Equity Bancshares (NYSE:EQBK) reported second-quarter 2026 results that management said reflected a more normalized view of the company following the integration of recent acquisitions, with earnings, margin and efficiency improving after merger-related noise subsided.
Chairman and Chief Executive Officer Brad Elliott said the quarter showed “the earnings power of the combined companies” after the NBC and Frontier transactions. The company reported GAAP earnings per diluted share of $1.27 and core earnings per diluted share of $1.41. Return on average tangible common equity was 16.6% on a GAAP basis and 17.2% on a core basis. The company’s efficiency ratio was 53.4%.
Net Interest Margin Expands as Core Profitability Improves
Chief Financial Officer Chris Navratil said net income for the quarter was $26.4 million, or $1.27 per share. Excluding M&A expenses, intangible amortization and losses on securities, core net income was $29.4 million, or $1.41 per share. Adjusted pre-tax, pre-provision net revenue was $36.4 million, up $2.4 million from the prior quarter.
Net interest income totaled $73.9 million. Navratil said that figure reflected declining purchase accounting accretion and lower average earning assets, offset by higher securities yields and a lower cost of funds. Net interest margin expanded three basis points to 4.36%. Loan purchase accounting accretion contributed $2.9 million, or about 17 basis points, which Navratil said was in line with expectations.
For the second half of 2026, Navratil said the margin may decrease modestly as average earning assets are expected to expand to a range of $6.85 billion to $6.95 billion. He attributed the potential compression to expected mix shift and continued accretion burn-down.
In response to an analyst question about higher interest rates, Navratil said the balance sheet’s positioning has not changed meaningfully from the last rising-rate cycle and that the company is “positioned to do well” in that environment, while noting that liability pricing remains an important variable.
Loan Production Hits Record as Acquired Portfolios Are Pruned
Rick Sems, the company’s bank CEO, said loan and deposit balances continued to face headwinds from normal runoff and optimization efforts tied to acquired portfolios. However, he said legacy markets absorbed much of that pressure, leading to effectively flat loan balances period over period.
Equity closed $315 million in loans during the quarter, which Sems described as the company’s largest quarterly production level ever. The loans carried an average rate of 6.56%, and production increased $119 million, or 60%, compared with the same period in 2025. Sems cited Kansas City, Des Moines and western Kansas as key contributors.
Loan balances in non-acquired markets grew at an annualized rate above 10% and were up 3% compared with the second quarter of 2025. Sems said the company’s current pipeline stood at $1.6 billion, up 23% from the prior quarter, while its 75% pipeline was $475 million.
During the question-and-answer session, Sems said management expects overall loan growth in the second half of the year to be in the low-single-digit to mid-single-digit range as legacy market growth begins to offset attrition from acquired portfolios.
Elliott said loan opportunities were broad-based across the company’s footprint, including western Kansas, Oklahoma, Nebraska, Kansas City and Wichita. Sems added that loan pricing has remained relatively firm, although he noted that the company has avoided competing with “irrational” pricing in certain markets.
Deposits Flat, Fee Income Improves
Total deposits were flat for the quarter, while non-brokered balances declined modestly. Sems said the second quarter is typically a seasonal period of outflows as customers pay taxes and service debt. He characterized the decline in core balances as concentrated in existing customer relationships and “transitory rather than structural.”
Cost of deposits declined modestly as use of lower-cost accounts offset continued optimization of higher-cost acquired funds. In the Q&A, Navratil said there remains some opportunity to reduce deposit costs from Frontier-related accounts over the next several quarters, although much of the work has already been completed.
Core non-interest income was $10.3 million, up $0.7 million from the prior quarter. Navratil said the company saw growth in debit and credit card activity, mortgage banking, and trust and wealth management. He guided to second-half non-interest income of $18 million to $22 million.
Sems said the company is investing in treasury management and has brought in Melissa Morin to lead that strategic initiative. He said the goal is to better serve commercial customers with a more complete product suite.
Expenses Fall After Frontier Conversion
Non-interest expense was $46.9 million, down from $55 million in the previous quarter. Excluding merger costs in both periods, expenses declined $2.5 million to $46.8 million. The quarter also benefited from an $850,000 gain on sale of assets. Navratil guided to second-half non-interest expense of $94 million to $98 million.
Asked about the expense improvement, Navratil said much of the benefit came from completing the Frontier conversion in the first quarter, including reductions in technology costs and personnel costs tied to managing those systems. He said artificial intelligence and automation are not yet producing a tangible expense benefit in the reported numbers.
Elliott said Equity is actively implementing AI and automation tools across the bank. He said 15% of staff are actively using Anthropic AI products, while 75% have Microsoft Copilot installed. The company has six bots running in production, and AI is supporting areas including loan review and M&A due diligence.
“Phase 1 is implementation, stabilization, and proof of concept,” Elliott said. “Phase 2 is where the efficiency gains show up in the numbers.”
Credit, Capital and M&A Outlook
Non-performing assets increased to 86 basis points of total assets from 76 basis points. Sems said part of the increase was tied to credits inherited from Frontier that the company is working through. Net charge-offs were $1.7 million, or 12 basis points annualized, while classified assets to regulatory capital improved modestly to 11.9%.
In response to a question about the Frontier-related nonaccrual loans, Elliott said some credits were paying as agreed at acquisition but moved to nonaccrual after the bank declined to renew them on existing terms as part of the workout process. He said the credits were appropriately marked as part of the acquisition and described the increase as modest, with “nothing systemic” in it.
Capital levels remained strong. Navratil said tangible common equity ended the quarter at 9.07%, common equity tier 1 capital was 11.84% and total risk-based capital was 14.66%. Tangible book value per share increased to $33.45 from $32.58. The company paid a dividend of $0.18 per share and repurchased 211,000 shares during the quarter. Year to date, it has repurchased 711,000 shares at an average price of $44.84.
Elliott said Equity remains active in evaluating acquisition opportunities but is maintaining discipline. He said the company will pursue deals that fit its strategy, meet return standards and make Equity a better company, while avoiding transactions that do not clear those hurdles.
“We are not chasing deals for the sake of activity,” Elliott said. “We are focused on the right deals.”
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.
