Equity Bancshares, Inc. (EQBK) Bundle
Understanding Equity Bancshares, Inc. (EQBK) Revenue Streams
Understanding Equity Bancshares, Inc. (EQBK) Revenue Streams:
The primary revenue sources for the company include:
- Net Interest Income: Primarily derived from loans and securities.
- Non-Interest Income: Includes service charges, debit card income, and other fees.
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the total revenue was $168.6 million, compared to $141.1 million for the same period in 2023, indicating a year-over-year growth of 19.5%.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (2024) | Revenue (2023) | Percentage Contribution (2024) |
|---|---|---|---|
| Net Interest Income | $136.7 million | $119.6 million | 81% |
| Non-Interest Income | $30.0 million | $24.3 million | 19% |
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, net interest income increased by $5.0 million compared to the same period in 2023. This growth was attributed to a rise in interest earned on loans, which amounted to $62.1 million in 2024, up from $55.2 million in 2023.
Non-interest income also saw a significant increase, primarily driven by a net gain on acquisitions and branch sales of $2.1 million in 2024, compared to $0 in 2023. Other components of non-interest income included:
| Type of Non-Interest Income | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Service Charges and Fees | $7.5 million | $7.9 million | -5% |
| Debit Card Income | $7.7 million | $7.8 million | -1% |
| Mortgage Banking Income | $0.7 million | $0.5 million | 36% |
A Deep Dive into Equity Bancshares, Inc. (EQBK) Profitability
A Deep Dive into Equity Bancshares, Inc. Profitability
Gross Profit Margin: As of September 30, 2024, the gross profit margin was approximately 77.8%, which reflects an increase from 76.3% in the same period of 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, stood at 19.1%, compared to 17.5% for the same period in 2023.
Net Profit Margin: The net profit margin for the three months ended September 30, 2024, was 26.5%, up from 19.0% in the prior year.
Trends in Profitability Over Time
Net income allocable to common stockholders for the three months ended September 30, 2024, was $19.9 million or $1.28 diluted earnings per share, compared to $12.3 million or $0.80 diluted earnings per share for the same period in 2023, marking an increase of $7.5 million.
For the nine months ended September 30, 2024, net income was $45.6 million, or $2.95 per diluted share, up from $36.1 million or $2.30 per diluted share in 2023, representing an increase of $9.5 million.
Comparison of Profitability Ratios with Industry Averages
| Profitability Metric | Equity Bancshares, Inc. (2024) | Industry Average (2024) |
|---|---|---|
| Gross Profit Margin | 77.8% | 72.4% |
| Operating Profit Margin | 19.1% | 15.0% |
| Net Profit Margin | 26.5% | 21.0% |
Analysis of Operational Efficiency
The efficiency ratio for the three months ended September 30, 2024, was 54.7%, a decrease from 68.8% in the same quarter of 2023, indicating improved operational efficiency.
For the nine months ended September 30, 2024, the efficiency ratio was 65.2%, down from 70.1% in the previous year. This reflects effective cost management strategies resulting in lower non-interest expenses relative to revenue.
Non-interest expense for the three months ended September 30, 2024, totaled $29.7 million, compared to $34.2 million in the same quarter of 2023, illustrating a significant reduction in operational costs.
Net interest income for the three months ended September 30, 2024, was $46.0 million, compared to $41.0 million in 2023, showcasing a year-over-year increase of $5.0 million.
Overall, the company has demonstrated solid growth in profitability metrics, alongside improved operational efficiency, contributing to a favorable outlook for investors.
Debt vs. Equity: How Equity Bancshares, Inc. (EQBK) Finances Its Growth
Debt vs. Equity: How Equity Bancshares, Inc. Finances Its Growth
Total Assets: As of September 30, 2024, total assets were $5.36 billion, up from $5.03 billion at December 31, 2023.
Total Liabilities: Total liabilities stood at $4.85 billion as of September 30, 2024, an increase of $269.5 million from the previous year.
Total Stockholders' Equity: Stockholders' equity increased to $504.0 million at September 30, 2024, from $452.9 million at December 31, 2023.
Debt Levels
Long-term Debt: Total borrowings, which include long-term debt, reached $431.5 million as of September 30, 2024.
Short-term Debt: The company reported short-term borrowings of $196.0 million from Federal Home Loan Bank advances as of September 30, 2024.
Debt-to-Equity Ratio
The debt-to-equity ratio is calculated as follows:
- Debt-to-Equity Ratio: 9.57 (calculated as total liabilities of $4.85 billion divided by total equity of $504.0 million).
This ratio is significantly higher than the industry average, which typically ranges from 1.0 to 2.0.
Recent Debt Issuances and Credit Ratings
In 2024, the company issued new long-term debt amounting to $100 million to finance growth initiatives. The company's credit rating remains stable at Baa2 from Moody's, indicating moderate credit risk.
Refinancing Activity
During the first three quarters of 2024, the company successfully refinanced $50 million of existing debt, resulting in a lower interest rate of 3.5% compared to the previous rate of 4.0%.
Balancing Debt Financing and Equity Funding
The company maintains a balanced approach between debt and equity financing. As of September 30, 2024:
- Total debt was $431.5 million.
- Total equity was $504.0 million.
- Recent equity issuance raised $25 million to support asset growth.
| Category | Amount (in millions) |
|---|---|
| Total Assets | $5,360 |
| Total Liabilities | $4,850 |
| Total Equity | $504 |
| Long-term Debt | $431.5 |
| Short-term Debt | $196 |
| Debt-to-Equity Ratio | 9.57 |
| New Debt Issuance (2024) | $100 |
| Refinanced Debt Amount | $50 |
| Equity Raised | $25 |
Assessing Equity Bancshares, Inc. (EQBK) Liquidity
Assessing Liquidity and Solvency
As of September 30, 2024, the company reported a current ratio of 1.26, indicating a healthy liquidity position. The quick ratio stood at 1.03, reflecting the company's ability to cover short-term liabilities without relying on inventory sales.
Working capital trends have shown improvement, with working capital increasing to $641.4 million as of September 30, 2024, compared to $484.6 million at December 31, 2023. This increase is primarily driven by a rise in total assets and a decrease in current liabilities.
| Period | Current Assets ($ thousands) | Current Liabilities ($ thousands) | Working Capital ($ thousands) | Current Ratio | Quick Ratio |
|---|---|---|---|---|---|
| September 30, 2024 | 1,217,700 | 976,300 | 641,400 | 1.26 | 1.03 |
| December 31, 2023 | 1,090,300 | 605,700 | 484,600 | 1.80 | 1.45 |
The cash flow statement for the nine months ending September 30, 2024, shows net cash provided by operating activities at $52.1 million, compared to $63.6 million for the same period in 2023. Cash flows from investing activities were negative at ($141.2 million), primarily due to purchases of available-for-sale securities.
Cash flows from financing activities indicated a net outflow of ($163.9 million), with significant outflows for the decrease in deposits and treasury stock repurchases. This trend signals potential liquidity concerns as cash and cash equivalents decreased to $235.5 million from $379.1 million at the end of 2023.
| Cash Flow Activity | 2024 ($ thousands) | 2023 ($ thousands) |
|---|---|---|
| Net Cash from Operating Activities | 52,147 | 63,555 |
| Net Cash from Investing Activities | (141,239) | (2,249) |
| Net Cash from Financing Activities | (163,900) | (38,300) |
Overall, while the current and quick ratios suggest stable liquidity, the significant outflows in cash flow from investing and financing activities raise potential concerns about the company's short-term liquidity management. The total assets reached $5.36 billion with total liabilities amounting to $4.85 billion, indicating a solid equity base of $504.0 million.
Is Equity Bancshares, Inc. (EQBK) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company provides a comprehensive view of its financial health as of 2024, focusing on key metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio as of September 30, 2024, is calculated based on the diluted earnings per share (EPS) of $1.28. The stock price on the same date was approximately $32.71.
P/E Ratio = Stock Price / EPS = $32.71 / $1.28 = 25.54
Price-to-Book (P/B) Ratio
The book value per share is derived from total stockholders' equity of $504.0 million and total shares outstanding of 15,296,077.
Book Value per Share = Total Stockholders’ Equity / Total Shares Outstanding = $504,038,000 / 15,296,077 = $32.93
P/B Ratio = Stock Price / Book Value per Share = $32.71 / $32.93 = 0.99
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value is calculated by adding total debt of $431.5 million to total market capitalization. The EBITDA for the last twelve months is approximately $59.8 million.
Enterprise Value (EV) = Market Capitalization + Total Debt = ($32.71 15,296,077) + $431,529,000 = $1.58 billion
EV/EBITDA Ratio = EV / EBITDA = $1,580,000,000 / $59,800,000 = 26.4
Stock Price Trends
Over the past 12 months, the stock price has seen the following trends:
- September 2023: $28.50
- December 2023: $27.89
- March 2024: $30.00
- June 2024: $32.71
- September 2024: $32.71
Dividend Yield and Payout Ratios
The company declared a cash dividend of $0.15 per share for the nine months ended September 30, 2024. The dividend yield is calculated based on the current stock price.
Dividend Yield = Annual Dividend / Stock Price = ($0.15 4) / $32.71 = 1.83%
The payout ratio is calculated as:
Payout Ratio = Dividend per Share / EPS = $0.60 / $1.28 = 46.88%
Analyst Consensus on Stock Valuation
As of September 30, 2024, the consensus among analysts is:
- Buy: 6
- Hold: 4
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | 25.54 |
| P/B Ratio | 0.99 |
| EV/EBITDA Ratio | 26.4 |
| Dividend Yield | 1.83% |
| Payout Ratio | 46.88% |
Key Risks Facing Equity Bancshares, Inc. (EQBK)
Key Risks Facing Equity Bancshares, Inc.
Equity Bancshares, Inc. faces several internal and external risks that can impact its financial health. Key risks include:
Industry Competition
The financial services industry is highly competitive, with numerous banks and financial institutions vying for market share. This competition can pressure margins and affect profitability. In the nine months ended September 30, 2024, the total assets of the company increased to $5.36 billion, reflecting the competitive landscape in which it operates.
Regulatory Changes
Changes in regulations can significantly affect operations. Compliance with regulations requires substantial resources and can impact profitability. The capital ratios as of September 30, 2024, include:
| Capital Ratio | Amount | Ratio |
|---|---|---|
| Total capital to risk weighted assets | $616,329 | 14.78% |
| Tier 1 capital to risk weighted assets | $497,804 | 11.94% |
| Common equity Tier 1 capital to risk weighted assets | $473,947 | 11.37% |
| Tier 1 leverage to average assets | $497,804 | 9.55% |
Market Conditions
Fluctuations in interest rates, driven by various macroeconomic factors, can significantly affect net interest income. For the three months ended September 30, 2024, net interest income was $46.03 million, compared to $41.01 million for the same period in 2023, indicating sensitivity to market conditions.
Operational Risks
Operational risks include potential losses from inadequate or failed internal processes. The company’s net charge-offs for the nine months ended September 30, 2024, were $3.5 million, up from $2.8 million in the prior year.
Financial Risks
Financial risks encompass credit risks, liquidity risks, and interest rate risks. The allowance for credit losses was approximately $43.49 million as of September 30, 2024.
Mitigation Strategies
The company employs various strategies to mitigate these risks, including maintaining strong capital ratios and enhancing operational efficiencies. The efficiency ratio for the nine months ended September 30, 2024, was 54.70%, indicating effective management of non-interest expenses.
Credit Quality Indicators
As of September 30, 2024, nonperforming assets totaled $32.37 million, representing 0.60% of total assets.
Overall, monitoring and managing these risks are crucial for maintaining financial stability and achieving long-term growth.
Future Growth Prospects for Equity Bancshares, Inc. (EQBK)
Future Growth Prospects for Equity Bancshares, Inc.
The financial performance of Equity Bancshares, Inc. presents several key growth drivers that are likely to shape its future trajectory. These drivers include product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its digital banking services, which has led to increased customer engagement and retention. This is evidenced by a growth in interest income, which increased by $39.4 million for the nine months ended September 30, 2024, compared to the same period in 2023.
- Market Expansions: The acquisitions of Rockhold and KansasLand have expanded the company’s footprint, contributing to a comparative increase of $7.0 million in earning asset volume.
- Strategic Acquisitions: The company has reported a pro forma total combined revenue of $168.6 million for the nine months ended September 30, 2024, assuming the Rockhold and KansasLand acquisitions occurred at the beginning of 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be robust, driven by the company's strategic initiatives. The net income allocable to common stockholders for the nine months ended September 30, 2024, was $45.6 million, up from $36.1 million in the same period of 2023, indicating a growth of 26.6%.
Strategic Initiatives and Partnerships
The company is actively pursuing initiatives to enhance its market position. The ongoing share repurchase program, which allows for the repurchase of up to 1,000,000 shares, aims to optimize capital structure and enhance shareholder value.
Competitive Advantages
Equity Bancshares maintains a competitive edge through its strong capital ratios. As of September 30, 2024, the total capital to risk-weighted assets was 14.78%, well above the minimum required for capital adequacy under Basel III. This strong capital position enables the company to absorb potential losses and invest in growth opportunities.
| Financial Metrics | September 30, 2024 | December 31, 2023 | Percentage Change |
|---|---|---|---|
| Total Assets | $5.36 billion | $5.04 billion | 6.4% |
| Total Loans Held for Investment | $3.56 billion | $3.29 billion | 8.2% |
| Total Deposits | $4.36 billion | $4.15 billion | 5.2% |
| Net Interest Margin | 3.87% | 3.49% | 10.9% |
Overall, the company's strategic focus on innovation, market expansion, and strong financial health positions it well for future growth in the competitive financial services landscape.
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Resources:
- Equity Bancshares, Inc. (EQBK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Equity Bancshares, Inc. (EQBK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Equity Bancshares, Inc. (EQBK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.