EQUITY BANCSHARES INC

Results of Operations

We generate our revenue from interest income and fees on loans, interest and dividends on investment securities, and non-interest income, such as service charges and fees, debit card income, trust and mortgage banking income. We incur interest expense on deposits and other borrowed funds and non-interest expense, such as salaries and employee benefits and occupancy expenses.

Changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities and stockholders’ equity, are usually the largest drivers of periodic change in net interest income. Fluctuations in interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international circumstances and domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma, as well as developments affecting the consumer, commercial and real estate sectors within these markets.

Net Income

Three months ended June 30, 2026, compared with three months ended June 30, 2025: Net income allocable to common stockholders for the three months ended June 30, 2026, was $26.4 million, or $1.27 diluted earnings per share as compared to $15.3 million, or $0.86 diluted earnings per share for the three months ended June 30, 2025, an increase of $11.2 million. The increase was primarily due to an increase in interest and dividend income of $33.6 million, partially offset by increases in interest expense of $9.6 million, non-interest expense of $6.9 million and provision for income taxes of $4.2 million.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: Net income allocable to common stockholders for the six months ended June 30, 2026, was $43.4 million, or $2.06 diluted earnings per share as compared to $30.3 million, or $1.72 diluted earnings per share for the six months ended June 30, 2025, an increase of $13.1 million. The increase was primarily due to an increase in interest and dividend income of $67.0 million, partially offset by increases in non-interest expense of $22.8 million, interest expense of $19.5 million, provision for income taxes of $5.6 million and provision for credit losses of $4.5 million.

Net Interest Income and Net Interest Margin Analysis

Net interest income is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. To evaluate net interest income, management measures and monitors (1) yields on loans and other interest-earning assets, (2) the costs of deposits and other funding sources, (3) the net interest spread, and (4) net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources of funds. Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change,” and is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a “yield/rate change.”

Three months ended June 30, 2026, compared with three months ended June 30, 2025: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the three months ended June 30, 2026, and 2025. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

(1)

Average loan balances include non-accrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earnings assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

Actual un-rounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the three month periods ended June 30 2026 from June 30, 2025.

Analysis of Changes in Net Interest Income

For the Three Months Ended June 30, 2026

(1)

The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the prior year’s volume. The changes attributable to both volume and rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each.

Interest income increased $33.6 million for the quarter ended June 30, 2026, as compared to the quarter ended June 30, 2025. The increase was due to increased volume of average interest earning assets, primarily attributable to our mergers with Frontier and NBC as well as an improving yield on earning assets. The fed rate target is down approximately 75 basis points as compared to the 2025 period, but yields have improved driven by a repositioning of the Company's investment portfolio in the fourth quarter of 2025, accretion of purchase discounts and continued accretive rates on originated credits in the loan portfolio.

Similarly, interest expense increased $9.6 million compared to the quarter ended June 30, 2025, driven by the increase in interest bearing deposits following the acquisitions of Frontier and NBC. While the fed fund target moved down approximately 75 basis points, cost of interest bearing deposits was effectively flat. This result is due to the composition of the deposits acquired in the Frontier and NBC transactions as compared to pre-acquisition balances. Each transaction contributed a comparatively higher cost of funds resulting in a consistent cost of interest bearing deposits while the broader market was seeing decline in short term rates.

During the quarter ended June 30, 2026 when compared to the quarter ended June 30, 2025, net interest margin increased 19 basis points and net interest spread increased by 27 basis points to 3.77% from 3.50%.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the six months ended June 30, 2026, and 2025. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

(1)

Average loan balances include non-accrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earnings assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

Actual un-rounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the six month periods ended June 30, 2026 from June 30, 2025.

Analysis of Changes in Net Interest Income

For the Six Months Ended June 30, 2026

Interest income increased $67.0 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025.The increase was due to increased volume of average interest earning assets, primarily attributable to our mergers with Frontier and NBC.

The increase in interest expense of $19.5 million was due to an increase in interest bearing liabilities primarily attributable to our mergers with Frontier and NBC.

During the six months ended June 30, 2026 when compared to the six months ended June 30, 2025, net interest margin increased 2 basis points and net interest spread increased by 8 basis points to 3.65% from 3.57%.

Provision for Credit Losses

We maintain an allowance for credit losses for estimated losses in our loan portfolio. The allowance for credit losses is increased by a provision for credit losses, which is a charge to earnings, and subsequent recoveries of amounts previously charged-off, but is decreased by charge-offs when the collectability of a loan balance is unlikely. Management estimates the allowance balance required using past loan loss experience within our portfolio. This historical loss calculation is then modified to reflect quantitative economic circumstances based on evidenced economic conditions and regression formulas, which incorporate lag factors in identifying a sufficiently predictive adjusted-R square, as well as qualitative factors not inherently reflected in our historical loss or quantitative economic inputs. Included in our qualitative assessment is the consideration of prospective economic conditions over the next 12 months, which is what we consider as our reasonable and supportable forecast period. As these factors change, the amount of the credit loss provision changes.

Three months ended June 30, 2026, compared with three months ended June 30, 2025: During the three months ended June 30, 2026, there was a provision for credit losses of $1.3 million compared to a provision for credit losses of $19 thousand for the three months ended June 30, 2025. We continue to estimate the allowance for credit losses with assumptions that anticipate slower prepayment rates and continued market disruption caused by the impact of U.S. trade and fiscal policy and the resulting impact on consumers and businesses. Net charge-offs for the three months ended June 30, 2026 and 2025, were $1.7 million and $573 thousand, respectively. For the three months ended June 30, 2026, gross charge-offs were $3.0 million, offset by gross recoveries of $1.3 million. In comparison, gross charge-offs were $1.1 million for the three months ended June 30, 2025, offset by gross recoveries of $545 thousand.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: During the six months ended June 30, 2026, there was a provision for credit losses of $7.3 million compared to a provision for credit losses of $2.7 million for the six months ended June 30, 2025. The variance in provision for the six months ended is primarily attributable to the establishment of reserves on purchased seasoned loans acquired in the Frontier acquisition. We continue to estimate the allowance for credit losses with assumptions that anticipate slower prepayment rates and continued market disruption caused by the impact of U.S. trade and fiscal policy and the resulting impact on consumers and businesses. Net charge-offs for the six months ended June 30, 2026 and 2025, were $3.0 million and $738 thousand, respectively. For the six months ended June 30, 2026, gross charge-offs were $5.0 million, offset by gross recoveries of $2.0 million. In comparison, gross charge-offs were $2.3 million for the six months ended June 30, 2025, offset by gross recoveries of $1.5 million.

The primary sources of non-interest income are service charges and fees, debit card income, mortgage banking income, trust income and increases in the value of bank-owned life insurance. Non-interest income does not include loan origination or other loan fees, which are recognized as an adjustment to yield using the interest method.

Three months ended June 30, 2026, compared with three months ended June 30, 2025: The following table provides a comparison of the major components of non-interest income for the three months ended June 30, 2026, and 2025.

For the Three Months Ended June 30,

Total non-interest income decreased $531 thousand during the three months ended June 30, 2026, as compared to the same period in 2025. The decrease is due to losses on security transactions resulting from a write-down of a fund investment of $2.2 million, partially offset by increases in mortgage banking of $377 thousand, debit card income of $339 thousand and an increase in value of bank owned life insurance of $302 thousand.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: The following table provides a comparison of the major components of non-interest income for the six months ended June 30, 2026, and 2025.

For the Six Months Ended June 30,

Total non-interest income decreased $1.4 million during the six months ended June 30, 2026, as compared to the same period in 2025. The decrease is due to a death benefit that was realized during the six months ended June 30, 2025, that did not recur in the six months ended June 30, 2026, causing a decrease in bank owned life insurance of $1.9 million, partially offset by increases in debit card income of $952 thousand, mortgage banking of $619 thousand and service charges and fees of $666 thousand driven by customers gained through our mergers with NBC and Frontier.

Three months ended June 30, 2026, compared with three months ended June 30, 2025: For the three months ended June 30, 2026, non-interest expense totaled $46.9 million, an increase of $6.9 million, when compared to the three months ended June 30, 2025. Changes in the various components of non-interest expense for the three months ended June 30, 2026, and 2025, are discussed in more detail in the following table.

For the Three Months Ended June 30,

Salaries and employee benefits: There was an increase in salaries and employee benefits of $4.9 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase in employee salaries and wages was due to additional payroll costs as well as an increase in employee insurance expense, which is primarily driven by the increase in staff from the NBC and Frontier mergers.

Amortization of core deposit intangible: There was an increase in amortization of core deposit intangible of $1.2 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase was driven by the NBC and Frontier mergers.

Net occupancy and equipment: There was an increase in net occupancy and equipment of $1.1 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase was primarily related to Frontier lease amortization, rent and depreciation.

Other: Other non-interest expenses consists of subscriptions, memberships and dues, employee expenses, including travel, meals, entertainment and education, supplies, printing, insurance, account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, losses net of gains on the sale of repossessed assets other than real estate, other operating expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. The overall increase is comprised of a number of insignificant changes within expense categories noted above.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: For the six months ended June 30, 2026, non-interest expense totaled $101.9 million, an increase of $22.8 million, when compared to the six months ended June 30, 2025.Changes in the various components of non-interest expense for the six months ended June 30, 2026, and 2025, are discussed in more detail in the following table.

For the Six Months Ended June 30,

Salaries and employee benefits: There was an increase in salaries and employee benefits of $11.2 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase in employee salaries and wages was due to additional payroll costs as well as an increase in employee insurance expense, which is primarily driven by the increase in staff from the Frontier merger.

Merger expenses: There was an increase in merger expenses of $5.4 million for the period ended June 30, 2026, as compared to the same period in 2025. This increase is primarily due to the completion of the Frontier merger in the first quarter of 2026.

Net occupancy and equipment: There was an increase in net occupancy and equipment of $2.3 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase was primarily related to Frontier lease amortization, rent and depreciation.

Amortization of core deposit intangible: There was an increase in amortization of core deposit intangible of $2.1 million for the period ended June 30, 2026, as compared to the same period in 2025. The increase was driven by the NBC and Frontier mergers.

Other: Other non-interest expenses consists of subscriptions, memberships and dues, employee expenses, including travel, meals, entertainment and education, supplies, printing, insurance, account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, losses net of gains on the sale of repossessed assets other than real estate, other operating expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. The overall increase is comprised primarily of provision expenses on funded commitments offset by a gain on the sale of fixed assets and a number of individually insignificant changes within expense categories noted above.

Efficiency Ratio

The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of performance and is not defined under GAAP. For a reconciliation of non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2. Our efficiency ratio is computed by dividing non-interest expense, excluding goodwill impairment, merger expenses and loss on debt extinguishment, by the sum of net interest income and non-interest income, excluding net gains or losses on sales of and settlement of securities and gain on acquisition. Generally, an increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease would indicate a more efficient allocation of resources.

The efficiency ratio was 53.38% for the three months ended June 30, 2026, compared with 63.62% for the three months ended June 30, 2025. The positive trend was driven by realization of positive operating leverage through our mergers with NBC and Frontier as earnings grew at a faster pace than the expenses required to produce them.

The efficiency ratio was 55.03% for the six months ended June 30, 2026, compared with 63.01% for the six months ended June 30, 2025.

Income Taxes

In general, we record income tax expense each quarter based on our estimate of the full year’s effective tax rate which includes, in addition to statutory rates, estimated amounts for tax-exempt interest income, non-taxable life insurance income, non-deductible executive compensation, valuation allowance on deferred assets, other non-deductible expense, and federal and state income tax credits anticipated to be available in proportion to anticipated annual income before income taxes. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits or shortfalls with respect to share-based compensation and changes in tax law.

During the tax year ended December 31, 2024, a Corporate Application for Tentative Refund was filed to carry back excess general business credits from 2023 to the 2020, 2021 and 2022 tax years resulting in a refund of $14.9 million which was received in the second quarter of 2025. Pursuant to Section 6405 of the Internal Revenue Code, refunds in excess of $5 million to a corporate taxpayer must be reviewed by the Joint Committee on Taxation (JCT). Accordingly, the IRS has referred the proposed refund to the JCT and remains under review as of June 30, 2026. While tax years ending 12/31/2020 and 12/31/2021 are closed for audit purposes, tax year ending 12/31/2022 remains open and, under request from the IRS, the statute of limitation has been extended to October 31, 2027.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing U.S. tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act, repealing certain clean energy initiatives, in addition to other changes. While we are still evaluating the tax provisions effective in 2026, we do not expect them to have a material effect on our financial statements.

Three months ended June 30, 2026, compared with three months ended June 30, 2025: The effective income tax rate for the three-month period ended June 30, 2026 was 21.6%, compared with 16.9% for the three-month period ended June 30, 2025. The increase in the effective tax rate was primarily driven by higher pre-tax income in the current quarter, which reduced the relative impact of permanent tax benefits. The increase also reflected the absence of certain prior-year items that reduced the effective tax rate in the comparative quarter, including bank-owned life insurance proceeds, interest income recognized in income tax related to federal carryback claims, and tax benefits associated with an investment in a new tax credit structure.

Six months ended June 30, 2026, compared with six months ended June 30, 2025: The effective income tax rate for the six month period ended June 30, 2026, was 22.4% as compared to 18.6% for the six month period ended June 30, 2025. See drivers of change in the section above.