EQUITY BANCSHARES INC Q2 FY2025 earnings call

• Strong earnings, core margin expansion in Q2 2025. - Successfully closed merger with MVC Bank on July 2, welcomed NBC Bank team. - Retail and commercial teams making progress, originations growing, commercial product sales up. - TCE ratio at 10.63%, tangible book value per share at $32.17, up vs Q2 2024. - Net interest income up, margin improved. - Noninterest income up due to customer service charge growth. - Noninterest expenses $40 million, adjusted excluding certain items $38.3 million. - Asset quality: Nonaccrual loans up due to QSR relationship, but classified assets below historical averages, delinquency down. - Loan growth: Over $100 million YTD, Q2 production $197 million, 75% pipeline $481 million. - Deposit balance: Excluding brokerage funds, down $43 million, but NBC acquisition adds Oklahoma City market.

Net income for the quarter was $15.3 million or 86¢ per diluted share, adjusting for items to $16.6 million or 94¢ per diluted share. Net interest income was $49.8 million, up $1.8 million. Noninterest income was $8.6 million, up $500,000. Noninterest expenses were $40 million, adjusted excluding certain items to $38.3 million. TCE ratio was 10.63%, tangible book value per share was $32.17. Margin was 4.17%, an improvement of 10 basis points. Loan balances year-to-date were up $100 million, deposits (excluding seasonal public funds) held steady.

• Optimistic about margin maintenance on legacy portfolio and benefits from MVC transaction. - Provision forecasted to be 12 basis points to average loans annualized. - Expect loan growth in second half based on pipeline. - Runway for additional repricing moves into 2026.

• Credit risks related to QSR portfolio, though granularity and diversification exist. - Economic uncertainties that could affect credit quality. - Regulatory risks associated with M&A approvals and compliance.

Q: Talk about plans for NBC Bank bond portfolio and securities portfolio management.

A: Under the MVC agreement, MVC's bond portfolio was sold prior to acquisition, cash available for deployment; bond portfolio managed for liquidity and pledging.

Q: Stress in QSR portfolio outside of one relationship.

A: Softer operating numbers in sector, but one small relationship outside, portfolio diversified.

Q: Step down in noninterest expenses in 4Q.

A: Predominantly impact of NBC, with some year-over-year downward trend.

Q: Trigger for nonaccrual on QSR loan and exit of stores.

A: Loans past due, plan to exit unprofitable stores, rest of locations performing well.

Q: Loan growth outlook and line utilization.

A: Continued pipeline, C&I and CRE strong, line utilization one-time issue.

Q: Wichita aviation and defense opportunities.

A: Minimal exposure, community unaffected by Boeing issues.

Q: Deposit betas and deposit growth outlook.

A: Most cost adjustments complete, limited future beta opportunity.

Q: Margin and deposit betas.

A: Most cost adjustments done, competition persists, but runway for repricing.