	265,215	$	131,228	$	350,243	$	887,612	$	3,943	$	3,293,530
Special mention		1,160		158		134		—		—		1,588		614		—		3,654
Substandard		1,530		3,433		4,549		3,927		3,867		9,965		8,380		66		35,717
Doubtful		—		—		—		—		—		—		—		—		—
Total loans	$	460,368	$	582,152	$	623,733	$	269,142	$	135,095	$	361,796	$	896,606	$	4,009	$	3,332,901

The following table discloses the charge-off and recovery activity by loan type and year of origination for the nine month period ending September 30, 2024.


September 30, 2024	2024			2023			2022			2021			2020			Prior			Revolving Loans Amortized Cost			Revolving Loans Converted to Term		Total
Commercial real estate
Gross charge-offs	$	—		$	—		$	(17	)	$	—		$	—		$	—		$	(2	)	$	—	$	(19	)
Gross recoveries		—			—			8			—			1			28			1			—		38
Net charge-offs	$	—		$	—		$	(9	)	$	—		$	1		$	28		$	(1	)	$	—	$	19
Commercial and industrial
Gross charge-offs	$	—		$	(31	)	$	(360	)	$	(124	)	$	(194	)	$	(770	)	$	(1,293	)	$	—	$	(2,772	)
Gross recoveries		—			—			125			13			20			56			57			1		272
Net charge-offs	$	—		$	(31	)	$	(235	)	$	(111	)	$	(174	)	$	(714	)	$	(1,236	)	$	1	$	(2,500	)
Residential real estate
Gross charge-offs	$	—		$	—		$	(337	)	$	(2	)	$	—		$	(21	)	$	(25	)	$	—	$	(385	)
Gross recoveries		—			—			—			1			—			36			4			—		41
Net charge-offs	$	—		$	—		$	(337	)	$	(1	)	$	—		$	15		$	(21	)	$	—	$	(344	)
Agricultural real estate
Gross charge-offs	$	—		$	—		$	(11	)	$	(12	)	$	(1	)	$	—		$	—		$	—	$	(24	)
Gross recoveries		4			—			10			—			—			2			—			—		16
Net charge-offs	$	4		$	—		$	(1	)	$	(12	)	$	(1	)	$	2		$	—		$	—	$	(8	)
Agricultural
Gross charge-offs	$	—		$	(2	)	$	(25	)	$	(1	)	$	—		$	—		$	—		$	—	$	(28	)
Gross recoveries		—			—			22			1			—			—			—			—		23
Net charge-offs	$	—		$	(2	)	$	(3	)	$	—		$	—		$	—		$	—		$	—	$	(5	)
Consumer
Gross charge-offs	$	(133	)	$	(82	)	$	(207	)	$	(158	)	$	(42	)	$	(145	)	$	(47	)	$	—	$	(814	)
Gross recoveries		4			7			19			42			8			83			11			—		174
Net charge-offs	$	(129	)	$	(75	)	$	(188	)	$	(116	)	$	(34	)	$	(62	)	$	(36	)	$	—	$	(640	)
Total loans
Gross charge-offs	$	(133	)	$	(115	)	$	(957	)	$	(297	)	$	(237	)	$	(936	)	$	(1,367	)	$	—	$	(4,042	)
Gross recoveries		8			7			184			57			29			205			73			1		564
Net charge-offs	$	(125	)	$	(108	)	$	(773	)	$	(240	)	$	(208	)	$	(731	)	$	(1,294	)	$	1	$	(3,478	)

The following table discloses the charge-off and recovery activity by loan type and year of origination for the nine month period ending September 30, 2023.


September 30, 2023	2023			2022			2021			2020			2019			Prior			Revolving Loans Amortized Cost			Revolving Loans Converted to Term		Total
Commercial real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	(9	)	$	(9	)	$	—		$	—	$	(18	)
Gross recoveries		—			64			—			—			—			19			—			—		83
Net charge-offs	$	—		$	64		$	—		$	—		$	(9	)	$	10		$	—		$	—	$	65
Commercial and industrial
Gross charge-offs	$	—		$	(69	)	$	(10	)	$	(19	)	$	(2	)	$	(1,158	)	$	(1,216	)	$	—	$	(2,474	)
Gross recoveries		—			29			—			15			—			9			—			—		53
Net charge-offs	$	—		$	(40	)	$	(10	)	$	(4	)	$	(2	)	$	(1,149	)	$	(1,216	)	$	—	$	(2,421	)
Residential real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	(52	)	$	(5	)	$	—	$	(57	)
Gross recoveries		—			—			—			—			—			60			—			—		60
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	8		$	(5	)	$	—	$	3
Agricultural real estate
Gross charge-offs	$	—		$	—		$	—		$	—		$	—		$	(4	)	$	—		$	—	$	(4	)
Gross recoveries		—			—			—			—			—			4			—			—		4
Net charge-offs	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Agricultural
Gross charge-offs	$	—		$	—		$	(107	)	$	—		$	—		$	(1	)	$	—		$	—	$	(108	)
Gross recoveries		—			—			—			—			—			155			—			—		155
Net charge-offs	$	—		$	—		$	(107	)	$	—		$	—		$	154		$	—		$	—	$	47
Consumer
Gross charge-offs	$	(168	)	$	(129	)	$	(84	)	$	(48	)	$	(46	)	$	(164	)	$	(59	)	$	—	$	(698	)
Gross recoveries		1			15			41			10			9			94			11			—		181
Net charge-offs	$	(167	)	$	(114	)	$	(43	)	$	(38	)	$	(37	)	$	(70	)	$	(48	)	$	—	$	(517	)
Total loans
Gross charge-offs	$	(168	)	$	(198	)	$	(201	)	$	(67	)	$	(57	)	$	(1,388	)	$	(1,280	)	$	—	$	(3,359	)
Gross recoveries		1			108			41			25			9			341			11			—		536
Net charge-offs	$	(167	)	$	(90	)	$	(160	)	$	(42	)	$	(48	)	$	(1,047	)	$	(1,269	)	$	—	$	(2,823	)

Modifications to Debtors Experiencing Financial Difficulty

The following table presents the amortized cost basis of loans at September 30, 2024, and 2023, that were both experiencing financial difficulty and modified during the three months ended September 30, 2024, and 2023, by class and 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.


September 30, 2024	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	30	$	443	$	—	$	9,635	$	10,108		0.53	%
Commercial and industrial		—		—		—		—		—		0.00	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		1,070		—		858		1,928		0.74	%
Agricultural		—		1,175		—		720		1,895		2.12	%
Consumer		—		—		—		—		—		0.00	%
Total	$	30	$	2,688	$	—	$	11,213	$	13,931		0.39	%

September 30, 2023	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	—	$	—	$	—	$	—		0.00	%
Commercial and industrial		—		—		—		4,896		4,896		0.84	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		458		—		—		458		0.22	%
Agricultural		—		—		—		—		—		0.00	%
Consumer		—		—		—		—		—		0.00	%
Total	$	—	$	458	$	—	$	4,896	$	5,354		0.16	%

The following table presents the amortized cost basis of loans at September 30, 2024, and 2023, that were both experiencing financial difficulty and modified during the nine months ended September 30, 2024, and 2023, by class and by type of modification.


September 30, 2024	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	947	$	—	$	10,229	$	11,176		0.58	%
Commercial and industrial		3,631		2,059		—		—		5,690		0.85	%
Residential real estate		—		—		—		—		—		0.00	%
Agricultural real estate		—		1,454		—		858		2,312		0.89	%
Agricultural		—		1,175		—		720		1,895		2.12	%
Consumer		—		—		—		—		—		0.00	%
Total	$	3,631	$	5,635	$	—	$	11,807	$	21,073		0.59	%

September 30, 2023	Payment Delay		Term Extension		Combination Rate Change, Payment Delay and Term Extension		Combination Payment Delay and Term Extension		Total Modifications		Total Class of Financing Receivable
Commercial real estate	$	—	$	—	$	—	$	355	$	355		0.02	%
Commercial and industrial		—		1,491		—		10,884		12,375		2.11	%
Residential real estate		—		163		—		12		175		0.03	%
Agricultural real estate		—		858		—		170		1,028		0.50	%
Agricultural		122		—		—		421		543		0.53	%
Consumer		—		—		24		—		24		0.02	%
Total	$	122	$	2,512	$	24	$	11,842	$	14,500		0.44	%

At September 30, 2024, and 2023, there were $1,813 and $796 in commitments to lend additional amounts on these loans.

At modification date, 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 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 period of ongoing performance under the terms of the modified loan.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified during the twelve months ended September 30, 2024, and 2023.


September 30, 2024	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 89 days Past Due		Total Past Due
Commercial real estate	$	36	$	643	$	—	$	679
Commercial and industrial		—		—		145		145
Residential real estate		—		—		—		—
Agricultural real estate		—		—		—		—
Agricultural		—		—		—		—
Consumer		—		—		—		—
Total	$	36	$	643	$	145	$	824

September 30, 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		163		12		—		175
Agricultural real estate		—		—		—		—
Agricultural		—		—		—		—
Consumer		24		—		—		24
Total	$	187	$	12	$	—	$	199

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the three months ended September 30, 2024, and 2023.



September 30, 2024	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension in Years
Commercial real estate	$	—		—	%		0.31
Commercial and industrial		—		—	%		—
Residential real estate		—		—	%		—
Agricultural real estate		—		—	%		6.18
Agricultural		—		—	%		0.27
Consumer		—		—	%		—
Total loans	$	—		—	%		0.77


September 30, 2023	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension
Commercial real estate	$	—		—	%		—
Commercial and industrial		1,142		—	%		0.13
Residential real estate		—		—	%		—
Agricultural real estate		—		—	%		1.00
Agricultural		—		—	%		—
Consumer		—		—	%		—
Total loans	$	1,142		—	%		0.20

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the nine months ended September 30, 2024, and 2023.



September 30, 2024	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension in Years
Commercial real estate	$	—		—	%		0.31
Commercial and industrial		—		—	%		0.84
Residential real estate		—		—	%		—
Agricultural real estate		—		—	%		5.29
Agricultural		—		—	%		0.27
Consumer		—		—	%		—
Total loans	$	—		—	%		0.75


September 30, 2023	Principal Forgiveness		Weighted Average Interest Rate Reduction			Weighted Average Term Extension
Commercial real estate	$	—		—	%		0.49
Commercial and industrial		1,142		—	%		1.13
Residential real estate		—		—	%		9.60
Agricultural real estate		—		—	%		0.99
Agricultural		—		—	%		0.58
Consumer		—		—	%		2.16
Total loans	$	1,142		—	%		1.19

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

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

The following table lists allowance for credit losses on off-balance-sheet credit exposures as of September 30, 2024, and December 31, 2023.


	Allowance for Credit Losses
	September 30, 2024		December 31, 2023
Commercial real estate	$	271	$	285
Commercial and industrial		1,204		1,053
Agricultural real estate		1		2
Residential real estate		65		35
Agricultural		4		3
Consumer		11		247
Total allowance for credit losses	$	1,556	$	1,625

NOTE 4 – DERIVATIVE FINANCIAL INSTRUMENTS

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.

Interest Rate Swaps Designated as Fair Value Hedges

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 LIBOR or one-month SOFR plus a spread to the index and pays a fixed-rate cash flow equal to the customer loan rate. At September 30, 2024, the portfolio of interest rate swaps had a weighted average maturity of 6.17 years, a weighted average pay rate of 4.60% and a weighted average rate received of 8.37%. At December 31, 2023, the portfolio of interest rate swaps had a weighted average maturity of 6.9 years, a weighted average pay rate of 4.60% and a weighted average rate received of 8.50%.

Interest Rate Swaps Designated as Cash Flow Hedges

The Company has entered into cash flow hedges to hedge future cash flows related to subordinated debt and Federal Home Loan Bank advances interest expense and adjustable rate loans interest income. These agreements are designated as cash flow hedges and are marked to market through other comprehensive income.

The following table lists the cash flow hedges at September 30, 2024, and December 31, 2023.


	September 30, 2024								December 31, 2023
	Weighted average Maturity in years		Weighted average pay rate			Weighted average rate received			Weighted average Maturity in years		Weighted average pay rate			Weighted average rate received
Subordinated debt hedges		11.0		2.81	%		7.40	%		11.7		2.80	%		7.43	%
Variable rate FHLB advance hedges		1.5		3.59	%		4.84	%		2.2		3.58	%		5.35	%
Prime based receivable loan hedges		—		—	%		—	%		0.2		8.50	%		5.60	%
Total cash flow hedges		2.1		3.54	%		5.02	%		1.4		6.43	%		5.56	%

Stand-Alone Derivatives

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 September 30, 2024, this portfolio of interest rate swaps had a weighted average maturity of 4.23 years, weighted average pay rate of 7.40% and a weighted average rate received of 7.52%. At December 31, 2023, this portfolio of interest rate swaps had a weighted average maturity of 4.63 years, weighted average pay rate of 8.31% and weighted average rate received of 8.46%.

Reconciliation of Derivative Fair Values and Gains/(Losses)

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

The following table shows the notional balances and fair values (including net accrued interest) of the derivatives outstanding by derivative type at September 30, 2024, and December 31, 2023.


	September 30, 2024								December 31, 2023
	Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	$	14,698	$	1,213		$	—		$	15,461	$	1,580		$	—
Derivatives designated as cash flow hedges:
Interest rate swaps		107,500		3,127			2,901			257,500		1,976			631
Total derivatives designated as hedging relationships		122,198		4,340			2,901			272,961		3,556			631
Derivatives not designated as hedging instruments:
Interest rate swaps		203,169		1,796			58			180,911		3,446			3,025
Total derivatives not designated as hedging instruments		203,169		1,796			58			180,911		3,446			3,025
Total	$	325,367		6,136			2,959		$	453,872		7,002			3,656
Cash collateral				—			4,474					—			5,952
Netting adjustments				(4,935	)		(4,935	)				(6,406	)		(6,406	)
Net amount presented in Balance Sheet			$	1,201		$	2,498				$	596		$	3,202

The table below lists designated and qualifying hedged items in fair value hedges at September 30, 2024, and December 31, 2023.


	September 30, 2024								December 31, 2023
	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	$	15,325	$	(1,439	)	$	(410	)	$	15,795	$	(1,826	)	$	(446	)
Total	$	15,325	$	(1,439	)	$	(410	)	$	15,795	$	(1,826	)	$	(446	)

The Company reports hedging derivative gains (losses) as adjustments to loan interest income and loan interest expense along with the related net interest settlements. The non-hedging derivative gains (losses) and related net interest settlements for economic derivatives are reported in other income. For the three and nine months period ended September 30, 2024, and 2023, the Company recorded net gains (losses) on derivatives and hedging activities as shown in the table below.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024		2023
Derivatives designated as hedging instruments:
Interest rate swaps	$	10		$	(5	)	$	16	$	5
Total net gain (loss) related to derivatives designated as hedging instruments		10			(5	)		16		5
Derivatives designated as cash flow hedges:
Interest rate swaps		—			—			—		—
Total net gain (loss) related to derivatives designated as cash flow hedges		—			—			—		—
Total net gains (losses) related to hedging relationships		10			(5	)		16		5
Derivatives not designated as hedging instruments:
Economic hedges:
Interest rate swaps		(114	)		203			105		407
Total net gains (losses) related to derivatives not designated as hedging instruments		(114	)		203			105		407
Net gains (losses) on derivatives and hedging activities	$	(104	)	$	198		$	121	$	412

The following tables show 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 periods ended September 30, 2024, and 2023.


	September 30, 2024
	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	$	(447	)	$	457	$	10	$	246
Total	$	(447	)	$	457	$	10	$	246


	September, 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	$	133	$	(138	)	$	(5	)	$	247
Total	$	133	$	(138	)	$	(5	)	$	247

The following tables show 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 nine month periods ended September 30, 2024, and 2023.


	September 30, 2024
	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	$	(335	)	$	351	$	16	$	478
Total	$	(335	)	$	351	$	16	$	478


	September 30, 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	$	(3	)	$	(2	)	$	(5	)	$	551
Total	$	(3	)	$	(2	)	$	(5	)	$	551

The following tables show the recorded net gains or (losses) on derivatives and the related hedged items in cash flow hedging relationships and the impact of those derivatives on the Company's net interest income for the three month periods ended September 30, 2024, and 2023.


	September 30, 2024
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based loan receivable hedges	$	—		$	—		$	—
FHLB advance hedges		(1,740	)		(1,323	)		430
Subordinated note hedges		(373	)		(277	)		86
Total	$	(2,113	)	$	(1,600	)	$	516

	September 30, 2023
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based loan receivable hedges	$	1,035		$	781		$	(1,083	)
FHLB advance hedges		545			412			421
Subordinated note hedges		414			311			92
Total	$	1,994		$	1,504		$	(570	)

The following tables show the recorded net gains or (losses) on derivatives and the related hedged items in cash flow hedging relationships and the impact of those derivatives on the Company's net interest income for the nine month periods ended September 30, 2024, and 2023.


	September 30, 2024
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based loan receivable hedges	$	1,159		$	876		$	(1,267	)
FHLB advance hedges		(771	)		(582	)		1,304
Subordinated note hedges		(177	)		(131	)		261
Total	$	211		$	163		$	298

	September 30, 2023
	Gain/(Loss) on Derivatives			Gain/(Loss) Recorded in Accumulated Other Comprehensive Income			Effect of Derivatives on Net Interest Income
Prime based loan receivable hedges	$	1,991		$	1,492		$	(2,833	)
FHLB advance hedges		2,577			1,946			803
Subordinated note hedges		340			256			157
Total	$	4,908		$	3,694		$	(1,873	)

NOTE 5 – LEASE OBLIGATIONS

Right-of-use asset and lease obligations by type of property for the periods ended September 30, 2024, and December 31, 2023, are listed below.


September 30, 2024	Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate
Operating Leases
Land and building leases	$	3,729	$	3,728		12.5		3.30	%
Total operating leases	$	3,729	$	3,728		12.5		3.30	%


December 31, 2023	Right-of-Use Asset		Lease Liability		Weighted Average Lease Term in Years		Weighted Average Discount Rate
Operating Leases
Land and building leases	$	3,291	$	3,307		14.8		3.00	%
Total operating leases	$	3,291	$	3,307		14.8		3.00	%

Operating lease costs for the three and nine months ended September 30, 2024, and 2023, are listed below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	164	$	177	$	439	$	585
Short-term lease cost		—		—		—		—
Variable lease cost		14		34		57		62
Total operating lease cost	$	178	$	211	$	496	$	647

There were no sale and leaseback transactions, leverage leases, lease transactions with related parties or leases that had not yet commenced during the three or nine month periods ended September 30, 2024.

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


Lease Payments	September 30, 2024
Due in one year or less	$	578
Due after one year through two years		623
Due after two years through three years		578
Due after three years through four years		484
Due after four years through five years		284
Thereafter		2,045
Total undiscounted cash flows		4,592
Discount on cash flows		(864	)
Total operating lease liability	$	3,728

NOTE 6 – BORROWINGS

Federal funds purchased and retail repurchase agreements

Federal funds purchased and retail repurchase agreements as of September 30, 2024, and December 31, 2023, are listed below.


	September 30, 2024		December 31, 2023
Federal funds purchased	$	—	$	—
Retail repurchase agreements		38,196		43,582

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 $40,070 and $47,282 at September 30, 2024, and December 31, 2023. The agreements are on a day-to-day basis and can be terminated on demand.

The following table presents the borrowing usage and interest rate information for federal funds purchased and retail repurchase agreements at September 30, 2024, and December 31, 2023.


	September 30, 2024			December 31, 2023
Average daily balance during the period	$	42,213		$	43,469
Average interest rate during the period		1.81	%		1.13	%
Maximum month-end balance year-to-date	$	47,312		$	46,798
Weighted average interest rate at period-end		1.62	%		1.69	%

Federal Home Loan Bank advances

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 September 30, 2024, and December 31, 2023, are as follows.


	September 30, 2024		December 31, 2023
Federal Home Loan Bank line of credit advances	$	195,997	$	—
Federal Home Loan Bank fixed-rate term advances		100,000		100,000
Total Federal Home Loan Bank advances	$	295,997	$	100,000

At September 30, 2024, and December 31, 2023, the Company had un-disbursed advance commitments (letters of credit) with the Federal Home Loan Bank of $45,256 and $39,922. 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 $842,086 and securities of $84,148 for a total of $926,234 at September 30, 2024, and qualifying loans of $846,601 and securities of $65,209 for a total of $911,810 at December 31, 2023. Based on this collateral and the Company’s holdings of Federal Home Loan Bank stock, the Company was eligible to borrow an additional $583,927 and $770,711 at September 30, 2024, and December 31, 2023.

Federal Reserve Bank borrowings

At September 30, 2024, and December 31, 2023, the Company had a borrowing capacity of $338,743 and $471,569, for which the Company has pledged loans with an outstanding balance of $379,309 and $394,810 and securities with a fair value of $9,520 and $155,934. At December 31, 2023 the Company held $140,000 in borrowings secured from this facility under the Federal Reserve's Bank Term Funding Program with a rate of 4.38% and maturity date of March 22, 2024. The Company repaid this borrowing at maturity and there were no outstanding borrowings at September 30, 2024.

Bank stock loan

The Company entered into an agreement with an unaffiliated financial institution that provided for an initial maximum borrowing facility of $40,000, secured by the Company’s stock in Equity Bank. Each draw of funds on the facility will create a separate note that is repayable over a term of five years. Each note will bear interest at the greater of a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily, or a floor of 3.50%. Accrued interest and principal payments will be due quarterly with one final payment of unpaid principal and interest due at the end of the five-year term of each separate note.

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

The loan was renewed on February 10, 2023, with a new maturity date of February 10, 2024. With this renewal, the maximum borrowing amount remained 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.

The loan was renewed and amended on February 10, 2024, with the same terms as the previous renewal and a new maturity date of February 10, 2025.

There were no outstanding principal balances on the bank stock loan at September 30, 2024, and December 31, 2023.

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

Subordinated debt

Subordinated debt as of September 30, 2024, and December 31, 2023, are listed below.


	September 30, 2024		December 31, 2023
Subordinated debentures	$	23,857	$	23,594
Subordinated notes		73,479		73,327
Total	$	97,336	$	96,921

Subordinated debentures

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 were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 2.00%; however on July 12, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 2.00 % on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on April 15, 2035, or upon earlier redemption.

FCB Capital Trust III (“CTIII”): The trust preferred securities issued by CTIII were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 1.89%; however on September 15, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 1.89% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on June 15, 2037, or upon earlier redemption.

Community First (AR) Statutory Trust I (“CFSTI”): The trust preferred securities issued by CFSTI were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 3.25%; however on September 26, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 3.25% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on December 26, 2032, or upon earlier redemption.

American State Bank Statutory Trust I (“ASBSTI”): The trust preferred securities issued by ASBSTI were initially issued to accrue and pay distributions quarterly at three-month LIBOR plus 1.80%; however on September 15, 2023, after the LIBOR transition it will now accrue and pay distributions quarterly at three-month CME term SOFR plus a tenor spread adjustment of 0.26% plus 1.80% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on September 15, 2035, or upon earlier redemption.

Subordinated debentures as of September 30, 2024, and December 31, 2023, are listed below.


	September 30, 2024			Weighted Average Rate			Weighted Average Term in Years
CTII subordinated debentures	$	10,310			7.56	%		10.5
CTIII subordinated debentures		5,155			7.10	%		12.7
CFSTI subordinated debentures		5,155			8.17	%		8.2
ASBSTI subordinated debentures		7,732			7.01	%		11.0
Total contractual balance		28,352
Fair market value adjustments		(4,495	)
Total subordinated debentures	$	23,857


	December 31, 2023			Weighted Average Rate			Weighted Average Term in Years
CTII subordinated debentures	$	10,310			7.66	%	11.3
CTIII subordinated debentures		5,155			7.54	%		13.5
CFSTI subordinated debentures		5,155			8.87	%		9.0
ASBSTI subordinated debentures		7,732			7.45	%		11.7
Total contractual balance		28,352
Fair market value adjustments		(4,758	)
Total subordinated debentures	$	23,594

Subordinated notes

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

Subordinated notes as of September 30, 2024, are listed below.


	September 30, 2024			Weighted Average Rate			Weighted Average Term in Years
Subordinated notes	$	75,000			7.00	%		5.8
Total principal outstanding		75,000
Debt issuance cost		(1,521	)
Total subordinated notes	$	73,479

Subordinated notes as of December 31, 2023, are listed below.


	December 31, 2023			Weighted Average Rate			Weighted Average Term in Years
Subordinated notes	$	75,000			7.00	%		6.5
Total principal outstanding		75,000
Debt issuance cost		(1,673	)
Total subordinated notes	$	73,327

Future principal repayments

Future principal repayments of the September 30, 2024, outstanding balances are as follows.


	Retail Repurchase Agreements		FHLB Advances		Subordinated Debentures		Subordinated Notes		FRB Borrowings		Total
Due in one year or less	$	38,196	$	295,997	$	—	$	—	$	—	$	334,193
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	$	38,196	$	295,997	$	28,352	$	75,000	$	—	$	437,545

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred stock

The Company’s articles of incorporation provide for the issuance of shares of preferred stock. At September 30, 2024, and December 31, 2023, there was no preferred stock outstanding.

Common stock

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

The following table presents shares that were issued, held in treasury or were outstanding at September 30, 2024, and December 31, 2023.


	September 30, 2024			December 31, 2023
Class A common stock – issued		20,675,614			20,460,615
Class A common stock – held in treasury		(5,379,537	)		(5,016,964	)
Class A common stock – outstanding		15,296,077			15,443,651
Class B common stock – issued		234,903			234,903
Class B common stock – held in treasury		(234,903	)		(234,903	)
Class B common stock – outstanding		—			—

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

In 2019, the Company’s Board of Directors adopted the Equity Bancshares, Inc. 2019 Employee Stock Purchase Plan (“ESPP”). The ESPP enables eligible employees to purchase the Company’s common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each offering period. ESPP compensation expense of $25 and $94 was recorded for the three and nine months ended September, 2024. ESPP compensation expense of $17 and $94 was recorded for the three and nine months ended September 2023. The following table presents the offering periods and costs associated with this program during the reporting period.


Offering Period	Shares Purchased		Cost Per Share		Compensation Expense
August 15, 2021 to February 14, 2022		14,274	$	27.37	$	69
February 15, 2022 to August 14, 2022		14,555		27.61		71
August 15, 2022 to February 14, 2023		17,508		26.18		81
February 15, 2023 to August 14, 2023		14,548		22.34		57
August 15, 2023 to February 14, 2024		16,884		21.79		65
February 15, 2024 to August 14, 2024		12,581		28.52		63

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. Under this program, during the years ended December 31, 2023, and 2022, the Company repurchased a total of 832,893 shares of the Company’s outstanding common stock at an average price paid of $27.89 per share.

In July of 2023, 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 on October 1, 2023, and concluding on September 30, 2024. The repurchase program does 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 2023 and 2024, the Company repurchased a total of 362,573 shares of the Company’s outstanding common stock at an average price paid of $32.71 per share. At September 30, 2024, there are 637,427 shares remaining under the program that expired on September 30, 2024.

In September of 2024, the Company’s Board of Directors approved a share repurchase plan for up to 1,000,000 shares of outstanding common stock beginning on October 1, 2024, and concluding on September 30, 2025. The repurchase program does 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. Non-objection from the Federal Reserve Bank of Kansas City related to this repurchase plan was received October 7, 2024.

Accumulated other comprehensive income (loss)

At September 30, 2024, and December 31, 2023, accumulated other comprehensive income (loss) consisted of (i) the after-tax effect of unrealized gains (losses) on available-for-sale securities and (ii) unrealized gains (losses) on cash flow hedges.

Components of accumulated other comprehensive income as of September 30, 2024, and December 31, 2023, are listed below.


	Available-for- Sale Securities			Cash Flow Hedges			Accumulated Other Comprehensive Income (Loss)
September 30, 2024
Net unrealized or unamortized gains (losses)	$	(53,721	)	$	1,050		$	(52,671	)
Tax effect		12,913			(254	)		12,659
	$	(40,808	)	$	796		$	(40,012	)
December 31, 2023
Net unrealized or unamortized gains (losses)	$	(77,548	)	$	839		$	(76,709	)
Tax effect		18,995			(206	)		18,789
	$	(58,553	)	$	633		$	(57,920	)

NOTE 8 – REGULATORY MATTERS

Banks and bank holding companies (on a consolidated basis) are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The Basel III rules require banks to maintain a Common Equity Tier 1 capital ratio of 6.5%, a total Tier 1 capital ratio of 8%, a total capital ratio of 10% and a leverage ratio of 5% to be deemed “well capitalized” for purposes of certain rules and prompt corrective action requirements. The risk-based ratios include a “capital conservation buffer” of 2.5% which can limit certain activities of an institution, including payment of dividends, share repurchases and discretionary bonuses to executive officers, if its capital level is below the buffer amount. Management believes as of September 30, 2024, the Company and 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.

As of September 30, 2024, the most recent notifications from the federal regulatory agencies categorized Equity Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Equity Bank must

maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed Equity Bank’s category.

The Company’s and Equity Bank’s capital amounts and ratios at September 30, 2024, and December 31, 2023, are presented in the table below. The Company was able to take advantage of the accumulated other comprehensive income exception on capital calculations that was made available by regulators in order to maintain strong regulatory ratios. Ratios provided for Equity Bancshares, Inc. represent the ratios of the Company on a consolidated basis.


	Actual					Minimum Required for Capital Adequacy Under Basel III						To Be Well Capitalized Under Prompt Corrective Provisions
	Amount		Ratio			Amount		Ratio				Amount		Ratio
September 30, 2024
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	616,329		14.78	%	$	437,810		10.50	%	$		N/A	N/A
Equity Bank		587,441		14.12	%		436,964		10.50	%			416,156		10.00	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		497,804		11.94	%		354,417		8.50	%		N/A		N/A
Equity Bank		542,395		13.03	%		353,732		8.50	%			332,925		8.00	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		473,947		11.37	%		291,873		7.00	%		N/A		N/A
Equity Bank		542,395		13.03	%		291,309		7.00	%			270,501		6.50	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		497,804		9.55	%		208,427		4.00	%		N/A		N/A
Equity Bank		542,395		10.43	%		208,067		4.00	%			260,083		5.00	%
December 31, 2023
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	589,131		15.48	%	$	399,729		10.50	%	$	N/A		N/A
Equity Bank		571,938		15.05	%		399,006		10.50	%			380,006		10.00	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		470,659		12.36	%		323,590		8.50	%		N/A		N/A
Equity Bank		526,793		13.86	%		323,005		8.50	%			304,004		8.00	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		447,064		11.74	%		266,486		7.00	%		N/A		N/A
Equity Bank		526,793		13.86	%		266,004		7.00	%			247,004		6.50	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		470,659		9.46	%		199,112		4.00	%		N/A		N/A
Equity Bank		526,793		10.60	%		198,782		4.00	%			248,477		5.00	%

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

NOTE 9 – EARNINGS PER SHARE

The following table presents earnings per share for the three and nine months ended September 2024, and 2023.


	Three months ended				Nine months ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Basic:
Net income (loss) allocable to common stockholders	$	19,851	$	12,341	$	45,635	$	36,120
Weighted average common shares outstanding		15,258,704		15,404,882		15,307,627		15,570,357
Weighted average vested restricted stock units		118		110		3,261		5,374
Weighted average shares		15,258,822		15,404,992		15,310,888		15,575,731
Basic earnings (loss) per common share	$	1.30	$	0.80	$	2.98	$	2.32
Diluted:
Net income (loss) allocable to common stockholders	$	19,851	$	12,341	$	45,635	$	36,120
Weighted average common shares outstanding for:
Basic earnings per common share		15,258,822		15,404,992		15,310,888		15,575,731
Dilutive effects of the assumed exercise of stock options		77,192		33,189		63,709		37,550
Dilutive effects of the assumed vesting of restricted stock units		114,197		66,892		92,086		76,193
Dilutive effects of the assumed exercise of ESPP purchases		1,334		2,099		1,247		2,831
Average shares and dilutive potential common shares		15,451,545		15,507,172		15,467,930		15,692,305
Diluted earnings (loss) per common share	$	1.28	$	0.80	$	2.95	$	2.30

Average shares not included in the computation of diluted earnings per share because they were antidilutive are shown in the following table as of September 30, 2024, and 2023.


	Three months ended				Nine months ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Stock options		288,583		280,814		152,824		268,713
Restricted stock units		148		122,074		4,916		129,160
Total antidilutive shares		288,731		402,888		157,740		397,873

NOTE 10 – FAIR VALUE

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.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

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), private-label residential mortgage-backed securities, corporate securities, Small Business Administration securities, and State and Political Subdivision securities are classified as Level 2.

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

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables as of September 30, 2024, and December 31, 2023.


	September 30, 2024
	(Level 1)			(Level 2)		(Level 3)
Assets:
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		$	75,190	$	—
U.S. Treasury securities		85,145			—		—
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—			606,726		—
Private label residential mortgage-backed securities		—			130,403		—
Corporate		—			58,288		—
Small Business Administration loan pools		—			6,561		—
State and political subdivisions		—			78,687		—
Derivative assets:
Derivative assets (included in other assets)		—			6,136		—
Cash collateral held by counterparty and netting adjustments		(4,935	)		—		—
Total derivative assets		(4,935	)		6,136		—
Other assets:
Equity securities with readily determinable fair value		1,011			—		—
Total other assets		1,011			—		—
Total assets	$	81,221		$	961,991	$	—
Liabilities:
Derivative liabilities:
Derivative liabilities (included in other liabilities)	$	—		$	2,959	$	—
Cash collateral held by counterparty and netting adjustments		(461	)		—		—
Total derivative liabilities		(461	)		2,959		—
Total liabilities	$	(461	)	$	2,959	$	—


	December 31, 2023
	(Level 1)			(Level 2)		(Level 3)
Assets:
Available-for-sale securities:
U.S. Government-sponsored entities	$	—		$	33,087	$	—
U.S. Treasury securities		89,256			—		—
Mortgage-backed securities
Government-sponsored residential mortgage- backed securities		—			529,143		—
Private label residential mortgage-backed securities		—			137,841		—
Corporate		—			49,683		—
Small Business Administration loan pools		—			7,727		—
State and political subdivisions		—			72,911		—
Derivative assets:
Derivative assets (included in other assets)		—			7,002		—
Cash collateral held by counterparty and netting adjustments		(6,406	)		—		—
Total derivative assets		(6,406	)		7,002		—
Other assets:
Equity securities with readily determinable fair value		674			—		—
Total other assets		674			—		—
Total assets	$	83,524		$	837,394	$	—
Liabilities:
Derivative liabilities:
Derivative liabilities (included in other liabilities)	$	—		$	3,656	$	—
Cash collateral held by counterparty and netting adjustments		(454	)		—		—
Total derivative liabilities		(454	)		3,656		—
Total liabilities	$	(454	)	$	3,656	$	—

There were no material transfers between levels during the nine months ended September 30, 2024, or the year ended December 31, 2023. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period.

Fair Value of Assets and Liabilities Measured on a Non-recurring Basis

Certain assets are measured at fair value on a non-recurring basis when there is evidence of loans individually assessed for credit losses. The fair value of loans individually assessed for credit losses with specific allowance for credit losses are generally based on recent real estate appraisals of the 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. Such adjustments made to real estate appraisals and other loan valuations are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets measured at fair value on a non-recurring basis are summarized below as of September 30, 2024, and December 31, 2023.


	September 30. 2024
	(Level 1)		(Level 2)		(Level 3)
Loans individually evaluated for credit losses:
Commercial real estate	$	—	$	—	$	3,260
Commercial and industrial		—		—		7,526
Residential real estate		—		—		3,468
Agricultural real estate		—		—		3,180
Other		—		—		907
Other real estate owned:
Commercial real estate		—		—		2,141
Residential real estate		—		—		57


	December 31, 2023
	(Level 1)		(Level 2)		(Level 3)
Loans individually evaluated for credit losses:
Commercial real estate	$	—	$	—	$	1,616
Commercial and industrial		—		—		3,706
Residential real estate		—		—		6,165
Agricultural real estate		—		—		2,606
Other		—		—		2,442
Other real estate owned:
Commercial real estate		—		—		1,061
Residential real estate		—		—		170

The Company did not record any liabilities for which the fair value was measured on a non-recurring basis at September 30, 2024, or December 31, 2023.

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

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized with Level 3 of the fair value hierarchy as of September 30, 2024, and December 31, 2023.


	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average) or Multiple of Earnings
September 30, 2024
Individually evaluated real estate loans	$	16,764	Sales Comparison Approach	Adjustments for differences between comparable sales	5% - 40% (22%)
Individually evaluated real estate loans	$	1,577	Cost Approach	Adjustments for differences between replacement cost and depreciated cost	26% - 70% (29%)
Individually evaluated other real estate owned	$	2,198	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 13% (8%)
December 31, 2023
Individually evaluated real estate loans	$	16,535	Sales Comparison Approach	Adjustments for differences between comparable sales	3% - 34% (19%)
Individually evaluated other real estate owned	$	1,231	Sales Comparison Approach	Adjustments for differences between comparable sales	7% - 28% (18%)

Carrying amount and estimated fair values of financial instruments at period end were as follows for September 30, 2024, and December 31, 2023.


	September 30, 2024
	Carrying Amount			Estimated Fair Value			(Level 1)			(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	235,483		$	235,483		$	235,483		$	—	$	—
Available-for-sale securities		1,041,000			1,041,000			85,145			955,855		—
Held-to-maturity securities		5,408			5,610			—			5,610		—
Loans held for sale		901			901			—			901		—
Loans, net of allowance for credit losses		3,557,435			3,511,452			—			—		3,511,452
Federal Reserve Bank and Federal Home Loan Bank stock		34,429			34,429			—			34,429		—
Interest receivable		28,398			28,398			—			28,398		—
Derivative assets		6,136			6,136			—			6,136		—
Cash collateral held by derivative counterparty and netting adjustments		(4,935	)		(4,935	)		(4,935	)		—		—
Total derivative assets		1,201			1,201			(4,935	)		6,136		—
Equity securities with readily determinable fair value		1,011			1,011			1,011			—		—
Total assets	$	4,905,266		$	4,859,485		$	316,704		$	1,031,329	$	3,511,452
Financial liabilities:
Deposits	$	4,362,944		$	4,359,686		$	—		$	4,359,686	$	—
Federal funds purchased and retail repurchase agreements		38,196			38,196			—			38,196		—
Federal Home Loan Bank advances		295,997			295,997			—			295,997		—
Subordinated debentures		23,857			23,857			—			23,857		—
Subordinated notes		73,479			72,729			—			72,729		—
Contractual obligations		19,683			19,683			—			19,683		—
Interest payable		8,775			8,775			—			8,775		—
Derivative liabilities		2,959			2,959			—			2,959		—
Cash collateral held by derivative counterparty and netting adjustments		(461	)		(461	)		(461	)		—		—
Total derivative liabilities		2,498			2,498			(461	)		2,959		—
Total liabilities	$	4,825,429		$	4,821,421		$	(461	)	$	4,821,882	$	—


	December 31, 2023
	Carrying Amount			Estimated Fair Value			(Level 1)			(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	379,099		$	379,099		$	379,099		$	—	$	—
Available-for-sale securities		919,648			919,648			89,256			830,392		—
Held-to-maturity securities		2,209			2,250			—			2,250		—
Loans held for sale		476			476			—			476		—
Loans, net of allowance for credit losses		3,289,381			3,227,789			—			—		3,227,789
Federal Reserve Bank and Federal Home Loan Bank stock		20,608			20,608			—			20,608		—
Interest receivable		25,497			25,497			—			25,497		—
Derivative assets		7,002			7,002			—			7,002		—
Cash collateral held by derivative counterparty and netting adjustments		(6,406	)		(6,406	)		(6,406	)		—		—
Total derivative assets		596			596			(6,406	)		7,002		—
Equity securities with readily determinable fair value		674			674			674			—		—
Total assets	$	4,638,188		$	4,576,637		$	462,623		$	886,225	$	3,227,789
Financial liabilities:
Deposits	$	4,145,455		$	4,140,501		$	—		$	4,140,501	$	—
Federal funds purchased and retail repurchase agreements		43,582			43,582			—			43,582		—
Federal Home Loan Bank advances		100,000			100,000			—			100,000		—
Federal Reserve Bank Borrowings		140,000			140,000			—			140,000		—
Subordinated debentures		23,594			23,594			—			23,594		—
Subordinated notes		73,327			71,827			—			71,827		—
Contractual obligations		19,315			19,315			—			19,315		—
Interest payable		9,180			9,180			—			9,180		—
Derivative liabilities		3,656			3,656			—			3,656		—
Cash collateral held by derivative counterparty and netting adjustments		(454	)		(454	)		(454	)		—		—
Total derivative liabilities		3,202			3,202			(454	)		3,656		—
Total liabilities	$	4,557,655		$	4,551,201		$	(454	)	$	4,551,655	$	—

The fair value of off-balance-sheet items is not considered material.

NOTE 11 – COMMITMENTS AND CREDIT RISK

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

Commitments to Originate Loans and Available Lines of Credit

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

The contractual amounts of commitments to originate loans and available lines of credit as of September 30, 2024, and December 31, 2023, were as follows.


	September 30, 2024				December 31, 2023
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	39,590	$	402,556	$	47,465	$	343,715
Mortgage loans in the process of origination		391		2,208		4,574		357
Unused lines of credit		166,965		407,829		124,893		355,270

At September 30, 2024, the fixed rate loan commitments have interest rates ranging from 3.25% to 18.00% and maturities ranging from 1 month to 216 months.

Standby Letters of Credit

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

The contractual amounts of standby letters of credit as of September 30, 2024, and December 31, 2023, were as follows.


	September 30, 2024				December 31, 2023
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Standby letters of credit	$	17,104	$	28,645	$	18,145	$	30,680

NOTE 12 – LEGAL MATTERS

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 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 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 filed on February 2, 2022, in Jackson 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 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 28, 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.

NOTE 13 – REVENUE RECOGNITION

The majority of the Company’s revenues come from interest income on financial instruments, including loans, leases, securities and derivatives, which are outside the scope of ASC 606. The Company’s services that fall within the scope of ASC 606 are presented with non-interest income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of ASC 606 include service charges and fees on deposits, debit card income, investment referral income, insurance sales commissions and other non-interest income related to loans and deposits.

Except for gains or losses from the sale of other real estate owned, which for the three and nine months ended September 30, 2024, include the liquidation of a preferred equity interest taken as resolution of a problem loan relationship that resulted in an $8,500 gain, all of the Company’s revenue from contracts with customers within the scope of ASC 606 are recognized in non-interest income.

The following table presents the Company’s sources of non-interest income for the three and nine months ended September 30, 2024, and 2023.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023			2024			2023
Non-interest income
Service charges and fees	$	2,424	$	2,690		$	7,534		$	7,888
Debit card income		2,665		2,591			7,733			7,798
Mortgage banking(a)		287		226			720			527
Increase in bank-owned life insurance(a)		1,344		794			3,083			3,134
Net gain (loss) on acquisitions(a)		831		—			2,131			—
Net gain (loss) from securities transactions(a)		206		(1	)		222			(1,291	)
Other
Investment referral income		109		101			395			307
Trust income		412		291			1,115			799
Insurance sales commissions		166		264			309			405
Recovery on zero-basis purchased loans(a)		5		2			4,378			515
Income (loss) from equity method investments(a)		—		(56	)		(87	)		(167	)
Other non-interest income related to loans and deposits		856		1,828			2,969			4,340
Other non-interest income not related to loans and deposits(a)		12		5			(496	)		30
Total other non-interest income		1,560		2,435			8,583			6,229
Total	$	9,317	$	8,735		$	30,006		$	24,285
(a) Not within the scope of ASC 606.

NOTE 14 – BUSINESS COMBINATIONS AND BRANCH SALES

At close of business on February 9, 2024, the Company acquired 100% of the outstanding common shares of Rockhold BanCorp ("Rockhold"), the holding company of the Bank of Kirksville (“BOK”), based in Kirksville, Missouri. Results of operations of BOK were included in the Company’s results of operations beginning February 10, 2024. Acquisition-related costs associated with this acquisition were $79 ($60 on an after-tax basis) and are included in merger expense in the Company’s income statement for the nine months ended September 30, 2024.

Information necessary to recognize the fair value of assets acquired and liabilities assumed is currently still on-going. The acquisition was and expansion to the Company's current footprint in Missouri with the addition of eight branch locations in the Kirksville area.

The following table summarizes the amounts of assets acquired and liabilities assumed by BOK on February 9, 2024.


Fair value of consideration:
Cash	$	44,304
	$	44,304

Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and due from banks	$	105,218
Available-for-sale securities		164,629
Loans		118,131
Premises and equipment		3,473
Core deposit intangible		11,530
Other assets		3,255
Total assets acquired		406,236
Deposits		349,777
Federal funds purchased and retail repurchase agreements		8,818
Interest payable and other liabilities		2,037
Total liabilities assumed		360,632
Total identifiable net assets		45,604
Bargain purchase gain		(1,300	)
	$	44,304

The following tables reconcile the par value of BOK loan portfolio as of the purchase date to the fair value indicated in the table above. For non-purchase credit deteriorated assets, the entire fair value adjustment including both interest and credit related components is recorded as an adjustment to par (“Fair Value Marks”) and reflected as an adjustment to the carrying value of that asset within the Consolidated Balance Sheet. Following purchase, an ACL is also established for these non-purchase credit deteriorated assets which is not reflected in this table as it is accounted for outside of the business combination. For purchase-credit deteriorated assets, as required by CECL, the fair value mark is divided between an adjustment to par (“Non-Credit Rate Marks”) and an addition to the ACL (“Credit Marks in ACL”). The addition to ACL is based on the application of management’s CECL methodology to the individual loans.


Non-Purchase Credit Deteriorated Loans	Loan Par Value		Fair Value Marks			Purchase Price
Commercial real estate	$	1,959	$	(85	)	$	1,874
Commercial and industrial		32,300		(578	)		31,722
Residential real estate		42,318		(1,182	)		41,136
Agricultural		37,641		(949	)		36,692
Consumer		1,373		(36	)		1,337
Total non-PCD loans	$	115,591	$	(2,830	)	$	112,761


Purchase Credit Deteriorated Loans	Loan Par Value		Discounts from Other Factors Excluding ACL			Credit Marks in ACL			Purchase Price
Commercial and industrial	$	1,366	$	(178	)	$	(119	)	$	1,069
Residential real estate		2,044		(210	)		(183	)		1,651
Agricultural		3,316		(472	)		(284	)		2,560
Consumer		115		(15	)		(10	)		90
Total PCD loans	$	6,841	$	(875	)	$	(596	)	$	5,370

Total Purchased Loans	Purchase Price
Non-Purchase Credit Deteriorated Loans	$	112,761
Purchase Credit Deteriorated Loans		5,370
Total loans	$	118,131

At close of business on July 1, 2024, the Company acquired 100% of the outstanding common shares of KansasLand Bancshares, Inc. ("KansasLand"), the holding company of KansasLand Bank (“KSL”), which has two branch locations in Quinter and Americus, Kansas. Results of operations of KSL were included in the Company’s results of operations beginning July 2, 2024.

Acquisition-related costs associated with this acquisition were $538 ($409 on an after-tax basis) and are included in merger expense in the Company’s income statement for the nine months ended September 30, 2024.

Information necessary to recognize the fair value of assets acquired and liabilities assumed is currently still on-going. The acquisition was and expansion to the Company's current footprint in Western Kansas with the addition of two branch locations.

The following table summarizes the amounts of assets acquired and liabilities assumed by KSL on July 1, 2024.


Fair value of consideration:
Cash	$	100
	$	100

Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and due from banks	$	1,361
Available-for-sale securities		20,004
Loans		27,926
Premises and equipment		372
Core deposit intangible		506
Other assets		1,764
Total assets acquired		51,933
Deposits		42,418
Federal funds purchased and retail repurchase agreements		780
Federal Home Loan Bank advances		7,049
Bank stock loan		691
Interest payable and other liabilities		64
Total liabilities assumed		51,002
Total identifiable net assets		931
Bargain purchase gain		(831	)
	$	100

The following tables reconcile the par value of KSL loan portfolio as of the purchase date to the fair value indicated in the table above. For non-purchase credit deteriorated assets, the entire fair value adjustment including both interest and credit related components is recorded as an adjustment to par (“Fair Value Marks”) and reflected as an adjustment to the carrying value of that asset within the Consolidated Balance Sheet. Following purchase, an ACL is also established for these non-purchase credit deteriorated assets which is not reflected in this table as it is accounted for outside of the business combination. For purchase-credit deteriorated assets, as required by CECL, the fair value mark is divided between an adjustment to par (“Non-Credit Rate Marks”) and an addition to the ACL (“Credit Marks in ACL”). The addition to ACL is based on the application of management’s CECL methodology to the individual loans.


Non-Purchase Credit Deteriorated Loans	Loan Par Value		Fair Value Marks			Purchase Price
Commercial real estate	$	163	$	(14	)	$	149
Commercial and industrial		4,549		(258	)		4,291
Residential real estate		7,053		(103	)		6,950
Agricultural real estate		9,644		(387	)		9,257
Agricultural		2,133		(7	)		2,126
Consumer		1,524		(6	)		1,518
Total non-PCD loans	$	25,066	$	(775	)	$	24,291


Purchase Credit Deteriorated Loans	Loan Par Value		Discounts from Other Factors Excluding ACL			Credit Marks in ACL			Purchase Price
Commercial and industrial	$	109	$	(14	)	$	(9	)	$	86
Residential real estate		479		(48	)		(43	)		388
Agricultural real estate		3,717		(419	)		(330	)		2,968
Agricultural		244		(29	)		(22	)		193
Total PCD loans	$	4,549	$	(510	)	$	(404	)	$	3,635

Total Purchased Loans	Purchase Price
Non-Purchase Credit Deteriorated Loans	$	24,291
Purchase Credit Deteriorated Loans		3,635
Total loans	$	27,926

Assuming the Rockhold and KansasLand acquisitions would have taken place on January 1, 2023, total combined revenue would have been $168,626 for the nine months ended September 30, 2024, and $141,078 for the year ended December 31, 2023. Net income would have been $48,091 at September 30, 2024, and $7,518 at December 31, 2023. The pro forma amounts disclosed exclude merger expense from non-interest expense, which is considered a non-recurring adjustment. Separate revenue and earnings of the former Rockhold locations are not available subsequent to the acquisition.

NOTE 15 – SEGMENT REPORTING

Equity Bancshares, Inc. is a financial holding company, whose principal activity is the ownership and management of its wholly-owned subsidiaries, including Equity Bank (“Equity Bank”). As a community-oriented financial institution, substantially all of the Company’s operations involve the delivery of loan and deposit products to customers. Management makes operating decisions and assesses performance based on an ongoing review of these banking operations, which constitute the Company’s only operating segment for financial reporting purposes.

The Company’s chief operating decision maker is comprised of the executive leadership team. For Equity Bancshares Inc., the executive leadership team uses gross profit and profit or loss from operations before interest and income taxes to allocate resources for in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances on a monthly basis for profit measures when making decisions about allocating capital and personnel to the operating segment. For Equity Bank, the executive leadership team uses net-interest income and non-interest income to allocate resources (including employees, financial, or capital resources) to that segment in the annual budget and forecasting process and uses that measure as a basis for evaluating lending terms for customer loans.

The following tables present information about reported segment revenue, measures of a segment’s profit or loss, significant segment expenses, and measure of a segment’s assets for the three months and nine months ended September 30, 2024, and September 30, 2023. The Company does not allocate all holding company expenses, income taxes or unusual items to the reportable segment. The following tables present the reconciliations of reportable segment revenues and measures of profit or loss and line item reconciliation to the Company’s consolidated financial statement totals.


				Unallocated Holding
				Company
	Equity Bank			Amounts			Eliminations				Total
Nine Months ended September 30, 2024
Interest and dividend income	$	221,427		$	437		$	—			$	221,864
Interest expense		79,404			5,771			—				85,175
Net interest income		142,023			(5,334	)		—				136,689
Provision (reversal) for credit losses		2,448			—			—				2,448
Net interest income after provision (reversal) for credit losses		139,575			(5,334	)		—				134,241
Non-interest income
Service charges and fees		7,534			—			—				7,534
Debit card income		7,733			—			—				7,733
Mortgage banking		720			—			—				720
Increase in value of bank-owned life insurance		3,083			—			—				3,083
Net gain on acquisition and branch sales		2,131			—			—				2,131
Net gain (loss) from securities transactions		(72	)		294			—				222
Other		8,583			42,825			(42,825	)	(a)		8,583
Total non-interest income		29,712			43,119			(42,825	)			30,006
Non-interest expense
Salaries and employee benefits		54,292			126			—				54,418
Net occupancy and equipment		10,800			—			—				10,800
Data processing		15,016			—			—				15,016
Professional fees		4,148			509			—				4,657
Advertising and business development		3,896			1			—				3,897
Telecommunications		1,887			—			—				1,887
FDIC insurance		1,821			—			—				1,821
Courier and postage		1,912			—			—				1,912
Free nationwide ATM cost		1,569			—			—				1,569
Amortization of core deposit intangibles		3,229			—			—				3,229
Loan expense		447			—			—				447
Other real estate owned		710			(8,496	)		—				(7,786	)
Merger expenses		3,893			568			—				4,461
Other		10,170			(147	)		—				10,023
Intersegment service charges		(1,065	)		1,065			—				—
Total non-interest expense		112,725			(6,374	)		—				106,351
Income (loss) before income tax		56,562			44,159			(42,825	)			57,896
Provision (benefit) for income taxes		14,467			(2,206	)		—				12,261
Total segment profit/(loss)	$	42,095		$	46,365		$	(42,825	)		$	45,635

(a) Elimination of equity in earnings of subsidiary


				Unallocated Holding
				Company
	Equity Bank			Amounts			Eliminations				Total
Nine Months ended September 30, 2023
Interest and dividend income	$	181,934		$	484		$	—			$	182,418
Interest expense		57,121			5,746			—				62,867
Net interest income		124,813			(5,262	)		—				119,551
Provision (reversal) for credit losses		1,162			—			—				1,162
Net interest income after provision (reversal) for credit losses		123,651			(5,262	)		—				118,389
Non-interest income
Service charges and fees		7,888			—			—				7,888
Debit card income		7,798			—			—				7,798
Mortgage banking		527			—			—				527
Increase in value of bank-owned life insurance		3,134			—			—				3,134
Net gain (loss) from securities transactions		(1,291	)		—			—				(1,291	)
Other		6,228			41,972			(41,971	)	(a)		6,229
Total non-interest income		24,284			41,972			(41,971	)			24,285
Non-interest expense
Salaries and employee benefits		47,667			119			—				47,786
Net occupancy and equipment		9,081			—			—				9,081
Data processing		12,962			—			—				12,962
Professional fees		3,895			446			—				4,341
Advertising and business development		3,827			—			—				3,827
Telecommunications		1,503			—			—				1,503
FDIC insurance		1,535			—			—				1,535
Courier and postage		1,469			—			—				1,469
Free nationwide ATM cost		1,565			—			—				1,565
Amortization of core deposit intangibles		2,635			—			—				2,635
Loan expense		385			—			—				385
Other real estate owned		318			—			—				318
Other		13,639			(443	)		—				13,196
Intersegment service charges		(1,007	)		1,007			—				—
Total non-interest expense		99,474			1,129			—				100,603
Income (loss) before income tax		48,461			35,581			(41,971	)			42,071
Provision (benefit) for income taxes		7,515			(1,564	)		—				5,951
Total segment profit/(loss)	$	40,946		$	37,145		$	(41,971	)		$	36,120

(a) Elimination of equity in earnings of subsidiary


				Unallocated Holding
				Company
	Equity Bank			Amounts			Eliminations				Total
Three Months ended September 30, 2024
Interest and dividend income	$	74,878		$	87		$	—			$	74,965
Interest expense		27,007			1,927			—				28,934
Net interest income		47,871			(1,840	)		—				46,031
Provision (reversal) for credit losses		1,183			—			—				1,183
Net interest income after provision (reversal) for credit losses		46,688			(1,840	)		—				44,848
Non-interest income
Service charges and fees		2,424			—			—				2,424
Debit card income		2,665			—			—				2,665
Mortgage banking		287			—			—				287
Increase in value of bank-owned life insurance		1,344			—			—				1,344
Net gain on acquisition and branch sales		831			—			—				831
Net gain (loss) from securities transactions		206			—			—				206
Other		1,560			12,737			(12,737	)	(a)		1,560
Total non-interest income		9,317			12,737			(12,737	)			9,317
Non-interest expense
Salaries and employee benefits		18,455			39			—				18,494
Net occupancy and equipment		3,478			—			—				3,478
Data processing		5,152			—			—				5,152
Professional fees		1,308			179			—				1,487
Advertising and business development		1,368			—			—				1,368
Telecommunications		660			—			—				660
FDIC insurance		660			—			—				660
Courier and postage		686			—			—				686
Free nationwide ATM cost		544			—			—				544
Amortization of core deposit intangibles		1,112			—			—				1,112
Loan expense		143			—			—				143
Other real estate owned		777			(8,496	)		—				(7,719	)
Merger expenses		615			3			—				618
Other		3,494			151			—				3,645
Intersegment service charges		(375	)		375			—				—
Total non-interest expense		38,077			(7,749	)		—				30,328
Income (loss) before income tax		17,928			18,646			(12,737	)			23,837
Provision (benefit) for income taxes		5,205			(1,219	)		—				3,986
Total segment profit/(loss)	$	12,723		$	19,865		$	(12,737	)		$	19,851

(a) Elimination of equity in earnings of subsidiary


				Unallocated Holding
				Company
	Equity Bank			Amounts			Eliminations				Total
Three Months ended September 30, 2023
Interest and dividend income	$	64,598		$	441		$	—			$	65,039
Interest expense		22,111			1,916			—				24,027
Net interest income		42,487			(1,475	)		—				41,012
Provision (reversal) for credit losses		1,230			—			—				1,230
Net interest income after provision (reversal) for credit losses		41,257			(1,475	)		—				39,782
Non-interest income
Service charges and fees		2,690			—			—				2,690
Debit card income		2,591			—			—				2,591
Mortgage banking		226			—			—				226
Increase in value of bank-owned life insurance		794			—			—				794
Net gain (loss) from securities transactions		(1	)		—			—				(1	)
Other		2,434			13,929			(13,928	)	(a)		2,435
Total non-interest income		8,734			13,929			(13,928	)			8,735
Non-interest expense
Salaries and employee benefits		15,820			37			—				15,857
Net occupancy and equipment		3,262			—			—				3,262
Data processing		4,553			—			—				4,553
Professional fees		1,225			87			—				1,312
Advertising and business development		1,419			—			—				1,419
Telecommunications		502			—			—				502
FDIC insurance		660			—			—				660
Courier and postage		548			—			—				548
Free nationwide ATM cost		516			—			—				516
Amortization of core deposit intangibles		799			—			—				799
Loan expense		132			—			—				132
Other real estate owned		128			—			—				128
Other		4,556			—			—				4,556
Intersegment service charges		(345	)		345			—				—
Total non-interest expense		33,775			469			—				34,244
Income (loss) before income tax		16,216			11,985			(13,928	)			14,273
Provision (benefit) for income taxes		2,466			(534	)		—				1,932
Total segment profit/(loss)	$	13,750		$	12,519		$	(13,928	)		$	12,341

(a) Elimination of equity in earnings of subsidiary


	For the Nine Months ended September 30,
	2024							2023
	Equity Bank		Administrative Adjustments			Total		Equity Bank		Administrative Adjustments			Total
Depreciation	$	3,997	$	135		$	4,132	$	3,371	$	114		$	3,485
Amortization of operating lease right-of-use-asset		346		—			346		472		—			472
Amortization of cloud computing implementation costs		104		—			104		141		—			141
Amortization of intangible assets		3,337		—			3,337		2,743		—			2,743
Purchase of long lived assets		10,499		—			10,499		12,425		—			12,425
Provision (benefit) for income taxes		14,467		(2,206	)		12,261		7,515		(1,564	)		5,951


	For the Three Months ended September 30,
	2024							2023
	Equity Bank		Administrative Adjustments			Total		Equity Bank		Administrative Adjustments			Total
Depreciation	$	1,354	$	45		$	1,399	$	1,160	$	38		$	1,198
Amortization of operating lease right-of-use-asset		130		—			130		149		—			149
Amortization of cloud computing implementation costs		34		—			34		47		—			47
Amortization of intangible assets		1,148		—			1,148		835		—			835
Purchase of long lived assets		4,162		—			4,162		5,324		—			5,324
Provision (benefit) for income taxes		5,205		(1,219	)		3,986		2,466		(534	)		1,932


	September 30,			December 31,
	2024			2023
Assets
Total assets for reportable segments	$	5,342,899		$	5,024,161
Holding company administrative adjustments		612,797			560,434
Elimination of bank cash and intercompany receivable of subsidiaries		(24,497	)		(13,515	)
Elimination of investment in subsidiaries		(575,966	)		(536,488	)
Consolidated total assets	$	5,355,233		$	5,034,592

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 7, 2024, 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:

•

Table containing selected financial data and ratios for the periods;

•

Overview – a general description of our business and financial highlights;

•

Critical Accounting Policies – a discussion of accounting policies that require critical estimates and assumptions;

•

Results of Operations – an analysis of our operating results, including disclosures about the sustainability of our earnings;

•

Financial Condition – an analysis of our financial position;

•

Liquidity and Capital Resources – an analysis of our cash flows and capital position; and

•

Non-GAAP Financial Measures – a reconciliation of non-GAAP measures.


(Dollars in thousands, except per share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Statement of Income Data (for the quarterly period ended)
Interest and dividend income	$	74,965		$	75,132		$	71,767		$	64,294		$	65,039
Interest expense		28,934			28,656			27,585			24,827			24,027
Net interest income		46,031			46,476			44,182			39,467			41,012
Provision (reversal) for credit losses		1,183			265			1,000			711			1,230
Net gain on acquisition and branch sales		831			60			1,240			—			—
Net gain (loss) from securities transactions		206			(27	)		43			(50,618	)		(1	)
Other non-interest income		8,280			8,925			10,448			7,204			8,736
Merger expenses		618			2,287			1,556			297			—
Other non-interest expense		29,710			36,584			35,596			34,701			34,244
Income (loss) before income taxes		23,837			16,298			17,761			(39,656	)		14,273
Provision for income taxes		3,986			4,582			3,693			(11,357	)		1,932
Net income (loss)		19,851			11,716			14,068			(28,299	)		12,341
Net income (loss) allocable to common stockholders		19,851			11,716			14,068			(28,299	)		12,341
Basic earnings (loss) per share	$	1.30		$	0.77		$	0.91		$	(1.84	)	$	0.80
Diluted earnings (loss) per share	$	1.28		$	0.76		$	0.90		$	(1.84	)	$	0.80
Balance Sheet Data (at period end)
Cash and cash equivalents	$	235,483		$	260,266		$	235,018		$	379,099		$	199,017
Securities available-for-sale		1,041,000			1,042,176			1,091,717			919,648			1,057,009
Securities held-to-maturity		5,408			5,226			2,205			2,209			2,212
Loans held for sale		901			1,959			1,311			476			627
Gross loans held for investment		3,600,925			3,454,407			3,482,163			3,332,901			3,282,118
Allowance for credit losses		43,490			43,487			44,449			43,520			44,186
Loans held for investment, net of allowance for credit losses		3,557,435			3,410,920			3,437,714			3,289,381			3,237,932
Goodwill and core deposit intangibles, net		69,130			69,737			70,955			60,323			61,062
Mortgage servicing asset, net		—			25			50			75			100
Naming rights, net		968			979			989			1,000			1,011
Total assets		5,355,233			5,245,517			5,239,036			5,034,592			4,945,267
Total deposits		4,362,944			4,341,437			4,371,026			4,145,455			4,082,170
Borrowings		431,529			385,533			360,800			380,503			376,488
Total liabilities		4,851,195			4,784,082			4,782,260			4,581,732			4,527,137
Total stockholders’ equity		504,038			461,435			456,776			452,860			418,130
Tangible common equity*		433,940			390,694			384,782			391,462			355,957
Performance ratios
Return on average assets (ROAA) annualized		1.52	%		0.91	%		1.10	%		(2.29	)%		0.97	%
Adjusted operating return on average assets (ROAA)*		1.54	%		1.18	%		1.25	%		0.97	%		0.97	%
Return on average equity (ROAE) annualized		16.27	%		10.35	%		12.29	%		(26.53	)%		11.49	%
Return on average equity before income tax and provision for loan losses*		20.50	%		14.63	%		16.39	%		(36.51	)%		14.43	%
Return on average tangible common equity (ROATCE) annualized*		19.92	%		13.31	%		14.96	%		(30.39	)%		14.18	%
Yield on loans annualized		7.11	%		7.15	%		6.85	%		6.62	%		6.67	%
Cost of interest-bearing deposits annualized		2.85	%		2.78	%		2.77	%		2.58	%		2.40	%
Cost of total deposits		2.20	%		2.14	%		2.16	%		1.98	%		1.84	%
Net interest margin annualized		3.87	%		3.94	%		3.75	%		3.49	%		3.51	%
Efficiency ratio*		54.70	%		66.03	%		65.16	%		74.35	%		68.83	%
Non-interest income / average assets annualized		0.71	%		0.69	%		0.92	%		(3.52	)%		0.69	%
Non-interest expense / average assets annualized		2.32	%		3.01	%		2.90	%		2.84	%		2.69	%
Capital Ratios
Tier 1 Leverage Ratio		9.55	%		9.14	%		9.10	%		9.46	%		9.77	%
Common Equity Tier 1 Capital Ratio		11.37	%		11.12	%		11.14	%		11.74	%		12.65	%
Tier 1 Risk Based Capital Ratio		11.94	%		11.70	%		11.73	%		12.36	%		13.27	%
Total Risk Based Capital Ratio		14.78	%		14.61	%		14.71	%		15.48	%		16.42	%
Equity / Assets		9.41	%		8.80	%		8.72	%		8.99	%		8.46	%
Tangible common equity to tangible assets*		8.21	%		7.55	%		7.45	%		7.87	%		7.29	%
Dividend payout ratio		11.74	%		15.79	%		13.31	%		(6.65	)%		15.13	%
Book value per share	$	32.97		$	30.36		$	29.80		$	29.35		$	27.13
Tangible common book value per share*	$	28.38		$	25.70		$	25.10		$	25.37		$	23.09
Tangible common book value per diluted share*	$	28.00		$	25.44		$	24.87		$	25.05		$	22.96

* 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.

Overview

We are a 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

71 full-service banking sites located in Arkansas, Kansas, Missouri, and Oklahoma. As of September 30, 2024, we had consolidated total assets of $5.36 billion, total loans held for investment, net of allowance, of $3.56 billion, total deposits of $4.36 billion, and total stockholders’ equity of $504.0 million. During the three and nine month periods ended September 30, 2024, the Company had net income of $19.9 million and $45.6 million. The Company had net income of $12.3 million and $36.1 million for the three and nine month periods ended September 30, 2023.

Critical Accounting Policies

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, 2023, audited financial statements included in our Annual Report on Form 10-K filed with the SEC on March 7, 2024. The preparation of our financial statements in accordance with GAAP requires management to make a number of judgments 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 judgment are described below.

Allowance for Credit Losses: The allowance for credit losses represents management’s estimate of all expected credit losses over the expected life of our loan portfolio. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The level of the allowance is based upon management’s evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay a loan (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, industry and peer bank loan quality indications, and other pertinent factors, including regulatory recommendations. The level of the allowance for credit losses maintained by management is believed adequate to absorb all expected future losses inherent in the loan portfolio at the balance sheet date; however, determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. The 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, 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 September 30, 2024. 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. 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, 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 September 30, 2024, management conducted the quarterly qualitative assessment and has determined there was 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 judgment.

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

Results of Operations

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 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.

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 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 circumstances and 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 and real estate sectors within these markets.

Net Income

Three months ended September 30, 2024, compared with three months ended September 30, 2023: Net income allocable to common stockholders for the three months ended September 30, 2024, was $19.9 million, or $1.28 diluted earnings per share as compared to $12.3 million, or $0.80 diluted earnings per share for the three months ended September 30, 2023, an increase of $7.5 million. The increase was largely due to an increase in net interest income of $5.0 million, a gain on disposition in other real estate owned of $8.5 million, offset by an increase in other non-interest expense of $3.9 million and an increase in the provision for Income taxes of $2.1 million.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: Net income allocable to common stockholders for the nine months ended September 30, 2024, was $45.6 million, or $2.95 diluted earnings per share as compared to $36.1 million, or $2.30 diluted earnings per share for the nine months ended September 30, 2023, an increase of $9.5 million. The increase was largely due to an increase in net interest income of $17.1 million, an increase in non-interest income of $5.7 million, a gain on disposition in other real estate owned of $8.5 million, offset by an increase in other non-interest expense of $14.2 million, an increase in the provision for loan losses of $1.3 million and an increase in the provision for income taxes of $4.3 million.

Net Interest Income and Net Interest Margin Analysis

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 September 30, 2024, compared with three months ended September 30, 2023: 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 September 30, 2024, and 2023. 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 Three Months Ended September 30,
	2024							2023
(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	$	659,697	$	13,213		7.97	%	$	573,039	$	10,984		7.60	%
Commercial real estate		1,351,407		24,196		7.12	%		1,253,362		20,824		6.59	%
Real estate construction		442,857		9,732		8.74	%		480,355		9,838		8.13	%
Residential real estate		578,702		6,912		4.75	%		564,138		6,085		4.28	%
Agricultural real estate		251,595		4,365		6.90	%		203,399		3,898		7.60	%
Agricultural		91,500		1,906		8.29	%		99,773		1,856		7.38	%
Consumer		100,127		1,765		7.01	%		107,417		1,667		6.16	%
Total loans		3,475,885		62,089		7.11	%		3,281,483		55,152		6.67	%
Taxable securities		995,713		9,809		3.92	%		1,027,889		5,696		2.20	%
Nontaxable securities		60,120		400		2.65	%		58,016		369		2.52	%
Total Securities		1,055,833		10,209		3.85	%		1,085,905		6,065		2.22	%
Federal funds sold and other		200,209		2,667		5.30	%		267,996		3,822		5.66	%
Total interest-earning assets		4,731,927		74,965		6.30	%		4,635,384		65,039		5.57	%
Non-interest-earning assets:
Other real estate owned, net		2,992							4,206
Premises and equipment, net		115,441							108,869
Bank-owned life insurance		130,817							123,790
Goodwill, core deposit and other intangibles, net		70,824							62,635
Other non-interest-earning assets		153,016							111,295
Total assets	$	5,205,017						$	5,046,179
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,090,604		7,348		2.68	%	$	1,014,956		6,223		2.43	%
Savings and money market		1,465,312		9,136		2.48	%		1,408,424		7,108		2.00	%
Demand, savings and money market		2,555,916		16,484		2.57	%		2,423,380		13,331		2.18	%
Certificates of deposit		753,286		7,195		3.80	%		782,920		6,043		3.06	%
Total interest-bearing deposits		3,309,202		23,679		2.85	%		3,206,300		19,374		2.40	%
FHLB term and line of credit advances		252,751		3,089		4.86	%		100,000		968		3.84	%
Subordinated debt		97,262		1,905		7.79	%		96,712		1,893		7.77	%
Federal Reserve Bank borrowings		11		—		0.00	%		140,000		1,546		4.38	%
Other borrowings		45,166		261		2.30	%		48,413		246		2.02	%
Total interest-bearing liabilities		3,704,392		28,934		3.11	%		3,591,425		24,027		2.65	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		966,222							971,032
Non-interest-bearing liabilities		48,935							57,462
Stockholders’ equity		485,468							426,260
Total liabilities and stockholders’ equity	$	5,205,017						$	5,046,179
Net interest income			$	46,031						$	41,012
Interest rate spread						3.19	%						2.92	%
Net interest margin(2)						3.87	%						3.51	%
Total cost of deposits, including non-interest bearing deposits	$	4,275,424	$	23,679		2.20	%	$	4,177,332	$	19,374		1.84	%
Average interest-earning assets to interest-bearing liabilities						127.74	%						129.07	%

(1)

Average loan balances include nonaccrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earnings assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

Actual un-rounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

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 September 30, 2024, and 2023.

Analysis of Changes in Net Interest Income

For the Three Months Ended September 30, 2024, and 2023


	Increase (Decrease) Due to:						Total Increase /
(Dollars in thousands)	Volume(1)			Yield/Rate(1)			(Decrease)
Interest-earning assets:
Loans
Commercial and industrial	$	1,719		$	510		$	2,229
Commercial real estate		1,692			1,680			3,372
Real estate construction		(797	)		691			(106	)
Residential real estate		160			667			827
Agricultural real estate		861			(394	)		467
Agricultural		(161	)		211			50
Consumer		(117	)		215			98
Total loans		3,357			3,580			6,937
Taxable securities		(183	)		4,296			4,113
Nontaxable securities		13			18			31
Total securities		(170	)		4,314			4,144
Federal funds sold and other		(917	)		(238	)		(1,155	)
Total interest-earning assets		2,270			7,656			9,926
Interest-bearing liabilities:
Interest-bearing demand deposits		484			641			1,125
Savings and money market		296			1,732			2,028
Demand, savings and money market		780			2,373			3,153
Certificates of deposit		(236	)		1,388			1,152
Total interest-bearing deposits		544			3,761			4,305
FHLB term and line of credit advances		1,811			310			2,121
Subordinated debt		11			1			12
Federal Reserve Bank borrowings		(1,861	)		315			(1,546	)
Other borrowings		(18	)		33			15
Total interest-bearing liabilities		487			4,420			4,907
Net Interest Income	$	1,783		$	3,236		$	5,019

(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 increased $9.9 million for the quarter ended September 30, 2024, as compared to the quarter ended September 30, 2023. Of this increase, $7.7 million is attributable to increases in average asset rate/yield. Realized rate increases were attributable to the higher coupons on loan production, purchase accounting accretion, as well as the Company's re-positioning of its investment portfolio in the fourth quarter of 2023. Rate increases were complemented by higher earning asset volume, accounting for the remaining $2.3 million in period over period growth.

The increase in interest expense of $4.9 million was due to the deposit portfolio repricing as market interest rates remained well above our historic cost of deposits as well as increased utilization of our FHLB borrowing line.

During the quarter ended September 30, 2024, when compared to the quarter ended September 30, 2023, net interest margin increased 36 basis points and net interest spread increased by 27 basis points to 3.19% from 2.92%. The increase in both is primarily due to the increase in yield on interest-earning assets, which outpaced the increases in the cost of interest-bearing liabilities.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: 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 nine months ended September 30, 2024, and 2023. 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 Nine Months Ended September 30,
	2024							2023
(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	$	643,213	$	38,408		7.98	%	$	580,359	$	31,503		7.26	%
Commercial real estate		1,400,385		73,339		7.00	%		1,300,202		61,811		6.36	%
Real estate construction		400,317		26,350		8.79	%		450,147		24,764		7.36	%
Residential real estate		579,818		19,935		4.59	%		567,169		17,933		4.23	%
Agricultural real estate		218,334		11,777		7.21	%		202,963		10,399		6.85	%
Agricultural		116,520		7,398		8.48	%		100,450		5,039		6.71	%
Consumer		104,098		5,229		6.71	%		106,841		4,832		6.05	%
Total loans		3,462,685		182,436		7.04	%		3,308,131		156,281		6.32	%
Taxable securities		1,004,367		29,862		3.97	%		1,059,858		17,456		2.20	%
Nontaxable securities		60,903		1,192		2.62	%		82,230		1,606		2.61	%
Total securities		1,065,270		31,054		3.89	%		1,142,088		19,062		2.23	%
Federal funds sold and other		211,961		8,374		5.28	%		191,585		7,075		4.94	%
Total interest-earning assets		4,739,916		221,864		6.25	%		4,641,804		182,418		5.25	%
Non-interest-earning assets:
Other real estate owned, net		2,187							4,226
Premises and equipment, net		115,801							105,980
Bank-owned life insurance		128,209							123,409
Goodwill, core deposit and other intangibles, net		68,160							63,505
Other non-interest-earning assets		130,530							96,434
Total assets	$	5,184,803						$	5,035,358
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,087,488		22,134		2.72	%	$	1,021,163		16,651		2.18	%
Savings and money market		1,448,364		25,956		2.39	%		1,344,809		15,637		1.55	%
Demand, savings and money market		2,535,852		48,090		2.53	%		2,365,972		32,288		1.82	%
Certificates of deposit		765,800		21,106		3.68	%		856,862		18,111		2.83	%
Total interest-bearing deposits		3,301,652		69,196		2.80	%		3,222,834		50,399		2.09	%
FHLB term and line of credit advances		223,132		8,022		4.80	%		97,014		2,939		4.05	%
Subordinated debt		97,125		5,703		7.84	%		96,584		5,687		7.87	%
Federal Reserve Bank borrowings		41,391		1,361		4.39	%		97,952		3,209		4.38	%
Other borrowings		50,136		893		2.39	%		48,471		633		1.75	%
Total interest-bearing liabilities		3,713,436		85,175		3.06	%		3,562,855		62,867		2.36	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		958,786							997,165
Non-interest-bearing liabilities		45,513							51,443
Stockholders’ equity		467,068							423,895
Total liabilities and stockholders’ equity	$	5,184,803						$	5,035,358
Net interest income			$	136,689						$	119,551
Interest rate spread						3.19	%						2.89	%
Net interest margin(2)						3.85	%						3.44	%
Total cost of deposits, including non-interest bearing deposits	$	4,260,438	$	69,196		2.17	%	$	4,219,999	$	50,399		1.60	%
Average interest-earning assets to interest-bearing liabilities						127.64	%						130.28	%

(1)

Average loan balances include nonaccrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earnings assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

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 nine month periods ended September 30, 2024, and 2023.

Analysis of Changes in Net Interest Income

For the Nine Months Ended September 30, 2024, and 2023


	Increase (Decrease) Due to:						Total Increase /
(Dollars in thousands)	Volume(1)			Yield/Rate(1)			(Decrease)
Interest-earning assets:
Loans
Commercial and industrial	$	3,590		$	3,315		$	6,905
Commercial real estate		4,972			6,556			11,528
Real estate construction		(2,935	)		4,521			1,586
Residential real estate		407			1,595			2,002
Agricultural real estate		812			566			1,378
Agricultural		887			1,472			2,359
Consumer		(127	)		524			397
Total loans		7,606			18,549			26,155
Taxable securities		(959	)		13,365			12,406
Nontaxable securities		(418	)		4			(414	)
Total securities		(1,377	)		13,369			11,992
Federal funds sold and other		784			515			1,299
Total interest-earning assets		7,013			32,433			39,446
Interest-bearing liabilities:
Interest-bearing demand deposits		1,137			4,346			5,483
Savings and money market		1,285			9,034			10,319
Demand, savings and money market		2,422			13,380			15,802
Certificates of deposit		(2,077	)		5,072			2,995
Total interest-bearing deposits		345			18,452			18,797
FHLB term and line of credit advances		4,445			638			5,083
Subordinated debt		32			(16	)		16
Federal Reserve Bank borrowings		(1,860	)		12			(1,848	)
Other borrowings		22			238			260
Total interest-bearing liabilities		2,984			19,324			22,308
Net Interest Income	$	4,029		$	13,109		$	17,138

(1)

Interest income on interest-earning assets increased $39.4 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. Of this increase, $32.4 million is attributable to increases in earning asset yields. Yield on loans increased by 72 basis points, driven by continued repricing in a higher interest rate environment as well as the purchase accounting accretion following the Rockhold and KansasLand mergers. Investment yields contributed a comparative improvement of $13.4 million, primarily attributable to the Company's strategic repositioning in the fourth quarter of 2023. Earning asset volume generated a comparative increase of $7.0 million, driven by the addition of assets through the Rockhold and KansasLand mergers.

There was an increase in interest expense on Total interest-bearing deposits of $22.3 million due to the deposit portfolio repricing as market interest rates remained well above our historic cost of deposits as well as increased utilization of our FHLB borrowing line.

When compared to the nine months ended September 30, 2023, net interest margin increased 41 basis points during the nine months ended September 30, 2024, while net interest spread increased by 30 basis points to 3.19% from 2.89%. The increase in both can be attributed to an increase in the rate/yield earned on interest-earning assets and to a lesser extent the increase in volume of interest earning assets, offset by an increase in the cost of interest-bearing liabilities portfolio and utilization level of our FHLB line.

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 prospective economic conditions over the next 12 months, considered the Company’s reasonable and supportable forecast period. As these factors change, the amount of the credit loss provision changes.

Three months ended September 30, 2024, compared with three months ended September 30, 2023: During the three months ended September 30, 2024 and 2003, there was a provision for credit losses of $1.2 million. The provision for the three months ended is primarily attributable to the establishment of reserves on non-PCD loans acquired in the KansasLand acquisitions and loan growth. The Company continues to estimate the allowance for credit losses with assumptions that anticipate slower prepayment rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. Net charge-offs for the three months ended September 30, 2024 and 2023, were $1.6 million, respectively. For the three months ended September 30, 2024, gross charge-offs were $1.8 million, offset by gross recoveries of $197 thousand. In comparison, gross charge-offs were $1.7 million for the three months ended September 30, 2023, offset by gross recoveries of $65 thousand.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: During the nine months ended September 30, 2024, there was a provision for credit losses of $2.4 million compared to a provision for credit losses of $1.2 million during the nine months ended September 30, 2023. The change in provision is primarily attributable to the establishment of reserves on non-PCD loans acquired in the Rockhold and KansasLand acquisitions and loan growth. Net charge-offs for the nine months ended September 30, 2024, were $3.5 million compared to net charge-offs of $2.8 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, gross charge-offs were $4.0 million, offset by gross recoveries of $564 thousand. In comparison, gross charge-offs were $3.4 million for the nine months ended September 30, 2023, offset by gross recoveries of $536 thousand.

Non-Interest Income

The primary sources of non-interest income are service charges and fees, debit card income, mortgage banking income, trust 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 September 30, 2024, compared with three months ended September 30, 2023: The following table provides a comparison of the major components of non-interest income for the three months ended September 30, 2024, and 2023.

Non-Interest Income

For the Three Months Ended September 30,


						2024 vs. 2023
(Dollars in thousands)	2024		2023			Change			%
Service charges and fees	$	2,424	$	2,690		$	(266	)		(9.9	)%
Debit card income		2,665		2,591			74			2.9	%
Mortgage banking		287		226			61			27.0	%
Increase in value of bank-owned life insurance		1,344		794			550			69.3	%
Other
Investment referral income		109		101			8			7.9	%
Trust income		412		291			121			41.6	%
Insurance sales commissions		166		264			(98	)		(37.1	)%
Recovery on zero-basis purchased loans		5		2			3			150.0	%
Income (loss) from equity method investments		—		(56	)		56			(100.0	)%
Other non-interest income		868		1,833			(965	)		(52.6	)%
Total other		1,560		2,435			(875	)		(35.9	)%
Subtotal		8,280		8,736			(456	)		(5.2	)%
Net gain (loss) on acquisition and branch sales		831		—			831			100.0	%
Net gain (loss) from securities transactions		206		(1	)		207			(20700.0	)%
Total non-interest income	$	9,317	$	8,735		$	582			6.7	%

Total non-interest income increased $582 thousand during the three months ended September 30, 2024, as compared to the same period in 2023. The increase is largely attributable to a gain on the acquisition of KansasLand, an increase in bank owned life insurance as well as a decrease in losses on securities transactions, offset by a decrease in other non-interest income.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: The following table provides a comparison of the major components of non-interest income for the nine months ended September 30, 2024, and 2023

Non-Interest Income

For the Nine Months Ended September 30,


							2024 vs. 2023
(Dollars in thousands)	2024			2023			Change			%
Service charges and fees	$	7,534		$	7,888		$	(354	)		(4.5	)%
Debit card income		7,733			7,798			(65	)		(0.8	)%
Mortgage banking		720			527			193			36.6	%
Increase in value of bank-owned life insurance		3,083			3,134			(51	)		(1.6	)%
Other
Investment referral income		395			307			88			28.7	%
Trust income		1,115			799			316			39.5	%
Insurance sales commissions		309			405			(96	)		(23.7	)%
Recovery on zero-basis purchased loans		4,378			515			3,863			750.1	%
Income from equity method investments		(87	)		(167	)		80			(47.9	)%
Other non-interest income		2,473			4,370			(1,897	)		(43.4	)%
Total other		8,583			6,229			2,354			37.8	%
Subtotal		27,653			25,576			2,077			8.1	%
Net gain (loss) on acquisition and branch sales		2,131			—			2,131			(100.0	)%
Net gain (loss) from securities transactions		222			(1,291	)		1,513			(117.2	)%
Total non-interest income	$	30,006		$	24,285		$	5,721			23.6	%

Total non-interest income increased $5.7 million during the nine months ended September 30, 2024, as compared to the same period in 2023. The increase is largely attributable to increases in recovery on zero-basis purchased loans, net gain on the Rockhold and KansasLand mergers, the lack of realized losses on securities transactions offset by a decrease in other non-interest income.

Non-Interest Expense

Three months ended September 30, 2024, compared with three months ended September 30, 2023: For the three months ended September 30, 2024, non-interest expense totaled $30.3 million, a decrease of $3.9 million, when compared to the three months ended September 30, 2023. Changes in the various components of non-interest expense for the three months ended September 30, 2024, and 2023, are discussed in more detail in the following table.

Non-Interest Expense

For the Three Months Ended September 30,


						2024 vs. 2023
(Dollars in thousands)	2024			2023		Change			%
Salaries and employee benefits	$	18,494		$	15,857	$	2,637			16.6	%
Net occupancy and equipment		3,478			3,262		216			6.6	%
Data processing		5,152			4,553		599			13.2	%
Professional fees		1,487			1,312		175			13.3	%
Advertising and business development		1,368			1,419		(51	)		(3.6	)%
Telecommunications		660			502		158			31.5	%
FDIC insurance		660			660		—			—	%
Courier and postage		686			548		138			25.2	%
Free nationwide ATM cost		544			516		28			5.4	%
Amortization of core deposit intangible		1,112			799		313			39.2	%
Loan expense		143			132		11			8.3	%
Other real estate owned		(7,719	)		128		(7,847	)		(6130.5	)%
Other		3,645			4,556		(911	)		(20.0	)%
Subtotal		29,710			34,244		(4,534	)		(13.2	)%
Merger expenses		618			—		618			(100.0	)%
Total non-interest expense	$	30,328		$	34,244	$	(3,916	)		(11.4	)%

Salaries and employee benefits: There was an increase in salaries and employee benefits of $2.6 million for the period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to increases in employee salaries, incentive compensation and employee benefits. The increase in employee salaries and wages was partially due to additional payroll costs from the Rockhold and KansasLand mergers.

Data processing: There was an increase in data processing costs of $599 thousand for the period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to the renewal of software licenses.

Other real estate owned: The gain on disposition of other real estate owned resulted in a gain of $8.5 million. Excluding the one-time gain, other real estate owned increased by $653 thousand for the period ended September 30, 2024, as compared to the same period in 2023 due to the write-down of a previous bank location.

Amortization of core deposit intangible: Amortization of core deposit intangibles cost increased $313 thousand for the period ended September 30, 2024, as compared to the same period in 2023. The increase is due to additional amortization from the Rockhold and KansasLand mergers.

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. The primary driver of the decline from the comparative period is the maturing of legacy tax investments without comparative replacement. New solar tax investments now comply with PAM and no longer impact non-interest expense.

Merger expenses: To facilitate the KansasLand merger the Company realized expense of $618 thousand for the period ended September 30, 2024. No transactions were in process for the comparative period in 2023.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: For the nine months ended September 30, 2024, non-interest expense totaled $106.4 million, an increase of $5.7 million, when compared to the nine months ended September 30, 2023. Changes in the various components of non-interest expense for the nine months ended September 30, 2024, and 2023, are discussed in more detail in the following table.

Non-Interest Expense

For the Nine Months Ended September 30,


						2024 vs. 2023
(Dollars in thousands)	2024			2023		Change			%
Salaries and employee benefits	$	54,418		$	47,786	$	6,632			13.9	%
Net occupancy and equipment		10,800			9,081		1,719			18.9	%
Data processing		15,016			12,962		2,054			15.8	%
Professional fees		4,657			4,341		316			7.3	%
Advertising and business development		3,897			3,827		70			1.8	%
Telecommunications		1,887			1,503		384			25.5	%
FDIC insurance		1,821			1,535		286			18.6	%
Courier and postage		1,912			1,469		443			30.2	%
Free nationwide ATM cost		1,569			1,565		4			0.3	%
Amortization of core deposit intangibles		3,229			2,635		594			22.5	%
Loan expense		447			385		62			16.1	%
Other real estate owned		(7,786	)		318		(8,104	)		(2548.4	)%
Other		10,023			13,196		(3,173	)		(24.0	)%
Sub-Total		101,890			100,603		1,287			1.3	%
Merger expenses		4,461			—		4,461			(100.0	)%
Total non-interest expense	$	106,351		$	100,603	$	5,748			5.7	%

Salaries and employee benefits: There was an increase in salaries and employee benefits of $6.6 million for the period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to increases in employee salaries and incentive compensation. The increase in employee salaries and wages was partially due to additional payroll costs from the Rockhold and KansasLand mergers as well as additional staff added during the year. The increase in incentive compensation is partially due to the reversal of stock base compensation expense due to the departure of several senior management members in 2023.

Net occupancy and equipment: There was an increase in net occupancy and equipment costs of $1.7 million for the period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to increases in repairs and maintenance expense, depreciation expense and utilities expense partially attributable to current year merger transactions.

Data processing: There was an increase in data processing costs of $2.1 million for the period ended September 30, 2024, as compared to the same period in 2023. The increase is primarily due to the renewal of software licenses.

Amortization of core deposit intangible: Amortization of core deposit intangibles cost increased $594 thousand for the period ended September 30, 2024, as compared to the same period in 2023. The increase is due to additional amortization from the Rockhold and KansasLand mergers.

Other real estate owned: The gain on disposition of other real estate owned resulted in a gain of $8.5 million. Excluding the one-time gain, Other real estate owned increased by $396 thousand for the period ended September 30, 2024, as compared to the same period in 2023.

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, provision for unfunded commitments and the maturing of legacy tax investments without comparative replacement. New solar tax investments now comply with PAM and no longer impact non-interest expense.

Merger expenses: To facilitate the Rockhold and KansasLand mergers the Company realized expense of $4.5 million for the period ended September 30, 2024.

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 merger expenses, by the sum of net interest income and non-interest income, excluding 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 54.7% for the three months ended September 30, 2024, compared with 68.8% for the three months ended September 30, 2023. The improvement was primarily due to the reduced non-interest expense from the gain on disposition of other real estate owned. Excluding the gain on disposition of other real estate owned, the efficiency ratio was 70.4% for the three months ended September 30, 2024, compared with 68.8% for the three months ended September 30, 2023.

The efficiency ratio was 62.0% for the nine months ended September 30, 2024, compared with 69.3% for the nine months ended September 30, 2023. The improvement was primarily due to the reduced non-interest expense from the gain on disposition of other real estate owned. Excluding the gain on disposition of other real estate owned, the efficiency ratio was 67.2% for the three months ended September 30, 2024, compared with 69.3% for the three months ended September 30, 2023.

Income Taxes

In general, the Company records income tax expense each quarter based on its estimate of 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 September 30, 2024, compared with three months ended September 30, 2023: The effective income tax rate for the three month period ended September 30, 2024, was 16.7% as compared to 13.5% for the three month period ended September 30, 2023. The increase in rate for the quarter ended September 30, 2024, was primarily attributable to an $11.5 million tax gain and related penalty recognized due to the surrender of BOLI in the second quarter of 2024 offset by the reversal of a deferred tax asset valuation allowance for the expected current and future utilization of state net operating loss carryforwards. In addition, there was a comparative reduction in the recognition of tax benefit related to solar tax investments recognized under the hypothetical liquidation book value, partially offset by a new solar tax investment entered into in the second quarter of 2024 which qualifies for the proportional amortization method.

Nine months ended September 30, 2024, compared with nine months ended September 30, 2023: The effective income tax rate for the nine month period ended September 30, 2024, was 21.2% as compared to 14.1% for the nine month period ended September 30, 2023. See drivers of change in the section above.

Financial Condition

Total assets increased $320.6 million from December 31, 2023, to $5.36 billion at September 30, 2024. This variance was primarily due to an increase in loans held for investment of $268.0 million, a increase in available for sale securities of 121.4 million, partially offset by a decrease in cash and cash equivalents of $143.6 million. Total liabilities increased $269.5 million to $4.85 billion at September 30, 2024. The change in total liabilities is mostly due to increases in total deposits of $217.5 million and Federal Home Loan bank advances of $196.0 million, partially offset by a decrease in Federal Reserve Bank borrowings of $140.0 million. Total stockholders’ equity increased $51.2 million from $452.9 million at December 31, 2023, to $504.0 million at September 30, 2024, principally due to net income for the nine months ended September 30, 2024 and a decrease in unrealized losses on available for sale securities, net of tax, offset by the increase in treasury stock.

Loan Portfolio

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

Composition of Loan Portfolio


	September 30, 2024					December 31, 2023
	Amount		Percent			Amount		Percent			Change			%
	(Dollars in thousands)
Commercial and industrial	$	670,665		18.6	%	$	598,327		17.9	%	$	72,338			12.1	%
Real estate loans:
Commercial real estate		1,916,863		53.2	%		1,759,855		52.8	%		157,008			8.9	%
Residential real estate		567,063		15.8	%		556,328		16.7	%		10,735			1.9	%
Agricultural real estate		259,587		7.2	%		196,114		5.9	%		63,473			32.4	%
Total real estate loans		2,743,513		76.2	%		2,512,297		75.4	%		231,216			9.2	%
Agricultural		89,529		2.5	%		118,587		3.6	%		(29,058	)		(24.5	)%
Consumer		97,218		2.7	%		103,690		3.1	%		(6,472	)		(6.2	)%
Total loans held for investment	$	3,600,925		100.0	%	$	3,332,901		100.0	%	$	268,024			8.0	%
Total loans held for sale	$	901		100.0	%	$	476		100.0	%	$	425			89.3	%
Total loans held for investment (net of allowances)	$	3,557,435		100.0	%	$	3,289,381		100.0	%	$	268,054			8.1	%

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. The majority of our 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 September 30, 2024, gross total loans, including loans held for sale, were 82.6% of deposits and 67.3% of total assets. At December 31, 2023, gross total loans, including loans held for sale, were 80.4% of deposits and 66.4% 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 September 30, 2024, are summarized in the following table.

Loan Maturity and Sensitivity to Changes in Interest Rates


	As of September 30, 2024
	One year or less		After one year through five years		After five years through fifteen years		After fifteen years		Total
	(Dollars in thousands)
Commercial and industrial	$	216,385	$	368,214	$	83,224	$	2,842	$	670,665
Real Estate:
Commercial real estate		529,295		1,054,284		235,591		97,693		1,916,863
Residential real estate		2,867		11,607		128,237		424,352		567,063
Agricultural real estate		118,007		72,157		33,295		36,128		259,587
Total real estate		650,169		1,138,048		397,123		558,173		2,743,513
Agricultural		61,777		20,352		3,022		4,378		89,529
Consumer		34,632		48,849		11,725		2,012		97,218
Total	$	962,963	$	1,575,463	$	495,094	$	567,405	$	3,600,925
Loans with a predetermined fixed interest rate	$	387,410	$	572,001	$	116,153	$	261,964	$	1,337,528
Loans with an adjustable/floating interest rate		575,553		1,003,462		378,941		305,441		2,263,397
Total	$	962,963	$	1,575,463	$	495,094	$	567,405	$	3,600,925

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, 2023, are summarized in the following table.

Loan Maturity and Sensitivity to Changes in Interest Rates


	As of December 31, 2023
	One year or less		After one year through five years		After five years through fifteen years		After fifteen years		Total
	(Dollars in thousands)
Commercial and industrial	$	171,879	$	345,693	$	77,886	$	2,869	$	598,327
Real Estate:
Commercial real estate		369,311		1,063,226		247,300		80,018		1,759,855
Residential real estate		1,447		10,091		128,077		416,713		556,328
Agricultural real estate		73,882		84,802		27,559		9,871		196,114
Total real estate		444,640		1,158,119		402,936		506,602		2,512,297
Agricultural		80,659		30,948		2,851		4,129		118,587
Consumer		31,832		50,779		19,077		2,002		103,690
Total	$	729,010	$	1,585,539	$	502,750	$	515,602	$	3,332,901
Loans with a predetermined fixed interest rate	$	289,816	$	685,903	$	127,602	$	273,488	$	1,376,809
Loans with an adjustable/floating interest rate		439,194		899,636		375,148		242,114		1,956,092
Total	$	729,010	$	1,585,539	$	502,750	$	515,602	$	3,332,901

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


	September 30, 2024			December 31, 2023
	(Dollars in thousands)
Nonaccrual loans	$	31,278		$	25,026
Accruing loans 90 or more days past due		206			279
OREO acquired through foreclosure, net		645			772
Other repossessed assets		242			380
Total nonperforming assets	$	32,371		$	26,457
Ratios:
Nonperforming assets to total assets		0.60	%		0.53	%
Nonperforming assets to total loans plus OREO and repossessed assets		0.90	%		0.79	%

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 September 30, 2024, consisted of 285 separate credits and 232 separate borrowers. We had 5 non-performing loan relationships, totaling $12.4 million, with an outstanding balance in excess of $1.0 million as of September 30, 2024.

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 September 30, 2024, the Company had $14.2 million in potential problem loans which were not included in either non-accrual or 90 days past due categories, compared to $11.1 million at December 31, 2023.

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.

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)
September 30, 2024	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	15,236		$	15,809		$	7,720		$	2,535		$	522		$	1,668		$	43,490
Total loans outstanding (1)		1,916,863			670,665			567,063			259,587			89,529			97,218			3,600,925
Net (charge-offs) recoveries QTD		7			(854	)		(330	)		(9	)		21			(419	)		(1,584	)
Net (charge-offs) recoveries YTD		19			(2,500	)		(344	)		(8	)		(5	)		(640	)		(3,478	)
Average loan balance QTD (1)		659,697			1,794,264			576,722			251,595			91,500			100,127			3,473,905
Average loan balance YTD (1)		643,213			1,800,702			578,364			218,334			116,520			104,098			3,461,231
Non-accrual loan balance		8,781			9,772			4,594			7,017			538			576			31,278
Loans to total loans outstanding		53.2	%		18.6	%		15.7	%		7.2	%		2.5	%		2.7	%		100.0	%
ACL to total loans		0.8	%		2.4	%		1.4	%		1.0	%		0.6	%		1.7	%		1.2	%
Net charge-offs to average loans QTD		—	%		—	%		(0.1	)%		—	%		—	%		(0.4	)%		—	%
Net charge-offs to average loans YTD		—	%		(0.1	)%		(0.1	)%		—	%		—	%		(0.6	)%		(0.1	)%
Non-accrual loans to total loans		0.5	%		1.5	%		0.8	%		2.7	%		0.6	%		0.6	%		0.9	%
ACL to non-accrual loans		173.5	%		161.8	%		168.0	%		36.1	%		97.0	%		289.6	%		139.0	%


September 30, 2023	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Agricultural			Consumer			Total
Allowance for credit losses (ACL)	$	13,696		$	18,960		$	7,336		$	1,200		$	1,324		$	1,670		$	44,186
Total loans outstanding (1)		1,721,761			585,129			558,188			205,865			103,352			107,823			3,282,118
Net (charge-offs) recoveries QTD		(2	)		(1,397	)		2			(3	)		—			(188	)		(1,588	)
Net (charge-offs) recoveries YTD		65			(2,421	)		3			—			47			(517	)		(2,823	)
Average loan balance QTD (1)		1,733,717			573,039			563,081			203,399			99,773			107,417			3,280,426
Average loan balance YTD (1)		1,750,349			580,359			566,080			202,963			100,450			106,841			3,307,042
Non-accrual loan balance		3,087			5,619			3,124			4,364			2,585			656			19,435
Loans to total loans outstanding		52.5	%		17.8	%		17.0	%		6.3	%		3.1	%		3.3	%		100.0	%
ACL to total loans		0.8	%		3.2	%		1.3	%		0.6	%		1.3	%		1.5	%		1.3	%
Net charge-offs to average loans QTD		—	%		(0.2	)%		—	%		—	%		—	%		(0.2	)%		—	%
Net charge-offs to average loans YTD		—	%		(0.4	)%		—	%		—	%		—	%		(0.5	)%		(0.1	)%
Non-accrual loans to total loans		0.2	%		1.0	%		0.6	%		2.1	%		2.5	%		0.6	%		0.6	%
ACL to non-accrual loans		443.7	%		337.4	%		234.8	%		27.5	%		51.2	%		254.6	%		227.4	%

(1)

Excluding loans held for sale.

Management believes that the allowance for credit losses at September 30, 2024, 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 September 30, 2024.

The allowance for credit losses on loans measured on a collective basis totaled $37.8 million, or 1.1% of the $3.57 billion in loans measured on a collective basis at September 30, 2024, compared to an allowance for credit losses of $38.8 million, or 1.2%, of the $3.30 billion in loans measured on a collective basis at December 31, 2023. The total reserve percentage to total loans was 1.2% at September 30, 2024, and 1.3% at December 31, 2023.

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 September 30, 2024, securities represented 19.5% of total assets, slightly increasing from 18.3% at December 31, 2023.

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 that are classified as held-to-maturity are 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 that are not classified as held-to-maturity are classified as available-for-sale and are 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


	September 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
U.S. Government-sponsored entities	$	79,529	$	75,190	$	39,103	$	33,087
U.S. Treasury securities		85,068		85,145		89,999		89,256
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		626,955		606,726		560,674		529,143
Private label residential mortgage-backed securities		148,117		130,403		161,174		137,841
Corporate		61,910		58,288		56,722		49,683
Small Business Administration loan pools		6,792		6,561		8,066		7,727
State and political subdivisions		86,350		78,687		81,458		72,911
Total available-for-sale securities	$	1,094,721	$	1,041,000	$	997,196	$	919,648

Held-To-Maturity Securities


	September 30, 2024				December 31, 2023
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities	$	4,122	$	4,280	$	1,094	$	1,097
State and political subdivisions		1,286		1,330		1,115		1,153
Total held-to-maturity securities	$	5,408	$	5,610	$	2,209	$	2,250

At September 30, 2024, and December 31, 2023, 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 September 30, 2024, and December 31, 2023. 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 and held-to-maturity securities are shown at cost, adjusted for the amortization of premiums and the accretion of discounts.


	September 30, 2024
	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	$	13,304		5.02	%	$	25,968		4.46	%	$	34,056		1.85	%	$	1,862		2.02	%	$	75,190		3.31	%
U.S. Treasury securities		69,510		3.74	%		15,635		4.56	%		—		—	%		—		—	%		85,145		3.89	%
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		57,229		4.00	%		146,173		2.91	%		403,324		4.45	%		606,726		4.04	%
Private label residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		130,403		2.43	%		130,403		2.34	%
Corporate		600		4.25	%		11,151		7.27	%		46,537		4.82	%		—		—	%		58,288		5.28	%
Small Business Administration loan pools		—		—	%		—		—	%		4,568		5.63	%		1,993		2.17	%		6,561		4.58	%
State and political subdivisions(1)		3,644		2.72	%		10,848		2.37	%		33,117		2.06	%		31,078		2.49	%		78,687		2.30	%
Total available-for-sale securities		87,058		3.90	%		120,831		4.33	%		264,451		3.05	%		568,660		3.84	%		1,041,000		3.70	%
Held-to-maturity securities:
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		—		—	%		3,039		5.02	%		1,083		4.96	%		4,122		5.00	%
State and political subdivisions(1)		—		—	%		—		—	%		173		3.02	%		1,113		4.62	%		1,286		4.40	%
Total held-to-maturity securities		—		—	%		—		—	%		3,212		4.91	%		2,196		4.79	%		5,408		4.86	%
Total debt securities	$	87,058		3.90	%	$	120,831		4.33	%	$	267,663		3.07	%	$	570,856		3.85	%	$	1,046,408		3.71	%

(1)

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


	December 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	$	—		—	%	$	—		—	%	$	31,337		1.65	%	$	1,750		2.02	%	$	33,087		1.67	%
U.S. Treasury securities		69,843		5.39	%		19,413		1.18	%		—		—	%		—		—	%		89,256		4.47	%
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		40,978		3.78	%		137,929		2.62	%		350,236		4.26	%		529,143		3.80	%
Private label residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		137,841		2.27	%		137,841		2.27	%
Corporate		—		—	%		8,001		7.49	%		41,682		4.63	%		—		—	%		49,683		5.09	%
Small Business Administration loan pools		—		—	%		—		—	%		5,587		5.44	%		2,140		2.08	%		7,727		4.51	%
State and political subdivisions(1)		3,963		2.09	%		6,138		2.34	%		30,789		2.00	%		32,021		2.38	%		72,911		2.20	%
Total available-for-sale securities		73,806		5.21	%		74,530		3.38	%		247,324		2.82	%		523,988		3.60	%		919,648		3.51	%
Held-to-maturity securities:
Mortgage-backed securities
Government-sponsored residential mortgage-backed securities		—		—	%		—		—	%		—		—	%		1,094		4.93	%		1,094		4.93	%
State and political subdivisions(1)		—		—	%		—		—	%		—		—	%		1,115		4.62	%		1,115		4.62	%
Total held-to-maturity securities		—		—	%		—		—	%		—		—	%		2,209		4.77	%		2,209		4.77	%
Total debt securities	$	73,806		5.21	%	$	74,530		3.38	%	$	247,324		2.82	%	$	526,197		3.61	%	$	921,857		3.51	%

(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 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 September 30, 2024, and December 31, 2023, 72.2% and 73.2% of the residential mortgage-backed securities held by us had contractual final maturities of more than ten years, with a weighted average life of 4.6 years and 5.3 years and a modified duration of 3.9 years and 4.4 years.

Goodwill Impairment Assessment

At September 30, 2024, we performed an interim qualitative analysis and concluded there were no indications that goodwill was impaired. For additional information, see “Goodwill” under "Critical Accounting Policies" in the Management's Discussion and Analysis of Financial Condition and Results of Operation.

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 September 30, 2024, and December 31, 2023.

Composition of Deposits


	September 30, 2024					December 31, 2023
	Amount		Percent of Total			Amount		Percent of Total
	(Dollars in thousands)
Non-interest-bearing demand	$	967,858		22.2	%	$	898,129		21.7	%
Interest-bearing demand		997,228		22.9	%		998,822		24.1	%
Savings and money market		1,471,728		33.7	%		1,484,985		35.8	%
Time		926,130		21.2	%		763,519		18.4	%
Total deposits	$	4,362,944		100.0	%	$	4,145,455		100.0	%

Total deposits at September 30, 2024, were $4.36 billion, an increase of $217.5 million, or 5.2%, compared to total deposits of $4.15 billion at December 31, 2023.

The following tables show deposit acquired in 2024, as of the time of each acquisition.


	Rockhold Acquisition
	Amount		Percent of Total
	(Dollars in thousands)
Non-interest-bearing demand	$	97,593		27.9	%
Interest-bearing demand		124,760		35.7	%
Savings and money market		94,731		27.1	%
Time		32,693		9.3	%
Total deposits	$	349,777		100.0	%


	Kansasland Acquisition
	Amount		Percent of Total
	(Dollars in thousands)
Non-interest-bearing demand	$	6,439		15.2	%
Interest-bearing demand		5,011		11.8	%
Savings and money market		14,314		33.7	%
Time		16,654		39.3	%
Total deposits	$	42,418		100.0	%

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

The following table lists reciprocal and brokered deposits included in total deposits categorized by type at September 30, 2024, and December 31, 2023.


	September 30, 2024		December 31, 2023
Interest-bearing demand	(Dollars in thousands)
Reciprocal	$	341,132	$	382,614
Total interest-bearing demand		341,132		382,614
Savings and money market
Reciprocal		64,600		230,750
Total savings and money market		64,600		230,750
Time
Reciprocal		35,346		21,841
Non-reciprocal brokered		244,385		199,940
Total time		279,731		221,781
Total reciprocal and brokered deposits	$	685,463	$	835,145

The following table provides information on the maturity distribution of time deposits of $250 thousand or more as of September 30, 2024, and December 31, 2023.


	September 30, 2024		December 31, 2023		Change			%
	(Dollars in thousands)
3 months or less	$	56,062	$	65,449	$	(9,387	)		(14.3	)%
Over 3 through 6 months		65,289		94,459		(29,170	)		(30.9	)%
Over 6 through 12 months		138,492		18,082		120,410			665.9	%
Over 12 months		57,293		18,777		38,516			205.1	%
Total Time Deposits	$	317,136	$	196,767	$	120,369			61.2	%

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 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.

During the nine months ended September 30, 2024, and 2023, our liquidity needs have primarily been met by core deposits, security and loan maturities, and amortizing security and loan portfolios. Other funding sources include federal funds purchased, brokered certificates of deposit, borrowings from the FHLB, and Federal Reserve Bank borrowings.

Our largest sources of funds are deposits and FHLB borrowings and largest uses of funds are loan funding, securities purchases and debt servicing. Average loans were $3.46 billion for the nine months ended September 30, 2024, an increase of 4.8% over the December 31, 2023, 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 4.5 years and a modified duration of 3.8 years at September 30, 2024.

Cash and cash equivalents were $235.5 million at September 30, 2024, a decrease of $143.6 million from the $379.1 million cash and cash equivalents at December 31, 2023. The decrease in cash and cash equivalents is driven by $163.9 million net cash used in financing activities and $31.8 million net cash used in investing activities which was offset by $52.1 million net cash provided by operating activities. The $163.9 million net change in cash used in financing activities includes, $174.8 million in outflows for the decrease in deposits, $141.0 million in outflows for Federal Reserve borrowings, $15.0 million outflow for federal fund repurchased and retail repurchase agreements, $11.9 million outflow for the repurchase of treasury stock, $7.6 million in payments on capital tax credits and $5.6 million for the payment of dividends on common stock, offset by an increase in FHLB line of credit of $189.9 million. Cash and cash equivalents at January 1, 2024, plus liquidity provided by operating activities, pay downs, sales, and maturities of investment securities and FHLB borrowings during the first nine months of 2024 were primarily used to originate or purchase loans, to purchase investment securities and to facilitate the Rockhold and KansasLand mergers. 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 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 by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of September 30, 2024, and December 31, 2023, 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 September 30, 2024, 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 in our statements of income, balance sheet or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios, or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

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

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

Management believes that these measures are important to many investors 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
	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023
	(Dollars in thousands, except per share data)
Total stockholders’ equity	$	504,038	$	461,435	$	456,776	$	452,860	$	418,130
Less: goodwill		53,101		53,101		53,101		53,101		53,101
Less: core deposit intangibles, net		16,029		16,636		17,854		7,222		7,961
Less: mortgage servicing asset, net		—		25		50		75		100
Less: naming rights, net		968		979		989		1,000		1,011
Tangible common equity	$	433,940	$	390,694	$	384,782	$	391,462	$	355,957
Common shares issued at period end		15,288,309		15,200,194		15,327,799		15,428,251		15,413,064
Diluted common shares outstanding at period end		15,497,446		15,358,396		15,469,531		15,629,185		15,500,749
Book value per common share	$	32.97	$	30.36	$	29.80	$	29.35	$	27.13
Tangible book value per common share	$	28.38	$	25.70	$	25.10	$	25.37	$	23.09
Tangible book value per diluted common share	$	28.00	$	25.44	$	24.87	$	25.05	$	22.96

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

Management believes that this measure is important to many investors in the marketplace 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
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
	(Dollars in thousands)
Total stockholders’ equity	$	504,038		$	461,435		$	456,776		$	452,860		$	418,130
Less: goodwill		53,101			53,101			53,101			53,101			53,101
Less: core deposit intangibles, net		16,029			16,636			17,854			7,222			7,961
Less: mortgage servicing asset, net		—			25			50			75			100
Less: naming rights, net		968			979			989			1,000			1,011
Tangible common equity	$	433,940		$	390,694		$	384,782		$	391,462		$	355,957
Total assets	$	5,355,233		$	5,245,517		$	5,239,036		$	5,034,592		$	4,945,267
Less: goodwill		53,101			53,101			53,101			53,101			53,101
Less: core deposit intangibles, net		16,029			16,636			17,854			7,222			7,961
Less: mortgage servicing asset, net		—			25			50			75			100
Less: naming rights, net		968			979			989			1,000			1,011
Tangible assets	$	5,285,135		$	5,174,776		$	5,167,042		$	4,973,194		$	4,883,094
Equity to assets		9.41	%		8.80	%		8.72	%		8.99	%		8.46	%
Tangible common equity to tangible assets		8.21	%		7.55	%		7.45	%		7.87	%		7.29	%

Adjusted Operating Return on Average Assets: Adjusted operating return on average assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate (a) adjusted non-core items as net income (loss) allocable to common stockholders plus tax effected day one provision day one provisioning to a competed merger transaction, merger expenses, tax effected non-core items and BOLI tax adjustment, less gain (loss) from securities transactions; (b) adjusted operating net income as net income (loss) allocable to common stockholders plus adjusted non-core items, tax effected non-core items and BOLI tax adjustments.


	As of the period ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2024			2024			2024			2023			2023
	(Dollars in thousands, except per share data)
Net income (loss) allocable to common stockholders	$	19,851		$	11,716		$	14,068		$	(28,299	)	$	12,341
Add: Day 1 - Acquisition related provision		—			—			1,000			—			—
Less: Gain (loss) from securities transactions		206			(27	)		43			(50,618	)		(1	)
Add: Merger expense		618			2,287			1,556			297			—
Adjusted non-core items		412			2,314			2,513			50,915			1
Tax effected non-core items		325			1,828			1,985			40,223			1
BOLI tax adjustment		—			1,730			—			—			—
Adjusted operating net income	$	20,176		$	15,274		$	16,053		$	11,924		$	12,342
GAAP earnings (loss) per diluted share	$	1.28		$	0.76		$	0.90		$	(1.84	)	$	0.80
Adjusted earnings (loss) per diluted share	$	1.31		$	0.99		$	1.03		$	0.77		$	0.80
Total average assets	$	5,205,017		$	5,196,258		$	5,152,915		$	4,892,712		$	5,046,179
Adjusted Operating ROAA		1.54	%		1.18	%		1.25	%		0.97	%		0.97	%
Weighted average diluted common shares		15,451,545			15,377,980			15,569,225			15,417,200			15,507,172

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

Return on Average Common Equity, Pre-tax, Pre-provision: Return on common equity with annualized net income adjusted for pre-tax provision and pre-provision (reversal) for loan losses is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate (a) average common equity as total average stockholders’ equity; (b) adjusted net income allocable to common stockholders annualized, as net income allocable to common stockholders plus income tax provision and plus provision (reversal) for loan losses, divided by average common equity (as described in clause (a)). For adjusted return, pre-tax and pre-provision, on average 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
	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
	(Dollars in thousands)
Total average stockholders’ equity	$	485,468		$	455,322		$	460,244		$	423,207		$	426,260
Less: average intangible assets		70,824			71,423			62,203			61,756			62,635
Average tangible common equity	$	414,644		$	383,899		$	398,041		$	361,451		$	363,625
Net income (loss) allocable to common stockholders	$	19,851		$	11,716		$	14,068		$	(28,299	)	$	12,341
Amortization of intangible assets		1,148			1,254			935			775			835
Less: tax effect		241			263			196			163			175
Adjusted net income allocable to common stockholders	$	20,758		$	12,707		$	14,807		$	(27,687	)	$	13,001
Net income (loss) allocable to common stockholders	$	19,851		$	11,716		$	14,068		$	(28,299	)	$	12,341
Add: Income tax provision		3,986			4,582			3,693			(11,357	)		1,932
Add: Provision (reversal) of credit losses		1,183			265			1,000			711			1,230
Adjusted net income, Pre-tax, pre-provision	$	25,020		$	16,563		$	18,761		$	(38,945	)	$	15,503
Return on total average stockholders’ equity (ROAE) annualized		16.27	%		10.35	%		12.29	%		(26.53	)%		11.49	%
Return on average tangible common equity (ROATCE) annualized		19.92	%		13.31	%		14.96	%		(30.39	)%		14.18	%
Return on average common equity annualized, Pre-tax, Pre-provision		20.50	%		14.63	%		16.39	%		(36.51	)%		14.43	%

Efficiency Ratio: The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate the efficiency ratio by dividing non-interest expense, excluding merger expenses, by the sum of net interest income and non-interest income, excluding net gain on acquisition and branch sales, and net gain (loss) from securities transactions. The GAAP-based efficiency ratio is non-interest expense divided by net interest income plus non-interest income.

In management’s judgment, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess operating expenses in relation to operating revenue by removing merger expenses, net gain (loss) from securities 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
	September 30, 2024			June 30, 2024			March 31, 2023			December 31, 2023			September 30, 2023
	(Dollars in thousands)
Non-interest expense	$	30,328		$	38,871		$	37,152		$	34,998		$	34,244
Less: merger expense		618			2,287			1,556			297			—
Non-interest expense, excluding merger expense	$	29,710		$	36,584		$	35,596		$	34,701		$	34,244
Net interest income	$	46,031		$	46,476		$	44,182		$	39,467		$	41,012
Non-interest income	$	9,317		$	8,958		$	11,731		$	(43,414	)	$	8,735
Less: net gain on acquisition and branch sales		831			60			1,240			—			—
Less: net gain (loss) from securities transactions		206			(27	)		43			(50,618	)		(1	)
Non-interest income, excluding net gain (loss) from securities transactions and net gain on acquisition and branch sales	$	8,280		$	8,925		$	10,448		$	7,204		$	8,736
Net interest income plus non-interest income, excluding net gain on acquisition and branch sales and net gain (loss) from securities transactions	$	54,311		$	55,401		$	54,630		$	46,671		$	49,748
Non-interest expense to net interest income plus non-interest income		54.80	%		70.12	%		66.45	%		(886.70	)%		68.84	%
Efficiency Ratio		54.70	%		66.03	%		65.16	%		74.35	%		68.83	%

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 September 30, 2024, and December 31, 2023, 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 decrease in the level of positive impact to net interest income in the up interest rate shock scenarios is due to the level of adjustable rate loans receivable that will reprice to higher interest rates, non-term deposits that will adjust to higher rates, the use of derivatives to hedge borrowing costs, and decreased levels of cash on the balance sheet compared to December 31, 2023. These factors result in an overall positive impact to net interest income at September 30, 2024, but at a reduced level from the December 31, 2023, simulation 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 downward pricing of variable rate loans receivable and the level of term deposit repricing; and the assumed prepayment and scheduled repayment of existing fixed rate loans receivable and fixed rate investments. These factors result in the negative impact to net interest income in the down interest rate shock scenario.

The change in the economic value of equity from the base case for September 30, 2024, and December 31, 2023, 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. Due to the level of convexity in our fixed rate pre-payable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario, due to the current level of convexity in our fixed rate pre-payable assets becoming less negative and positive, in some cases, on a portion of or a 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 September 30, 2024, non-interest-bearing deposits were approximately $69.7 million, or 7.76%, higher than that deposit type at December 31, 2023. Substantially all investments and approximately 37.0% of loans are 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 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
Change in prevailing interest rates	September 30, 2024			December 31, 2023
+300 basis points		9.0	%		10.3	%
+200 basis points		6.0	%		6.8	%
+100 basis points		2.9	%		3.3	%
0 basis points		—			—
-100 basis points		(1.8	)%		(2.1	)%
-200 basis points		(3.7	)%		(4.3	)%
-300 basis points		(5.6	)%		(7.3	)%

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


	Impact on Economic Value of Equity
Change in prevailing interest rates	September 30, 2024			December 31, 2023
+300 basis points		(5.6	)%		(7.4	)%
+200 basis points		(3.2	)%		(4.3	)%
+100 basis points		(1.7	)%		(2.2	)%
0 basis points		—			—
-100 basis points		(0.5	)%		0.3	%
-200 basis points		(3.4	)%		(1.5	)%
-300 basis points		(8.8	)%		(5.3	)%

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 judgment 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 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 7, 2024.

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

Repurchase of Common Stock

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 concluded 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 December 31, 2022, and 2023, the Company repurchased a total of 832,893 shares of the Company’s outstanding common stock at an average price paid of $27.89 per share. At September 30, 2023, there are 167,107 shares remaining under the program that expired on September 30, 2023.

In July of 2023, the Board of Directors of Equity Bancshares, Inc. authorized the repurchase of up to 1,000,000 shares of outstanding common stock beginning on October 1, 2023, and concluding on September 30, 2024. The repurchase program does 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, 2023 and 2024, the company repurchased a total of 362,573 shares of the Company's outstanding common stock at an average price paid of $32.79 per share. At September 30, 2024, there are 637,427 shares remaining under the program that expired on September 30, 2024.

On September 12, 2024, the Board of Directors of Equity Bancshares authorized the repurchase of up to 1,000,000 shares of outstanding common stock beginning on October 1, 2024 and concluding on September 30, 2025. The repurchase program does not obligate the Company to acquire a specific dollar amount or number of shares, and may be extended. modified or discontinued at any time without notice. Non-objection from the Federal Reserve Bank of Kansas City related to this repurchase plan was received on October 7, 2024.


Date	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
July 1, 2024 through July 31, 2024		—	$	—		—		637,427
August 1, 2024 through August 31, 2024		—	$	—		—		637,427
September 1, 2024 through September 30, 2024		—	$	—		—		637,427
Total		—	$	—		—		637,427

Item 3: Defaults Upon Senior Securities

None

Item 4: Mine Safety Disclosures

Not applicable.

Item 5: Other Information

During the nine months ended September 30, 2024, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Item 6: Exhibits


Exhibit No.		Description
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.
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.

† 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.

November 8, 2024	By:	/s/ Brad S. Elliott
Date		Brad S. Elliott
		Chairman and Chief Executive Officer

November 8, 2024	By:	/s/ Chris M. Navratil
Date		Chris M. Navratil
		Executive Vice President and Chief Financial Officer