Equity Bancshares earnings edged higher in the third quarter of 2026 as record loan production supported growth, while deposit outflows and higher funding costs squeezed its lending margin. The Wichita-based parent of Equity Bank reported net income of $26.8 million, or $1.29 per diluted share, for the quarter ended September 30, up from $26.4 million, or $1.27 per share, in the preceding quarter.
Key Takeaways
- Record loan production of $379.3 million translated into a $39.2 million increase in outstanding loans.
- Deposits fell $136.4 million, while net interest margin narrowed to 4.20%.
- Management expects fourth-quarter margin improvement before the impact of the pending Lincoln Bancorp merger.
Table of Contents
- Equity Bancshares earnings show modest sequential growth
- Record lending meets more expensive funding
- Credit measures diverge as book value declines
- Fourth-quarter outlook separates Lincoln’s potential impact
- Conclusion
Equity Bancshares earnings show modest sequential growth
The company’s third-quarter results announcement, released October 14 ahead of its October 15 earnings call, put core net income at $29.1 million, or $1.40 per diluted share. Core earnings are a non-GAAP measure that excludes items including securities gains and losses, merger-related costs and provisions, and intangible-asset amortization.
Fee income helped support results. Total non-interest income reached $10.9 million, up $2.8 million from the second quarter. After adjusting for one-time items in the preceding period, the increase was $0.6 million, with gains in service charges, treasury services, card income, and trust and wealth management revenue.
Operating costs also rose. Non-interest expense totaled $48.1 million, compared with $46.9 million in the second quarter. Excluding merger expenses, costs increased to $47.2 million from $46.8 million. The efficiency ratio moved to 54.0% from 53.4%, meaning expenses consumed a slightly larger share of revenue.
| Item | Details |
|---|---|
| Quarter-end total assets | $7.6 billion at September 30, 2026. |
| CET1 capital ratio | 12.15% at quarter-end. |
| Total risk-based capital ratio | 14.94% at quarter-end. |
| Quarterly dividend | Increased 22% to $0.22 per common share. |
| Fourth-quarter fee-income guidance | $10.0 million–$11.0 million, excluding Lincoln. |
| Fourth-quarter expense guidance | $47.0 million–$48.0 million, excluding Lincoln. |
Record lending meets more expensive funding
Loan production increased 20.3% from the preceding quarter to $379.3 million. Outstanding loans ended September at approximately $5.4 billion, up $39.2 million. Production measures lending activity during the period, rather than the net change in balances after repayments and other reductions.
Growth was strongest in legacy markets, excluding those added through the Frontier and NBC acquisitions. Those markets delivered annualized loan growth of 11.9%, outpacing declines in acquired markets.
Deposits ended the quarter at approximately $6.2 billion, down $136.4 million. Equity attributed the decline to rate-sensitive time and municipal accounts, alongside seasonal withdrawals by several large customers.
Net interest income fell to $72.8 million from $73.9 million in the second quarter, although it remained 16.6% above the year-earlier level. Net interest margin narrowed 16 basis points to 4.20%, reflecting higher funding costs, lower earning-asset yields and a shift toward investment balances funded by borrowings.
Credit measures diverge as book value declines
Nonperforming assets increased to $75.4 million, or 0.99% of total assets, from $66.3 million, or 0.86%, at the previous quarter-end. Net charge-offs were $2.1 million, equivalent to an annualized 15 basis points of average loans, while the credit-loss provision was $1.7 million.
Other indicators improved: classified assets relative to regulatory capital fell 140 basis points to 10.42%, and the allowance for credit losses remained at 1.18% of loans.
Tangible book value per share declined to $32.93 from $33.45 as market-rate movements weighed on investment valuations through accumulated other comprehensive income. Excluding that component, tangible book value per share increased $1.19 during the quarter.
Fourth-quarter outlook separates Lincoln’s potential impact
Management expects fourth-quarter net interest margin of 4.25%–4.35%, excluding Lincoln Bancorp. The company expects changes in its earning-asset mix and the full-quarter effect of September’s interest-rate increase to offset deposit-pricing competition.
On the earnings call, Chief Financial Officer Chris Navratil said Lincoln could reduce the combined bank’s ongoing margin by 8–10 basis points. Assuming a December 1 closing, the estimated fourth-quarter effect would be 2–3 basis points. That closing date was a modeling assumption, not a completed transaction.
Chief Executive Brad Elliott targeted loan growth of 5%–7% for 2027 including the acquisition. The Lincoln merger remained subject to its approval process, which management said was progressing as planned.
Conclusion
The next reporting period will show whether stronger lending can lift interest income despite funding pressure. Equity’s fourth-quarter margin guidance excludes Lincoln, making the merger’s approval progress and eventual closing date important distinctions when assessing the combined results.
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