Equity Bancshares Inc 8-K, filed Jul 24, 2020
Equity Bancshares Inc (EQBK)
About this 8-K
Equity Bancshares Inc filed this 8-K on July 24, 2020, reporting on events of July 23, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.03: New debt or off-balance-sheet obligation
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Notes Offering
On July 23, 2020, Equity Bancshares, Inc. (the “Company”) entered into Subordinated Note Purchase Agreements (collectively, the “Note Purchase Agreement”) with certain qualified institutional buyers (the “Purchasers”) pursuant to which the Company issued and sold $33,000,000 in aggregate principal amount of its 7.00% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The offering of the Notes is a further issuance of the Company’s 7.00% Fixed-to-Floating Rate Subordinated Notes due 2030 of which the Company previously issued and sold $42,000,000 in aggregate principal amount on June 29, 2020 (the “Initial Closing”). The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act and Regulation D thereunder. The Company intends to use the net proceeds from the offering for general corporate purposes.
In connection with the issuance and sale of the Notes, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Purchasers with substantially the same terms as the Registration Rights Agreement entered into in connection with the Initial Closing. Under the terms of the Registration Rights Agreement, the Company has agreed to conduct an offer to exchange the Notes for subordinated notes with substantially the same terms as the Notes in an offering registered under the Securities Act. If the Company fails to comply with certain of its obligations under the Registration Rights Agreement, it will be required to pay additional interest to the holders of the Notes.
The Notes were issued under an Indenture, dated as of June 29, 2020 (the “Indenture”), by and between the Company and UMB Bank, N.A., as trustee. The Notes will mature on June 30, 2030. From and including June 29, 2020, to, but excluding, June 30, 2025 or the date of earlier redemption, the Company will pay interest on the Notes semi-annually in arrears on June 30 and December 30 of each year, commencing on December 30, 2020, at a fixed interest rate of 7.00% per annum. From and including June 30, 2025, to, but excluding, the maturity date or the date of earlier redemption (the “Floating Rate Period”), the Company will pay interest on the Notes at a floating interest rate. The floating interest rate will be reset quarterly, and the interest rate for any Floating Rate Period shall be equal to the then-current Three-Month Term SOFR (as defined in the Indenture) plus 688 basis points for each quarterly interest period during the Floating Rate Period. Interest payable on the Notes during the Floating Rate Period will be paid quarterly in arrears on March 30, June 30, September 30, and December 30, of each year, commencing on September 30, 2025. Notwithstanding the foregoing, in the event that the benchmark rate is less than zero, the benchmark rate shall be deemed to be zero.
The Company has committed to the Federal Reserve Bank of Kansas City that, other than upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event,” or “Investment Company Event” (each as defined in the Indenture), the Company will not redeem any of the Notes prior to September 30, 2025. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the date of redemption. Any redemption of the Notes will be subject to the receipt of the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations, including capital adequacy rules or regulations.
There is no right of acceleration of maturity of the Notes in the case of default in the payment of principal of, or interest on, the Notes or in the performance of any other obligation of the Company under the Notes or the Indenture. The Indenture provides that holders of the Notes may accelerate payment of indebtedness only upon the Company’s or the Bank’s bankruptcy, insolvency, reorganization, receivership or other similar proceedings.
The Notes are general unsecured, subordinated obligations of the Company and rank junior to all of its existing and future Senior Indebtedness (as defined in the Indenture), including all of its general creditors. The Notes will be equal in right of payment with any of the Company’s existing and future subordinated indebtedness, and will be senior to the Company’s obligations relating to any junior subordinated debt securities issued to the Company’s subsidiary trusts. In addition, the Notes are effectively subordinated to all secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness.
The foregoing descriptions of the Indenture, the Notes, the Note Purchase Agreement and Registration Rights Agreement does not purport to be complete and are each qualified in their entirety by reference to the full text of such agreements, which are incorporated as Exhibits 4.1, 4.2, 10.1 and 10.2, respectively, and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
On July 23, 2020, the Company issued a press release announcing the completion of the offering of the Notes, which is furnished as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| EQUITY BANCSHARES, INC. | ||||||
| DATE: July 24, 2020 | By: | /s/ Brad S. Elliott | ||||
| Brad S. Elliott | ||||||
| Chairman and Chief Executive Officer | ||||||
Exhibit 99.1
EQUITY BANCSHARES, INC.
PRESS RELEASE – 07/23/2020
Equity Bancshares, Inc. Announces Completion of Additional $33 Million Subordinated Notes Offering, Raising a Total of $75 Million
Additional proceeds from private placement transaction will provide the Company with opportunistic capital
WICHITA, Kansas, July 23, 2020 – Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, announced the issuance of $33 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2030 (the “Notes”) to certain institutional accredited investors and qualified institutional buyers in a private placement transaction.
The offering of the Notes is a further issuance of the 7.00% Fixed-to-Floating Rate Subordinated Notes, due 2030, issued on June 29, 2020, and form a single series with and are identical in all material respects to the $42.0 million aggregate principal amount of outstanding notes.
The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes. The Notes will initially bear interest at a fixed annual rate of 7.00%, payable semi-annually in arrears to, but excluding, June 30, 2025. From and including June 30, 2025, to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to the then-current three-month term SOFR (provided, that in the event the three-month term SOFR is less than zero, the three-month term SOFR will be deemed to be zero) plus 688 basis points, payable quarterly in arrears. Equity is entitled to redeem the Notes, in whole or in part, on any interest payment date on or after June 30, 2025, and to redeem the Notes at any time in whole upon certain other specified events. The Egan-Jones Ratings Company assigned an investment grade rating of BBB to the Notes.
In connection with the issuance and sale of the Notes, Equity entered into a registration rights agreement with the purchasers of the Notes pursuant to which Equity has agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act of 1933, as amended (the “Securities Act”), with substantially the same terms as the Notes.
“We are pleased to make this announcement today, and we appreciate the additional support our investors have shown Equity following the initial closing of this private placement,” said Brad S. Elliott, Chairman and CEO of Equity. “Recognizing that our timing and the timing of certain investors did not coincide with the initial closing, we are delighted that we could make a further issuance of the Notes and raise a total of $75 million of additional capital, which is what our original expectations were at the start of the process. The additional capital provided allows us to be supportive of the customers and the communities we serve, and provides opportunistic capital for organic or strategic growth, and to continue to evaluate our stock repurchase program.”
Piper Sandler & Co. served as lead placement agent and Stephens Inc. and Keefe, Bruyette & Woods, A Stifel Company, acted as co-placement agents for the offering. Norton Rose Fulbright US LLP served as legal counsel to Equity, and Barack Ferrazzano Kirschbaum & Nagelberg LLP served as legal counsel to the placement agents.
About Equity Bancshares, Inc.
Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NASDAQ Global Select Market under the symbol “EQBK.” Learn more at www.equitybank.com.
No Offer or Solicitation
This press release shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The Notes have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The indebtedness evidenced by the Notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.
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EQUITY BANCSHARES, INC.
PRESS RELEASE – JULY 23, 2020
Special Note Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include the impact of COVID-19; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.
For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2020 and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.
Investor Contact:
Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.com
Media Contact:
John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(816) 505-4063
jhanley@equitybank.com
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