Hello and welcome to the Equity Bank Shares Inc. 2012-25 Q4 Earnings Call. My name is Karla and I will be coordinating your call today. During the presentation, you can register to ask questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I would now like to hand you over to your host, Brian Katsuke, Vice President, Director of Corporate Development and Investor Relations to begin. Please go ahead when you're ready.

Good morning. Thank you for joining us today for at Equity Bank Shares fourth quarter earnings. Let me remind you that today's call is being recorded and is available via webcast at investor.equitybank.com along with our earnings release and presentation materials. Today's presentation contains forward-looking statements, uncertainty, and other factors that could cause actual assault to differ materially from those discussed. Following the presentation, we will have time for questions and further discussion. Thank you all for joining us. With that, I'd like to turn the call over to our chairman.

Good morning, everyone. Thanks for being here today, joining me in 2025 with nearly 50% that's a huge milestone made possible by in 2025. While handling the two biggest transactions in our company's history of 1.5 million, litigation

settlement expense resolution of our ongoing overdraft suit and non-accrual benefit of $900,000. Adjusted earnings were $23.3 million or $121 per dilute share, compared to adjusted earnings at $22.4 million or $117 per dilute share in the previous quarter. Purchase accounting accretion on the loan portfolio was $2.3 million in each period. Net interest income for the quarter was $63.5 million, up $1 million late quarter. Margin for the quarter was 4.47% and an improvement of two basis points when compared to margin of 4.45% linked quarter. Non-interest income for the quarter was $9.5 million, up $400,000 from adjusted Q3 and in line with expectations. Non-interest expenses for the quarter were $46.6 million. Adjusted to exclude M&A charges and the litigation settlement accrual in both periods, non-interest expenses were $44.1 million compared to $42.9 million, an increase of 2.7% linked quarter. The increase is attributable to provisioning for unfunded commitments, which was up $1.2 million in the quarter. Excluding these non-core items from each period adjusted non-interest expense as the percentage of average assets improved two basis points to 2.80%. Our GAAP net income included an immaterial release of reserve through the provision as periodic loan balances were down and charge-offs were muted. The ending coverage of ACL loans was 1.26%. The ending reserve ratio, inclusive of discounts related to MVC, closed the quarter at 1.33%. During the quarter, we were active under our repurchase authorization, acquiring 172,338 shares at a weighted average cost of $41.69. 872,662 shares remain under the authorization approved by the board in September. TCE closed the quarter at 9.9% of 23 basis points quarter over quarter. CET1 and total capital closed the quarter at 13.1% and 16.3% respectively. At the bank level, the TCE ratio closed at 10.3%. I'll stop here for a moment and let Rick talk through asset quality for the quarter.

Thanks, Chris. In the quarter, we saw a series of positive outcomes in our credit portfolio. Non-accrual loans moved down to $40.3 million from $48.6 million linked quarter, a 17% decline. The improvement was driven by a relationship brought on through NBC, resolution of which also contributed positively to margin and provisioning. The remaining non-accrual balance is comprised of a number of low-dollar exposures, with only two in excess of $1.3 million. The largest, a QSR relationship we have discussed previously, continues to move towards resolution. Loans past due and not accrual as a percentage of end-of-period loans declined to $1.53 from $1.55. Net charge-offs annualized were seven basis points.

Tears portfolio is not expected as their portfolio is granular, indicated in their mentioned marginally improved two basis points of accounting and non-accrual benefits contributed 22 basis points to declines in the cost of funding outpacing declines in the earning asset yield as the impact of our bond portfolio repositioning was fully realized in the quarter. Normalizing loan purchase accounting to 12 basis points of margin and excluding non-accrual benefit yields a core margin of 4.36%. We seem to see the FOMC move down interest rates in the quarter, cost of deposits declined by 10 basis points, and cost of funding declined by 12 basis points. As we look ahead to future FOMC decisions, the balance sheet remains positioned to realize a neutral impact in a moderated decline scenario. During the quarter, average earning assets increased 1.21% to $5.64 billion. The combination of margin and asset expansion led to an increase in net interest income of $1 million, approximately $700,000 ahead at the midpoint of our forecast. Comparative outperformance was driven by better than expected purchase accounting and asset quality as well as the repositioning of the bond portfolio in the previous quarter. Loans as a percentage of average earning assets declined from 76.2% to 74.6%. As we previously mentioned, we closed on our merger with Frontier on the first day of the new year. Frontier contributes $1.3 billion in loan assets against $1.1 billion in deposits. As we look to Q1-2026, we anticipate loans as a percentage of average earning assets of approximately 80% and a loan-to-deposit ratio of 88%. While purchase accounting remains in process, using the model expectations from our announcement, the addition of Frontier's portfolio will be accreted to NII but diluted to margin. We anticipate margin for the quarter and throughout 2026 of 4.2% to 4.35%. In addition to its impact on margin, our merger with Frontier is expected to add non-interest expense of $23 to $24 million and non-interest income of $2 to $3 million. Refer to the outlook within our investor presentation for additional detail on expectations for 2026. The conversion of Frontier systems is scheduled to take place in the middle of February with anticipated cost days realized by the end of Q1. Rick? Thanks, Chris.

I want to start by emphasizing the exceptional efforts of the Equity Bank team over the last 180 days. It has been a transformative year, and it would not have been possible without the committed efforts of the best community bankers in the business. I want to thank all the operating teams that report to Julie Huber, David Pass, Chris Navratel, and Christoph Slukowski. The teams have done a great job executing on the integration of NBC and getting ready for Frontier. They have done great jobs making all this look routine. As we enter 2026, we have a presence in six states, including five major metros and many strong communities. We have the tools, products, and motivated teams to drive excellent performance in the During the quarter, throughout the footprint, our production teams continue to originate state loans and relationships at a high level. Loan production in the quarter was $220 million, down late quarter but up $100 million compared to the same period last year. Originations came on at an average rate of 6.77%, representing continued accretion to current coupon loan yield on the portfolio. Production was offset by continued headwinds in the portfolio from payout activity. We were cognizant of the impact of Frontier on the pro forma balance sheet and were strategic in our approach to pricing new business in the quarter, resulting in a modest level of decline in ending balances. In addition to realized production, our pipelines continue to grow throughout our banker network, positioning the bank to execute on organic growth initiatives as we look to 2026. At the close of the quarter, our 75% pipeline is $452 million. Line utilization was flat for the quarter at approximately 54%, though unfunded positions rose with production in the quarter, providing opportunities for increases moving forward. Total deposits increased approximately $43.5 million during the quarter, including core deposit expansion of $123.5 million, offset by a decline in brokered deposits of $80 million. Non-interest-bearing accounts closed the quarter at 22.4% of total deposits. It's a long way to go. As we welcome friends who couldn't be more excited about the expansion, Greg Kossover has done a great job leading the NBC group through the transition into the equity bank platform. Asset generation debt, community markets continue to provide funding opportunities.

As we close the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When we're ready to ask you a question, please ensure your device is unmuted locally. We'll make a quick pause here for the questions to be registered. And our first question comes from Jeff Raleigh with DA Davidson.

Good morning, this is Ryan Payne on for Jeff Raleigh. Just on the margin guide, I wanna confirm that that includes expected accretion from Frontier. If you have a read on that going into 2026, just trying to get at a consolidated core margin expectation.

Yeah, good morning, Ryan. That does include the accretion for Frontier into 2026, yeah.

And appreciate the loan growth guide, but maybe on competition, are you seeing other stretch on pricing or underwriting standards? How do you see things shaking out there?

Yeah, so this is Rick. So I think what we're definitely seeing some of that in the competition front. So we just kind of strategically made that decision that we're continuing to hold our pricing higher. So, again, we had about a billion dollars of production. We had one-time payoffs this year of about $700,000. When we get into that, there was about 40 – actually, I want to break about three-fourths of them. So that was about 30% of that, so roughly 200 and some, are ones in which I would say it's really rate-based. where we saw people go really low, you know, going down into, you know, maybe a point lower than where we were and winning those. So we've strategically decided to let those ones go and keep our pricing up at that point. So, again, our production continues at that high level. We continue to expect that to happen through the quarter, and as we get that benefit of lower paydowns this quarter, we'll start seeing, we'll start seeing that growth. So we're not that concerned about that level.

We, you know, we've gone into these periods before where we just finished a merger that was very high loan-to-deposit ratio. We're adding Frontier, who's very high at loan-to-deposit ratio, that also has assets that are sole participations to other institutions that we can pull back. So we made a strategic look into that opportunity and said, you know, we don't want to stretch down on rates on our portfolio when we know we are getting rates that are at a higher number coming on our balance sheet in the very near future. So I think it was – we've had really good originations, but in the same sense, it doesn't make sense to put things on our books at a point lower than where we think the market it is, just to keep a little volume.

Thanks, guys. I'll step back.

Thank you. And our next question comes from Damon Dalmonte with KPW.

Hey, good morning, guys. Thanks for taking my questions. Just a follow-up on the commentary on the loans. Brad, you just mentioned about the opportunity to pull back some participations that, you know, left the Frontier Bank. What types of loans are those? Are they traditional C&I loans or are they CRE and kind of any color on the opportunity there?

Actually, this is Rick. It's a combination. Yeah, how are you doing, Damon? It's probably, you know, $50-ish million in that range across the board of types. So it's not just one type of loan.

Gotcha. Okay, great. And then when you look at your expense guide for next year, I think at the time of the merger, you guys had targeted around 23% in cost saves. I guess now that the deal is closed and you've had a good look at Frontier, how do you feel about those cost saves, and do you think there's opportunity to come in at the lower end of the expense range?

Yeah, Damon, I tell you, so the 23%, I think it's still a good number. Can we do a little better than that? I think we'll find out as we progress through the first quarter and know better. but today I think that's a good baseline for thinking about Frontier. That said, the lower end of the expense guide to me is still an accomplishable number. So we've been talking about over the last few quarters and really the last couple of years of initiatives to try and drive additional efficiency into the way we go about operations, looking specifically at contracts and driving cost reductions across some of our partnerships that products and services we're providing to customers. So there's absolutely opportunity to hit it without, call it, outsized positives coming out of Frontier from a cost-based perspective. But that said, you know, using 23% is still a good number today, and there may be upside to that as well.

Got it. And then just lastly, from a capital management perspective, you know, nice to see some buyback during the quarter. You know, M&A has been a big topic of discussion with you guys, particularly in this last year with the two deals he got done. But I guess how do you feel about things now that Frontier has done and you're going through the integration process? Do we think more about capital management falling into the buyback bucket in the near term, or do you see more M&A opportunity in the near horizon?

Well, as you know, banks are sold and not bought. We say that all the time. but it's so it's going to depend on you know if there are opportunities for us to deploy that capital you know and by the way I think that would be mid-year we'd be doing that we're making 25 million dollars in a quarter approximately so you know we're building capital along the way so we've got plenty of capital to do both and we feel very confident that we are going to have opportunities to do both so we're going to look at buybacks when it makes sense and we'll deploy capital that way as we have even while we're doing M&A but I think M&A

we have a lot of really good great appreciate all the color and answers thank you thank you and our next question comes from Nathan Ray speaking by Chris Sandler hey guys good morning thanks for taking the questions Chris I was wondering if you could just help us on a good starting point for the margin I know it's going to include some accretion in the first quarter And, you know, what does that margin outlook for the first quarter contemplate in terms of, you know, the opportunities to reduce some of the higher-cost funding that she'll be picking up from Frontier?

I would look at the low end to the midpoint for the first quarter. So let's call it $425 for the first quarter. It does contemplate some repositioning of debt and high-cost liabilities on the Frontier balance sheet. So immediately post-transaction, we paid off all of the holding company debt they had. So there's some cost savings there, there's some margin improvement there. They do have some higher cost FHLB borrowings and broker funding that we'll continue to look at opportunistically reducing, which will come at the cost of cash. So it becomes something of a neutral trade in terms of NII, but we'll improve margin a little bit. But yeah, Nate, I'd look at about four and a quarter for the first quarter and the holding company debt immediately out and looking at some other opportunities to reduce cost through the first quarter as well.

Okay, great. That's really helpful. Then maybe for Rick, you know, curious if you have any visibility into kind of expected payoffs in the first quarter and just how you kind of see the guidance, I'm sorry, the cadence of that loan growth progressing over the course of this year? Do you anticipate to be kind of more 2Q and 3, 2 and 4Q weighted or just any thoughts on kind of just the pipeline and visibility and payoffs and just how you see the cadence of loan growth over the course of 2026?

Yeah, so right now the pipeline again as we talked about it is fairly strong, consistent with where it's been in the other quarter. So we expect to still have the same amount of production for the quarter from this quarter. So that would be the first point there. As far as payoffs go, I mean, they're actually unexpected, unscheduled payoffs. So there are times in it where we have a lot less input and visibility into that. At this point in time, I mean, we're not seeing, you know, I don't have a list from, and the guys do a pretty good job of staying ahead of it. I don't have a list that's saying, well, we're going to have a super high unexpected payoffs this quarter. Normally, though, it is a situation where second and third quarter are really good, you know, growth opportunities for us or are really good opportunities for us where we do grow the overall loan balances. So I don't know if that exactly helps, but again, payoffs just they tend to a lot of times come out of the blue.

The borrower gets an offer, the borrower is marketing something, doesn't know whether they want to sell it or not. They aren't communicating with their lender on that strategy because it's not something that they want to spook the lender about. So sometimes payoffs aren't scheduled. We've never had payoffs like we had last year, so I don't anticipate that repeating itself. Rick's got the team doing really great originations. We had four quarters in a row last year where we had our strongest origination. So I think we're, you know, we're well positioned to continue to grow the balance sheet and keep it where we want it to be and increase our margin.

That's really helpful. If I could just sneak one last one just on the buyback appetite going forward. Obviously, nice to see some share repurchases in the quarter. And I was wondering if you could just remind us in terms of kind of what your governors are, in terms of how aggressive you want to be on buybacks going forward. Obviously, you're going to be building capital at really strong clips. just given the profitability profile these days and the outlook for this year. And obviously, you know, that includes, you know, some thoughts on kind of the expectations for acquisitions this year as well, which I appreciate to your earlier comments, Brad, that, you know, there's still some active discussions going on.

Yeah, we always look at a, you know, we look at it similarly to acquisition opportunities. So we look at that three-year earnback-ish range on buybacks. And as we're deploying capital and making sure that we know we have a capital need coming up, we might be less aggressive on the buyback side. Or if we don't think we'll have any opportunities coming up, we might be more aggressive. But it kind of gives you a framework of how we think about it as an organization. We've been very active in the buyback market over the last five years. I hope I gave you enough to look at on it.

That's great, Collar. I appreciate it. Thanks, guys.

So just as a reminder that if you'd like to ask a question, a start one on your telephone keypad. And our next question comes from Brett Palatin with Health Group.

Hey, guys. This is Anya Pelshaw speaking on behalf of Brett. Just hoping you guys could comment on what you're seeing competitively as far as deposits go and also some thoughts on deposit generation in newer markets.

Yeah. So this is Rick. So first off, I'd actually say that deposit account gathering is really good. So we've made changes there. We've been – we're opening accounts in a manner that we haven't historically. So that part is really positive. Balances continue to be, you know, be challenging because there are a lot of people out there looking for balances. And so we continue to be disciplined from a pricing perspective. And so we look at it as we'd rather have the account, we'd rather have the transaction account later on, and that's going to come back to us. The team has done a really good job, though. We definitely gathered deposits this year. And so the outlook for this year, again, it's going to be challenging, but I like the areas we're in. We're in some really good areas of adding in that give us opportunities in Oklahoma City and in Omaha now with both NBC and with Frontier. And then their markets, their community markets, there's some really strong community markets that we added. And with our product sets that we're adding on there, we're starting to see additional account generation. So we can see some growth coming out of there. Again, it's a challenging environment, so it's hard to say what competition will do in that space. But we feel confident that we can grow deposits this year.

Sounds good. Thank you.

Thank you. And the next question comes from Terry McBride, with Stafford.

Hi, this is Brandon Roudon for Terry. My person just on loan growth in 2026, are there any markets or commercial segments in particular that you may anticipate outperforming the portfolio as a whole?

Yeah, each year we have a couple that seem to do well off of there. I like what's happening in Missouri. I think that's markets that can do really, really well for us. And then I think what we're doing down in Oklahoma, same type of thing. I think there's a lot of opportunity in Oklahoma City and in the surrounding communities. And as we're getting to know the team up in Nebraska better, that's going to create a lot of opportunities for us as well. So those are the – Tulsa down in Oklahoma has been a very strong generator for the last couple years, and I expect that to continue to be the case as well.

Kansas City had a booming year.

Yeah, Kansas City had a great year this year, and that's where it's the same with Missouri. I think that whole – both in Kansas City and then also throughout the community markets in there give us a real good opportunity for growth.

Maybe it's more of a modeling question, but I heard your comments on loan pricing earlier. Where are new loans coming on at, and how does that compare to those that are paying and often maturing? I'm just trying to get a sense of the incremental benefit that they're picking up.

It's true. Yeah, so the new originations are accreted today to where a coupon has been heading. So the new originations that are coming out about 50 basis points ahead of our coupon yield that's included within the margin. So we're seeing, call it, a creative impact of each of the incremental dollars that are going out. So as we can grow that balance sheet, you should see comparative expansion of loan yield on a coupon basis, right, so backing out the purchase accounting and non-accrual type of stuff.

Perfect. Thank you. And I guess the last one for me, over the near term, I heard your comments that accretion is within the 420 to 435. I guess, do you have a near-term sense of where that may shake out? I think you said normalize the 12 basis points for the fourth quarter. I'm assuming that steps up a bit in 1Q.

Yeah, the 12 basis points, that's the cost benefit of NBC. As we layer in additional frontier components, you're going to have additional accretion. And I can shoot you, Brandon, the basis point attribution. I don't have it in front of me, but it's included or encapsulated within that 420 and 435.

Okay. Thank you very much.

Just as another reminder that if you'd like to ask a question, is start one on your telephone keypad. We have a follow-up from Nathan Reyes. Nathan, your line is now open. So just as a reminder, if you'd like to ask a question, is start one on your telephone keypad. And a reminder is start one on your telephone keypad to ask a question. And as we have no further questions in the queue, this does conclude today's call. Thank you, everyone, for joining. You may now disconnect.