Equity Bancshares Q3FY26 Results: Adj EPS $1.40 beats est, revenue misses
- Adjusted EPS of $1.40 beat consensus by 8.53%; revenue missed by 1.56%
- Net interest margin declined to 4.20% but is guided to recover to 4.25%-4.35% in Q4FY26
- Record loan production of $379.3 million; legacy market loans grew 11.9% annualized
- Lincoln Bancorp merger expected to close in Q4FY26, bringing pro forma assets to $9.1 billion
- Dividend increased 22% to $0.22 per share; share buybacks paused due to merger filing
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Equity Bancshares, Inc. reported adjusted earnings per share of $1.40 for the quarter ended September 30, 2026, beating the analyst consensus estimate of $1.29 by 8.53%. This represents a 19.66% increase from the $1.17 adjusted EPS reported in the same period last year.
Quarterly sales clocked in at $83.7 million, missing the analyst consensus estimate of $85.1 million by 1.56%. Despite the miss, revenue expanded 17.34% year-over-year from $71.4 million. The Wichita-based holding company of Equity Bank posted results that reflected organic loan growth and all-time high loan production, alongside progress on its announced merger with Lincoln Bancorp. Net income rose to $26.8 million, or $1.29 per diluted share, from $26.4 million in the prior quarter.
Key Financial Highlights
The following table summarises key performance metrics for Q3FY26 compared to the prior quarter and the year-ago period.
| Metric | Q3FY26 (Sep 30, 2026) | Q2FY26 (Jun 30, 2026) | Q3FY25 (Sep 30, 2025) |
|---|---|---|---|
| Net Income | $26.8 million | $26.4 million | $(29.7) million |
| Diluted EPS | $1.29 | $1.27 | $(1.55) |
| Core/Adj EPS | $1.40 | $1.41 | $1.22 |
| Net Interest Income | $72.8 million | $73.9 million | $62.5 million |
| Net Interest Margin | 4.20% | 4.36% | 4.45% |
| Return on Average Equity | 12.71% | 12.86% | (16.45)% |
| ROATCE | 16.10% | 16.59% | (18.31)% |
| Efficiency Ratio | 54.0% | 53.4% | 58.3% |
| Total Assets | $7.6 billion | $7.7 billion | $6.4 billion |
What the Numbers Show
A divergence exists between top-line expectations and bottom-line performance. While adjusted EPS beat consensus by a significant margin of 8.53%, revenue missed the estimate by 1.56%. This suggests that operational efficiency or non-interest income contributions likely drove the earnings beat despite slightly softer-than-expected sales figures. The year-over-year revenue growth of 17.34% indicates robust underlying demand, contrasting with the quarterly miss.
Loan Growth and Production
Loans held for investment ended the period at $5.4 billion, up $39.2 million, representing an annualized growth rate of 2.9%. Legacy markets, excluding loans acquired through the Frontier and NBC acquisitions, grew at an annualized rate of 11.9%. Loan production for the period was $379.3 million, up 20.3% quarter over quarter.
Period-end loan balances were $50.4 million higher than average balances during the period. Management highlighted that this marks the first time total loan balances increased since the recent acquisitions closed, driven by strong performance in legacy markets like Kansas City, Wichita, and Western Missouri.
Net Interest Income and Margin
Net interest income was $72.8 million for the quarter, down $1.0 million quarter over quarter. Growth in interest income of $1.1 million was outpaced by growth in interest expense as deposit costs increased. Year-over-year, net interest income was up $10.4 million, or 16.6%. Loan purchase accounting accretion was $3.3 million in the quarter.
The net interest margin was 4.20%, compared to 4.36% in the prior quarter. The decline was attributed to an expanding cost of funds and declining yield on earning assets, with average earning assets increasing $78.0 million driven by investment balances funded by borrowings. CFO Chris Navratil noted that excess liquidity carried during the period impacted the margin by approximately seven basis points. Excluding these factors and accounting for rate movements, management expects the net interest margin to return to the 4.25% to 4.35% range in Q4FY26, excluding the impact of the Lincoln merger.
Non-Interest Income and Expense
Total non-interest income was $10.9 million, up $2.8 million from the prior quarter. Period results were driven by growth in service charges and fees, treasury services, debit and credit card income, and trust and wealth management revenue. Year-over-year non-interest income, exclusive of gains or losses on security sales, increased $2.0 million, or 22.8%. Non-interest income represented 12.9% of total revenue, up from 11.2% in the prior quarter.
Total non-interest expense was $48.1 million, compared to $46.9 million in the prior quarter. Excluding merger expenses in both periods, non-interest expense was $47.2 million versus $46.8 million. The GAAP non-interest expense to average assets ratio was 2.58%, down from 3.20% in the same period of the prior year. Management guided for Q4FY26 non-interest expense, excluding Lincoln, to be between $47 million and $48 million.
Credit Quality and Asset Quality
| Metric | Q3FY26 | Q2FY26 |
|---|---|---|
| Net Charge-offs | $2.1 million | $1.7 million |
| ACL to Gross Loans | 1.18% | 1.19% |
| ACL + Purchase Discounts | 1.65% | 1.73% |
| Nonperforming Assets | $75.4 million | $66.3 million |
| Nonperforming Assets / Total Assets | 0.99% | 0.86% |
| Classified Assets / Regulatory Capital | 10.42% | 11.82% |
Net charge-offs were $2.1 million, or an annualized 15 basis points of average loans. The allowance for credit losses was sufficient to cover 7.7 years of current period annualized losses. Classified assets to regulatory capital improved 140 basis points in the period, closing the quarter at 10.42%. Management remains comfortable with the overall credit posture, noting positive resolutions in classified assets and stable commercial customer performance.
Capital Position
Book capital decreased $11.3 million quarter over quarter to $816.0 million. Tangible book value per share closed at $32.93, down from $33.45 at prior quarter end. Exclusive of accumulated other comprehensive income, book value per share and tangible book value per share increased $1.08 and $1.19, respectively. The decline in reported tangible book value reflects a $35 million negative adjustment to AOCI as rates rose during the period.
| Capital Metric | Q3FY26 |
|---|---|
| CET1 Capital Ratio | 12.15% |
| Total Risk-Based Capital Ratio | 14.94% |
| Tier 1 Leverage Ratio | 10.18% |
| Tangible Common Equity / Tangible Assets | 9.10% |
| Book Value Per Share | $39.59 |
| Tangible Book Value Per Share | $32.93 |
The company repurchased 711,369 shares year to date at a weighted average price of $44.84 per share. The dividend payout ratio year to date was 17.3%, within the company's 10 to 20% target range. A 22% increase in the quarterly dividend to $0.22 on outstanding common shares as of September 30, 2026 was announced. Share repurchases are currently paused due to the S-4 filing lockout for the Lincoln transaction.
Income Tax
The effective tax rate for the quarter was 21.2%, compared to 21.6% for the quarter ended June 30, 2026. The decrease was primarily attributable to tax benefits from an investment in a new tax credit structure, non-taxable life insurance proceeds, and share-based compensation activity, partially offset by federal provision-to-return adjustments and non-deductible transaction costs. The year-to-date tax rate was 22.0%.
Lincoln Bancorp Merger Update
Equity Bancshares announced its merger with Lincoln Bancorp during the quarter. In connection with the proposed transaction, Equity filed with the SEC a registration statement on Form S-4 to register shares of Equity's Class A common stock to be issued to Lincoln shareholders. The approval process is progressing as planned, with a close expected in late Q4FY26. Pro forma assets are expected to be approximately $9.1 billion. Lincoln Savings Bank systems will convert onto Equity Systems in Q2FY27. No branches will be closed or consolidated, preserving local leadership and community relationships.
Conference Call
Equity Bancshares' Chairman and Chief Executive Officer Brad Elliott, Chief Executive Officer of Equity Bank Rick Sems, and Chief Financial Officer Chris Navratil will hold a conference call and webcast on October 15, 2026 at 9:00 am Central Time to discuss the company's financial results. The replay will be available until October 31, 2026 at investor.equitybank.com.
How will the integration of Lincoln Bancorp's $1.5 billion in assets impact Equity Bancshares' net interest margin and cost structure in the first half of 2027?
What specific strategies is management employing to reverse the trend of rising deposit costs and stabilize the net interest margin within the guided 4.25%-4.35% range for Q4?
Given the pause in share repurchases due to the S-4 lockout, when does the company expect to resume buybacks post-merger close, and what capital deployment priorities are set for 2027?
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