10q10k10q10k.net

What changed in EQUITY BANCSHARES INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of EQUITY BANCSHARES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+372 added−320 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-07)

Top changes in EQUITY BANCSHARES INC's 2024 10-K

372 paragraphs added · 320 removed · 289 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

66 edited+8 added−3 removed227 unchanged
Biggest changeOur strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for all credit exposures. Our processes emphasize early-stage review of loans, regular credit evaluations and management reviews of loans, which supplement the ongoing and proactive credit monitoring and loan servicing provided by our bankers.
Biggest changeOur processes emphasize early-stage review of loans, regular credit evaluations and management reviews of loans, which supplement the ongoing and proactive credit monitoring and loan servicing provided by our bankers. Our Chief Credit Officer provides Company-wide credit oversight to ensure that the risk identification processes are functioning properly and that our credit standards are followed.
Consumer Loans . We make a variety of loans to individuals for personal and household purposes, including secured and unsecured term loans and home improvement loans. Consumer loans are underwritten based on the individual borrower’s income, current debt level, past credit history and the value of any available collateral.
We make a variety of loans to individuals for personal and household purposes, including secured and unsecured term loans and home improvement loans. Consumer loans are underwritten based on the individual borrower’s income, current debt level, past credit history and the value of any available collateral.
While expanding our infrastructure, several departmental functions have been outsourced to gain the experience of outside professionals while at the same time achieving more favorable economics and cost-effective solutions. Such outsourced areas include specific internal audit functions and select loan review. This outsourcing strategy has proven to control costs while adding enhanced controls and/or service levels.
While expanding our infrastructure, several departmental functions have been outsourced to gain the experience of outside professionals while at the same time achieving more favorable economics and cost-effective solutions. Such outsourced areas include specific internal audit 6 functions and select loan review. This outsourcing strategy has proven to control costs while adding enhanced controls and/or service levels.
In addition, the collateral securing commercial and industrial loans generally includes movable property such as equipment and inventory, which may decline in value more rapidly than we anticipate exposing us to increased credit risk. As a result of these additional complexities, variables and risks, commercial and industrial loans require extensive underwriting and servicing. 9 Commercial Real Estate Loans .
In addition, the collateral securing commercial and industrial loans generally includes movable property such as equipment and inventory, which may decline in value more rapidly than we anticipate exposing us to increased credit risk. As a result of these additional complexities, variables and risks, commercial and industrial loans require extensive underwriting and servicing. Commercial Real Estate Loans .
Our executive management team has identified significant acquisition and consolidation opportunities ranging from small to large community banking 6 institutions. We believe our track record of strategic acquisitions and effective integrations, combined with our expertise in our markets and scalable platform, will allow us to capitalize on these growth opportunities. • Disciplined Acquisition Approach .
Our executive management team has identified significant acquisition and consolidation opportunities ranging from small to large community banking institutions. We believe our track record of strategic acquisitions and effective integrations, combined with our expertise in our markets and scalable platform, will allow us to capitalize on these growth opportunities. • Disciplined Acquisition Approach .
In addition, our loan policies provide guidelines for personal guarantees; an environmental review; loans to employees, executive officers and directors; problem loan identification; maintenance of an adequate allowance for credit losses and other matters relating to lending practices. Lending Limits . Our lending activities are subject to a variety of lending limits imposed by federal and state law.
In addition, our loan policies provide guidelines for personal guarantees; an environmental review; loans to employees, executive officers and directors; problem loan identification; maintenance of an adequate allowance for credit losses and other matters relating to lending practices. 8 Lending Limits . Our lending activities are subject to a variety of lending limits imposed by federal and state law.
In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans.
In addition, consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or 10 personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans.
We understand the community banking needs of the businesses and individuals within our markets and have focused on developing a commercial and personal banking platform to service such needs. Information Technology Systems We continue to make significant investments in our information technology systems and staff for our banking and lending operations and treasury management activities.
We understand the community banking needs 11 of the businesses and individuals within our markets and have focused on developing a commercial and personal banking platform to service such needs. Information Technology Systems We continue to make significant investments in our information technology systems and staff for our banking and lending operations and treasury management activities.
We believe that our competitive pricing, personalized service and community involvement enable us to effectively compete in the communities in which we operate. 12 Human Capital The Company’s success depends on its ability to attract and retain highly qualified senior and middle management and other skilled employees.
We believe that our competitive pricing, personalized service and community involvement enable us to effectively compete in the communities in which we operate. Human Capital The Company’s success depends on its ability to attract and retain highly qualified senior and middle management and other skilled employees.
None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. Available Information The Company files reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. 12 Available Information The Company files reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Annual Reporting and Examinations We are required to file annual and quarterly reports with the Federal Reserve and such additional information as the Federal Reserve may require pursuant to the BHC Act. The Federal Reserve may examine a bank holding company or any of its subsidiaries and 14 charge the company for the cost of such an examination.
Annual Reporting and Examinations We are required to file annual and quarterly reports with the Federal Reserve and such additional information as the Federal Reserve may require pursuant to the BHC Act. The Federal Reserve may examine a bank holding company or any of its subsidiaries and charge the company for the cost of such an examination.
These limits do not apply to transactions with all directors or to insiders of the bank’s affiliates. Restrictions on Transactions with Affiliates Section 23A of the Federal Reserve Act imposes quantitative and qualitative limits on transactions between a bank and any affiliate and requires certain levels of collateral for any such loans.
These limits do not apply to transactions with all directors or to insiders of the bank’s affiliates. 17 Restrictions on Transactions with Affiliates Section 23A of the Federal Reserve Act imposes quantitative and qualitative limits on transactions between a bank and any affiliate and requires certain levels of collateral for any such loans.
Our construction loans have terms that typically range from six months to two years depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically structured with an interest only construction period.
Our construction loans have terms that typically range from six months to two years depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically 9 structured with an interest only construction period.
Consumer loans entail greater risk than do residential real estate loans because they may be unsecured or, if secured, the value of the collateral, such as an automobile or boat, may be more difficult to assess and more likely to decrease in value than real estate.
Consumer loans entail greater risk than residential real estate loans because they may be unsecured or, if secured, the value of the collateral, such as an automobile or boat, may be more difficult to assess and more likely to decrease in value than real estate.
We also seek to cross-sell our various banking products, including our deposit and treasury wealth management products, to our commercial loan customers, which we believe provides a basis for expanding our banking relationships as well as a stable, low-cost deposit base.
We 5 also seek to cross-sell our various banking products, including our deposit and treasury wealth management products, to our commercial loan customers, which we believe provides a basis for expanding our banking relationships as well as a stable, low-cost deposit base.
We are focused on continuing to grow organically and believe the markets in which we operate currently provide meaningful 5 opportunities to expand our commercial customer base and increase our current market share.
We are focused on continuing to grow organically and believe the markets in which we operate currently provide meaningful opportunities to expand our commercial customer base and increase our current market share.
Our markets also serve as the corporate headquarters for Koch Industries Inc., Hallmark Cards, Inc., H&R Block, Inc., American Century Investments, Garmin International, Inc., Cessna Aircraft Company, Seaboard Corporation, Cargill Meat Solutions, Spirit AeroSystems, Dairy Farmers of America, Quik Trip, ONEOK, Salina Vortex and Williams Companies and host a major presence for companies across a variety of industries, including Bombardier Learjet, Collective Brands, Inc., FedEx, Flexsteel, Hills Pet Nutrition, Inc., Textron Aviation Services, Tyson Foods, Schwan’s Company, Phillips 66, Rib Crib, Honeywell, T-Mobile, Oracle, and Bayer Corporation.
Our markets also serve as the corporate headquarters for Koch Industries Inc., Hallmark Cards, Inc., H&R Block, Inc., American Century Investments, Garmin International, Inc., Cessna Aircraft Company, Seaboard Corporation, Cargill Meat Solutions, Spirit AeroSystems, Dairy Farmers of America, Quik Trip, ONEOK, Salina Vortex and Williams Companies and host a major presence for companies across a variety of industries, including Bombardier Learjet, Collective Brands, Inc., FedEx, Flexsteel, Hills Pet Nutrition, Inc., Textron Aviation Services, Phillips 66, Rib Crib, Honeywell, T-Mobile, Oracle, and Bayer Corporation.
(3) Represents 49 locations outside of the Wichita, Kansas City and Tulsa MSAs. Our team of seasoned bankers represents an important driver of our organic growth by expanding banking relationships with current and potential customers. We expect to continue to make opportunistic hires of talented and entrepreneurial bankers, particularly in our metropolitan markets, to further augment our growth.
(3) Represents 57 locations outside of the Wichita, Kansas City and Tulsa MSAs. Our team of seasoned bankers represents an important driver of our organic growth by expanding banking relationships with current and potential customers. We expect to continue to make opportunistic hires of talented and entrepreneurial bankers, particularly in our metropolitan markets, to further augment our growth.
Failure to meet capital guidelines could subject Equity Bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits and other restrictions on our business. As of December 31, 2023, Equity Bank exceeded the capital levels required to be deemed well capitalized.
Failure to meet capital guidelines could subject Equity Bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits and other restrictions on our business. As of December 31, 2024, Equity Bank exceeded the capital levels required to be deemed well capitalized.
We do participate in the Certificate of Deposit Registry Services (“CDARS”) as well as the Insured Cash Sweep ("ICS") both provided via Promontory Interfinancial Network as options for our customers to place funds and occasionally as a funding source. We also bid for, and accept deposits from public entities in our markets.
We do participate in the Certificate of Deposit Registry Services (“CDARS”) as well as the Insured Cash Sweep ("ICS") both provided via IntraFi Network as options for our customers to place funds and occasionally as a funding source. We also bid for, and accept deposits from public entities in our markets.
Our risk management practices are overseen by the Chairmen of our audit and risk committees, who have many years of combined banking experience, and our Chief Risk Officer, who has more than 25 years of banking and financial services experience.
Our risk management practices are overseen by the Chairmen of our audit and risk committees, who have many years of combined banking experience, and our Chief Risk Officer, who has more than 30 years of banking and financial services experience.
Our strategy for approving or disapproving loans is to follow conservative loan policies and consistent underwriting practices which include: • maintaining close relationships among our customers and their designated banker to ensure ongoing credit monitoring and loan servicing; • granting credit on a sound basis with full knowledge of the purpose and source of repayment for such credit; • ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan; • developing and maintaining targeted levels of diversification for our loan portfolio as a whole and for loans within each category; and • ensuring that each loan is properly documented and that any insurance coverage requirements are satisfied. 8 Managing credit risk is a Company-wide process.
Our strategy for approving or disapproving loans is to follow conservative loan policies and consistent underwriting practices which include: • maintaining close relationships among our customers and their designated banker to ensure ongoing credit monitoring and loan servicing; • granting credit on a sound basis with full knowledge of the purpose and source of repayment for such credit; • ensuring that primary and secondary sources of repayment are adequate in relation to the amount of the loan; • developing and maintaining targeted levels of diversification for our loan portfolio as a whole and for loans within each category; and • ensuring that each loan is properly documented and that any insurance coverage requirements are satisfied.
The following table shows our total deposits and loans in our community markets and our metropolitan markets as of December 31, 2023, which we believe illustrates our execution of this strategy.
The following table shows our total deposits and loans in our community markets and our metropolitan markets as of December 31, 2024, which we believe illustrates our execution of this strategy.
Management believes the allowance for credit losses is adequate to cover expected losses in our loan portfolio as of December 31, 2023. Sound risk management practices and appropriate levels of capital are essential elements of a sound commercial real estate lending program.
Management believes the allowance for credit losses is adequate to cover expected losses in our loan portfolio as of December 31, 2024. 7 Sound risk management practices and appropriate levels of capital are essential elements of a sound commercial real estate lending program.
Item 1: B usiness Our Company 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 64 branches located in Arkansas, Kansas, Missouri and Oklahoma, as of December 31, 2023.
Item 1: B usiness Our Company 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 branches located in Arkansas, Kansas, Missouri and Oklahoma, as of December 31, 2024.
Additionally, the Company is committed to employee development through a combination of in-house and external training programs. Further, the Company has two staff development programs with formal in-house training programs for junior bankers including guidance from senior banking team members. As of December 31, 2023, the Company employed 717 full-time equivalent employees.
Additionally, the Company is committed to employee development through a combination of in-house and external training programs. Further, the Company has two staff development programs with formal in-house training programs for junior bankers including guidance from senior banking team members. As of December 31, 2024, the Company employed 810 full-time equivalent employees.
We offer insurance brokerage services primarily focused on crop coverage for agricultural customers throughout our footprint. Our Markets As of December 31, 2023, we conducted banking operations through our 64 bank locations in Arkansas, Kansas, Missouri and Oklahoma.
We offer insurance brokerage services primarily focused on crop coverage for agricultural customers throughout our footprint. Our Markets As of December 31, 2024, we conducted banking operations through our 71 bank locations in Arkansas, Kansas, Missouri and Oklahoma.
We believe our branch network is strategically split between growing metropolitan markets, such as Kansas City, Wichita and Tulsa, and stable community markets within Western Kansas, Western Missouri, Topeka, Northern Arkansas and Northern Oklahoma.
We believe our branch network is strategically split between growing metropolitan markets, such as Kansas City, Wichita and Tulsa, and stable community markets within Southeastern Kansas, Southwestern Kansas, Central Kansas, North Central Kansas, Western Kansas, Topeka, Western Missouri, North Central Missouri, Northern Arkansas, Northern Oklahoma and Western Oklahoma.
The Bank’s legal lending limit as of December 31, 2023, on loans to a single borrower was $143.0 million. However, we typically maintain an in-house limit of $25.0 million for loans to a single borrower.
The Bank’s legal lending limit as of December 31, 2024, on loans to a single borrower was $151.9 million. However, we typically maintain an in-house limit of $25.0 million for loans to a single borrower.
We offer debit cards with no ATM surcharges or foreign ATM fees for checking customers, plus night depository, direct deposit, cashier’s and travelers checks and letters of credit, as well as treasury management services, wire transfer services and automated clearing house (“ACH”) services.
We offer debit cards with no ATM surcharges or foreign ATM fees for checking customers, plus night depository, direct deposit, cashier’s and travelers checks and letters of credit, as well as treasury management services, wire transfer services and automated clearing house (“ACH”) services. We offer both consumer and commercial credit cards, as well as Health Savings Account solutions.
As a result of these strategic and organic growth efforts, we have expanded our team of full-time equivalent employees from 19 to 717 and our network of branches from 2 to 64 as of December 31, 2023.
As a result of these strategic and organic growth efforts, we have expanded our team of full-time equivalent employees from 19 to 810 and our network of branches from 2 to 71 as of December 31, 2024.
We have control of Equity Bank for the purpose of this statute. Further, by statute and regulation, a bank holding company must serve as a source of financial and managerial strength to each bank that it controls and, under appropriate circumstances, may be required to commit resources to support each such controlled bank.
Further, by statute and regulation, a bank holding company must serve as a source of financial and managerial strength to each bank that it controls and, under appropriate circumstances, may be required to commit resources to support each such controlled bank.
Management believes these practices allow us to appropriately monitor concentrations in commercial real estate in our loan portfolio. Large Credit Relationships . As of December 31, 2023, the aggregate amount of loans to our ten largest borrowers (including related entities) amounted to approximately $344.7 million, or 10.3% of total loans.
Management believes these practices allow us to appropriately monitor concentrations in commercial real estate in our loan portfolio. Large Credit Relationships . As of December 31, 2024, the aggregate amount of loans to our ten largest borrowers (including related entities) amounted to approximately $314.6 million, or 9.0% of total loans.
We offer both consumer and commercial credit cards, as well as Health Savings Account solutions. 11 We offer a full array of commercial treasury management services designed to be competitive with banks of all sizes. Treasury management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, ACH origination and stop payments.
We offer a full array of commercial treasury management services designed to be competitive with banks of all sizes. Treasury management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, ACH origination and stop payments.
Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings. 18 Consumer Financial Protection Bureau The Dodd-Frank Act created the CFPB which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
Consumer Financial Protection Bureau The Dodd-Frank Act created the CFPB which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement 18 Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of the Gramm-Leach-Bliley Act and certain other statutes.
We believe that our enterprise risk management philosophy has been important in gaining and maintaining the confidence of our various constituencies and growing our business and footprint within our markets.
We believe that our enterprise risk management philosophy has been important in gaining and maintaining the confidence of our various constituencies and growing our business and footprint within our markets. We also believe our strong risk management practices are manifested in our asset quality statistics.
Rules on Regulatory Capital Regulatory capital rules pursuant to the Basel III requirements (“Basel III rules”), require banks and bank holding companies to maintain a minimum common equity Tier 1 (“CET1”) risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6%, a total risk-based capital ratio of 8% and a leverage ratio of 4%.
We are also subject to reporting and disclosure requirements under state and federal securities laws. 14 Rules on Regulatory Capital Regulatory capital rules pursuant to the Basel III requirements (“Basel III rules”), require banks and bank holding companies to maintain a minimum common equity Tier 1 (“CET1”) risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6%, a total risk-based capital ratio of 8% and a leverage ratio of 4%.
A significant number of agricultural borrowers with these types of loans may qualify for relief under a chapter of the U.S. Bankruptcy Code that is designed specifically for the reorganization of financial obligations of family farmers and which provides certain preferential procedures to agricultural borrowers compared to traditional bankruptcy proceedings pursuant to other chapters of the U.S. Bankruptcy Code.
Bankruptcy Code that is designed specifically for the reorganization of financial obligations of family farmers and which provides certain preferential procedures to agricultural borrowers compared to traditional bankruptcy proceedings pursuant to other chapters of the U.S. Bankruptcy Code. Consumer Loans .
Our loan portfolio consists primarily of commercial real estate loans, which were $1.76 billion and constituted 52.8% of our total loans as of December 31, 2023, commercial and industrial loans, which were $598.3 million and constituted 18% of our total loans as of December 31, 2023, and residential real estate loans, which were $556.3 million and constituted 16.7% of our total loans as of December 31, 2023.
Our loan portfolio consists primarily of commercial real estate loans, which were $1.83 billion and constituted 52.3% of our total loans as of December 31, 2024, commercial and industrial loans, which were $658.9 million and constituted 18.8% of our total loans as of December 31, 2024, and residential real estate loans, which were $566.8 million and constituted 16.2% of our total loans as of December 31, 2024.
Pursuant to FDICIA, each federal banking agency has specified, by regulation, the levels at which an insured institution would be considered well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. As of December 31, 2023, Equity Bank exceeded the capital levels required to be deemed well capitalized.
Pursuant to FDICIA, each federal banking agency has specified, by regulation, the levels at which an insured institution would be considered well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
As of December 31, 2023, we had, on a consolidated basis, total assets of $5.03 billion, total deposits of $4.15 billion, total loans (net of allowances) of $3.29 billion and total stockholders’ equity of $452.9 million.
As of December 31, 2024, we had, on a consolidated basis, total assets of $5.33 billion, total deposits of $4.37 billion, total loans (net of allowances) of $3.46 billion and total stockholders’ equity of $592.9 million.
Activities Closely Related to Banking The BHC Act prohibits a bank holding company, with certain limited exceptions, from acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank or from engaging in any activities other than those of banking, managing or controlling banks and certain other subsidiaries or furnishing services to or performing services for its subsidiaries.
Federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions, for violation of laws and policies. 13 Activities Closely Related to Banking The BHC Act prohibits a bank holding company, with certain limited exceptions, from acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank or from engaging in any activities other than those of banking, managing or controlling banks and certain other subsidiaries or furnishing services to or performing services for its subsidiaries.
The Company and Equity Bank have not made an election to use the community bank leverage ratio framework but may make such an election in the future if eligible and doing so is advantageous. 15 Imposition of Liability for Undercapitalized Subsidiaries The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risks of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multifamily mortgages.
Imposition of Liability for Undercapitalized Subsidiaries The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risks of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multifamily mortgages.
If there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, Equity Bank may be required to pay higher FDIC insurance premiums.
If there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, Equity Bank may be required to pay higher FDIC insurance premiums. Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings.
As measured by outstanding balances at December 31, 2023, commercial loans composed over 70.8% of our loan portfolio and within our commercial loan portfolio, 74.6% of such loans were commercial real estate loans and 25.4% were commercial and industrial loans.
As measured by outstanding balances at December 31, 2024, commercial loans composed over 71.1% of our loan portfolio and within our commercial loan portfolio, 73.5% of such loans were commercial real estate loans and 26.5% were commercial and industrial loans.
Our Chief Credit Officer provides Company-wide credit oversight to ensure that the risk identification processes are functioning properly and that our credit standards are followed. In addition, a third-party loan review is performed to assist in the identification of problem assets and to confirm our internal risk rating of loans.
In addition, a third-party loan review is performed to assist in the identification of problem assets and to confirm our internal risk rating of loans.
We also believe our strong risk management practices are manifested in our asset quality statistics. 7 Our Banking Services A general description of the range of commercial banking products and other services we offer follows. Lending Activities At December 31, 2023, we had total loans of $3.29 billion (net of allowances), representing 65.3% of our total assets.
Our Banking Services A general description of the range of commercial banking products and other services we offer follows. Lending Activities At December 31, 2024, we had total loans of $3.46 billion (net of allowances), representing 64.8% of our total assets.
If an institution becomes significantly undercapitalized or critically undercapitalized, additional and significant limitations are placed on the institution. The capital restoration plan of an undercapitalized institution will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan, until it becomes adequately capitalized.
The capital restoration plan of an undercapitalized institution will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan, until it becomes adequately capitalized. We have control of Equity Bank for the purpose of this statute.
In addition, a bank may purchase an asset from or sell an asset to an insider only if the transaction is on market terms and if representing more than 10% of capital, is approved in advance by the majority of disinterested directors. 17 Additional and more stringent limits apply to a bank’s transactions with its own executive officers and certain directors.
For loans above certain threshold amounts, board approval is required, and the interested insider may not be involved. In addition, a bank may purchase an asset from or sell an asset to an insider only if the transaction is on market terms and if representing more than 10% of capital, is approved in advance by the majority of disinterested directors.
Agricultural operating loans may be originated at an adjustable or fixed rate of interest and generally for a term of up to 7 years. In the case of agricultural operating loans secured by breeding livestock and/or farm equipment, such loans are originated at fixed rates of interest for a term of up to 5 years.
In the case of agricultural operating loans secured by breeding livestock and/or farm equipment, such loans are originated at fixed rates of interest for a term of up to 5 years. We typically originate agricultural operating loans based on the borrower’s ability to make repayment from the cash flow of the borrower’s agricultural business.
We also originate agricultural real estate loans directly and through programs sponsored by the Farm Service Agency (“FSA”), an agency of the United States Department of Agriculture, which provides a partial guarantee on loans underwritten to FSA standards. Agricultural real estate loans generally carry higher interest rates and have shorter terms than 1-4 family residential real estate loans.
Generally, our agricultural real estate loans amortize over periods not in excess of 20 years and have a loan-to-value ratio under 80%. We also originate agricultural real estate loans directly and through programs sponsored by the Farm Service Agency (“FSA”), an agency of the United States Department of Agriculture, which provides a partial guarantee on loans underwritten to FSA standards.
Interstate Branching The Dodd-Frank Act permits a national or state bank, with the approval of its regulator, to open a branch in any state if the law of the state in which the branch is located would permit the establishment of the branch if the bank were a bank chartered in that state. 16 Anti-Tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of certain services, such as extensions of credit, to other services offered by a holding company or its affiliates.
Interstate Branching The Dodd-Frank Act permits a national or state bank, with the approval of its regulator, to open a branch in any state if the law of the state in which the branch is located would permit the establishment of the branch if the bank were a bank chartered in that state.
We also make loans to finance the purchase of machinery, equipment and breeding stock, seasonal crop operating loans used to fund the borrower’s crop production operating expenses, livestock operating, and revolving loans used to purchase livestock for resale and related livestock production expense. 10 Generally, our agricultural real estate loans amortize over periods not in excess of 20 years and have a loan-to-value ratio under 80%.
We also make loans to finance the purchase of machinery, equipment and breeding stock, seasonal crop operating loans used to fund the borrower’s crop production operating expenses, livestock operating, and revolving loans used to purchase livestock for resale and related livestock production expense.
The geographic concentration subjects the loan portfolio to the general economic conditions within Arkansas, Kansas, Missouri and Oklahoma. The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for credit losses.
The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for credit losses.
Our Strategies We believe we are a leading provider of commercial and personal banking services to businesses and business owners as well as individuals in our targeted Midwestern markets. Our strategy is to continue consolidating community banks within such markets and maintaining our organic growth, while preserving our asset quality through disciplined lending practices. • Strategic Consolidation of Community Banks.
Our Strategies We believe we are a leading provider of commercial and personal banking services to businesses and business owners as well as individuals in our targeted Midwestern markets.
Such institutions may continue to draw large amounts of funds away from banking institutions, with a continuing adverse effect on the banking industry in general. 13 Bank Holding Company Regulation We are a bank holding company registered under the Bank Holding Company Act of 1956 (“BHC Act”), as amended, and are subject to supervision and regulation by the Federal Reserve.
Bank Holding Company Regulation We are a financial holding company registered under the Bank Holding Company Act of 1956 (“BHC Act”), as amended, and are subject to supervision and regulation by the Federal Reserve.
We typically originate agricultural operating loans based on the borrower’s ability to make repayment from the cash flow of the borrower’s agricultural business. As a result, the availability of funds for the repayment of agricultural operating loans may be substantially dependent on the success of the business itself and the general economic environment.
As a result, the availability of funds for the repayment of agricultural operating loans may be substantially dependent on the success of the business itself and the general economic environment. A significant number of agricultural borrowers with these types of loans may qualify for relief under a chapter of the U.S.
Additionally, FDICIA requires bank regulators to take prompt corrective action to resolve problems associated with insured depository institutions. Under these prompt corrective action provisions of FDICIA, if a controlled bank is undercapitalized, then the regulators could require the bank to submit a capital restoration plan.
Under these prompt corrective action provisions of FDICIA, if a controlled bank is undercapitalized, then the regulators could require the bank to submit a capital restoration plan. If an institution becomes significantly undercapitalized or critically undercapitalized, additional and significant limitations are placed on the institution.
Agricultural real estate loans, however, entail additional credit risks compared to one-to-four-family residential real estate loans, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. We generally require farmers to obtain multi-peril crop insurance coverage through a program partially subsidized by the Federal government to help mitigate the risk of crop failures.
Agricultural real estate loans generally carry higher interest rates and have shorter terms than 1-4 family residential real estate loans. Agricultural real estate loans, however, entail additional credit risks compared to one-to-four-family residential real estate loans, as they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers.
The purchase increased our deposits by $75.1 million, our loans by $1.4 million and our total assets by $75.8 million. • December 2023 – Announced the Company's merger with Rockhold BanCorp, the parent company of Bank of Kirksville.
The purchase increased our deposits by $75.1 million, our loans by $1.4 million and our total assets by $75.8 million. • February 2024 – Acquired Rockhold BanCorp ("Rockhold"), which had a total of eight branches in Missouri.
We believe our strategy of selectively acquiring and integrating community banks has provided us with economies of scale and improved our overall franchise efficiency. We expect to continue to pursue strategic acquisitions and believe our targeted market areas present us with many and varied 4 acquisition opportunities.
Our strategy is to continue consolidating community banks within such markets and maintaining our organic growth, while preserving our asset quality through disciplined lending practices. 4 • Strategic Consolidation of Community Banks. We believe our strategy of selectively acquiring and integrating community banks has provided us with economies of scale and improved our overall franchise efficiency.
Deposits Loans Amount (1) Overall % Amount (1) Overall % Metropolitan markets (2) $ 1,633,213 39 % $ 2,461,136 74 % Community markets (3) $ 2,512,242 61 % $ 871,765 26 % (1) Amounts in thousands. (2) Represents 15 locations in the Wichita, Kansas City and Tulsa metropolitan statistical areas (“MSAs”).
Deposits Loans Amount (1) Overall % Amount (1) Overall % Metropolitan markets (2) $ 1,596,394 36 % $ 2,366,878 68 % Community markets (3) $ 2,778,395 64 % $ 1,133,938 32 % 100 % 100 % (1) Amounts in thousands. (2) Represents 14 locations in the Wichita, Kansas City and Tulsa metropolitan statistical areas (“MSAs”).
Less regulation may give these institutions a competitive advantage over the Company and Equity Bank.
Less regulation may give these institutions a competitive advantage over the Company and Equity Bank. Such institutions may continue to draw large amounts of funds away from banking institutions, with a continuing adverse effect on the banking industry in general.
Bank Regulation Equity Bank operates under a Kansas state bank charter and is subject to regulation by the OSBC and the Federal Reserve.
Anti-Tying Restrictions Bank holding companies and their affiliates are prohibited from tying the provision of certain services, such as extensions of credit, to other services offered by a holding company or its affiliates. 16 Bank Regulation Equity Bank operates under a Kansas state bank charter and is subject to regulation by the OSBC and the Federal Reserve.
The following map illustrates the headquarters of potential acquisition opportunities within our target footprint. We believe many of these banks will continue to be burdened by new and more complex banking regulations, resource constraints, competitive limitations, rising technological and other business costs, management succession issues and liquidity concerns.
State $300M - $1B $1B - $2B Kansas 132 48 8 Missouri 113 60 18 Arkansas 30 28 9 Oklahoma 97 55 14 Nebraska 83 44 13 Iowa 137 70 16 Total 592 305 78 We believe many of these banks will continue to be burdened by new and more complex banking regulations, resource constraints, competitive limitations, rising technological and other business costs, management succession issues and liquidity concerns.
Following the merger, the Company has added approximately $350 million in deposit balances and $122 million in loan balances serviced out of 8 branch locations located in northcentral Missouri. The transaction closed on February 9, 2024. In conjunction with our strategic acquisition growth, we strive to reposition and improve the loan portfolio and deposit mix of the banks we acquire.
The acquisition increased our deposits by $42.4 million, our loans by $27.9 million and our total assets by $51.9 million. In conjunction with our strategic acquisition growth, we strive to reposition and improve the loan portfolio and deposit mix of the banks we acquire.
Removed
Federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage and to a range of supervisory requirements and activities, including regulatory enforcement actions, for violation of laws and policies.
Added
The acquisition increased our deposits by $349.8 million, our loans by $118.1 million and our total assets by $406.2 million. • July 2024 – Acquired KansasLand Bancshares, Inc. ("Kansasland"), with one branch in Quinter, Kansas and one branch in Americus, Kansas.
Removed
We are also subject to reporting and disclosure requirements under state and federal securities laws.
Added
We expect to continue to pursue strategic acquisitions and believe our targeted market areas present us with many and varied acquisition opportunities. The following table presents the number of banks by asset size within our operating footprint and potential markets of expansion.
Removed
For loans above certain threshold amounts, board approval is required, and the interested insider may not be involved.
Added
Residential real estate loans consists primarily of loans secured by 1-4 family residential properties, including home equity lines of credit. The geographic concentration subjects the loan portfolio to the general economic conditions within Arkansas, Kansas, Missouri and Oklahoma.
Added
Managing credit risk is a Company-wide process. Our strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for all credit exposures.
Added
We generally require farmers to obtain multi-peril crop insurance coverage through a program partially subsidized by the Federal government to help mitigate the risk of crop failures. Agricultural operating loans may be originated at an adjustable or fixed rate of interest and generally for a term of up to 7 years.
Added
The Company and Equity Bank have not made an election to use the community bank leverage ratio framework but may make such an election in the future if eligible and doing so is advantageous.
Added
As of December 31, 2024, Equity Bank exceeded the capital levels required to be deemed well capitalized. 15 Additionally, FDICIA requires bank regulators to take prompt corrective action to resolve problems associated with insured depository institutions.
Added
Additional and more stringent limits apply to a bank’s transactions with its own executive officers and certain directors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

76 edited+45 added−4 removed322 unchanged
Biggest changeSummary of Risk Factors Our risk factors can be broadly summarized by the following categories: • Economic Risks • Credit and Interest Rate Risks • Strategic Risks • Risks Relating to the Regulation of Our Industry • Risks Relating to the Company’s Common Stock • General Risks While not an exhaustive list, the principal risks that we believe could adversely affect our business, financial condition or results of operations include: • a change in economic conditions or a return to recessionary conditions could result in increases in our level of nonperforming loans and/or reduced demand for our products and services; • the value of real estate collateral may fluctuate significantly resulting in an under-collateralized loan portfolio; • external economic factors, such as changes in monetary policy and inflation and deflation, may have an adverse effect on our business, financial condition and results of operations; • inability to effectively manage or adequately measure credit risk; • we could suffer losses from a decline in the credit quality of the assets that we hold; • a significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could negatively impact our business; • a large portion of our loan portfolio is comprised of commercial loans that are secured by accounts receivable, inventory, equipment or other asset-based collateral, and deterioration in the value of such collateral could increase our exposure to future probable losses; • our largest lending relationships currently make up a material percentage of our total loan portfolio; • our profitability is vulnerable to interest rate fluctuations; • market interest rates for loans, investments and deposits are highly sensitive to many factors beyond our control; • our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI; • the outbreak of an epidemic, pandemic or highly contagious disease occurring in the United States or in the geographies in which we conduct operations; • our financial performance will be negatively impacted if we are unable to execute our growth strategy; • our strategy of pursuing acquisitions exposes us to financial, execution, compliance and operational risks; • acquisitions may disrupt our business, dilute stockholder value and be costly to integrate; • we rely heavily on our management team and could be adversely affected by the unexpected loss of key officers; • our business is concentrated in, and largely dependent upon, the continued growth and welfare of the general geographic markets in which we operate; • our ability to grow our loan portfolio may be limited; • our future profitability levels are dependent on our ability to grow and maintain deposits at competitive costs; • our ability to retain bankers and recruit additional successful bankers is critical to the success of our business strategy; • a lack of liquidity could adversely affect our financial condition and results of operations; • our financial projections are based upon numerous assumptions about future events and our actual financial performance may differ materially from our projections if our assumptions are inaccurate; • we continually encounter technological change and may have fewer resources than our competitors; • our information systems may experience a failure or interruption; • we use information technology in our operations and offer online banking services to our customers, and unauthorized access to our or our customers’ confidential or proprietary information as a result of a cyber-attack or otherwise; • we are dependent upon outside third parties for the processing and handling of our records and data; 22 • if our enterprise risk management framework is not effective at mitigating risk and loss to us; • changes in accounting standards could materially impact our financial statements; • if the goodwill that we have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings, which would adversely affect our business, financial condition and results of operations; • we may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances, which could harm liquidity, results of operations and financial condition; • increasing scrutiny and evolving expectations from customers, regulators, investors and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks; • we are subject to extensive regulations in the conduct of our business, which imposes additional costs on us; • changes in laws, government regulation and monetary policy may have a material effect on our results of operations; • our banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments; • we are subject to certain capital requirements by regulators; • we are subject to stringent capital requirements, which may adversely impact our return on equity or constrain us from paying dividends or repurchasing shares; • we may need to raise additional capital in the future and the capital may not be available when it is needed or may be dilutive to stockholders; • we are subject to the Bank Secrecy Act and other anti-money laundering statutes and regulations, and any deemed deficiency by us with respect to these laws could result in significant liability; • the laws that regulate our operations are designed for the protection of depositors and the public, not our stockholders; • as a bank holding company, the sources of funds available to us are limited; • recent negative developments affecting the banking industry, and resulting media coverage, may have eroded customer confidence in the banking system; • any regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company's expenses and affect the Company's operation; • climate change related legislative and regulatory initiatives, have the potential to disrupt our business and adversely impact the operations and creditworthiness of our customers • the market price of our Class A common stock may be subject to substantial fluctuations which may make it difficult for you to sell your shares at the volumes, prices and times desired; • the obligations associated with being a public company requires significant resources and management attention; • there is no guarantee that we will declare or pay cash dividends on our common stock; • securities analysts may not initiate or continue coverage on our Class A common stock, which could adversely affect the market for our Class A common stock; • use of our common stock for future acquisitions or to raise capital may be dilutive to existing stockholders; • a future issuance of stock could dilute the value of our Class A common stock; • we have significant institutional investors whose interests may differ from yours; • our directors and executive officers beneficially own a significant portion of our Class A common stock and have substantial influence over us; • shares of our Class A common stock are not insured deposits and may lose value; • we have the ability to incur debt and pledge our assets, including our stock in Equity Bank, to secure that debt, and holders of any such debt obligations will generally have priority over holders of our Class A common stock with respect to certain payment obligations; • if we fail to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud; • our board of directors may issue shares of preferred stock that would adversely affect the rights of our Class A common stockholders; • the return on your investment in our Class A common stock is uncertain; • we operate in a highly competitive industry and face significant competition from other banking organizations; • as a community bank, our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance; • we are subject to environmental risk in our lending activities; • we are subject to claims and litigation pertaining to intellectual property; • we have pledged all of the stock of Equity Bank as collateral for a loan, and if the lender forecloses, you could lose your investment; and • we have outstanding subordinated debt obligations, and if the Company defaults on those obligations, the debt holders could lose their investment. 23 The foregoing factors should not be construed as exhaustive.
Biggest changeSummary of Risk Factors Our risk factors can be broadly summarized by the following categories: • Economic Risks • Credit and Interest Rate Risks • Strategic Risks • Risks Relating to the Regulation of Our Industry • Risks Relating to the Company’s Common Stock • General Risks While not an exhaustive list, the principal risks that we believe could adversely affect our business, financial condition or results of operations include: • a change in economic conditions or a return to recessionary conditions could result in increases in our level of nonperforming loans and/or reduced demand for our products and services; • the value of real estate collateral may fluctuate significantly resulting in an under-collateralized loan portfolio; • unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations; • external economic factors, such as changes in monetary policy and inflation and deflation as well as the possibility of U.S. tariffs and retaliatory tariffs, may have an adverse effect on our business, financial condition and results of operations; • inability to effectively manage or adequately measure credit risk; • we could suffer losses from a decline in the credit quality of the assets that we hold; • a significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could negatively impact our business; • a large portion of our loan portfolio is comprised of commercial loans that are secured by accounts receivable, inventory, equipment or other asset-based collateral, and deterioration in the value of such collateral could increase our exposure to future probable losses; • our largest lending relationships currently make up a material percentage of our total loan portfolio; • our profitability is vulnerable to interest rate fluctuations; • market interest rates for loans, investments and deposits are highly sensitive to many factors beyond our control; • our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI; • the outbreak of an epidemic, pandemic or highly contagious disease occurring in the United States or in the geographies in which we conduct operations; • our financial performance will be negatively impacted if we are unable to execute our growth strategy; • our strategy of pursuing acquisitions exposes us to financial, execution, compliance and operational risks; • acquisitions may disrupt our business, dilute stockholder value and be costly to integrate; • we rely heavily on our management team and could be adversely affected by the unexpected loss of key officers; • our business is concentrated in, and largely dependent upon, the continued growth and welfare of the general geographic markets in which we operate; • our ability to grow our loan portfolio may be limited; • we may suffer losses in our loan portfolio due to inadequate or faulty underwriting and loan collection practices; • our future profitability levels are dependent on our ability to grow and maintain deposits at competitive costs; • our ability to retain bankers and recruit additional successful bankers is critical to the success of our business strategy; • a lack of liquidity could adversely affect our financial condition and results of operations; • our financial projections are based upon numerous assumptions about future events and our actual financial performance may differ materially from our projections if our assumptions are inaccurate; • we continually encounter technological change and may have fewer resources than our competitors; • our information systems may experience a failure or interruption; • we use information technology in our operations and offer online banking services to our customers, and unauthorized access to our or our customers’ confidential or proprietary information as a result of a cyber-attack or otherwise; • we are dependent upon outside third parties for the processing and handling of our records and data; 22 • the development and use of AI presents risks and challenges that may adversely impact the Company's business; • if our enterprise risk management framework is not effective at mitigating risk and loss to us; • changes in accounting standards could materially impact our financial statements; • if the goodwill that we have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings, which would adversely affect our business, financial condition and results of operations; • we may be required to repurchase mortgage loans or indemnify buyers against losses in some circumstances, which could harm liquidity, results of operations and financial condition; • increasing scrutiny and evolving expectations from customers, regulators, investors and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks; • we are subject to extensive regulations in the conduct of our business, which imposes additional costs on us; • changes in laws, government regulation and monetary policy may have a material effect on our results of operations; • significant changes to the size, structure, powers and operations of the federal government may cause economic disruptions that could, in turn, adversely impact our business, results of operations and financial conditions; • the company faces risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities; • the CFPB has reshaped the consumer financial laws through rulemaking and enforcement of the prohibitions against unfair, deceptive and abusive business practices.
These provisions and the corporate and banking laws and regulations applicable to us, among others: • empower our board of directors, without stockholder approval, to issue preferred stock, the terms of which, including voting power, are set by our board of directors; • only permit stockholder action to be taken at an annual or special meeting of stockholders and not by written consent in lieu of such a meeting; • provide for a classified board of directors, so that only approximately one-third of our directors are elected each year; • prohibit us from engaging in certain business combinations with “interested stockholders” (generally defined as a holder of 15% or more of the corporation’s outstanding voting stock); 44 • require at least 120 days’ advance notice of nominations for the election of directors and the presentation of stockholder proposals at meetings of stockholders; and • require prior regulatory application and approval of any transaction involving control of our organization.
These provisions and the corporate and banking laws and regulations applicable to us, among others: • empower our board of directors, without stockholder approval, to issue preferred stock, the terms of which, including voting power, are set by our board of directors; • only permit stockholder action to be taken at an annual or special meeting of stockholders and not by written consent in lieu of such a meeting; • provide for a classified board of directors, so that only approximately one-third of our directors are elected each year; • prohibit us from engaging in certain business combinations with “interested stockholders” (generally defined as a holder of 15% or more of the corporation’s outstanding voting stock); • require at least 120 days’ advance notice of nominations for the election of directors and the presentation of stockholder proposals at meetings of stockholders; and • require prior regulatory application and approval of any transaction involving control of our organization.
As a public company, we are required to: • prepare and distribute periodic reports, proxy statements and other stockholder communications in compliance with the federal securities laws and rules; • expand the roles and duties of our board of directors and committees thereof; • maintain an enhanced internal audit function; • institute more comprehensive financial reporting and disclosure compliance procedures; • involve and retain to a greater degree outside counsel and accountants in the activities listed above; • enhance our investor relations function; • establish internal policies, including those relating to trading in our securities and disclosure controls and procedures; • retain additional personnel; • comply with the New York Stock Exchange listing standards; and • comply with the Sarbanes-Oxley Act.
As a public company, we are required to: • prepare and distribute periodic reports, proxy statements and other stockholder communications in compliance with the federal securities laws and rules; • expand the roles and duties of our board of directors and committees thereof; • maintain an enhanced internal audit function; • institute more comprehensive financial reporting and disclosure compliance procedures; • involve and retain to a greater degree outside counsel and accountants in the activities listed above; • enhance our investor relations function; • establish internal policies, including those relating to trading in our securities and disclosure controls and procedures; • retain additional personnel; 44 • comply with the New York Stock Exchange listing standards; and • comply with the Sarbanes-Oxley Act.
Cybersecurity risks for banking organizations have significantly increased in recent years and have been difficult to detect before they occur because, among other reasons: • the proliferation of new technologies and the use of the internet and telecommunications technologies to conduct financial transactions; 34 • these threats arise from numerous sources, not all of which are in our control, including among others, human error, fraud or malice on the part of employees or third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, natural disasters or severe weather conditions, health emergencies or pandemics, or outbreaks of hostilities or terrorist acts; • the techniques used in cyber-attacks change frequently and may not be recognized until launched or until well after the breach has occurred; • the increased sophistication and activities of organized crime groups, hackers, terrorist organizations, hostile foreign governments, disgruntled employees or vendors, activists and other external parties, including those involved in corporate espionage; • the vulnerability of systems to third parties seeking to gain access to such systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers or other users of our systems; and • our frequent transmission of sensitive information to, and storage of such information by, third parties, including our vendors and regulators, and possible weaknesses that go undetected in our data systems notwithstanding the testing we conduct of those systems.
Cybersecurity risks for banking organizations have significantly increased in recent years and have been difficult to detect before they occur because, among other reasons: • the proliferation of new technologies and the use of the internet and telecommunications technologies to conduct financial transactions; • these threats arise from numerous sources, not all of which are in our control, including among others, human error, fraud or malice on the part of employees or third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, natural disasters or severe weather conditions, health emergencies or pandemics, or outbreaks of hostilities or terrorist acts; • the techniques used in cyber-attacks change frequently and may not be recognized until launched or until well after the breach has occurred; • the increased sophistication and activities of organized crime groups, hackers, terrorist organizations, hostile foreign governments, disgruntled employees or vendors, activists and other external parties, including those involved in corporate espionage; 35 • the vulnerability of systems to third parties seeking to gain access to such systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers or other users of our systems; and • our frequent transmission of sensitive information to, and storage of such information by, third parties, including our vendors and regulators, and possible weaknesses that go undetected in our data systems notwithstanding the testing we conduct of those systems.
These actions include the power to enjoin “unsafe or unsound” practices, to require 37 affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against us, our officers, or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance.
These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against us, our officers, or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance.
Subject to limitations imposed by law or our Articles of Incorporation, our board of directors is empowered to determine: • the designation of, and the number of, shares constituting each series of preferred stock; • the dividend rate for each series; • the terms and conditions of any voting, conversion and exchange rights for each series; • the amounts payable on each series on redemption or our liquidation, dissolution or winding-up; • the provisions of any sinking fund for the redemption or purchase of shares of any series; and • the preferences and the relative rights among the series of preferred stock.
Subject to limitations imposed by law or our Articles of Incorporation, our board of directors is empowered to determine: • the designation of, and the number of, shares constituting each series of preferred stock; • the dividend rate for each series; • the terms and conditions of any voting, conversion and exchange rights for each series; • the amounts payable on each series on redemption or our liquidation, dissolution or winding-up; • the provisions of any sinking fund for the redemption or purchase of shares of any series; and 47 • the preferences and the relative rights among the series of preferred stock.
Such risks could also impair the value of collateral securing loans and hurt our deposit base. 46 We are or may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences. Many aspects of our business involve substantial risk of legal liability.
Such risks could also impair the value of collateral securing loans and hurt our deposit base. We are or may become involved from time to time in suits, legal proceedings, information-gathering requests, investigations and proceedings by governmental and self-regulatory agencies that may lead to adverse consequences. Many aspects of our business involve substantial risk of legal liability.
We subject to the reporting requirements of the Exchange Act, which requires that we file annual, quarterly and current reports with respect to our business and financial condition and proxy and other information statements, and the rules and 41 regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Act, the PCAOB and the New York Stock Exchange, each of which imposes additional reporting and other obligations on public companies.
We subject to the reporting requirements of the Exchange Act, which requires that we file annual, quarterly and current reports with respect to our business and financial condition and proxy and other information statements, and the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Act, the PCAOB and the New York Stock Exchange, each of which imposes additional reporting and other obligations on public companies.
In addition, (i) any bank holding company or foreign bank with a U.S. presence is required to obtain the approval of the Federal Reserve under the Bank Holding Company Act to acquire or retain 5% or more of a class of our outstanding shares of voting stock, and (ii) any person other than a bank holding company may be required to obtain prior regulatory approval under the Change in Bank Control Act to acquire or retain 10% or more of our outstanding shares of 38 voting stock.
In addition, (i) any bank holding company or foreign bank with a U.S. presence is required to obtain the approval of the Federal Reserve under the Bank Holding Company Act to acquire or retain 5% or more of a class of our outstanding shares of voting stock, and (ii) any person other than a bank holding company may be required to obtain prior regulatory approval under the Change in Bank Control Act to acquire or retain 10% or more of our outstanding shares of voting stock.
There are substantial risks associated with such efforts, including risks that (i) revenues from such activities might not be sufficient to offset the development, compliance and other implementation costs, (ii) competing 31 products and services and shifting market preferences might affect the profitability of such activities and (iii) our internal controls might be inadequate to manage the risks associated with new activities.
There are substantial risks associated with such efforts, including risks that (i) revenues from such activities might not be sufficient to offset the development, compliance and other implementation costs, (ii) competing products and services and shifting market preferences might affect the profitability of such activities and (iii) our internal controls might be inadequate to manage the risks associated with new activities.
Even if the loans are collateralized, the large increase in classified assets could harm our reputation with our regulators, investors and potential investors and inhibit our ability to execute our business plan. We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, which could adversely affect our profitability.
Even if the loans are collateralized, the large increase in classified assets could harm our reputation with our regulators, investors and potential investors and inhibit our ability to execute our business plan. 26 We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, which could adversely affect our profitability.
We may also be forced, as a result of any withdrawal of deposits, to rely more heavily on other, potentially more expensive and less stable funding sources. Consequently, the occurrence of any of these events could have a material adverse effect on our business, results of operations, financial condition and future prospects.
We may also be forced, as a result of any withdrawal of deposits, to rely more heavily on 31 other, potentially more expensive and less stable funding sources. Consequently, the occurrence of any of these events could have a material adverse effect on our business, results of operations, financial condition and future prospects.
Many of our competitors have greater resources to invest in technological improvements and we may not be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete. 33 Our information systems may experience a failure or interruption. We rely heavily on communications and information systems to conduct our business.
Many of our competitors have greater resources to invest in technological improvements and we may not be able to effectively implement new technology-driven products and services, which could reduce our ability to effectively compete. Our information systems may experience a failure or interruption. We rely heavily on communications and information systems to conduct our business.
Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. The laws that regulate our operations are designed for the protection of depositors and the public, not our stockholders.
Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. 42 The laws that regulate our operations are designed for the protection of depositors and the public, not our stockholders.
This influence may also have the effect of delaying or preventing changes of control, or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company. 43 Shares of our Class A common stock are not insured deposits and may lose value.
This influence may also have the effect of delaying or preventing changes of control, or changes in management or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company. Shares of our Class A common stock are not insured deposits and may lose value.
Any such effect on customers or restrictions by our regulators could have a material adverse effect on our financial condition and results of operations. We are subject to stringent capital requirements, which may adversely impact our return on equity or constrain us from paying dividends or repurchasing shares.
Any such effect on customers or restrictions by our regulators could have a material adverse effect on our financial condition and results of operations. 40 We are subject to stringent capital requirements, which may adversely impact our return on equity or constrain us from paying dividends or repurchasing shares.
The COVID-19 pandemic caused changes in the behavior of customers, businesses, and their employees, including illness, quarantines, social distancing practices, cancellation of events and travel, business and school shutdowns, reduction in commercial 27 activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability.
The COVID-19 pandemic caused changes in the behavior of customers, businesses, and their employees, including illness, quarantines, social distancing practices, cancellation of events and travel, business and school shutdowns, reduction in commercial activity and financial transactions, supply chain interruptions, increased unemployment, and overall economic and financial market instability.
Stockholders may be deemed to be acting in concert or otherwise in control of us and our bank subsidiary, which could impose prior approval requirements and result in adverse regulatory consequences for such holders. We are a bank holding company regulated by the Federal Reserve.
Stockholders may be deemed to be acting in concert or otherwise in control of us and our bank subsidiary, which could impose prior approval requirements and result in adverse regulatory consequences for such holders. We are a financial holding company regulated by the Federal Reserve.
We may incur compliance, operating, maintenance and remediation costs. Risks Relating to the Company’s Common Stock The market price of our Class A common stock may be subject to substantial fluctuations which may make it difficult for you to sell your shares at the volumes, prices and times desired.
We may incur compliance, operating, maintenance and remediation costs. 43 Risks Relating to the Company’s Common Stock The market price of our Class A common stock may be subject to substantial fluctuations which may make it difficult for you to sell your shares at the volumes, prices and times desired.
Depending on our portfolio of loans and investments, our financial condition and results of operations may be adversely affected by changes in interest rates. Our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI. We hold certain financial instruments measured at fair value.
Depending on our portfolio of loans and investments, our financial condition and results of operations may be adversely affected by changes in interest rates. 27 Our financial instruments expose us to certain market risks and may increase the volatility of earnings and AOCI. We hold certain financial instruments measured at fair value.
Although our customers’ business and financial interests may extend well beyond these market areas, adverse conditions that affect these market areas could reduce our growth rate, affect the ability of our customers to repay their loans, affect the value of collateral underlying loans, impact our ability to attract deposits and generally affect our financial conditions and results of operations.
Although our customers’ business and financial interests may extend well beyond these market areas, adverse conditions that affect these market 30 areas could reduce our growth rate, affect the ability of our customers to repay their loans, affect the value of collateral underlying loans, impact our ability to attract deposits and generally affect our financial conditions and results of operations.
Moreover, loan growth throughout the year can fluctuate due in part to 30 seasonality of the businesses of our borrowers and potential borrowers and the timing on loan repayments, particularly those of our borrowers with significant relationships with us, resulting from, among other things, excess levels of liquidity.
Moreover, loan growth throughout the year can fluctuate due in part to seasonality of the businesses of our borrowers and potential borrowers and the timing on loan repayments, particularly those of our borrowers with significant relationships with us, resulting from, among other things, excess levels of liquidity.
Such regulatory approvals may not be granted on terms that are 39 acceptable to us, or at all. We may also be required to sell branches as a condition to receiving regulatory approval, which may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.
Such regulatory approvals may not be granted on terms that are acceptable to us, or at all. We may also be required to sell branches as a condition to receiving regulatory approval, which may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.
Among other things, there may be an increased focus by both regulators and investors on deposit composition and the level of uninsured deposits. As a result, the Bank could face increased 40 scrutiny or be viewed as higher risk by regulators and the investor community.
Among other things, there may be an increased focus by both regulators and investors on deposit composition and the level of uninsured deposits. As a result, the Bank could face increased scrutiny or be viewed as higher risk by regulators and the investor community.
This could have a material adverse effect on our provision for credit losses and our operating results and financial condition. External economic factors, such as changes in monetary policy and inflation and deflation, may have an adverse effect on our business, financial condition and results of operations.
This could have a material adverse effect on our provision for credit losses and our operating results and financial condition. 24 External economic factors, such as changes in monetary policy and inflation and deflation, may have an adverse effect on our business, financial condition and results of operations.
This allocation of resources, as well as any failure to comply with applicable requirements, may negatively impact our financial condition and results of operations. Changes in laws, government regulation and monetary policy may have a material effect on our results of operations.
This allocation of resources, as well as any failure to comply with applicable requirements, may negatively impact our financial condition and results of operations. 38 Changes in laws, government regulation and monetary policy may have a material effect on our results of operations.
If economic conditions negatively impact our markets generally, and small to medium-sized businesses are adversely affected, our financial condition and results of operations may be negatively affected. A lack of liquidity could adversely affect our financial condition and results of operations. Liquidity is essential to our business.
If economic conditions negatively impact our markets generally, and small to medium-sized businesses are adversely affected, our financial condition and results of operations may be negatively affected. 32 A lack of liquidity could adversely affect our financial condition and results of operations. Liquidity is essential to our business.
Given the lower trading volume of our Class A common stock, significant sales of our Class A common stock or the expectation of these sales, could cause the price of our Class A common stock to decline. Use of our common stock for future acquisitions or to raise capital may be dilutive to existing stockholders.
Given the lower trading volume of our Class A common stock, significant sales of our Class A common stock or the expectation of these sales, could cause the price of our Class A common stock to decline. 45 Use of our common stock for future acquisitions or to raise capital may be dilutive to existing stockholders.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 46 purposes in accordance with generally accepted accounting principles.
It is also difficult to project future commodity prices as they are dependent upon many different factors beyond our control. 24 Credit and Interest Rate Risks Inability to effectively manage credit risk.
It is also difficult to project future commodity prices as they are dependent upon many different factors beyond our control. Credit and Interest Rate Risks Inability to effectively manage credit risk.
When we originate loans, we rely upon information supplied by loan applicants and third parties, including the information contained in the loan application, property appraisal and title information, if applicable, 35 and employment and income documentation provided by third parties.
When we originate loans, we rely upon information supplied by loan applicants and third parties, including the information contained in the loan application, property appraisal and title information, if applicable, and employment and income documentation provided by third parties.
Banks, securities firms and insurance companies can merge under the umbrella of a financial 45 holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.
Banks, securities firms and insurance companies can merge under the umbrella of a financial holding company, which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.
Any such losses could adversely affect our business, financial condition and results of operations. 26 Our profitability is vulnerable to interest rate fluctuations. Our profitability depends substantially upon our net interest income.
Any such losses could adversely affect our business, financial condition and results of operations. Our profitability is vulnerable to interest rate fluctuations. Our profitability depends substantially upon our net interest income.
We maintain an allowance for credit losses, which is an allowance established through a provision for credit losses charged to expense that represents management’s best estimate of probable incurred losses in our loan portfolio. Additional credit losses will likely occur in the future and may occur at a rate greater than we have experienced to date.
We maintain an allowance for credit losses, which is an allowance established through a provision for credit losses charged to expense that represents management’s best estimate of credit losses in our loan portfolio. Additional credit losses will likely occur in the future and may occur at a rate greater than we have experienced to date.
We have pledged all of the stock of Equity Bank as collateral for a loan, and if the lender forecloses, you could lose your investment. We have pledged all of the stock of Equity Bank as collateral for a third-party loan, which had no balance as of December 31, 2023. This loan has a maximum lending commitment of $25.0 million.
We have pledged all of the stock of Equity Bank as collateral for a loan, and if the lender forecloses, you could lose your investment. We have pledged all of the stock of Equity Bank as collateral for a third-party loan, which had no balance as of December 31, 2024. This loan has a maximum lending commitment of $25.0 million.
Our authorized capital stock includes 10,000,000 shares of preferred stock of which none were issued and outstanding as of March 7, 2024. Our board of directors, in its sole discretion, may designate and issue one or more series of preferred stock from the authorized and unissued shares of preferred stock.
Our authorized capital stock includes 10,000,000 shares of preferred stock of which none were issued and outstanding as of March 7, 2025. Our board of directors, in its sole discretion, may designate and issue one or more series of preferred stock from the authorized and unissued shares of preferred stock.
In the event of default, the Company’s senior debt holders will be entitled to receive payment in full prior to payment of subordinated debt holders. If the company’s distributable assets in the event of default can only repay the senior debt holders the subordinated debt holders could lose their investment. 47 Item 1B: Unresolve d Staff Comments None
In the event of default, the Company’s senior debt holders will be entitled to receive payment in full prior to payment of subordinated debt holders. If the company’s distributable assets in the event of default can only repay the senior debt holders the subordinated debt holders could lose their investment. 50 Item 1B: Unresolve d Staff Comments None
In addition, our acquisition activities could be material to our business and involve a number of significant risks, including the following: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target company or the assets and liabilities that we seek to acquire; • exposure to potential asset quality issues of the target company; • intense competition from other banking organizations and other potential acquirers, many of which have substantially greater resources than we do; • potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including, without limitation, liabilities for regulatory and compliance issues; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence and other projected benefits of the acquisition; • incurring time and expense required to integrate the operations and personnel of the combined businesses; • inconsistencies in standards, procedures and policies that would adversely affect our ability to maintain relationships with customers and employees; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse short-term effect on our results of operations; • losing key employees and customers; • significant problems relating to the conversion of the financial and customer data of the entity; • integration of acquired customers into our financial and customer product systems; • potential changes in banking or tax laws or regulations that may affect the target company; or 29 • risks of impairment to goodwill.
We anticipate that the integration of businesses that we may acquire in the future will be a time-consuming and expensive process, even if the integration process is effectively planned and implemented. 29 In addition, our acquisition activities could be material to our business and involve a number of significant risks, including the following: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operation of our existing business; • using inaccurate estimates and judgments to evaluate credit, operations, management and market risks with respect to the target company or the assets and liabilities that we seek to acquire; • exposure to potential asset quality issues of the target company; • intense competition from other banking organizations and other potential acquirers, many of which have substantially greater resources than we do; • potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including, without limitation, liabilities for regulatory and compliance issues; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence and other projected benefits of the acquisition; • incurring time and expense required to integrate the operations and personnel of the combined businesses; • inconsistencies in standards, procedures and policies that would adversely affect our ability to maintain relationships with customers and employees; • experiencing higher operating expenses relative to operating income from the new operations; • creating an adverse short-term effect on our results of operations; • losing key employees and customers; • significant problems relating to the conversion of the financial and customer data of the entity; • integration of acquired customers into our financial and customer product systems; • potential changes in banking or tax laws or regulations that may affect the target company; or • risks of impairment to goodwill.
This summary of risk factors should be read in conjunction with the more detailed risk factors below. Economic Risks Recessionary conditions could result in increases in our level of nonperforming loans and/or reduced demand for our products and services, which could have an adverse effect on our results of operations.
The foregoing factors should not be construed as exhaustive. This summary of risk factors should be read in conjunction with the more detailed risk factors below. Economic Risks Recessionary conditions could result in increases in our level of nonperforming loans and/or reduced demand for our products and services, which could have an adverse effect on our results of operations.
We depend on the accuracy and completeness of information about customers and counterparties. In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information.
In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information.
Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, we may have to engage in litigation that could be expensive, time-consuming, disruptive to our operations and distracting to management.
The plaintiffs in these actions frequently seek injunctions and substantial damages. 49 Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, we may have to engage in litigation that could be expensive, time-consuming, disruptive to our operations and distracting to management.
Competitors of our vendors, or other individuals or companies, have from time to time claimed to hold intellectual property sold to us by its vendors. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.
Competitors of our vendors, or other individuals or companies, have from time to time claimed to hold intellectual property sold to us by its vendors. Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors.
Additionally, to the extent that any component of our strategic plan requires regulatory approval, if we are unable to obtain necessary approval, we will be unable to completely implement our strategy, which may adversely affect our actual financial results. Our inability to successfully implement our strategic plan could adversely affect the price of our Class A common stock.
Additionally, to the extent that any component of our strategic plan requires regulatory approval, if we are unable to obtain necessary approval, we will be unable to completely implement our strategy, which may adversely affect our actual financial results.
Nonetheless, we may incur a temporary disruption in our ability to conduct business or process transactions, or incur damage to our reputation, if the third-party vendor fails to adequately maintain internal controls or institute necessary changes to systems. Such a disruption or breach of security may have a material adverse effect on our business.
Nonetheless, we may incur a temporary disruption in our ability to conduct business or process transactions, or incur damage to our reputation, if the third-party vendor fails to adequately maintain internal controls or institute necessary changes to systems.
If we are able to identify attractive acquisition opportunities, we must generally satisfy a number of conditions prior to completing any such transaction, including certain bank regulatory approval, which has become substantially more difficult, time-consuming and unpredictable as a result of the recent financial crisis. Additionally, any future acquisitions may not produce the revenue, earnings or synergies that we anticipated.
If we are able to identify attractive acquisition opportunities, we must generally satisfy a number of conditions prior to completing any such transaction, including certain bank regulatory approval, which has become substantially more difficult, time-consuming and unpredictable as a result of the recent financial crisis.
As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates.
This loan was renewed subsequent to December 31, 2023, that set a new maturity date of February 10, 2025. If we were to default on this indebtedness, the lender of such loan could foreclose on Equity Bank’s stock and we would lose our principal asset.
This loan was renewed and amended on February 10, 2025 and has a maturity date of February 10, 2026. If we were to default on this indebtedness, the lender of such loan could foreclose on Equity Bank’s stock and we would lose our principal asset.
Further, the concentration of real estate collateral in these four markets limits our ability to diversify the risk of such occurrences. 25 A large portion of our loan portfolio is comprised of commercial loans that are secured by accounts receivable, inventory, equipment or other asset-based collateral, and deterioration in the value of such collateral could increase our exposure to future probable losses.
A large portion of our loan portfolio is comprised of commercial loans that are secured by accounts receivable, inventory, equipment or other asset-based collateral, and deterioration in the value of such collateral could increase our exposure to future probable losses.
If securities analysts do not cover our Class A common stock, the lack of research coverage may adversely affect our market price. If we are covered by securities analysts and our Class A common stock is the subject of an unfavorable report, the price of our Class A common stock may decline.
If we are covered by securities analysts and our Class A common stock is the subject of an unfavorable report, the price of our Class A common stock may decline.
Many factors can lead to a finding of acting in concert, including where: (i) the stockholders are commonly controlled or managed; (ii) the stockholders are parties to an oral or written agreement or understanding regarding the acquisition, voting or transfer of control of voting securities of a bank or bank holding company; (iii) the stockholders are immediate family members; or (iv) both a stockholder and a controlling stockholder, partner, trustee or management official of such stockholder own equity in the bank or bank holding company.
Many factors can lead to a finding of acting in concert, including where: (i) the stockholders are commonly controlled or managed; (ii) the stockholders are parties to an oral or written agreement or understanding regarding the acquisition, voting or transfer of control of voting securities of a bank or bank holding company; (iii) the stockholders are immediate family members; or (iv) both a stockholder and a controlling stockholder, partner, trustee or management official of such stockholder own equity in the bank or bank holding company. 41 We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Our strategy of pursuing acquisitions exposes us to financial, execution, compliance and operational risks that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. We intend to continue pursuing a strategy that includes acquisitions.
Additionally, any future acquisitions may not produce the revenue, earnings or synergies that we anticipated. 28 Our strategy of pursuing acquisitions exposes us to financial, execution, compliance and operational risks that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. We intend to continue pursuing a strategy that includes acquisitions.
As of December 31, 2023, we had a net unrealized loss of $51.9 million on our available for-sale investment securities portfolio primarily as a result of the rising interest rate environment. As a community banking institution, we have lower lending limits and different lending risks than certain of our larger, more diversified competitors.
At December 31, 2024, we had a net unrealized loss of $56.8 million, net of tax, on our available for-sale investment securities portfolio. As a community banking institution, we have lower lending limits and different lending risks than certain of our larger, more diversified competitors.
To the extent that we are unable to find suitable acquisition targets, an important component of our growth strategy may not be realized. 28 Acquisitions of financial institutions and branches also involve operational risks and uncertainties, such as unknown or contingent liabilities with no available manner of recourse, exposure to unexpected problems such as asset quality, the retention of key employees and customers and other issues that could negatively affect our business.
Acquisitions of financial institutions and branches also involve operational risks and uncertainties, such as unknown or contingent liabilities with no available manner of recourse, exposure to unexpected problems such as asset quality, the retention of key employees and customers and other issues that could negatively affect our business.
A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could negatively impact our business. There are significant risks associated with real estate-based lending.
In particular, we face credit quality risks presented by past, current and potential economic and real estate market conditions. 25 A significant portion of our loan portfolio is secured by real estate, and events that negatively impact the real estate market could negatively impact our business. There are significant risks associated with real estate-based lending.
A decline in the price of shares of our Class A common stock might impede our ability to raise capital through the issuance of additional shares of our Class A common stock or other equity securities and could result in a decline in the value of the shares of our Class A common stock. 42 Securities analysts may not initiate or continue coverage on our Class A common stock, which could adversely affect the market for our Class A common stock.
A decline in the price of shares of our Class A common stock might impede our ability to raise capital through the issuance of additional shares of our Class A common stock or other equity securities and could result in a decline in the value of the shares of our Class A common stock.
We are subject to losses due to the errors or fraudulent behavior of employees or third parties. We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical record-keeping errors and transactional errors.
Such a disruption or breach of security may have a material adverse effect on our business. 36 We are subject to losses due to the errors or fraudulent behavior of employees or third parties. We are exposed to many types of operational risk, including the risk of fraud by employees and outsiders, clerical record-keeping errors and transactional errors.
To the extent that we are unable to increase loans, we may be unable to successfully implement our growth strategy, which could materially and adversely affect us.
To the extent that we are unable to increase loans, we may be unable to successfully implement our growth strategy, which could materially and adversely affect us. We may suffer losses in our loan portfolio due to inadequate or faulty underwriting and loan collection practices.
As of December 31, 2023, our ten largest loan relationships totaled over $344.7 million in loan exposure, or 10.4% of the total loan portfolio.
As of December 31, 2024, our ten largest loan relationships totaled over $314.6 million in loan exposure, or 9.0% of the total loan portfolio.
As of December 31, 2023, our ten largest non-brokered depositors accounted for $270.6 million in deposits, or approximately 6.5% of our total deposits. Further, our non-brokered deposit account balance was $3.8 billion, or approximately 92.4% of our total deposits, as of December 31, 2023.
As of December 31, 2024, our ten largest non-brokered depositors accounted for $438.7 million in deposits, or approximately 10.0% of our total deposits. Further, our non-brokered deposit account balance was $4.2 billion, or approximately 97.1% of our total deposits, as of December 31, 2024.
The occurrence of any failures or interruptions impacting our information systems could damage our reputation, result in a loss of customer business and expose us to additional regulatory scrutiny, civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
The occurrence of any failures or interruptions impacting our information systems could damage our reputation, result in a loss of customer business and expose us to additional regulatory scrutiny, civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations. 34 We use information technology in our operations and offer online banking services to our customers, and unauthorized access to our or our customers’ confidential or proprietary information as a result of a cyber-attack or otherwise could expose us to reputational harm and litigation and adversely affect our ability to attract and retain customers.
In addition, increased competition may also drive up the acquisition consideration that we will be required to pay in order to successfully capitalize on attractive acquisition opportunities.
In addition, increased competition may also drive up the acquisition consideration that we will be required to pay in order to successfully capitalize on attractive acquisition opportunities. To the extent that we are unable to find suitable acquisition targets, an important component of our growth strategy may not be realized.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our business, financial condition and results of operations.
Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability, which, in turn, could harm our business, financial condition and results of operations. 48 As a community bank, our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance.
Furthermore, to the extent that real estate collateral is obtained through foreclosure, the costs of holding and marketing the real estate collateral, as well as the ultimate values obtained from disposition, could reduce our earnings and adversely affect our financial condition. The value of real estate collateral may fluctuate significantly resulting in an under-collateralized loan portfolio.
Furthermore, to the extent that real estate collateral is obtained through foreclosure, the costs of holding and marketing the real estate collateral, as well as the ultimate values obtained from disposition, could reduce our earnings and adversely affect our financial condition. Unstable global economic conditions may have serious adverse consequences on our business, financial condition, and operations.
The trading market for our Class A common stock may depend in part on the research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts, and they may not cover our Class A common stock.
Securities analysts may not initiate or continue coverage on our Class A common stock, which could adversely affect the market for our Class A common stock. The trading market for our Class A common stock may depend in part on the research and reports that securities analysts publish about us and our business.
These policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on our financial condition and results of operations. In particular, we face credit quality risks presented by past, current and potential economic and real estate market conditions.
These policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on our financial condition and results of operations.
The federal and state legislatures and regulatory agencies have proposed legislative and regulatory initiatives seeking to mitigate the effects of climate change. These agreements and measures may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes.
These agreements and measures may result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes.
Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
As a bank holding company, we are subject to federal regulation under the BHC Act, and the examination and reporting requirements of the Federal Reserve.
Risks Relating to the Regulation of Our Industry We are subject to extensive regulation in the conduct of our business, which imposes additional costs on us and adversely affects our profitability. As a bank holding company, we are subject to federal regulation under the BHC Act, and the examination and reporting requirements of the Federal Reserve.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs.
We are dependent upon outside third parties for the processing and handling of our records and data. We rely on software developed by third-party vendors to process various transactions. In some cases, we have contracted with third parties to run their proprietary software on our behalf.
We rely on software developed by third-party vendors to process various transactions. In some cases, we have contracted with third parties to run their proprietary software on our behalf. These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing and securities portfolio accounting.
We may try to serve such borrowers by selling loan participations to other financial institutions; however, this strategy may not succeed. 32 Our financial projections are based upon numerous assumptions about future events and our actual financial performance may differ materially from our projections if our assumptions are inaccurate.
Our financial projections are based upon numerous assumptions about future events and our actual financial performance may differ materially from our projections if our assumptions are inaccurate.
If repurchase and indemnity demands increase and such demands are valid claims and are in excess of our provision for potential losses, our liquidity, results of operations and financial condition may be adversely affected. 36 Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.
As a community bank, our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance. We are a community bank and our reputation is one of the most valuable components of our business.
We are a community bank and our reputation is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our reputation.
These lower lending limits may discourage borrowers with lending needs that exceed our limits from doing business with us.
These lower lending limits may discourage borrowers with lending needs that exceed our limits from doing business with us. We may try to serve such borrowers by selling loan participations to other financial institutions; however, this strategy may not succeed.
Equity Bank's level of uninsured deposits as a percentage of non-brokered deposits was 35.2% at December 31, 2023, and 25.3% at December 31, 2022. Climate change related legislative and regulatory initiatives, have the potential to disrupt our business and adversely impact the operations and creditworthiness of our customers. Political and social attention to the issue of climate change has increased.
Climate change related legislative and regulatory initiatives, have the potential to disrupt our business and adversely impact the operations and creditworthiness of our customers. Political and social attention to the issue of climate change has increased. The federal and state legislatures and regulatory agencies have proposed legislative and regulatory initiatives seeking to mitigate the effects of climate change.
In addition, we may fail to realize some or all of the anticipated benefits of completed acquisitions. We anticipate that the integration of businesses that we may acquire in the future will be a time-consuming and expensive process, even if the integration process is effectively planned and implemented.
In addition, we may fail to realize some or all of the anticipated benefits of completed acquisitions.
Removed
We use information technology in our operations and offer online banking services to our customers, and unauthorized access to our or our customers’ confidential or proprietary information as a result of a cyber-attack or otherwise could expose us to reputational harm and litigation and adversely affect our ability to attract and retain customers.
Added
Compliance with such initiatives may impact the business operations of depository institutions offering consumer financial products or services, including the Company; • a protracted government shutdown may result in reduced loan originations and related gains on sales could negatively affect our financial condition and results of operations; • our banking subsidiary may be required to pay higher FDIC insurance premiums or special assessments; • we are subject to certain capital requirements by regulators; • we are subject to stringent capital requirements, which may adversely impact our return on equity or constrain us from paying dividends or repurchasing shares; • we may need to raise additional capital in the future and the capital may not be available when it is needed or may be dilutive to stockholders; • we are subject to the Bank Secrecy Act and other anti-money laundering statutes and regulations, and any deemed deficiency by us with respect to these laws could result in significant liability; • the laws that regulate our operations are designed for the protection of depositors and the public, not our stockholders; • as a bank holding company, the sources of funds available to us are limited; • recent negative developments affecting the banking industry, and resulting media coverage, may have eroded customer confidence in the banking system; • any regulatory examination scrutiny or new regulatory requirements arising from the recent events in the banking industry could increase the Company's expenses and affect the Company's operation; • climate change related legislative and regulatory initiatives, have the potential to disrupt our business and adversely impact the operations and creditworthiness of our customers • the market price of our Class A common stock may be subject to substantial fluctuations which may make it difficult for you to sell your shares at the volumes, prices and times desired; • the obligations associated with being a public company requires significant resources and management attention; • there is no guarantee that we will declare or pay cash dividends on our common stock; • securities analysts may not initiate or continue coverage on our Class A common stock, which could adversely affect the market for our Class A common stock; • use of our common stock for future acquisitions or to raise capital may be dilutive to existing stockholders; • a future issuance of stock could dilute the value of our Class A common stock; • we have significant institutional investors whose interests may differ from yours; • our directors and executive officers beneficially own a significant portion of our Class A common stock and have substantial influence over us; • shares of our Class A common stock are not insured deposits and may lose value; • we have the ability to incur debt and pledge our assets, including our stock in Equity Bank, to secure that debt, and holders of any such debt obligations will generally have priority over holders of our Class A common stock with respect to certain payment obligations; • if we fail to maintain an effective system of disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud; • our board of directors may issue shares of preferred stock that would adversely affect the rights of our Class A common stockholders; • the return on your investment in our Class A common stock is uncertain; • we operate in a highly competitive industry and face significant competition from other banking organizations; • as a community bank, our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance; • we are subject to environmental risk in our lending activities; • we are subject to claims and litigation pertaining to intellectual property; 23 • we have pledged all of the stock of Equity Bank as collateral for a loan, and if the lender forecloses, you could lose your investment; and • we have outstanding subordinated debt obligations, and if the Company defaults on those obligations, the debt holders could lose their investment.
Removed
These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing and securities portfolio accounting.
Added
The global credit and financial markets have from time-to-time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, high rates of inflation, and uncertainty about economic stability.

… 45 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed15 unchanged
Biggest changeThe CISO has served in various roles in information technology and information security for over 15 years, including serving as the Chief Information Security Officer of two large public companies. The CISO holds an undergraduate degree in Information Networking and Telecommunications , a graduate degree in Cybersecurity, and has attained the professional certification of Certified Information Systems Security Professional.
Biggest changeThe CISO has served in various roles in information technology and information security for over 15 years, including serving as the Chief Information Security Officer of two large public companies. The CISO holds an undergraduate degree in Information Networking and Telecommunications, a graduate degree in Cybersecuri ty, and has attained the professional certification of Certified Information Systems Security Professional.
The results of such assessments, audits and reviews are reviewed by the Cybersecurity team and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews. 48 Governance Board Oversight of Risks from Cybersecurity Threats The Board, in coordination with the Risk Management Committee, oversees the Company’s ERM process, including the management of risks arising from cybersecurity threats.
The results of such assessments, audits and reviews are reviewed by the Cybersecurity team and the Company adjusts its cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews. 51 Governance Board Oversight of Risks from Cybersecurity Threats The Board, in coordination with the Risk Management Committee, oversees the Company’s ERM process, including the management of risks arising from cybersecurity threats.
The CIO holds an undergraduate degree in Business Finance and has served in various roles in information technology for over 30 years, including serving as either the Chief Information Security Officer or Chief Information Officer of two public companies.
The CIO holds an undergraduate degree in Business Finance and has served in various roles in information technology for over 30 years, including serving as either the Chief Information Security Officer or Chief Information Officer of two public companie s.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeAddress Owned/Leased Principal Executive Office and Wichita Branch: 7701 East Kellogg Drive Wichita, Kansas 67207 Owned Branches as of December 31, 2023 Owned 57 Leased (1) 7 49 (1) Included in this category is one branch in which the building is owned but the land is on a long-term lease expiring in January 2030.
Biggest changeThe following table summarizes pertinent details of our principal executive offices and branches, as of December 31, 2024. 52 Address Owned/Leased Principal Executive Office and Wichita Branch: 7701 East Kellogg Drive Wichita, Kansas 67207 Owned Branches as of December 31, 2024 Owned 63 Leased (1) 8 (1) Included in this category is one branch in which the building is owned but the land is on a long-term lease expiring in January 2030.
Including our principal executive offices, as of December 31, 2023, we operated a total of 64 branches, consisting of seven branches in the Wichita, Kansas metropolitan area, seven branches in the Kansas City metropolitan area, two branches in Topeka, Kansas, eleven branches in Western Missouri, seven branches in Western Kansas, four branches in Southeast Kansas, seven branches in Southwest Kansas, five branches in Central Kansas, two branches in North Central Kansas, five branches in Northern Arkansas, one branch in the Tulsa, Oklahoma metropolitan area, four branches in Northern Oklahoma and two branches in Western Oklahoma.
Including our principal executive offices, as of December 31, 2024, we operated a total of 71 branches, consisting of seven branches in the Wichita, Kansas metropolitan area, six branches in the Kansas City metropolitan area, two branches in Topeka, Kansas, eleven branches in Western Missouri, eight branches in North Central Missouri, seven branches in Western Kansas, four branches in Southeast Kansas, seven branches in Southwest Kansas, five branches in Central Kansas, two branches in North Central Kansas, five branches in Northern Arkansas, one branch in the Tulsa, Oklahoma metropolitan area, four branches in Northern Oklahoma and two branches in Western Oklahoma.
Most of Equity Bank’s branches are equipped with automated teller machines and drive-through facilities. We believe all of our facilities are suitable for our operational needs. The following table summarizes pertinent details of our principal executive offices and branches, as of December 31, 2023.
Most of Equity Bank’s branches are equipped with automated teller machines and drive-through facilities. We believe all of our facilities are suitable for our operational needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 4: Mine Saf ety Disclosures Not applicable. 50 Part II
Biggest changeItem 4: Mine Saf ety Disclosures Not applicable. 53 Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

31 edited+6 added−8 removed58 unchanged
Biggest changeThis 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; • 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 – reconciliation of non-GAAP measures. 56 Years Ended December 31, (Dollars in thousands, except per share data) 2023 2022 2021 2020 2019 Statement of Income Data Interest and dividend income $ 246,712 $ 188,248 $ 157,368 $ 155,561 $ 175,499 Interest expense 87,694 25,418 14,789 22,909 49,641 Net interest income 159,018 162,830 142,579 132,652 125,858 Provision (reversal) for credit losses 1,873 125 (8,480 ) 24,255 18,354 Net gain on acquisition - 962 585 2,145 — Net gain (loss) from securities transactions (51,909 ) 5 406 11 14 Other non-interest income 32,780 34,990 31,851 23,867 24,974 Merger expense 297 594 9,189 299 915 Goodwill impairment — — — 104,831 — Loss on extinguishment of debt — — 372 — — Other non-interest expense 135,304 127,786 109,904 103,860 98,720 Income (loss) before income taxes 2,415 70,282 64,436 (74,570 ) 32,857 Provision for income taxes (5,406 ) 12,594 11,956 400 7,278 Net income (loss) 7,821 57,688 52,480 (74,970 ) 25,579 Net income (loss) allocable to common stockholders 7,821 57,688 52,480 (74,970 ) 25,579 Basic earnings (loss) per share 0.50 3.56 3.49 (4.97 ) 1.64 Diluted earnings (loss) per share 0.50 3.51 3.43 (4.97 ) 1.61 Balance Sheet Data (at period end) Cash and cash equivalents $ 379,099 $ 104,428 $ 259,954 $ 280,698 $ 89,291 Securities available-for-sale 919,648 1,184,390 1,327,442 871,827 142,067 Securities held-to-maturity 2,209 1,948 — — 769,059 Loans held for sale 476 349 4,214 12,394 5,933 Gross loans held for investment 3,332,901 3,311,548 3,155,627 2,591,696 2,556,652 Allowance for credit losses 43,520 45,847 48,365 33,709 12,232 Loans held for investment, net of allowance for credit losses 3,289,381 3,265,701 3,107,262 2,557,987 2,544,420 Goodwill and core deposit intangibles, net 60,323 63,697 69,344 47,658 156,339 Mortgage servicing asset, net 75 176 276 — 5 Naming rights, net 1,000 1,044 1,087 1,130 1,174 Total assets 5,034,592 4,981,651 5,137,631 4,013,356 3,949,578 Total deposits 4,145,455 4,241,807 4,420,004 3,447,590 3,063,516 Borrowings 380,503 281,734 151,891 133,857 383,632 Total liabilities 4,581,732 4,571,593 4,637,000 3,605,707 3,471,518 Total stockholders’ equity 452,860 410,058 500,631 407,649 478,060 Tangible common equity * 391,462 345,141 429,924 358,861 320,542 Performance ratios Return on average assets (ROAA) 0.16 % 1.15 % 1.18 % (1.87 )% 0.64 % Return on average equity (ROAE) 1.85 % 13.08 % 11.75 % (16.14 )% 5.52 % Return on average tangible common equity (ROATCE) * 2.94 % 16.35 % 14.10 % 8.27 % 9.22 % Yield on loans 6.39 % 4.98 % 4.77 % 5.00 % 5.73 % Cost of interest-bearing deposits 2.21 % 0.53 % 0.30 % 0.66 % 1.53 % Net interest margin 3.46 % 3.51 % 3.44 % 3.63 % 3.48 % Efficiency ratio * 70.55 % 64.60 % 63.01 % 66.36 % 65.45 % Non-interest income / average assets -0.38 % 0.72 % 0.74 % 0.65 % 0.63 % Non-interest expense / average assets 2.71 % 2.56 % 2.70 % 5.23 % 2.50 % Dividend payout ratio 88.35 % 10.26 % 4.84 % 0.00 % 0.00 % Capital Ratios Tier 1 Leverage Ratio 9.46 % 9.61 % 9.09 % 9.30 % 9.02 % Common Equity Tier 1 Capital Ratio 11.74 % 12.26 % 12.03 % 12.82 % 11.63 % Tier 1 Risk Based Capital Ratio 12.36 % 12.88 % 12.67 % 13.37 % 12.15 % Total Risk Based Capital Ratio 15.48 % 16.08 % 15.96 % 17.35 % 12.59 % Equity / Assets 8.99 % 8.23 % 9.74 % 10.16 % 12.10 % Book value per share $ 29.35 $ 25.74 $ 29.87 $ 28.04 $ 30.95 Tangible book value per share * $ 25.37 $ 21.67 $ 25.65 $ 24.68 $ 20.75 Tangible common equity to tangible assets * 7.87 % 7.02 % 8.48 % 9.05 % 8.45 % * Indicates non-GAAP financial measure.
Biggest changeThis 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; • 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 – reconciliation of non-GAAP measures. 59 Years Ended December 31, (Dollars in thousands, except per share data) 2024 2023 2022 2021 2020 Statement of Income Data Interest and dividend income $ 296,843 $ 246,712 $ 188,248 $ 157,368 $ 155,561 Interest expense 110,681 87,694 25,418 14,789 22,909 Net interest income 186,162 159,018 162,830 142,579 132,652 Provision (reversal) for credit losses 2,546 1,873 125 (8,480 ) 24,255 Net gain on acquisition 2,131 — 962 585 2,145 Net gain (loss) from securities transactions 220 (51,909 ) 5 406 11 Other non-interest income 36,471 32,780 34,990 31,851 23,867 Merger expense 4,461 297 594 9,189 299 Goodwill impairment — — — — 104,831 Loss on extinguishment of debt — — — 372 — Other non-interest expense 139,696 135,304 127,786 109,904 103,860 Income (loss) before income taxes 78,281 2,415 70,282 64,436 (74,570 ) Provision for income taxes 15,660 (5,406 ) 12,594 11,956 400 Net income (loss) 62,621 7,821 57,688 52,480 (74,970 ) Net income (loss) allocable to common stockholders 62,621 7,821 57,688 52,480 (74,970 ) Basic earnings (loss) per share 4.04 0.50 3.56 3.49 (4.97 ) Diluted earnings (loss) per share 4.00 0.50 3.51 3.43 (4.97 ) Balance Sheet Data (at period end) Cash and cash equivalents $ 383,747 $ 379,099 $ 104,428 $ 259,954 $ 280,698 Securities available-for-sale 1,004,455 919,648 1,184,390 1,327,442 871,827 Securities held-to-maturity 5,217 2,209 1,948 — — Loans held for sale 513 476 349 4,214 12,394 Gross loans held for investment 3,500,816 3,332,901 3,311,548 3,155,627 2,591,696 Allowance for credit losses 43,267 43,520 45,847 48,365 33,709 Loans held for investment, net of allowance for credit losses 3,457,549 3,289,381 3,265,701 3,107,262 2,557,987 Goodwill and core deposit intangibles, net 68,070 60,323 63,697 69,344 47,658 Mortgage servicing asset, net — 75 176 276 — Naming rights, net 957 1,000 1,044 1,087 1,130 Total assets 5,332,047 5,034,592 4,981,651 5,137,631 4,013,356 Total deposits 4,374,789 4,145,455 4,241,807 4,420,004 3,447,590 Borrowings 312,796 380,503 281,734 151,891 133,857 Total liabilities 4,739,129 4,581,732 4,571,593 4,637,000 3,605,707 Total stockholders’ equity 592,918 452,860 410,058 500,631 407,649 Tangible common equity * 523,891 391,462 345,141 429,924 358,861 Performance ratios Return on average assets (ROAA) 1.23 % 0.16 % 1.15 % 1.18 % (1.87 )% Return on average equity (ROAE) 12.97 % 1.85 % 13.08 % 11.75 % (16.14 )% Return on average tangible common equity (ROATCE) * 15.94 % 2.94 % 16.35 % 14.10 % 8.27 % Yield on loans 7.14 % 6.39 % 4.98 % 4.77 % 5.00 % Cost of interest-bearing deposits 2.80 % 2.21 % 0.53 % 0.30 % 0.66 % Net interest margin 3.98 % 3.46 % 3.51 % 3.44 % 3.63 % Efficiency ratio * 60.77 % 68.71 % 62.48 % 60.58 % 63.87 % Non-interest expense to net interest income plus non-interest income* 64.07 % 96.93 % 64.58 % 68.10 % 65.64 % Non-interest income / average assets 0.76 % (0.38 )% 0.72 % 0.74 % 0.65 % Non-interest expense / average assets 2.84 % 2.71 % 2.56 % 2.70 % 5.23 % Dividend payout ratio 13.91 % 88.35 % 10.26 % 4.84 % 0.00 % Performance ratios - Core Core earnings per diluted share* $ 4.43 $ 3.31 $ 3.69 $ 4.09 $ 0.62 Core return on average assets* 1.37 % 1.03 % 1.21 % 1.41 % 0.23 % Core return on average equity* 14.29 % 11.63 % 13.72 % 13.85 % 1.87 % Core non-interest expense / average assets* 2.67 % 2.64 % 2.46 % 2.38 % 2.50 % Capital Ratios Tier 1 Leverage Ratio 11.67 % 9.46 % 9.61 % 9.09 % 9.30 % Common Equity Tier 1 Capital Ratio 14.51 % 11.74 % 12.26 % 12.03 % 12.82 % Tier 1 Risk Based Capital Ratio 15.11 % 12.36 % 12.88 % 12.67 % 13.37 % Total Risk Based Capital Ratio 18.07 % 15.48 % 16.08 % 15.96 % 17.35 % Total Stockholders equity / Total Assets 11.12 % 8.99 % 8.23 % 9.74 % 10.16 % Tangible common equity to tangible assets * 9.95 % 7.87 % 7.02 % 8.48 % 9.05 % 60 Book value per share $ 34.04 $ 29.35 $ 25.74 $ 29.87 $ 28.04 Tangible book value per common share * $ 30.07 $ 25.37 $ 21.67 $ 25.65 $ 24.68 Tangible book value per diluted common share * $ 29.70 $ 25.05 $ 21.35 $ 25.22 $ 24.68 * Indicates non-GAAP financial measure.
For more information, see “Item 1 – Supervision and Regulation – Banking Regulation – Standards for Safety and Soundness.” Since we are a bank holding company and do not engage directly in business activities of a material nature, our ability to pay dividends to our stockholders depends, in large part, upon our receipt of dividends from Equity Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies.
For more information, see “Item 1 – Supervision and Regulation – Banking Regulation – Standards for Safety and Soundness.” Since we are a financial holding company and do not engage directly in business activities of a material nature, our ability to pay dividends to our stockholders depends, in large part, upon our receipt of dividends from Equity Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies.
Our qualitative analysis process consists of using recent bank merger transactions, for companies that are similar to the Company based on financial performance, to calculate the average change in control premium from the merger data.
Our qualitative analysis process consists of using recent bank merger transactions, for companies that are 63 similar to the Company based on financial performance, to calculate the average change in control premium from the merger data.
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 December 31, 2023. Likewise, an improvement in loan quality or economic conditions may allow for a further reduction in the required allowance.
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 December 31, 2024. Likewise, an improvement in loan quality or economic conditions may allow for a further reduction in the required allowance.
Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for reconciliation to the most directly comparable GAAP measure. 57 Overview We are a financial holding company headquartered in Wichita, Kansas.
Please see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for reconciliation to the most directly comparable GAAP measure. 61 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 64 full-service branches located in Arkansas, Kansas, Missouri and Oklahoma.
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 branches located in Arkansas, Kansas, Missouri and Oklahoma.
Our 58 accounting policies are described in “NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the Notes to 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.
Our accounting policies are described in “NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the Notes to Consolidated Financial Statements. 62 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.
Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume change,” and it 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 “yield/rate change.” 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 years ended December 31, 2023, 2022, 60 and 2021.
Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as “volume change,” and it 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 “yield/rate change.” 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 years ended December 31, 2024, 2023, 64 and 2022.
For information comparing our results of operations for the year ended December 31, 2022, to year ended December 31, 2021, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 9, 2023.
For information comparing our results of operations for the year ended December 31, 2023, to year ended December 31, 2022, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 7, 2024.
We believe our geographic footprint, which is strategically split between growing metropolitan markets, such as Kansas City, Tulsa and Wichita, and stable community markets within Western Kansas, Western Missouri, Topeka, Northern Arkansas and Northern Oklahoma, provides us with access to low cost stable core deposits in community markets that we can use to fund commercial loan growth in our metropolitan markets.
We believe our geographic footprint, which is strategically split between growing metropolitan markets, such as Kansas City, Tulsa and Wichita, and stable community markets within Southeastern Kansas, Southwestern Kansas, Central Kansas, North Central Kansas, Western Kansas, Topeka, Western Missouri, North Central Missouri, Northern Arkansas, Northern Oklahoma and Western Oklahoma, provides us with access to low cost stable core deposits in community markets that we can use to fund commercial loan growth in our metropolitan markets.
Recent Sales of Unregistered Equity Securities None Purchases of Equity Securities by the Issuer and Affiliated Purchasers Repurchase of Common Stock On September 27, 2023, the Federal Reserve Bank of Kansas City advised the Company that it had no objection to the Company’s authorization of its repurchase of up to an additional 1,000,000 shares of the Company’s Class A Voting common stock, par value $0.01 per share, from time to time, beginning October 1, 2023, and concluding September 30, 2024. 53 The following table presents shares that were repurchased under the repurchase program during the fourth quarter of 2023.
Recent Sales of Unregistered Equity Securities None Purchases of Equity Securities by the Issuer and Affiliated Purchasers Repurchase of Common Stock On October 7, 2024, the Federal Reserve Bank of Kansas City advised the Company that it had no objection to the Company’s authorization of its repurchase of up to an additional 1,000,000 shares of the Company’s Class A Voting common stock, par value $0.01 per share, from time to time, beginning October 1, 2024, and concluding September 30, 2025. 56 The following table presents shares that were repurchased under the repurchase program during the fourth quarter of 2024.
For the year ended December 59 31, 2023, management performed a qualitative analysis and has determined that there was not evidence of a triggering event during the period then ended.
For the year ended December 31, 2024, management performed a qualitative analysis and has determined that there was not evidence of a triggering event during the period then ended.
Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. 61 The following table analyzes the change in volume variances and yield/rate variances for the year ended December 31, 2023, as compared to the year ended December 31, 2022, and the year ended December 31, 2022, as compared to the year ended December 31, 2021.
Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. 65 The following table analyzes the change in volume variances and yield/rate variances for the year ended December 31, 2024, as compared to the year ended December 31, 2023, and the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Plan beginning October 1, 2023, to September 30, 2024 Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Repurchase Plan Maximum Number of Shares That May Yet Be Purchased Under the Plan (1) October 1, 2023 through October 31, 2023 — $ — — 1,000,000 November 1, 2023 through November 30, 2023 — — — 1,000,000 December 1, 2023 through December 31, 2023 — — — 1,000,000 Total - $ - - 1,000,000 (1)Represents shares that may be repurchased under the 2023 repurchase plan 54 Item 6 : Reserved 55 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations .
Plan beginning October 1, 2024, to September 30, 2025 Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Repurchase Plan Maximum Number of Shares That May Yet Be Purchased Under the Plan (1) October 1, 2024 through October 31, 2024 — $ — — 1,000,000 November 1, 2024 through November 30, 2024 — — — 1,000,000 December 1, 2024 through December 31, 2024 — — — 1,000,000 Total — $ — — 1,000,000 (1)Represents shares that may be repurchased under the 2024 repurchase plan 57 Item 6 : Reserved 58 Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations .
There were pour over shares available in the new plan from the previous plan due to forfeiture, cancellation, and expiration after the effective date. For the year ended December 31, 2023, there were pour over shares of 420,318 from our Amended and Restated 2013 Stock Incentive Plan, which are included in the available RSU balance at December 31, 2023.
There were pour over shares available in the new plan from the previous plan due to forfeiture, cancellation, and expiration after the effective date. For the year ended December 31, 2024, there were pour over shares of 22,731 from our Amended and Restated 2013 Stock Incentive Plan, which are included in the available RSU balance at December 31, 2024.
Net interest spread decreased from 3.30% at December 31, 2022 to 2.88% at December 31, 2023 primarily due to the increase in both the volume and cost of interest-bearing liabilities out-pacing the increase in the yield and change in volume in interest-earning assets.
Net interest spread increased from 2.88% at December 31, 2023 to 3.29% at December 31, 2024 primarily due to the increase in both the volume and yield of interest-earning assets out-pacing the increase in the cost and change in volume in interest-bearing liabilities.
Net income for the year ended December 31, 2023, was $7.8 million, compared to net income of $57.7 million for the year ended December 31, 2022. History and Background From 2003 through 2023, we completed a series of twenty acquisitions, two charter consolidations and two branch dispositions.
Net income for the year ended December 31, 2024, was $62.6 million, compared to net income of $7.8 million for the year ended December 31, 2023. History and Background From 2003 through 2024, we completed a series of 22 acquisitions, two charter consolidations and two branch dispositions.
At December 31, 2023, there were 351,646 shares available under the employee stock purchase plan for future issuance . 52 Performance Graph The following performance graph compares total stockholders’ return on the Company’s common stock for the period beginning at the close of trading December 31, 2018, to December 31, 2023, with the cumulative total return of the S&P 500 Index, NASDAQ Composite Index and the NASDAQ Bank Index for the same period.
At December 31, 2024, there were 322,181 shares available under the employee stock purchase plan for future issuance . 55 Performance Graph The following performance graph compares total stockholders’ return on the Company’s common stock for the period beginning at the close of trading December 31, 2019, to December 31, 2024, with the cumulative total return of the S&P 500 Index, NASDAQ Composite Index and the NASDAQ Bank Index for the same period.
Year ended December 31, 2023, compared with year ended December 31, 2022 The decrease in net interest income is primarily due to a 172 basis point increase in average rates of interest bearing liabilities offset by a 130 basis point increase in yields on interest-earning assets.
Year ended December 31, 2024, compared with year ended December 31, 2023 The increase in net interest income is primarily due to a 99 basis point increase in yields on interest-earning assets offset by a 58 basis point increase in the average cost of interest bearing liabilities.
Year ended December 31, 2023, compared with year ended December 31, 2022 There was a $1.9 million provision for credit losses for the year ended December 31, 2023, compared to a provision for credit losses of $125 thousand for the year ended December 31, 2022.
Year ended December 31, 2024, compared with year ended December 31, 2023 There was a $2.5 million provision for credit losses for the year ended December 31, 2024, compared to a provision for credit losses of $1.9 million for the year ended December 31, 2023.
As of December 31, 2023, we had, on a consolidated basis, total assets of $5.03 billion, total deposits of $4.15 billion, total loans held for investment, net of allowances, of $3.29 billion and total stockholders’ equity of $452.9 million.
As of December 31, 2024, we had, on a consolidated basis, total assets of $5.33 billion, total deposits of $4.37 billion, total loans held for investment, net of allowances, of $3.46 billion and total stockholders’ equity of $592.9 million.
Average Balance Sheets and Net Interest Analysis December 31, 2023 December 31, 2022 December 31, 2021 (Dollars in thousands) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Interest-earning assets Loans (1) Commercial and industrial $ 580,451 $ 42,901 7.39 % $ 583,295 $ 32,258 5.53 % $ 714,561 $ 41,580 5.82 % Commercial real estate 1,302,568 83,441 6.41 % 1,259,257 65,122 5.17 % 1,040,443 48,676 4.68 % Real estate construction 447,516 33,764 7.54 % 363,902 18,269 5.02 % 277,307 10,256 3.70 % Residential real estate 565,711 23,799 4.21 % 597,196 22,004 3.68 % 498,164 19,341 3.88 % Agricultural real estate 201,326 13,820 6.86 % 201,295 11,399 5.66 % 153,607 8,122 5.29 % Agricultural 100,394 6,966 6.94 % 125,342 6,697 5.34 % 108,276 5,361 4.95 % Consumer 106,542 6,522 6.12 % 102,185 5,110 5.00 % 88,383 3,998 4.52 % Total loans 3,304,508 211,213 6.39 % 3,232,472 160,859 4.98 % 2,880,741 137,334 4.77 % Taxable securities 1,027,726 23,873 2.32 % 1,185,750 22,713 1.92 % 976,942 15,996 1.64 % Nontaxable securities 74,917 1,960 2.62 % 106,955 2,698 2.52 % 105,522 2,843 2.69 % Federal funds sold and other 193,941 9,666 4.98 % 107,298 1,978 1.84 % 182,443 1,195 0.65 % Total interest-earning assets 4,601,092 246,712 5.36 % 4,632,475 188,248 4.06 % 4,145,648 157,368 3.80 % Non-interest-earning assets Other real estate owned, net 3,991 10,144 10,510 Premises and equipment, net 107,297 102,165 93,539 Bank-owned life insurance 123,665 121,741 103,255 Goodwill and other intangibles, net 63,064 67,747 50,831 Other non-interest-earning assets 100,296 88,840 28,017 Total assets $ 4,999,405 $ 5,023,112 $ 4,431,800 Interest-bearing liabilities Interest-bearing demand deposits $ 1,002,543 22,681 2.26 % $ 1,124,828 7,248 0.64 % $ 1,032,938 2,165 0.21 % Savings and money market 1,359,822 23,525 1.73 % 1,308,536 3,549 0.27 % 1,129,869 1,540 0.14 % Demand savings and money market 2,362,365 46,206 1.96 % 2,433,364 10,797 0.44 % 2,162,807 3,705 0.17 % Certificates of deposit 827,652 24,267 2.93 % 663,790 5,524 0.83 % 625,562 4,550 0.73 % Total interest-bearing deposits 3,190,017 70,473 2.21 % 3,097,154 16,321 0.53 % 2,788,369 8,255 0.30 % FHLB term and line of credit advances 98,380 3,944 4.01 % 79,775 2,094 2.63 % 16,797 169 1.01 % Federal Reserve Bank discount window 108,551 4,755 4.38 % 3 — 0.25 % 3 — 0.25 % Subordinated borrowings 96,651 7,591 7.85 % 96,133 6,771 7.04 % 89,785 6,261 6.97 % Other borrowings 49,464 931 1.88 % 55,036 232 0.42 % 45,819 104 0.23 % Total interest-bearing liabilities 3,543,063 87,694 2.48 % 3,328,101 25,418 0.76 % 2,940,773 14,789 0.50 % Non-interest-bearing liabilities and stockholders’ equity Non-interest-bearing checking accounts 979,410 1,203,167 1,021,261 Non-interest-bearing liabilities 53,210 50,962 22,971 Stockholders’ equity 423,722 440,882 446,795 Total liabilities and stockholders’ equity $ 4,999,405 $ 5,023,112 $ 4,431,800 Net interest income $ 159,018 $ 162,830 $ 142,579 Interest rate spread 2.88 % 3.30 % 3.30 % Net interest margin (2) 3.46 % 3.51 % 3.44 % Total cost of deposits, including non-interest bearing deposits $ 4,169,427 $ 70,473 1.69 % $ 4,300,321 $ 16,321 0.38 % $ 3,809,630 $ 8,255 0.22 % Average interest-earning assets to interest-bearing liabilities 129.86 % 139.19 % 140.97 % (1) Average loan balances include nonaccrual loans, hedge fair value adjustments and merger fair value adjustments.
Average Balance Sheets and Net Interest Analysis December 31, 2024 December 31, 2023 December 31, 2022 (Dollars in thousands) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Average Outstanding Balance Interest Income/ Expense Average Yield/ Rate (3)(4) Interest-earning assets Loans (1) Commercial and industrial $ 635,881 $ 51,188 8.05 % $ 580,451 $ 42,901 7.39 % $ 583,295 $ 32,258 5.53 % Commercial real estate 1,400,661 99,316 7.09 % 1,302,568 83,441 6.41 % 1,259,257 65,122 5.17 % Real estate construction 416,296 36,004 8.65 % 447,516 33,764 7.54 % 363,902 18,269 5.02 % Residential real estate 563,176 26,505 4.71 % 565,711 23,799 4.21 % 597,196 22,004 3.68 % Agricultural real estate 227,341 16,848 7.41 % 201,326 13,820 6.86 % 201,295 11,399 5.66 % Agricultural 96,877 9,103 9.40 % 100,394 6,966 6.94 % 125,342 6,697 5.34 % Consumer 100,995 6,851 6.78 % 106,542 6,522 6.12 % 102,185 5,110 5.00 % Total loans 3,441,227 245,815 7.14 % 3,304,508 211,213 6.39 % 3,232,472 160,859 4.98 % Taxable securities 979,926 39,091 3.99 % 1,027,726 23,873 2.32 % 1,185,750 22,713 1.92 % Nontaxable securities 59,597 1,579 2.65 % 74,917 1,960 2.62 % 106,955 2,698 2.52 % Federal funds sold and other 195,378 10,358 5.30 % 193,941 9,666 4.98 % 107,298 1,978 1.84 % Total interest-earning assets 4,676,128 296,843 6.35 % 4,601,092 246,712 5.36 % 4,632,475 188,248 4.06 % Non-interest-earning assets Other real estate owned, net 2,332 3,991 10,144 Premises and equipment, net 115,892 107,297 102,165 Bank-owned life insurance 129,232 123,665 121,741 Goodwill and other intangibles, net 68,190 63,064 67,747 Other non-interest-earning assets 84,165 100,296 88,840 Total assets $ 5,075,939 $ 4,999,405 $ 5,023,112 Interest-bearing liabilities Interest-bearing demand deposits $ 1,028,114 27,587 2.68 % $ 1,002,543 22,681 2.26 % $ 1,124,828 7,248 0.64 % Savings and money market 1,425,025 33,931 2.38 % 1,359,822 23,525 1.73 % 1,308,536 3,549 0.27 % Demand savings and money market 2,453,139 61,518 2.51 % 2,362,365 46,206 1.96 % 2,433,364 10,797 0.44 % Certificates of deposit 770,772 28,891 3.75 % 827,652 24,267 2.93 % 663,790 5,524 0.83 % Total interest-bearing deposits 3,223,911 90,409 2.80 % 3,190,017 70,473 2.21 % 3,097,154 16,321 0.53 % FHLB term and line of credit advances 216,012 10,180 4.71 % 98,380 3,944 4.01 % 79,775 2,094 2.63 % Federal Reserve Bank discount window 30,986 1,361 4.39 % 108,551 4,755 4.38 % 3 — 0.25 % Subordinated borrowings 97,194 7,580 7.80 % 96,651 7,591 7.85 % 96,133 6,771 7.04 % Other borrowings 47,336 1,151 2.43 % 49,464 931 1.88 % 55,036 232 0.42 % Total interest-bearing liabilities 3,615,439 110,681 3.06 % 3,543,063 87,694 2.48 % 3,328,101 25,418 0.76 % Non-interest-bearing liabilities and stockholders’ equity Non-interest-bearing checking accounts 931,860 979,410 1,203,167 Non-interest-bearing liabilities 45,666 53,210 50,962 Stockholders’ equity 482,974 423,722 440,882 Total liabilities and stockholders’ equity $ 5,075,939 $ 4,999,405 $ 5,023,112 Net interest income $ 186,162 $ 159,018 $ 162,830 Interest rate spread 3.29 % 2.88 % 3.30 % Net interest margin (2) 3.98 % 3.46 % 3.51 % Total cost of deposits, including non-interest bearing deposits $ 4,155,771 $ 90,409 2.18 % $ 4,169,427 $ 70,473 1.69 % $ 4,300,321 $ 16,321 0.38 % Average interest-earning assets to interest-bearing liabilities 129.34 % 129.86 % 139.19 % (1) Average loan balances include non-accrual loans, hedge fair value adjustments and merger fair value adjustments.
For more information, see “Item 7 – Supervision and Regulation – Banking Regulation – Standards for Safety and Soundness.” Securities Authorized for Issuance Under Equity Compensation Plans The following table presents shares of our common stock that may be issued with respect to compensation plans at December 31, 2023. 51 Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) (c) Equity compensation plans - stock options 376,446 $ 26.71 * Equity compensation plans - restricted stock awards and restricted stock units 283,375 * Equity compensation plans - available 659,821 543,912 Equity compensation plans - employee stock purchase plan — — 351,646 Equity compensation plans 659,821 895,558 Equity compensation plans not approved by security holders — — — Total 659,821 $ — 895,558 * All securities remaining available for future issuance were available under our 2022 Omnibus Equity Plan as of December 31, 2023.
For more information, see “Item 7 – Supervision and Regulation – Banking Regulation – Standards for Safety and Soundness.” Securities Authorized for Issuance Under Equity Compensation Plans The following table presents shares of our common stock that may be issued with respect to compensation plans at December 31, 2024. 54 Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) (c) Equity compensation plans - stock options 495,180 $ 30.07 * Equity compensation plans - restricted stock awards and restricted stock units 285,331 * Equity compensation plans - available 780,511 1,050,525 Equity compensation plans - employee stock purchase plan — — 322,181 Equity compensation plans 780,511 1,372,706 Equity compensation plans not approved by security holders — — — Total 780,511 $ — 1,372,706 * All securities remaining available for future issuance were available under our 2022 Omnibus Equity Plan as of December 31, 2024.
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.
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.
Net Income Year ended December 31, 2023, compared with year ended December 31, 2022 For the year ended December 31, 2023, there was net income allocable to common stockholders of $7.8 million, compared to net income allocable to common stockholders of $57.7 million for the year ended December 31, 2022, a decrease of $49.9 million.
Net Income Year ended December 31, 2024, compared with year ended December 31, 2023 For the year ended December 31, 2024, there was net income allocable to common stockholders of $62.6 million, compared to net income allocable to common stockholders of $7.8 million for the year ended December 31, 2023, an increase of $54.8 million.
At February 29, 2024, there were 15,437,891 shares of our Class A common stock, outstanding and 241 stockholders of record for the Company’s Class A common stock. At February 29, 2024, no shares of our Class B common stock were outstanding.
At February 28, 2025, there were 17,508,740 shares of our Class A common stock, outstanding and 216 stockholders of record for the Company’s Class A common stock. At February 28, 2025, no shares of our Class B common stock were outstanding.
Current problem asset ratios are amongst the lowest the Company has seen in its history. Critical Accounting Policies 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.
After expense capital impact totaled $86.9 million. Critical Accounting Policies 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.
The provision for credit losses recorded during the period ended December 31, 2023, is the result of overall portfolio loan growth, current realized loss rate, and net charge-offs during the period which were offset by decreases in projected future loss rates. The increase in impairments on specifically evaluated loans was primarily due to the charge-off of loans deemed uncollectible.
The provision for credit losses recorded during the period ended December 31, 2024, is the result of an increase in the loan portfolio, slower prepayment rates, and net charge-offs during the period which were offset by decreases in projected future loss rates and specific reserves on loans individually evaluated for credit loss. For additional detail see “
Analysis of Changes in Net Interest Income 2023 vs. 2022 2022 vs. 2021 Increase (Decrease) Due to: Increase (Decrease) Due to: (Dollars in thousands) Volume (1) Yield/Rate (1) Total Volume (1) Yield/Rate (1) Total Interest-earning assets Loans Commercial and industrial $ (158 ) $ 10,801 $ 10,643 $ (7,340 ) $ (1,982 ) $ (9,322 ) Commercial real estate 2,307 16,012 18,319 10,956 5,490 16,446 Real estate construction 4,860 10,635 15,495 3,736 4,277 8,013 Residential real estate (1,205 ) 3,000 1,795 3,689 (1,026 ) 2,663 Agricultural real estate 2 2,419 2,421 2,667 610 3,277 Agricultural (1,492 ) 1,761 269 889 447 1,336 Consumer 226 1,186 1,412 664 448 1,112 Total loans 4,540 45,814 50,354 15,261 8,264 23,525 Taxable securities (3,275 ) 4,435 1,160 3,743 2,974 6,717 Nontaxable securities (835 ) 97 (738 ) 38 (183 ) (145 ) Federal funds sold and other 2,473 5,215 7,688 (658 ) 1,441 783 Total interest-earning assets $ 2,903 $ 55,561 $ 58,464 $ 18,384 $ 12,496 $ 30,880 Interest-bearing liabilities Demand savings and money market $ (726 ) $ 36,135 $ 35,409 $ 486 $ 6,606 $ 7,092 Certificates of deposit 1,670 17,073 18,743 290 684 974 Total interest-bearing deposits 944 53,208 54,152 776 7,290 8,066 FHLB term and line of credit advances 567 1,283 1,850 1,348 577 1,925 Federal Reserve Bank discount window 4,753 2 4,755 — — — Subordinated borrowings 37 783 820 446 64 510 Other borrowings (26 ) 725 699 25 103 128 Total interest-bearing liabilities 6,275 56,001 62,276 2,595 8,034 10,629 Net Interest Income $ (3,372 ) $ (440 ) $ (3,812 ) $ 15,789 $ 4,462 $ 20,251 (1) The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average rate.
Analysis of Changes in Net Interest Income 2024 vs. 2023 2023 vs. 2022 Increase (Decrease) Due to: Increase (Decrease) Due to: (Dollars in thousands) Volume (1) Yield/Rate (1) Total Volume (1) Yield/Rate (1) Total Interest-earning assets Loans Commercial and industrial $ 4,286 $ 4,001 $ 8,287 $ (158 ) $ 10,801 $ 10,643 Commercial real estate 6,561 9,314 15,875 2,307 16,012 18,319 Real estate construction (2,467 ) 4,707 2,240 4,860 10,635 15,495 Residential real estate (107 ) 2,813 2,706 (1,205 ) 3,000 1,795 Agricultural real estate 1,874 1,154 3,028 2 2,419 2,421 Agricultural (252 ) 2,389 2,137 (1,492 ) 1,761 269 Consumer (352 ) 681 329 226 1,186 1,412 Total loans 9,543 25,059 34,602 4,540 45,814 50,354 Taxable securities (1,159 ) 16,377 15,218 (3,275 ) 4,435 1,160 Nontaxable securities (406 ) 25 (381 ) (835 ) 97 (738 ) Federal funds sold and other 72 620 692 2,473 5,215 7,688 Total interest-earning assets $ 8,050 $ 42,081 $ 50,131 $ 2,903 $ 55,561 $ 58,464 Interest-bearing liabilities Demand savings and money market $ 1,766 $ 13,546 $ 15,312 $ (726 ) $ 36,135 $ 35,409 Certificates of deposit (1,759 ) 6,383 4,624 1,670 17,073 18,743 Total interest-bearing deposits 7 19,929 19,936 944 53,208 54,152 FHLB term and line of credit advances 5,438 798 6,236 567 1,283 1,850 Federal Reserve Bank discount window (3,407 ) 13 (3,394 ) 4,753 2 4,755 Subordinated borrowings 43 (54 ) (11 ) 37 783 820 Other borrowings (42 ) 262 220 (26 ) 725 699 Total interest-bearing liabilities 2,039 20,948 22,987 6,275 56,001 62,276 Net Interest Income $ 6,011 $ 21,133 $ 27,144 $ (3,372 ) $ (440 ) $ (3,812 ) (1) The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average rate.
The performance graph assumes $100 is invested on December 31, 2018, in the Company’s common stock, the NASDAQ Composite Index, the NASDAQ Bank Index and the S&P 500 Index. The NASDAQ Composite Index is shown for comparative purposes and will be replaced with the S&P 500 Index in future reporting periods.
The performance graph assumes $100 is invested on December 31, 2019, in the Company’s common stock, the NASDAQ Bank Index and the S&P 500 Index. Historical stock price performance is not necessarily indicative of future stock price performance.
Adjusted to exclude the loss on re-positioning of the investment portfolio, net income was $48.9 million, or $3.13 diluted earnings per share. • Dividends declared of $6.9 million, or $0.44 per share, for the year ended December 31, 2023, compared to $5.4 million, or $0.36 per share, for the year ended December 31, 2022, an increase of 22.0% • Total loans held for investment increased to $3.33 billion at December 31, 2023, compared to $3.31 billion at December 31, 2022. • Announced the 10th whole-bank acquisition since the Company's initial public offering, with our merger with Rockhold BanCorp.
Highlights for the Year Ended December 31, 2024 • Net income of $62.6 million, or $4.00 diluted earnings per share, for the year ended December 31, 2024. • Dividends declared of $8.7 million, or $0.54 per share, for the year ended December 31, 2024, compared to $6.9 million, or $0.44 per share, for the year ended December 31, 2023, an increase of 26.0% • Total loans held for investment increased to $3.50 billion at December 31, 2024, compared to $3.33 billion at December 31, 2023, an increase of 5.0%. • Completed two mergers during the year ended December 31, 2024.
Removed
Historical stock price performance is not necessarily indicative of future stock price performance.
Added
The first, Rockhold BanCorp, adding $349.8 million in deposits, eight banking locations and new territory to the Equity Bank footprint. The second, Kanasland Bancshares, Inc., adding $42.4 million in deposits and two banking locations. • The Company completed a common stock capital raise, issuing 2,067,240 shares at a public offering price of $44.50 per share.
Removed
Highlights for the Year Ended December 31, 2023 • Net income of $7.8 million, or $0.50 diluted earnings per share, for the year ended December 31, 2023.
Added
This change was primarily driven by a $27.1 increase in net interest income, a $58.0 million increase in non interest income offset by a $8.6 million increase in non interest expense and an increase in provision for taxes of $21.1 million.
Removed
The transaction was announced on December 6, 2023, and closed on February 9, 2024, adding approximately $340 million in deposits, eight banking locations and a new territory to the Equity Bank footprint. • Successfully reduced classified assets as a percentage of regulatory capital from 9.98% at the end of 2022 to 7.09% at the end of 2023.
Added
The change in yields and costs were driven, primarily, by a continued higher rate environment within the marketplace creating continued lag re-pricing of both the asset and liability portfolios throughout 2024. The asset yield was also positively impacted by the re-positioning of a portion of our investment portfolio in December of 2023.
Removed
This change was primarily driven by the sale of $490.1 of investment securities at a loss of $52.0 million.
Added
In the final four months of 2024, the FOMC reduced short-term interest rates by 100 basis points across three meetings. Due to their timing, the cuts did not have a material impact on operating results for 2024.
Removed
The change in yields and costs were driven, primarily, by rate increases within the marketplace over the past 20 months and their lagged impact on our balance sheet. Total fed fund rate increases of 525 basis points have been realized ratably within the asset portfolio while associated increases to liability costs have lagged and were more pronounced in 2023.
Added
The increase in net interest margin was driven by the additive yield from re-positioning of the investment portfolio, production of new earning assets and the acquisition of earning assets in the current environment outpacing the continued, lagged re-pricing of liabilities used in funding.
Removed
Following the banking turmoil in March of 2023, the Bank increased our FHLB and Federal Reserve Bank borrowings to maintain a heightened liquidity position. The amounts were materially offset by cash balances for the majority of the year, resulting in a small positive impact on net interest income and a reduction in net interest margin.
Added
Management estimates the allowance balance 66 required using past loan loss experience within the Company’s portfolio.
Removed
The primary driver of market interest rate changes in 2023 was the Federal Reserve raising the federal funds target rate four times for a total of 100 basis points.
Removed
The decrease in net interest margin is driven by the lagging impact of interest rate changes on our interest-bearing liability balances coupled with the excess liquidity position maintained by the Company throughout 2023. 62 Provision for Credit Losses We maintain an allowance for credit losses for estimated losses in our loan portfolio.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. Reserved 55 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 82 Item 8.
Biggest changeItem 6. Reserved 58 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 59 Item 7A. Quantitative and Qualitative Disclosure About Market Risk 87 Item 8.
Financial Statements and Supplementary Data 85 Report of Independent Registered Public Accounting Firm F- 1 Consolidated Balance Sheets F- 4 Consolidated Statements of Income F- 5 Consolidated Statements of Comprehensive Income F- 6 Consolidated Statements of Stockholders’ Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 10
Financial Statements and Supplementary Data 90 Report of Independent Registered Public Accounting Firm F- 1 Consolidated Balance Sheets F- 4 Consolidated Statements of Income F- 5 Consolidated Statements of Comprehensive Income F- 6 Consolidated Statements of Stockholders’ Equity F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 10

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+24 added−14 removed62 unchanged
Biggest changeAllowance for Credit Losses (Dollars in thousands) December 31, 2023 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses $ 13,476 $ 17,954 $ 7,784 $ 1,718 $ 995 $ 1,593 $ 43,520 Total loans outstanding (1) 1,759,855 598,327 556,328 196,114 118,587 103,690 3,332,901 Net charge-offs (75 ) 3,700 18 46 (47 ) 558 4,200 Average loan balance (1) 1,750,084 580,451 564,728 201,326 100,394 106,542 3,303,525 Non-accrual loan balance 5,447 5,041 7,251 4,214 2,470 603 25,026 Loans to total loans outstanding 52.8 % 18.0 % 16.7 % 5.9 % 3.6 % 3.1 % 100.0 % ACL to total loans 0.8 % 3.0 % 1.4 % 0.9 % 0.8 % 1.5 % 1.3 % Net charge-offs to average loans — % 0.6 % — % — % — % 0.5 % 0.1 % Non-accrual loans to total loans 0.3 % 0.8 % 1.3 % 2.1 % 2.1 % 0.6 % 0.8 % ACL to non-accrual loans 247.4 % 356.2 % 107.4 % 40.8 % 40.3 % 264.2 % 173.9 % December 31, 2022 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses $ 16,731 $ 14,951 $ 8,608 $ 819 $ 2,457 $ 2,281 $ 45,847 Total loans outstanding (1) 1,721,268 594,863 570,550 199,189 120,003 105,675 3,311,548 Net charge-offs 1,193 590 56 27 35 742 2,643 Average loan balance (1) 1,623,159 583,295 595,494 201,295 125,342 102,186 3,230,771 Non-accrual loan balance 2,689 5,838 3,206 2,052 3,468 348 17,601 Loans to total loans outstanding 52.0 % 18.0 % 17.2 % 6.0 % 3.6 % 3.2 % 100.0 % ACL to total loans 1.0 % 2.5 % 1.5 % 0.4 % 2.0 % 2.2 % 1.4 % Net charge-offs to average loans 0.1 % 0.1 % — % — % — % 0.7 % 0.1 % Non-accrual loans to total loans 0.2 % 1.0 % 0.6 % 1.0 % 2.9 % 0.3 % 0.5 % ACL to non-accrual loans 622.2 % 256.1 % 268.5 % 39.9 % 70.8 % 655.5 % 260.5 % December 31, 2021 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for loan losses $ 22,478 $ 12,248 $ 5,560 $ 2,235 $ 3,756 $ 2,088 $ 48,365 Total loans outstanding (1) 1,486,148 567,497 638,087 198,330 166,975 98,590 3,155,627 Net charge-offs (129 ) 7,870 (52 ) 473 (21 ) 504 8,645 Average loan balance (1) 1,317,750 714,561 491,747 153,607 108,276 88,383 2,874,324 Non-accrual loan balance 6,833 6,557 5,075 4,398 6,175 323 29,361 Loans to total loans outstanding 47.1 % 18.0 % 20.2 % 6.3 % 5.3 % 3.1 % 100.0 % ACL to total loans 1.5 % 2.2 % 0.9 % 1.1 % 2.2 % 2.1 % 1.5 % Net charge-offs to average loans — % 1.1 % — % 0.3 % — % 0.6 % 0.3 % Non-accrual loans to total loans 0.5 % 1.2 % 0.8 % 2.2 % 3.7 % 0.3 % 0.9 % ACL to non-accrual loans 329.0 % 186.8 % 109.6 % 50.8 % 60.8 % 646.4 % 164.7 % (1) Excluding loans held for sale.
Biggest changeAllowance for Credit Losses (Dollars in thousands) December 31, 2024 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses $ 14,948 $ 14,005 $ 8,553 $ 3,504 $ 439 $ 1,818 $ 43,267 Total loans outstanding (1) 1,830,514 658,865 566,766 267,248 87,339 90,084 3,500,816 Net charge-offs 53 2,787 139 8 3 809 3,799 Average loan balance (1) 1,816,957 635,881 561,914 227,341 96,877 100,993 3,439,963 Non-accrual loan balance 7,458 7,798 4,670 5,751 592 781 27,050 Loans to total loans outstanding 52.3 % 18.8 % 16.2 % 7.6 % 2.5 % 2.6 % 100.0 % ACL to total loans 0.8 % 2.1 % 1.5 % 1.3 % 0.5 % 2.0 % 1.2 % Net charge-offs to average loans — % 0.4 % — % — % — % 0.8 % 0.1 % Non-accrual loans to total loans 0.4 % 1.2 % 0.8 % 2.2 % 0.7 % 0.9 % 0.8 % ACL to non-accrual loans 200.4 % 179.6 % 183.1 % 60.9 % 74.2 % 232.8 % 160.0 % December 31, 2023 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for credit losses $ 13,476 $ 17,954 $ 7,784 $ 1,718 $ 995 $ 1,593 $ 43,520 Total loans outstanding (1) 1,759,855 598,327 556,328 196,114 118,587 103,690 3,332,901 Net charge-offs (75 ) 3,700 18 46 (47 ) 558 4,200 Average loan balance (1) 1,750,084 580,451 564,728 201,326 100,394 106,542 3,303,525 Non-accrual loan balance 5,447 5,041 7,251 4,214 2,470 603 25,026 Loans to total loans outstanding 52.8 % 18.0 % 16.7 % 5.9 % 3.6 % 3.1 % 100.0 % ACL to total loans 0.8 % 3.0 % 1.4 % 0.9 % 0.8 % 1.5 % 1.3 % Net charge-offs to average loans — % 0.6 % — % — % — % 0.5 % 0.1 % Non-accrual loans to total loans 0.3 % 0.8 % 1.3 % 2.1 % 2.1 % 0.6 % 0.8 % ACL to non-accrual loans 247.4 % 356.2 % 107.4 % 40.8 % 40.3 % 264.2 % 173.9 % December 31, 2022 Commercial Real Estate Commercial and Industrial Residential Real Estate Agricultural Real Estate Agricultural Consumer Total Allowance for loan losses $ 16,731 $ 14,951 $ 8,608 $ 819 $ 2,457 $ 2,281 $ 45,847 Total loans outstanding (1) 1,721,268 594,863 570,550 199,189 120,003 105,675 3,311,548 Net charge-offs 1,193 590 56 27 35 742 2,643 Average loan balance (1) 1,623,159 583,295 595,494 201,295 125,342 102,186 3,230,771 Non-accrual loan balance 2,689 5,838 3,206 2,052 3,468 348 17,601 Loans to total loans outstanding 52.0 % 18.0 % 17.2 % 6.0 % 3.6 % 3.2 % 100.0 % ACL to total loans 1.0 % 2.5 % 1.5 % 0.4 % 2.0 % 2.2 % 1.4 % Net charge-offs to average loans 0.1 % 0.1 % — % — % — % 0.7 % 0.1 % Non-accrual loans to total loans 0.2 % 1.0 % 0.6 % 1.0 % 2.9 % 0.3 % 0.5 % ACL to non-accrual loans 622.2 % 256.1 % 268.5 % 39.9 % 70.8 % 655.5 % 260.5 % (1) Excluding loans held for sale.
Treasury securities 69,843 5.39 19,413 1.18 % — 0.00 % — — % 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 — 0.00 % — 0.00 % — 0.00 % 1,094 4.93 % 1,094 4.93 % State and political subdivisions (1) — 0.00 % — 0.00 % — 0.00 % 1,115 4.62 % 1,115 4.62 % Total held-to-maturity securities — 0.00 % — 0.00 % — 0.00 % 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 calculated on a tax equivalent basis.
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 calculated on a tax equivalent basis.
Debt securities not classified as held-to-maturity are classified as available-for-sale and measured at fair value in the financial statements with unrealized gains and losses reported, net of deferred income tax, as accumulated comprehensive income or loss until realized. Interest earned on securities is included in total interest and dividend income.
Debt securities not classified as held-to-maturity are classified as available-for-sale and measured at fair value in the 75 financial statements with unrealized gains and losses reported, net of deferred income 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 71 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.
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.
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 our credit position at some future date. These loans are considered classified.
These loans are considered unclassified. 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 our credit position at some future date. These loans are considered classified.
For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. 79 Management believes that these measures are important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets.
For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value. Management believes that these measures are important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets.
We calculate the efficiency ratio by dividing non-interest expense, excluding goodwill impairment, merger expenses and loss on debt extinguishment, by the sum of net interest income and non-interest income, excluding net gains on 81 the sale of available-for-sale securities and other securities transactions, and the net gain on acquisition.
We calculate the efficiency ratio by dividing non-interest expense, excluding goodwill impairment, merger expenses and loss on debt extinguishment, by the sum of net interest income and non-interest income, excluding net gains on the sale of available-for-sale securities and other securities transactions, and the net gain on acquisition.
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. 80 The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible 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.
Our lending staff has been successful in building banking relationships with new customers. Several new lenders have been hired in our markets and these employees have been successful in transitioning their former clients and attracting new clients.
Our lending staff has been successful in building banking relationships with new customers. New lenders have been hired in our markets and these employees have been successful in transitioning their former clients and attracting new clients.
Lending activities originate from the efforts of our lenders with an emphasis on lending to individuals, professionals, small to medium-sized businesses and commercial companies located in the Wichita, Kansas City and Tulsa MSAs, as well as community markets in Arkansas, Kansas, Missouri and Oklahoma. 66 The following table summarizes our loan portfolio by type of loan as of the dates indicated.
Lending activities originate from the efforts of our lenders with an emphasis on lending to individuals, professionals, small to medium-sized businesses and commercial companies located in the Wichita, Kansas City and Tulsa MSAs, as well as community markets in Arkansas, Kansas, Missouri and Oklahoma. 70 The following table summarizes our loan portfolio by type of loan as of the dates indicated.
For detailed information, see “NOTE 10 – BORROWINGS” in the Notes to Consolidated Financial Statements. 76 Subordinated debentures: In conjunction with the 2012 acquisition of First Community, we assumed certain subordinated debentures owed to special purpose unconsolidated subsidiaries that are controlled by us, FCB Capital Trust II and FCB Capital Trust III, (“CTII” and “CTIII,” respectively).
For detailed information, see “NOTE 10 – BORROWINGS” in the Notes to Consolidated Financial Statements. 80 Subordinated debentures: In conjunction with the 2012 acquisition of First Community, we assumed certain subordinated debentures owed to special purpose unconsolidated subsidiaries that are controlled by us, FCB Capital Trust II and FCB Capital Trust III, (“CTII” and “CTIII,” respectively).
In this process, we focus on both assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs. During the years ended December 31, 2023, 2022, and 2021, our liquidity needs have primarily been met by core deposits, securities and loan maturities, as well as amortizing payment from investment securities and loans.
In this process, we focus on both assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs. During the years ended December 31, 2024, 2023, and 2022, our liquidity needs have primarily been met by core deposits, securities and loan maturities, as well as amortizing payment from investment securities and loans.
Management believes, as of December 31, 2023, and December 31, 2022, the Company and Equity Bank meet all capital adequacy requirements to which they are subject. Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition.
Management believes, as of December 31, 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.
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. 73 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.
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. 77 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.
Management believes that the allowance for credit losses at December 31, 2023, is adequate to cover current expected losses in the loan portfolio as of such date. There can be no assurance, however, that we will not sustain losses in future periods that could be substantial in relation to the size of the allowance at December 31, 2023.
Management believes that the allowance for credit losses at December 31, 2024, is adequate to cover current expected losses in the loan portfolio as of such date. There can be no assurance, however, that we will not sustain losses in future periods that could be substantial in relation to the size of the allowance at December 31, 2024.
As of December 31, 2023, the most recent notifications from the federal regulatory agencies categorized Equity Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Equity Bank must maintain minimum total capital, Tier 1 capital, Common Equity Tier 1 capital and Tier 1 leverage ratios.
As of December 31, 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 information related to cash flow during 2021, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 9, 2022.
For information related to cash flow during 2022, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 9, 2023.
Cash Flow Overview During 2023, investing activities provided $232.2 million and operating activities provided $76.5 million of liquidity, which were offset by financing activities use of $34.0 million, ultimately increasing total cash and cash equivalents by $274.7 million.
During 2023, investing activities provided $232.2 million and operating activities provided $76.5 million of liquidity, which were offset by financing activities use of $34.0 million, ultimately increasing total cash and cash equivalents by $274.7 million.
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, and December 31, 2022, are summarized in the following tables.
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, 2024, and December 31, 2023, are summarized in the following tables.
We calculate: (a) average tangible common equity as total average stockholders’ equity less average intangible assets and preferred stock; (b) adjusted net income allocable to common stockholders as net income allocable to common stockholders plus goodwill impairment, net of actual tax effect, plus amortization of intangible assets less estimated tax effect on amortization of intangible assets (tax rates used in this calculation were 21% for 2023, 2022, 2021, 2020 and 2019) (c) return on average tangible common equity as adjusted net income allocable to common stockholders (as described in clause (b)) divided by average tangible common equity (as described in clause (a)).
We calculate: (a) average tangible common equity as total average stockholders’ equity less average intangible assets and preferred stock; (b) core net income allocable to common stockholders as net income allocable to common stockholders plus goodwill impairment, net of actual tax effect, plus amortization of intangible assets less estimated tax effect on amortization of intangible assets (tax rates used in this calculation were 21% for 2024, 2023, 2022, 2021 and 2020) (c) return on average tangible common equity as core net income allocable to common stockholders (as described in clause (b)) divided by average tangible common equity (as described in clause (a)).
At December 31, 2023, and 2022, 73.2% and 62.1% of the mortgage-backed securities held by us had contractual final maturities of more than ten years with a weighted average life of 5.3 years and 5.1 years and a modified duration of 4.4 years and 4.3 years. Deposits Our lending and investing activities are primarily funded by deposits.
At December 31, 2024, and 2023, 72.3% and 73.2% of the mortgage-backed securities held by us had contractual final maturities of more than ten years with a weighted average life of 5.1 years and 5.3 years and a modified duration of 4.2 years and 4.4 years. Deposits Our lending and investing activities are primarily funded by deposits.
Non-Interest Income The following table provides a comparison of the major components of non-interest income for the years ended December 31, 2023, 2022, and 2021.
Non-Interest Income The following table provides a comparison of the major components of non-interest income for the years ended December 31, 2024, 2023, and 2022.
These items and other changes in the various components of non-interest expense are discussed in more detail below. Salaries and employee benefits: There was a $2.4 million increase in salaries and benefits for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
These items and other changes in the various components of non-interest expense are discussed in more detail below. Salaries and employee benefits: There was a $8.4 million increase in salaries and benefits for the year ended December 31, 2024, as compared to the year ended December 31, 2023.
Goodwill and other intangible assets have the effect of increasing average stockholders’ equity and, through amortization, decreasing net income allocable to common stockholders while not increasing average tangible common equity or decreasing adjusted net income allocable to common stockholders.
Goodwill and other intangible assets have the effect of 84 increasing average stockholders’ equity and, through amortization, decreasing net income allocable to common stockholders while not increasing average tangible common equity or decreasing core net income allocable to common stockholders.
Year ended December 31, 2023, compared with year ended December 31, 2022 The effective income tax rate for the year ended December 31, 2023, was -223.9% as compared to the U.S. statutory rate of 21.0% as a result of tax planning benefits and credits amplified by a reduction in pre-tax book income for the year due to the pre-tax losses generated in the fourth quarter related to the sale of bonds.
The effective income tax rate for the year ended December 31, 2023, was (223.9)% as compared to the U.S. statutory rate of 21.0% as a result of tax planning benefits and credits amplified by a reduction in pre-tax book income for the year due to the pre-tax losses related to the sale of bonds.
Included in time deposits are Certificate of Deposit Account Registry Service (“CDARS”) program balances of $21.8 million, $11.8 million, and $3.0 million at December 31, 2023, 2022, and 2021. CDARS allows Equity Bank to break large deposits into smaller amounts and place them in a network of other CDARS banks to ensure FDIC insurance coverage on the entire deposit.
Included in time deposits are Certificate of Deposit Account Registry Service (“CDARS”) program balances of $35.4 million, $21.8 million, and $11.8 million at December 31, 2024, 2023, and 2022. CDARS allows Equity Bank to break large deposits into smaller amounts and place them in a network of other CDARS banks to ensure FDIC insurance coverage on the entire deposit.
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 December 31, 2023, securities represented 18.3% of total assets compared with 23.8% at December 31, 2022.
Securities We use our securities portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk, to meet pledging requirements and to meet regulatory capital requirements. At December 31, 2024, securities represented 18.9% of total assets compared with 18.3% at December 31, 2023.
Government-sponsored entities $ — — % $ — 0.00 % $ 31,337 1.65 % $ 1,750 2.02 % $ 33,087 1.67 % U.S.
Government-sponsored entities $ — — % $ — — % $ 31,337 1.65 % $ 1,750 2.02 % $ 33,087 1.67 % U.S.
The following table shows our composition of deposits at December 31, 2023, 2022, and 2021.
The following table shows our composition of deposits at December 31, 2024, 2023, and 2022.
Excess deposits are primarily invested in our interest-bearing deposit account with the Kansas City Federal Reserve Bank, investment securities, federal funds sold or other short-term liquid investments until the funds are needed to fund loan growth. Our investment securities portfolio has a weighted average life of 5.1 years and a modified duration of 4.3 years at December 31, 2023.
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 investment securities portfolio has a weighted average life of 4.8 years and a modified duration of 4.0 years at December 31, 2024.
The following table reconciles, as of the dates set forth below, total average stockholders’ equity to average tangible common equity and net income allocable to common stockholders to adjusted net income allocable to common stockholders.
The following table reconciles, as of the dates set forth below, total average stockholders’ equity to average equity and net income allocable to common stockholders to core net income allocable to common stockholders.
For additional information see “NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the Notes to Consolidated Financial Statements. Analysis of allowance for credit losses: At December 31, 2023, the allowance for credit losses totaled $43.5 million, or 1.31% of total loans.
For additional information see “NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the Notes to Consolidated Financial Statements. Analysis of allowance for credit losses: At December 31, 2024, the allowance for credit losses totaled $43.3 million, or 1.24% of total loans.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance for Credit Losses.” Net charge-offs for the year ended December 31, 2023, were $4.2 million as compared to net charge-offs of $2.6 million for the year ended December 31, 2022.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance for Credit Losses.” Net charge-offs for the year ended December 31, 2024, were $3.8 million as compared to net charge-offs of $4.2 million for the year ended December 31, 2023.
In addition to competition, the overall decrease in deposits is due to a general decrease in excess liquidity in the market due to the impacts of elevated inflation and the effects of monetary policy, in the form of higher interest rates, on both consumer and business customers.
In addition to competition, the overall increase in deposits is due to merger activity, offset by a general decrease in excess liquidity in the market due to the impacts of elevated inflation and the effects of monetary policy, in the form of higher interest rates, on both consumer and business customers.
Net losses as a percentage of average loans was 0.13% for the twelve months ended December 31, 2023, as compared to 0.08% for the twelve months ended December 31, 2022, and 0.30% for the twelve months ended December 31, 2021. 70 The following table presents, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data.
Net losses as a percentage of average loans was 0.11% for the twelve months ended December 31, 2024, as compared to 0.13% for the twelve months ended December 31, 2023, and 0.08% for the twelve months ended December 31, 2022. 74 The following table presents, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data.
Consumer loans are considered pass 68 credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. We use 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. These loans are considered unclassified.
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. We use 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.
At December 31, 2023, gross total loans were 80.4% of deposits and 66.2% of total assets. At December 31, 2022, gross total loans were 78.1% of deposits and 66.5% of total assets. The organic, or non-acquired, growth in our loan portfolio is attributable to our ability to attract new customers from other financial institutions and overall growth in our markets.
At December 31, 2024, gross total loans were 80.0% of deposits and 65.7% of total assets. At December 31, 2023, gross total loans were 80.4% of deposits and 66.2% of total assets. The organic, or non-acquired, growth in our loan portfolio is attributable to our ability to attract new customers from other financial institutions and overall growth in our markets.
At December 31, 2023, the Company had $11.1 million in potential problem loans which were not included in either non-accrual or 90 days past due categories, compared to $37.6 million at December 31, 2022.
At December 31, 2024, the Company had $35.4 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.
The allowance for credit losses calculation on loans collectively evaluated at December 31, 2023, totaled $38.8 million, or 1.2%, of the $3.3 billion in loans collectively evaluated, compared to an allowance for credit losses of $40.9 million, or 1.2%, of the $3.3 billion in loans collectively evaluated at December 31, 2022.
The allowance for credit losses calculation on loans collectively evaluated at December 31, 2024, totaled $38.4 million, or 1.1%, of the $3.5 billion in loans collectively evaluated, compared to an allowance for credit losses of $38.8 million, or 1.2%, of the $3.3 billion in loans collectively evaluated at December 31, 2023.
For additional information about the risk category by class of loans see “NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES” in the Notes to Consolidated Financial Statements. At December 31, 2023, loans considered unclassified increased to 98.8% of total loans from 98.2% of total loans at December 31, 2022.
For additional information about the risk category by class of loans see “NOTE 4 – LOANS AND ALLOWANCE FOR CREDIT LOSSES” in the Notes to Consolidated Financial Statements. At December 31, 2024, loans considered unclassified were 98.1% of total loans compared to 98.8% of total loans at December 31, 2023.
Also included in savings and money market deposits at December 31, 2023, 2022, and 2021, are ICS reciprocal money-market deposit balances of $230.8 million, $17.7 million, and $52.2 million.
Also included in savings and money market deposits at December 31, 2024, 2023, and 2022, are ICS reciprocal money-market deposit balances of $100.6 million, $230.8 million, and $17.7 million.
December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Total stockholders’ equity $ 452,860 $ 410,058 $ 500,631 $ 407,649 $ 478,060 Less: goodwill 53,101 53,101 54,465 31,601 136,432 Less: core deposit intangibles, net 7,222 10,596 14,879 16,057 19,907 Less: mortgage servicing asset, net 75 176 276 — 5 Less: naming rights, net 1,000 1,044 1,087 1,130 1,174 Tangible common equity $ 391,462 $ 345,141 $ 429,924 $ 358,861 $ 320,542 Total assets $ 5,034,592 $ 4,981,651 $ 5,137,631 $ 4,013,356 $ 3,949,578 Less: goodwill 53,101 53,101 54,465 31,601 136,432 Less: core deposit intangibles, net 7,222 10,596 14,879 16,057 19,907 Less: mortgage servicing asset, net 75 176 276 — 5 Less: naming rights, net 1,000 1,044 1,087 1,130 1,174 Tangible assets $ 4,973,194 $ 4,916,734 $ 5,066,924 $ 3,964,568 $ 3,792,060 Equity / assets 8.99 % 8.23 % 9.74 % 10.16 % 12.10 % Tangible common equity to tangible assets 7.87 % 7.02 % 8.48 % 9.05 % 8.45 % 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.
December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Total stockholders’ equity $ 592,918 $ 452,860 $ 410,058 $ 500,631 $ 407,649 Goodwill (53,101 ) (53,101 ) (53,101 ) (54,465 ) (31,601 ) Core deposit intangibles, net (14,969 ) (7,222 ) (10,596 ) (14,879 ) (16,057 ) Mortgage servicing asset, net — (75 ) (176 ) (276 ) — Naming rights, net (957 ) (1,000 ) (1,044 ) (1,087 ) (1,130 ) Tangible common equity $ 523,891 $ 391,462 $ 345,141 $ 429,924 $ 358,861 Total assets $ 5,332,047 $ 5,034,592 $ 4,981,651 $ 5,137,631 $ 4,013,356 Goodwill (53,101 ) (53,101 ) (53,101 ) (54,465 ) (31,601 ) Core deposit intangibles, net (14,969 ) (7,222 ) (10,596 ) (14,879 ) (16,057 ) Mortgage servicing asset, net — (75 ) (176 ) (276 ) — Naming rights, net (957 ) (1,000 ) (1,044 ) (1,087 ) (1,130 ) Tangible assets $ 5,263,020 $ 4,973,194 $ 4,916,734 $ 5,066,924 $ 3,964,568 Equity / assets 11.12 % 8.99 % 8.23 % 9.74 % 10.16 % Tangible common equity to tangible assets 9.95 % 7.87 % 7.02 % 8.48 % 9.05 % Core Return on Average Equity: Core return on average equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions.
The cash provided by investing activities was driven mostly by the sale and maturity of securities of $789.4 million and mostly offset by the purchase of securities of $510.5 million, the purchase of correspondent and miscellaneous stock of $11.9 million and the purchase of premises and equipment of $15.6 million.
The cash provided by investing activities was driven by the sale and maturity of securities of $789.4 million and primarily offset by the purchase of securities of $510.5 million, the net change in loans of $23.7 million, the purchase of premises and equipment of $15.6 million and the purchase of correspondent and miscellaneous stock of $11.9 million.
Average loans were $3.30 billion for the year ended December 31, 2023, an increase of 2.2% over average loans of $3.23 billion for the year ended December 31, 2022.
Average loans were $3.44 billion for the year ended December 31, 2024, an increase of 4.2% over average loans of $3.30 billion for the year ended December 31, 2023.
December 31, 2023 2022 2021 2020 2019 (Dollars in thousands, except share data) Total stockholders’ equity $ 452,860 $ 410,058 $ 500,631 $ 407,649 $ 478,060 Less: goodwill 53,101 53,101 54,465 31,601 136,432 Less: core deposit intangibles, net 7,222 10,596 14,879 16,057 19,907 Less: mortgage servicing asset, net 75 176 276 — 5 Less: naming rights, net 1,000 1,044 1,087 1,130 1,174 Tangible common equity $ 391,462 $ 345,141 $ 429,924 $ 358,861 $ 320,542 Common shares outstanding at period end 15,428,251 15,930,112 16,760,115 14,540,556 15,444,434 Diluted common shares outstanding at period end 15,629,185 16,163,253 17,050,115 14,540,556 15,719,810 Book value per common share $ 29.35 $ 25.74 $ 29.87 $ 28.04 $ 30.95 Tangible book value per common share $ 25.37 $ 21.67 $ 25.65 $ 24.68 $ 20.75 Tangible book value per diluted common share $ 25.05 $ 21.35 $ 25.22 $ 24.68 $ 20.39 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.
December 31, 2024 2023 2022 2021 2020 (Dollars in thousands, except share data) Total stockholders’ equity $ 592,918 $ 452,860 $ 410,058 $ 500,631 $ 407,649 Goodwill (53,101 ) (53,101 ) (53,101 ) (54,465 ) (31,601 ) Core deposit intangibles, net (14,969 ) (7,222 ) (10,596 ) (14,879 ) (16,057 ) Mortgage servicing asset, net — (75 ) (176 ) (276 ) — Naming rights, net (957 ) (1,000 ) (1,044 ) (1,087 ) (1,130 ) Tangible common equity $ 523,891 $ 391,462 $ 345,141 $ 429,924 $ 358,861 Common shares outstanding at period end 17,419,858 15,428,251 15,930,112 16,760,115 14,540,556 Diluted common shares outstanding at period end 17,636,843 15,629,185 16,163,253 17,050,115 14,540,556 Book value per common share $ 34.04 $ 29.35 $ 25.74 $ 29.87 $ 28.04 Tangible book value per common share $ 30.07 $ 25.37 $ 21.67 $ 25.65 $ 24.68 Tangible book value per diluted common share $ 29.70 $ 25.05 $ 21.35 $ 25.22 $ 24.68 83 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.
For additional information about the Company’s capital see "NOTE 12 – STOCKHOLDERS' EQUITY", “NOTE 14 – REGULATORY MATTERS” and "NOTE 17 – SHARE-BASED PAYMENTS" in Notes to Consolidated Financial Statements. 78 Non-GAAP Financial Measures We identify certain financial measures discussed in this Annual Report on Form 10-K as being “non-GAAP financial measures.” In accordance with the 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 generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows.
Non-GAAP Financial Measures We identify certain financial measures discussed in this Annual Report on Form 10-K as being “non-GAAP financial measures.” In accordance with the 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 generally accepted accounting principles as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows.
The ratio defined under GAAP that is most comparable to the efficiency ratio is non-interest expense to net interest income plus non-interest income which is discussed in “Results of Operations – Non-GAAP Financial Measures.” The Company’s efficiency ratio increased in 2023 as compared to 2022 due to non-interest expense, excluding goodwill impairment and merger expenses, increasing at a higher proportional rate than net interest income and non-interest income, excluding net loss on security transactions and gain on acquisition, as discussed in “Results of Operations – Net Interest Income and Net Interest Margin Analysis” and “Results of Operations – Non-Interest Income.” Income Taxes The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, the amount of non-deductible expenses and available tax credits.
The ratio defined under GAAP that is most comparable to the efficiency ratio is non-interest expense to net interest income plus non-interest income which is discussed in “Results of Operations – Non-GAAP Financial Measures.” The Company’s efficiency ratio improved in 2024 as compared to 2023 due to the increase in net interest income excluding the net gain on securities transactions and gain on acquisition outpacing the change in non-interest expense, excluding goodwill impairment and merger expenses, as discussed in “Results of Operations – Net Interest Income and Net Interest Margin Analysis” and “Results of Operations – Non-Interest Income.” Income Taxes The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, the amount of non-deductible expenses and available tax credits.
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, loss on debt extinguishment, net gains on the sale of available-for-sale securities and other securities transactions, and the net gain on acquisition.
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, loss on debt extinguishment, net gains on the sale of available-for-sale securities and other securities transactions, and the net gain on acquisition. 86 The following table reconciles, as of the dates set forth below, the efficiency ratio to the GAAP-based efficiency ratio.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position will be sustained in a tax examination, with a tax examination being presumed to occur.
A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position will be sustained in a tax examination, with a tax examination being presumed to occur.
Overall, deposits have declined $96.4 million from December 31, 2022 to December 31, 2023 and deposits excluding brokered deposits have declined $44.5 million for the same time period. During 2023 there has been significant competition for deposits and continued pricing pressure which has caused deposit migration to higher earning deposit account types.
Overall, deposits have increased $229.3 million from December 31, 2023 to December 31, 2024 and deposits excluding brokered deposits have increased $104.2 million for the same time period. During 2024 there has been significant competition for deposits and continued pricing pressure which has caused deposit migration to higher earning deposit account types.
Held-To-Maturity Securities December 31, 2023 2022 Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in thousands) Mortgage-backed securities Government-sponsored residential mortgage-backed securities $ 1,094 $ 1,097 $ 1,108 $ 1,108 State and local subdivisions 1,115 1,153 840 865 Total held-to-maturity securities $ 2,209 $ 2,250 $ 1,948 $ 1,973 72 The following tables summarize the contractual maturity of debt securities and their weighted average yields as of December 31, 2023, and December 31, 2022.
Held-To-Maturity Securities December 31, 2024 2023 Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in thousands) Mortgage-backed securities Government-sponsored residential mortgage-backed securities $ 3,932 $ 3,909 $ 1,094 $ 1,097 State and local subdivisions 1,285 1,305 1,115 1,153 Total held-to-maturity securities $ 5,217 $ 5,214 $ 2,209 $ 2,250 76 The following tables summarize the contractual maturity of debt securities and their weighted average yields as of December 31, 2024, and December 31, 2023.
The amount recognized is the largest amount of tax benefit that is more likely than not to be realized on examination. 65 The Company recognizes interest and/or penalties related to income tax matters in income tax expense. There were no material amounts to report for interest or penalties incurred in 2023, 2022, or 2021.
The amount recognized is the largest amount of tax benefit that is more likely than not to be realized on examination . The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
Nonperforming Assets As of December 31, 2023 2022 2021 (Dollars in thousands) Nonaccrual loans $ 25,026 $ 17,601 $ 29,361 Accruing loans 90 or more days past due 279 — 256 OREO acquired through foreclosure, net 772 600 7,582 Other repossessed assets 380 47 28,799 Total nonperforming assets $ 26,457 $ 18,248 $ 65,998 Ratios: Nonperforming assets to total assets 0.53 % 0.37 % 1.28 % Nonperforming assets to total loans plus OREO 0.79 % 0.55 % 2.09 % Nonperforming assets (“NPAs”) include loans on nonaccrual status, accruing loans 90 or more days past due, restructured loans, other real estate acquired through foreclosure and other repossessed assets.
Nonperforming Assets As of December 31, 2024 2023 2022 (Dollars in thousands) Non-accrual loans $ 27,050 $ 25,026 $ 17,601 Accruing loans 90 or more days past due 181 279 — OREO acquired through foreclosure, net 2,632 772 600 Other repossessed assets 4,812 380 47 Total nonperforming assets $ 34,675 $ 26,457 $ 18,248 Ratios: Nonperforming assets to total assets 0.65 % 0.53 % 0.37 % Nonperforming assets to total loans plus OREO 0.99 % 0.79 % 0.55 % Nonperforming assets (“NPAs”) include loans on non-accrual status, accruing loans 90 or more days past due, restructured loans, other real estate acquired through foreclosure and other repossessed assets.
Average Deposit Balances and Average Rate Paid December 31, 2023 2022 2021 Average Balance Average Rate Paid Average Balance Average Rate Paid Average Balance Average Rate Paid (Dollars in thousands) Non-interest-bearing demand $ 979,410 — % $ 1,203,167 — % $ 1,021,261 — % Interest-bearing demand 1,002,543 2.26 % 1,124,828 0.64 % 1,032,938 0.21 % Savings and money market 1,359,822 1.73 % 1,308,536 0.27 % 1,129,869 0.14 % Time 827,652 2.93 % 663,790 0.83 % 625,562 0.73 % Total deposits $ 4,169,427 $ 4,300,321 $ 3,809,630 75 Included in interest-bearing demand deposits are Insured Cash Sweep (“ICS”) reciprocal demand deposit balances of $382.6 million at December 31, 2023, and $282.7 million at December 31, 2022, and $308.4 million at December 31, 2021.
Average Deposit Balances and Average Rate Paid December 31, 2024 2023 2022 Average Balance Average Rate Paid Average Balance Average Rate Paid Average Balance Average Rate Paid (Dollars in thousands) Non-interest-bearing demand $ 931,860 — % $ 979,410 — % $ 1,203,167 — % Interest-bearing demand 1,028,114 2.68 % 1,002,543 2.26 % 1,124,828 0.64 % Savings and money market 1,425,025 2.38 % 1,359,822 1.73 % 1,308,536 0.27 % Time 770,772 3.75 % 827,652 2.93 % 663,790 0.83 % Total deposits $ 4,155,771 $ 4,169,427 $ 4,300,321 79 Included in interest-bearing demand deposits are Insured Cash Sweep (“ICS”) reciprocal demand deposit balances of $469.5 million at December 31, 2024, and $382.6 million at December 31, 2023, and $282.7 million at December 31, 2022.
For the year ended December 31, 2023, gross charge-offs were $5.0 million offset by gross recoveries of $800 thousand. In comparison, gross charge-offs were $3.3 million for the year ended December 31, 2022, offset by gross recoveries of $700 thousand.
For the year ended December 31, 2024, gross charge-offs were $4.6 million offset by gross recoveries of $817 thousand. In comparison, gross charge-offs were $5.0 million for the year ended December 31, 2023, offset by gross recoveries of $754 thousand.
We had five nonperforming loan relationships each with outstanding balances exceeding $1.0 million as of December 31, 2023. There are several procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by lenders and we also monitor delinquency levels for any negative or adverse trends.
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.
Available-For-Sale Securities December 31, 2023 2022 Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in thousands) U.S. Government-sponsored entities $ 39,103 $ 33,087 $ 123,196 $ 106,406 U.S.
Available-For-Sale Securities December 31, 2024 2023 Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in thousands) U.S. Government-sponsored entities $ 71,173 $ 65,094 $ 39,103 $ 33,087 U.S.
United Bank and Trust Branch Sale Amount Percent of Total (Dollars in thousands) Non-interest-bearing demand $ 15,817 30.0 % Interest-bearing demand 9,039 17.2 % Savings and money market 19,576 37.1 % Time 8,282 15.7 % Total deposits $ 52,714 100.0 % High Plains Bank Branch Sale Amount Percent of Total (Dollars in thousands) Non-interest-bearing demand $ 1,925 10.1 % Interest-bearing demand 3,664 19.2 % Savings and money market 7,300 38.3 % Time 6,168 32.4 % Total deposits $ 19,057 100.0 % 74 The following tables show deposits assumed in 2021 acquisitions, as of the time of such acquisitions.
United Bank and Trust Branch Sale Amount Percent of Total (Dollars in thousands) Non-interest-bearing demand $ 15,817 30.0 % Interest-bearing demand 9,039 17.2 % Savings and money market 19,576 37.1 % Time 8,282 15.7 % Total deposits $ 52,714 100.0 % High Plains Bank Branch Sale Amount Percent of Total (Dollars in thousands) Non-interest-bearing demand $ 1,925 10.1 % Interest-bearing demand 3,664 19.2 % Savings and money market 7,300 38.3 % Time 6,168 32.4 % Total deposits $ 19,057 100.0 % The following table shows the average deposit balance and average rate paid on deposits for the year ended December 31, 2024, 2023, and 2022.
Composition of Loan Portfolio December 31, 2023 2022 2021 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial and industrial $ 598,327 17.9 % $ 594,863 18.0 % $ 567,497 18.0 % Real estate loans: Commercial real estate 1,759,855 52.8 % 1,721,268 52.0 % 1,486,148 47.1 % Residential real estate 556,328 16.7 % 570,550 17.2 % 638,087 20.2 % Agricultural real estate 196,114 5.9 % 199,189 6.0 % 198,330 6.3 % Total real estate loans 2,512,297 75.4 % 2,491,007 75.2 % 2,322,565 73.6 % Agricultural 118,587 3.6 % 120,003 3.6 % 166,975 5.3 % Consumer 103,690 3.1 % 105,675 3.2 % 98,590 3.1 % Total loans held for investment $ 3,332,901 100.0 % $ 3,311,548 100.0 % $ 3,155,627 100.0 % Total loans held for sale $ 476 100.0 % $ 349 100.0 % $ 4,214 100.0 % Total loans held for investment (net of allowances) $ 3,289,381 100.0 % $ 3,265,701 100.0 % $ 3,107,262 100.0 % 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.
Composition of Loan Portfolio December 31, 2024 2023 2022 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial and industrial $ 658,865 18.8 % $ 598,327 17.9 % $ 594,863 18.0 % Real estate loans: Commercial real estate 1,830,514 52.3 % 1,759,855 52.8 % 1,721,268 52.0 % Residential real estate 566,766 16.2 % 556,328 16.7 % 570,550 17.2 % Agricultural real estate 267,248 7.6 % 196,114 5.9 % 199,189 6.0 % Total real estate loans 2,664,528 76.1 % 2,512,297 75.4 % 2,491,007 75.2 % Agricultural 87,339 2.5 % 118,587 3.6 % 120,003 3.6 % Consumer 90,084 2.6 % 103,690 3.1 % 105,675 3.2 % Total loans held for investment $ 3,500,816 100.0 % $ 3,332,901 100.0 % $ 3,311,548 100.0 % Total loans held for sale $ 513 100.0 % $ 476 100.0 % $ 349 100.0 % Total loans held for investment (net of allowances) $ 3,457,549 100.0 % $ 3,289,381 100.0 % $ 3,265,701 100.0 % 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.
At December 31, 2022, the allowance for credit losses totaled $45.8 million, or 1.38% of total loans.
At December 31, 2023, the allowance for credit losses totaled $43.5 million, or 1.31% of total loans.
Unlike many industrial companies, substantially all our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services.
As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation.
The effective income tax rate for the year ended December 31, 2022, was 17.9% as compared to the U.S. statutory rate of 21.0%. As detailed in “NOTE 13 – INCOME TAXES” in the Notes to Consolidated Financial Statements, the income tax rates differed from the U.S. statutory rates primarily due to non-taxable income, non-deductible expenses, and tax credits.
As detailed in “NOTE 13 – INCOME TAXES” in the Notes to Consolidated Financial Statements, the income tax rates differed from the U.S. statutory rates primarily due to non-taxable income, non-deductible expenses, and tax credits.
December 31, 2023 2022 (Dollars in thousands) 3 months or less $ 65,449 $ 40,578 Over 3 through 6 months 94,459 51,365 Over 6 through 12 months 18,082 19,191 Over 12 months 18,777 34,586 Total Time Deposits $ 196,767 $ 145,720 Other Borrowed Funds We utilize borrowings to supplement deposits to fund our lending and investing activities.
December 31, 2024 2023 (Dollars in thousands) 3 months or less $ 69,637 $ 65,449 Over 3 through 6 months 200,049 94,459 Over 6 through 12 months 13,799 18,082 Over 12 months 52,080 18,777 Total Time Deposits $ 335,565 $ 196,767 Other Borrowed Funds We utilize borrowings to supplement deposits to fund our lending and investing activities.
Adjusted Net Income and Earnings Per Share: Adjusted net income and adjusted earnings per share are non-GAAP financial measures generally used to disclose core net income from the Company's operations and earnings per share.
Core Net Income and Earnings Per Share: Core net income and Core earnings per share are non-GAAP financial measures generally used to disclose core net income from the Company's operations and earnings per share. We calculated this by taking GAAP net income less non-core impacts to net income to arrive at core net income and core diluted earnings per share.
Non-Interest Income For the Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 (Dollars in thousands) 2023 2022 2021 Change % Change % Service charges and fees $ 10,187 $ 10,632 $ 8,596 $ (445 ) (4.2 )% $ 2,036 23.7 % Debit card income 10,322 10,677 10,236 (355 ) (3.3 )% 441 4.3 % Mortgage banking 652 1,416 3,306 (764 ) (54.0 )% (1,890 ) (57.2 )% Increase in value of bank-owned life insurance 4,059 3,113 3,506 946 30.4 % (393 ) (11.2 )% Other Investment referral income 424 539 678 (115 ) (21.3 )% (139 ) (20.5 )% Trust income 1,123 1,036 1,140 87 8.4 % (104 ) (9.1 )% Insurance sales commissions 582 566 545 16 2.8 % 21 3.9 % Recovery on zero-basis purchased loans 517 249 85 268 107.6 % 164 192.9 % Income (loss) from equity method investments (222 ) (222 ) (222 ) — — % — — % Other non-interest income 5,136 6,984 3,981 (1,848 ) (26.5 )% 3,003 75.4 % Total other 7,560 9,152 6,207 (1,592 ) (17.4 )% 2,945 47.4 % Subtotal 32,780 34,990 31,851 (2,210 ) (6.3 )% 3,139 9.9 % Gain on acquisition — 962 585 (962 ) (100.0 )% 377 64.4 % Net gain (loss) from securities transactions (51,909 ) 5 406 (51,914 ) (100.0 )% (401 ) (98.8 )% Total non-interest income $ (19,129 ) $ 35,957 $ 32,842 $ (55,086 ) (153.2 )% $ 3,115 9.5 % 63 Year ended December 31, 2023, compared with year ended December 31, 2022 Non-interest income, before gain on acquisition and gain (loss) on securities transactions decreased 6.3%.
Non-Interest Income For the Years Ended December 31, 2024 vs. 2023 2023 vs. 2022 (Dollars in thousands) 2024 2023 2022 Change % Change % Service charges and fees $ 9,830 $ 10,187 $ 10,632 $ (357 ) (3.5 )% $ (445 ) (4.2 )% Debit card income 10,246 10,322 10,677 (76 ) (0.7 )% (355 ) (3.3 )% Mortgage banking 861 652 1,416 209 32.1 % (764 ) (54.0 )% Increase in value of bank-owned life insurance 4,966 4,059 3,113 907 22.3 % 946 30.4 % Other Investment referral income 500 424 539 76 17.9 % (115 ) (21.3 )% Trust income 1,624 1,123 1,036 501 44.6 % 87 8.4 % Insurance sales commissions 555 582 566 (27 ) (4.6 )% 16 2.8 % Recovery on zero-basis purchased loans 4,380 517 249 3,863 747.2 % 268 107.6 % Income (loss) from equity method investments (87 ) (222 ) (222 ) 135 (60.8 )% — — % Other non-interest income 3,596 5,136 6,984 (1,540 ) (30.0 )% (1,848 ) (26.5 )% Total other 10,568 7,560 9,152 3,008 39.8 % (1,592 ) (17.4 )% Subtotal 36,471 32,780 34,990 3,691 11.3 % (2,210 ) (6.3 )% Gain on acquisition 2,131 — 962 2,131 100.0 % (962 ) (100.0 )% Net gain (loss) from securities transactions 220 (51,909 ) 5 52,129 (100.0 )% (51,914 ) (100.0 )% Total non-interest income $ 38,822 $ (19,129 ) $ 35,957 $ 57,951 (302.9 )% $ (55,086 ) (153.2 )% Year ended December 31, 2024, compared with year ended December 31, 2023 Non-interest income, before gain on acquisition and gain or loss on sale of securities, increased 11.3%.
Merger expenses: Merger expenses include legal, advisory and accounting fees associated with services to facilitate the acquisition of other banks. Merger expenses also include data processing conversion costs and costs associated with the integration of personnel, processes, facilities and employee bonuses. During 2023, the Company incurred merger expenses of $297 thousand related to the Bank of Kirksville acquisition.
Merger expenses: Merger expenses of $4.5 million include legal, advisory and accounting fees associated with services to facilitate the acquisition of two banks in 2024. Merger expenses also include data processing conversion costs and costs associated with the integration of personnel, processes, facilities and employee bonuses.
December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Non-interest expense $ 135,601 $ 128,380 $ 119,465 $ 208,990 $ 99,635 Less: goodwill impairment — — — 104,831 — Less: merger expenses 297 594 9,189 299 915 Less: loss on debt extinguishment — — 372 — — Non-interest expense, excluding merger expenses and loss on debt extinguishment $ 135,304 $ 127,786 $ 109,904 $ 103,860 $ 98,720 Net interest income $ 159,018 $ 162,830 $ 142,579 $ 132,652 $ 125,858 Non-interest income $ (19,129 ) $ 35,957 $ 32,842 $ 26,023 $ 24,988 Less: gain on acquisition and branch sales — 962 585 2,145 — Less: net gains (losses) from securities transactions (51,909 ) 5 406 11 14 Non-interest income, excluding net gains (losses) from security transactions and gain on acquisition $ 32,780 $ 34,990 $ 31,851 $ 23,867 $ 24,974 Non-interest expense, less goodwill impairment, to net interest income plus non-interest income 96.93 % 64.58 % 68.10 % 65.64 % 66.05 % Efficiency Ratio 70.55 % 64.60 % 63.01 % 66.36 % 65.45 %
December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Non-interest expense $ 144,157 $ 135,601 $ 128,380 $ 119,465 $ 208,990 Goodwill impairment — — — — (104,831 ) Merger expenses (4,461 ) (297 ) (594 ) (9,189 ) (299 ) Loss on debt extinguishment — — — (372 ) — Non-interest expense, excluding merger expenses and loss on debt extinguishment $ 139,696 $ 135,304 $ 127,786 $ 109,904 $ 103,860 Amortization of intangibles $ (4,408 ) $ (3,518 ) $ (4,186 ) $ (4,242 ) $ (3,898 ) Core Non-interest expense, excluding merger expenses, amortization of intangibles and loss on debt extinguishment $ 135,288 $ 131,786 $ 123,600 $ 105,662 $ 99,962 Net interest income $ 186,162 $ 159,018 $ 162,830 $ 142,579 $ 132,652 Non-interest income $ 38,822 $ (19,129 ) $ 35,957 $ 32,842 $ 26,023 Gain on acquisition and branch sales (2,131 ) — (962 ) (585 ) (2,145 ) Net (gains) losses from securities transactions (220 ) 51,909 (5 ) (406 ) (11 ) Non-interest income, excluding net gains (losses) from security transactions and gain on acquisition $ 36,471 $ 32,780 $ 34,990 $ 31,851 $ 23,867 Non-interest expense to net interest income plus non-interest income 64.07 % 96.93 % 64.58 % 68.10 % 65.64 % Efficiency Ratio 60.77 % 68.71 % 62.48 % 60.58 % 63.87 % Total average assets $ 5,075,939 $ 4,999,405 $ 5,023,112 $ 4,431,802 $ 3,999,709 Core non-interest expense, less goodwill impairment / Average assets 2.67 % 2.64 % 2.46 % 2.38 % 2.50 %
Non-Interest Expense For the Year Ended December 31, 2023 vs. 2022 2022 vs. 2021 (Dollars in thousands) 2023 2022 2021 Change % Change % Salaries and employee benefits $ 64,384 $ 62,006 $ 54,198 $ 2,378 3.8 % $ 7,808 14.4 % Net occupancy and equipment 12,325 12,223 10,137 102 0.8 % 2,086 20.6 % Data processing 17,433 15,883 13,261 1,550 9.8 % 2,622 19.8 % Professional fees 5,754 4,951 4,713 803 16.2 % 238 5.0 % Advertising and business development 5,425 5,042 3,370 383 7.6 % 1,672 49.6 % Telecommunications 1,963 1,916 1,966 47 2.5 % (50 ) (2.5 )% FDIC insurance 2,195 1,140 1,665 1,055 92.5 % (525 ) (31.5 )% Courier and postage 2,046 1,881 1,429 165 8.8 % 452 31.6 % Free nationwide ATM expense 2,073 2,103 2,019 (30 ) (1.4 )% 84 4.2 % Amortization of core deposit intangibles 3,374 4,042 4,174 (668 ) (16.5 )% (132 ) (3.2 )% Loan expense 540 828 934 (288 ) (34.8 )% (106 ) (11.3 )% Other real estate owned 542 589 (188 ) (47 ) (8.0 )% 777 (413.3 )% Loss on debt extinguishment — — 372 — 100.0 % (372 ) (100.0 )% Other 17,250 15,182 12,226 2,068 13.6 % 2,956 24.2 % Subtotal 135,304 127,786 110,276 7,518 5.9 % 17,510 15.9 % Merger expenses 297 594 9,189 (297 ) (50.0 )% (8,595 ) (93.5 )% Total non-interest expense $ 135,601 $ 128,380 $ 119,465 $ 7,221 5.6 % $ 8,915 7.5 % Year ended December 31, 2023, compared with year ended December 31, 2022 The increase in non-interest expense was primarily due to increases in salaries and employee benefits of $2.4 million, other non-interest expense of $2.1 million, data processing of $1.6 million and FDIC insurance of $1.1 million, offset by a decrease in the amortization of core deposits intangibles of $668 thousand.
Non-Interest Expense For the Year Ended December 31, 2024 vs. 2023 2023 vs. 2022 (Dollars in thousands) 2024 2023 2022 Change % Change % Salaries and employee benefits $ 72,786 $ 64,384 $ 62,006 $ 8,402 13.0 % $ 2,378 3.8 % Net occupancy and equipment 14,371 12,325 12,223 2,046 16.6 % 102 0.8 % Data processing 20,004 17,433 15,883 2,571 14.7 % 1,550 9.8 % Professional fees 6,503 5,754 4,951 749 13.0 % 803 16.2 % Advertising and business development 5,366 5,425 5,042 (59 ) (1.1 )% 383 7.6 % Telecommunications 2,501 1,963 1,916 538 27.4 % 47 2.5 % FDIC insurance 2,483 2,195 1,140 288 13.1 % 1,055 92.5 % Courier and postage 2,599 2,046 1,881 553 27.0 % 165 8.8 % Free nationwide ATM expense 2,127 2,073 2,103 54 2.6 % (30 ) (1.4 )% Amortization of core deposit intangibles 4,289 3,374 4,042 915 27.1 % (668 ) (16.5 )% Loan expense 601 540 828 61 11.3 % (288 ) (34.8 )% Other real estate owned and repossessed assets, net (7,525 ) 617 247 (8,142 ) (1319.6 )% 370 149.8 % Other 13,591 17,175 15,524 (3,584 ) (20.9 )% 1,651 10.6 % Subtotal 139,696 135,304 127,786 4,392 3.2 % 7,518 5.9 % Merger expenses 4,461 297 594 4,164 1402.0 % (297 ) (50.0 )% Total non-interest expense $ 144,157 $ 135,601 $ 128,380 $ 8,556 6.3 % $ 7,221 5.6 % Year ended December 31, 2024, compared with year ended December 31, 2023 The increase in non-interest expense was primarily due to increases in salaries and employee benefits of $8.4 million, data processing expense of $2.6 million, net occupancy and equipment expense of $2.0 million, offset by a decrease in Other real estate owned of $8.1 million and Other expenses of $3.6 million.
Efficiency Ratio The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of our performance and is not defined under GAAP.
During 2023, the Company incurred merger expenses of $297 thousand related to the Rockhold BanCorp acquisition. Efficiency Ratio The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of our performance and is not defined under GAAP.
Included in salaries and employee benefits is share-based compensation expense of $2.6 million for the year ended December 31, 2023, and $3.3 million for the year ended December 31, 2022.
Included in salaries and employee benefits is share-based compensation expense of $3.5 million for the year ended December 31, 2024, and $2.5 million for the year ended December 31, 2023. Data processing: The $2.6 million increase was principally due to increased software license expenses of $2.7 million.
Regulatory Loan Classification 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 and current economic trends, among other factors. Loans are analyzed individually and classified based on credit risk.
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. 72 Regulatory Loan Classification 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 and current economic trends, among other factors.
Composition of Deposits December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Amount Percent of Total Amount Percent of Total Amount Percent of Total Change % Change % (Dollars in thousands) Non-interest-bearing demand $ 898,129 21.7 % $ 1,097,899 25.9 % $ 1,244,117 28.1 % $ (199,770 ) (18.2 )% $ (146,218 ) (11.8 )% Interest-bearing demand 998,822 24.1 % 1,061,264 25.0 % 1,202,408 27.2 % (62,442 ) (5.9 )% (141,144 ) (11.7 )% Savings and money market 1,484,985 35.8 % 1,268,320 29.9 % 1,319,881 29.9 % 216,665 17.1 % (51,561 ) (3.9 )% Time 763,519 18.4 % 814,324 19.2 % 653,598 14.8 % (50,805 ) (6.2 )% 160,726 24.6 % Total deposits $ 4,145,455 100.0 % $ 4,241,807 100.0 % $ 4,420,004 100.0 % $ (96,352 ) (2.3 )% $ (178,197 ) (4.0 )% The following tables show deposits sold in 2022 branch dispositions, as of the time of such dispositions.
Composition of Deposits December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Amount Percent of Total Amount Percent of Total Amount Percent of Total Change % Change % (Dollars in thousands) Non-interest-bearing demand $ 954,065 21.8 % $ 898,129 21.7 % $ 1,097,899 25.9 % $ 55,936 6.2 % $ (199,770 ) (18.2 )% Interest-bearing demand 1,172,577 26.8 % 998,822 24.1 % 1,061,264 25.0 % 173,755 17.4 % (62,442 ) (5.9 )% Savings and money market 1,511,620 34.6 % 1,484,985 35.8 % 1,268,320 29.9 % 26,635 1.8 % 216,665 17.1 % Time 736,527 16.8 % 763,519 18.4 % 814,324 19.2 % (26,992 ) (3.5 )% (50,805 ) (6.2 )% Total deposits $ 4,374,789 100.0 % $ 4,145,455 100.0 % $ 4,241,807 100.0 % $ 229,334 5.5 % $ (96,352 ) (2.3 )% The following tables show deposits acquired in 2024, as of the time of each acquisition.
Treasury securities 89,999 89,256 257,690 232,158 Mortgage-backed securities Government-sponsored residential mortgage-backed securities 560,674 529,143 560,776 498,606 Private label residential mortgage-backed securities 161,174 137,841 190,889 163,560 Corporate 56,722 49,683 56,642 52,374 Small Business Administration loan pools 8,066 7,727 12,915 12,181 State and local subdivisions 81,458 72,911 130,311 119,105 Total available-for-sale securities $ 997,196 $ 919,648 $ 1,332,419 $ 1,184,390 The following table summarizes the amortized cost and fair value by classification of held-to-maturity securities as of the dates shown.
Treasury securities 86,523 86,563 89,999 89,256 Mortgage-backed securities Government-sponsored residential mortgage-backed securities 624,228 589,172 560,674 529,143 Private label residential mortgage-backed securities 144,971 124,664 161,174 137,841 Corporate 61,947 58,652 56,722 49,683 Small Business Administration loan pools 6,542 6,266 8,066 7,727 State and local subdivisions 83,868 74,044 81,458 72,911 Total available-for-sale securities $ 1,079,252 $ 1,004,455 $ 997,196 $ 919,648 The following table summarizes the amortized cost and fair value by classification of held-to-maturity securities as of the dates shown.
There are no conditions or events since that notification that management believes have changed Equity Bank’s category. The total increase in stockholders’ equity of $42.8 million was principally attributable to an increase in accumulated other comprehensive income of $55.6 million, partially offset by a decrease in treasury stock of $17.9 million.
There are no conditions or events since that notification that management believes have changed Equity Bank’s category. 82 The total increase in stockholders’ equity of $140.1 million was principally attributable to increases in additional paid-in-capital of $95.2 million and retained earnings of $53.9 million, partially offset by a increase in treasury stock of $11.9 million.
The increase in total liabilities was from increases in Federal Reserve Bank borrowings of $140.0 million, offset by a decrease in total deposits of $96.4 million and FHLB advances of $38.9 million. Our total stockholders’ equity increased $42.8 million, or 10.4%, from $410.1 million at December 31, 2022, to $452.9 million at December 31, 2023.
Our total liabilities increased $157.4 million, or 3.44%, from $4.58 billion at December 31, 2023, to $4.74 billion at December 31, 2024. The increase in total liabilities was from an increase in total deposits of $229.3 million, an increase in FHLB advances of $78.1 million, partially offset by a decrease in Federal Reserve Bank borrowings of $140.0 million.
Also included in time deposits are brokered deposit balances totaling $200 million as of December 31, 2023, compared to $252 million as of December 31, 2022. The following table provides information on the maturity distribution of time deposits of $250,000 or more as of December 31, 2023, and December 31, 2022.
The following table provides information on the maturity distribution of time deposits of $250,000 or more as of December 31, 2024, and December 31, 2023.
There was a $2.1 million increase in other non-interest expense for the year ended December 31, 2023, as compared to the year ended December 31, 2022. This increase was primarily due to increases in recruiting of $508 thousand, auto and travel expenses of $601 thousand, and the write-off of tax credit investments of $315 thousand.
There was a $3.6 million decrease in other non-interest expense for the year ended December 31, 2024, as compared to the year ended December 31, 2023. This decrease was primarily due to a reduction of $3.6 million in write-offs of tax credit investments.
The value of real estate collateral provides additional support to the borrower’s credit capacity. With respect to potential problem loans, all monitored and under-performing loans are individually reviewed.
With respect to potential problem loans, all monitored and under-performing loans are individually reviewed.
The Company made investments in solar tax credits during the years ended December 31, 2022, and December 31, 2023, which had a material impact on the effective income tax rate for each period. Income Taxes : Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
The Company made investments in solar tax credits during the years ended December 31, 2024 and December 31, 2023 which had a material impact on the effective income tax rate for each period. Additionally, the Company recognized tax gains and related penalties on the surrender of Bank Owned Life Insurance (“BOLI”) for the year ended December 31, 2024.
December 31, 2023 2022 2021 2020 2019 (Dollars in thousands) Total average stockholders’ equity $ 423,722 $ 440,882 $ 446,795 $ 464,608 $ 463,445 Less: average intangible assets 63,064 67,746 50,831 130,329 158,410 Average tangible common equity $ 360,658 $ 373,136 $ 395,964 $ 334,279 $ 305,035 Net income (loss) allocable to common stockholders $ 7,821 $ 57,688 $ 52,480 $ (74,970 ) $ 25,579 Plus: goodwill impairment, net of actual tax effect — — — 99,526 — Amortization of intangible assets 3,518 4,186 4,242 3,898 3,218 Less: estimated tax effect on intangible asset amortization 739 879 891 819 676 Adjusted net income allocable to common stockholders $ 10,600 $ 60,995 $ 55,831 $ 27,635 $ 28,121 Return on average equity (ROAE) 1.85 % 13.08 % 11.75 % (16.14 )% 5.52 % Return on average tangible common equity (ROATCE) 2.94 % 16.35 % 14.10 % 8.27 % 9.22 % Efficiency Ratio : The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions.
December 31, 2024 2023 2022 2021 2020 (Dollars in thousands) Total average stockholders’ equity $ 482,974 $ 423,722 $ 440,882 $ 446,795 $ 464,608 Average intangible assets (68,190 ) (63,064 ) (67,746 ) (50,831 ) (130,329 ) Average tangible common equity $ 414,784 $ 360,658 $ 373,136 $ 395,964 $ 334,279 Net income (loss) allocable to common stockholders $ 62,621 $ 7,821 $ 57,688 $ 52,480 $ (74,970 ) Amortization of intangible assets 4,408 3,518 4,186 4,242 3,898 Goodwill impairment, net of actual tax effect — — — — 99,526 Tax effect of adjustments (926 ) (739 ) (879 ) (891 ) (819 ) Adjusted net income (loss) allocable to common stockholders $ 66,103 $ 10,600 $ 60,995 $ 55,831 $ 27,635 Net gain on acquisition (2,131 ) — (962 ) (585 ) (2,145 ) Net (gain) loss on securities transactions (220 ) 51,909 (5 ) (406 ) (11 ) Loss on extinguishment of debt — — — 372 — Merger expenses 4,461 297 594 9,189 299 BOLI tax expense 1,730 — — — — Tax effect of adjustments (443 ) (10,963 ) 78 (1,800 ) 390 Core net income (loss) allocable to common stockholders $ 69,500 $ 51,843 $ 60,700 $ 62,601 $ 26,168 Return on average equity (ROAE) 12.97 % 1.85 % 13.08 % 11.75 % (16.14 )% Core return on average equity 14.29 % 11.63 % 13.72 % 13.85 % 1.87 % Return on average tangible common equity (ROATCE) 15.94 % 2.94 % 16.35 % 14.10 % 8.27 % Core income calculations: Core income calculations are a non-GAAP measure that management believes is an effective alternative measure of how efficiently the company utilizes its asset base.

… 52 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+0 added−2 removed17 unchanged
Biggest changeDecember 31, 2022, Analysis The increase in the level of negative impact to net interest income in the up interest rate shock scenarios is due to the level of adjustable rate loans that will reprice to higher interest rates and non-term deposits that will adjust to higher rates but at a slower pace.
Biggest changeDecember 31, 2024, Analysis The increase in the level of positive impact to net interest income in the up interest rate shock scenarios is due to the decrease in fixed rate investments, the level of interest earning cash balances, increase in the level of adjustable rate loans, increase in non-interest bearing deposits which were partially offset by the increase in interest bearing non-maturity deposits.
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.
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 prepayable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario; however, due to the current level of convexity in our fixed rate prepayable assets becoming less negative and positive, in some cases, on a portion of or portfolio has resulted in the overall value of assets increasing more than liabilities.
Due to the level of convexity in our fixed rate prepayable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario; however, due to the current level of convexity in our fixed rate prepayable assets becoming less negative and positive, in some cases, on a portion of our portfolio has resulted in the overall value of assets increasing more than liabilities.
Due to the level of convexity in our fixed rate prepayable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario; however, due to the current level of convexity in our fixed rate prepayable assets becoming less negative and positive, in some cases, on a portion of or portfolio has resulted in the overall value of assets increasing more than liabilities.
Due to the level of convexity in our fixed rate prepayable assets, we do not experience a similar change in the value of assets in a down interest rate shock scenario; however, due to the current level of convexity in our fixed rate prepayable assets becoming less negative and positive, in some cases, on a portion of our portfolio has resulted in the overall value of assets increasing more than liabilities.
Additionally, the ALCO reviews liquidity, projected cash flows, maturities of deposits, and consumer and commercial deposit activity. 82 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.
Additionally, the ALCO reviews liquidity; projected cash flows; maturities of deposits; and consumer and commercial deposit activity. 87 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 change in the impact of net interest income from the base case for December 31, 2023, and 2022 was primarily driven by the rate and mix of variable and fixed rate financial instruments, the underlying duration of the financial instruments, and the level of response to changes in the interest rate environment.
The change in the impact of net interest income from the base case for December 31, 2024, and 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.
Substantially all investments and approximately 41.3% 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.
Substantially all investments and approximately 37.8% 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.
Market Risk Impact on Net Interest Income December 31, Change in prevailing interest rates 2023 2022 +300 basis points 10.3 % 5.0 % +200 basis points 6.8 % 3.3 % +100 basis points 3.3 % 1.6 % 0 basis points — % — % -100 basis points (2.1 )% (2.3 )% -200 basis points (4.3 )% (5.5 )% -300 basis points (7.3 )% (10.2 )% Impact on Economic Value of Equity December 31, Change in prevailing interest rates 2023 2022 +300 basis points (7.4 )% (10.7 )% +200 basis points (4.3 )% (6.6 )% +100 basis points (2.2 )% (3.3 )% 0 basis points — % — % -100 basis points 0.3 % 0.7 % -200 basis points (1.5 )% (0.5 )% -300 basis points (5.3 )% (4.0 )% 84
Market Risk Impact on Net Interest Income December 31, Change in prevailing interest rates 2024 2023 +300 basis points 11.9 % 10.3 % +200 basis points 7.9 % 6.8 % +100 basis points 3.9 % 3.3 % 0 basis points — % — % -100 basis points (2.4 )% (2.1 )% -200 basis points (4.9 )% (4.3 )% -300 basis points (8.1 )% (7.3 )% Impact on Economic Value of Equity December 31, Change in prevailing interest rates 2024 2023 +300 basis points (6.5 )% (7.4 )% +200 basis points (4.2 )% (4.3 )% +100 basis points (2.4 )% (2.2 )% 0 basis points — % — % -100 basis points 0.3 % 0.3 % -200 basis points (1.5 )% (1.5 )% -300 basis points (5.1 )% (5.3 )% 89
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 December 31, 2022, non-interest-bearing deposits were approximately $1.10 billion, or 11.8%, lower than that deposit type at December 31, 2021.
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 December 31, 2024, non-interest-bearing deposits were approximately $1.07 billion, or 17.4%, higher than that deposit type at December 31, 2023.
The change in the economic value of equity from the base case for December 31, 2022, is due to us being in a liability sensitive position and the level of convexity in our prepayable assets.
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 December 31, 2024, is due to us being in a liability sensitive position and the level of convexity in our prepayable assets.
These factors result in the positive impacts to net interest income in the up interest rate shock scenarios that are detailed in the table below.
These factors result in the positive impacts to net interest income in the up interest rate shock scenarios that are detailed in the table below. In the down interest rate shock scenario, the main drivers of the negative impact on net interest income are the downward pricing of variable rate loans receivable, and the decrease in fixed rate investments.
The following table summarizes the simulated immediate change in net interest income for twelve months as of the dates indicated.
The prepaid principal is assumed to reprice at the assumed current rates, resulting in a smaller positive impact to the economic value of equity. 88 The following table summarizes the simulated immediate change in net interest income for twelve months and impact on economic value of equity as of the dates indicated.
Substantially all investments and approximately 55.4% of loans are prepayable and fixed rate and as rates decrease the level of modeled prepayments 83 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.
Substantially all investments and approximately 41.3% of loans are prepayable and fixed rate and as rates decrease the level of modeled prepayments increase.
Removed
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.
Removed
Term deposits repricing will only decrease the average cost paid by some amount due to the assumed repricing occurring at maturity. These factors result in the negative impact to net interest income in the down interest rate shock scenario.

Other EQBK 10-K year-over-year comparisons