Equity Bancshares (NYSE:EQBK) executives said the company finished 2025 with stronger-than-expected earnings and a significantly larger balance sheet following a year that included two major transactions and continued organic production across its footprint.
Quarterly results and key adjustments
Chief Financial Officer Chris Navratil reported net income of $22.1 million, or $1.15 per diluted share, for the fourth quarter. Management also provided an adjusted view of results that excluded several non-core items, including $1.5 million of merger expense, a $1.0 million litigation settlement expense “to fund anticipated resolution” of ongoing overdraft suits, and a $0.9 million non-accrual benefit. On that basis, adjusted earnings were $23.3 million, or $1.21 per diluted share, compared with adjusted earnings of $22.4 million, or $1.17 per diluted share, in the prior quarter.
Net interest income and margin trends
Net interest income (NII) was $63.5 million, up $1.0 million from the previous quarter. Net interest margin improved slightly to 4.47% from 4.45%, with management attributing the modest expansion to funding costs falling faster than earning asset yields as the impact of the company’s bond portfolio repositioning “was fully realized” in the quarter.
Navratil said loan purchase accounting and non-accrual benefits contributed 22 basis points to margin in each period. He also provided a “core” framing of margin, noting that normalizing loan purchase accounting to 12 basis points and excluding the non-accrual benefit would yield a core margin of 4.36%.
As interest rates moved lower during the quarter, management said the cost of deposits declined 10 basis points and the cost of funding declined 12 basis points. Looking ahead, Navratil said the balance sheet remains positioned to realize a neutral impact in a “moderated decline scenario” for future Federal Open Market Committee decisions.
Average earning assets increased 1.21% to $5.64 billion, and management said the combination of margin and asset growth drove the $1.0 million quarterly increase in NII, about $0.7 million ahead of the midpoint of the company’s forecast. Executives attributed the outperformance to better-than-expected purchase accounting and asset quality, as well as the prior-quarter bond portfolio repositioning.
Expenses, capital, and share repurchases
Non-interest income totaled $9.5 million, up $0.4 million from adjusted third-quarter levels and “in line with expectations,” Navratil said. Non-interest expense was $46.6 million. Excluding M&A charges and litigation settlement accruals in both periods, adjusted non-interest expense was $44.1 million, compared with $42.9 million in the prior quarter.
Management said the increase was attributable to provisioning for unfunded commitments, up $1.2 million in the quarter. Excluding those non-core items, adjusted non-interest expense as a percentage of average assets improved two basis points to 2.80%.
On credit reserves, Navratil said GAAP net income included an “immaterial release of reserve” through the provision as loan balances declined and charge-offs were “muted.” The ending allowance coverage of ACLL loans was 1.26%, and the ending reserve ratio inclusive of discounts related to MBC was 1.33%.
The company repurchased 172,338 shares during the quarter at a weighted average cost of $41.69, with 872,662 shares remaining under the repurchase authorization approved by the board in September.
Navratil said tangible common equity (TCE) closed the quarter at 9.9%, up 23 basis points from the prior quarter. CET1 and total capital ratios ended the quarter at 13.1% and 16.3%, respectively. At the bank level, the TCE ratio was 10.3%.
Credit quality improves; Frontier integration and 2026 outlook
Bank CEO Rick Sems described “a series of positive outcomes” in credit during the quarter. Non-accrual loans declined to $40.3 million from $48.6 million, a 17% drop, driven by the resolution of a relationship added through MBC. Sems said the remaining non-accrual balance is made up of “a number of low-dollar exposures,” with only two exceeding $1.3 million, and noted that the largest non-accrual credit—described as a QSR relationship discussed previously—continues to move toward resolution.
Loans past due and non-accruals as a percentage of end-of-period loans declined to 1.53% from 1.55%. Net charge-offs annualized were 7 basis points of average loans for the quarter, down 4 basis points sequentially, while year-to-date net charge-offs annualized were 6 basis points. Looking ahead, Sems said management remains “cautiously optimistic” about 2026 credit conditions, and added that Frontier’s portfolio is not expected to meaningfully affect credit trends given its “granular and well underwritten” history.
Chairman and CEO Brad Elliott said Equity ended 2025 with $6.4 billion in assets after starting the year with $5.3 billion, and that the Frontier merger, which closed on Jan. 1, adds an additional $1.4 billion in assets. Elliott characterized the combined growth as “nearly 50%” and said the company is pushing to earn “more than $5 per share in 2026.”
Navratil said Frontier contributes $1.3 billion in loan assets and $1.1 billion in deposits. Following the close, the company anticipates loans as a percentage of average earning assets of approximately 80% in the first quarter of 2026 and a loan-to-deposit ratio of 88%.
Management expects the Frontier addition to be accretive to net interest income but dilutive to margin, and guided to margin of 4.2% to 4.35% for the first quarter and throughout 2026. In response to an analyst question, Navratil said he would look to the low end to midpoint for the first quarter—“call it 4.25”—and noted the outlook contemplates repositioning of debt and higher-cost liabilities on Frontier’s balance sheet, including paying off Frontier’s holding company debt immediately post-transaction and evaluating higher-cost borrowings and brokered funding.
On the expense side, Navratil said the Frontier merger is expected to add non-interest expense of $23 million to $24 million and non-interest income of $2 million to $3 million, with Frontier systems conversion scheduled for mid-February and anticipated cost savings realized by the end of the first quarter.
Executives also discussed competitive dynamics. Sems said the company is seeing competition “stretch” on pricing, but said Equity has strategically chosen to hold pricing higher and let some deals go when competitors move materially lower on rate. He said loan production in the quarter was $220 million—down late in the quarter but up $100 million from the same period last year—at an average rate of 6.77%. Sems said production was offset by payoff headwinds, and he pointed to a $452 million “75% pipeline” at quarter-end. Line utilization was roughly 54%, while unfunded positions rose with production.
Deposits increased approximately $43.5 million during the quarter, including core deposit expansion of $123.5 million offset by an $80 million decline in brokered deposits. Non-interest-bearing accounts were 22.4% of total deposits at quarter-end. Sems said deposit account gathering has improved operationally, though balances remain challenging due to competitive demand, and he expressed confidence the bank can grow deposits in 2026.
On capital deployment, Elliott told analysts the company is building capital—citing roughly $25 million per quarter—and expects to have capacity for both buybacks and potential M&A, noting ongoing conversations on the M&A front. Management also said it evaluates buybacks using a framework similar to acquisitions, including a three-year “earnback-ish” range.
About Equity Bancshares (NYSE:EQBK)
Equity Bancshares, Inc is the bank holding company for Equity Bank, a regional financial services provider headquartered in Wichita, Kansas. As a publicly traded company on the New York Stock Exchange under the ticker EQBK, Equity Bancshares operates a network of branches and lending offices across Kansas, Missouri, Oklahoma, Illinois and Colorado. Its geographic footprint spans both urban and rural markets, reflecting a focus on supporting small businesses, agricultural enterprises and individual consumers throughout the Midwest.
The company’s core business activities encompass a full spectrum of commercial and consumer banking services.
