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Five Star BancorpBUILDING THE FUTURE 2013 ANNUAL REPORT ABOUT THE ANNUAL REPORT On January 22, 2014, Equity Bank’s Board of Directors and Executive Leadership Team helped break ground at the site of the Bank's newest, full-service Wichita branch location at 13th and Webb. Equity Bank at the Waterfront will be the Bank’s first branch built fully from the ground up in Wichita, the Bank's home base. Scheduled to open in Fall 2014, the 7,200-square foot facility will house Equity Bank retail and commercial space in about 4,000 feet, and drive-up lanes including an ATM. Located at 13th Street and Webb Road, the Waterfront is a unique, 175-acre, mixed-use development that already includes some of Wichita’s most recognized businesses, and will be anchored by a Whole Foods store. Photos in this report were catalogued during the groundbreaking event on January 22, 2014. Photography: Colin MacMillan, Imagemakers Design: Kayla Close, Equity Bank CONTENTS 4 6 8 10 11 LETTER TO SHAREHOLDERS FINANCIAL STATEMENTS BOARD OF DIRECTORS & SENIOR LEADERSHIP OUR MISSION, PROMISE & TEAM TIMELINE TO MY FELLOW SHAREHOLDERS, It’s with great pride that I look forward to Our community markets continue to remain stable, and we consider a fantastic year. Two thousand thirteen ourselves well-positioned to attract clients, customers, and businesses proved to be a transformative year for who have been let down by a struggling financial institution, or whose our Company. needs have outstripped a small bank’s service capabilities. For us, that’s More so than a year ago, now our Company proudly stands together as one, with nearly the luxury of scale. We’ve realized the benefits of our 27-branch network through two states, and our position in many markets is one of opportunity. 300 employees, shareholders and individuals We continue to gain in deposits, loan volume, and market share on some of banding together, truly building a future for our largest competitors in Wichita, Topeka, Warrensburg, and the Kansas one of Kansas and Missouri’s strongest, City market. Several of our communities boast an impressive reach and soundest banks. market command into the surrounding area, and our talented presidents, A full year following our October 2012 acquisition of First Community Bancshares, the dust has settled. With size and scope of a banking network, we remain focused on our efficiency – and continuing to realize growth in earnings per share (EPS). Net income of Equity Bancshares (the “Company”) in 2013 reached nearly $8 million, the highest total in our Company’s history. Earnings per share rose from $0.66 in 2012 to $0.93 in 2013. lenders, tellers, and managers maintain that market command. Innovation and Communication We identified and executed process improvements internally, including items processing, loan decision turn time, and imaging. In 2014, we've begun working with our customer relationship management system, delivering cues, touchpoints, and suggestions for our customer-facing staff. We’re also improving our statement delivery platform to boost communication with customers. “It's the commitment to innovation, to improved communication, and to our ongoing dialogue with customers that proves itself in loyalty as well as growth.” Innovations like these are crucial for a community bank. Our customers remain with us for the long haul, often starting with a deposit relationship and later adding services for their families or businesses. Our business customers may have worked with a lender on a community board or volunteer event, and turned to us for capital or automated treasury services. But it’s the commitment to innovation, to improved communication, and to our ongoing dialogue with customers that proves itself in We will continue to focus on EPS during 2014 with responsible loan and loyalty, as well as growth. deposit growth, as well as expense management. We'll continue to identify process and efficiency improvements that can have a great effect on the organization as a whole. Our sales teams and leaders will continue to develop beneficial partnerships, and our operations managers will continue to innovate and deliver service. Should a potential acquisition or growth More access points for customers, and constant, 24/7 integration of Equity Bank into their daily lives boosts trust and affinity. In 2014, we’ll launch our new Equity Bank mobile app, which allows customers to deposit checks via phone, and pay bills from their smartphone. It’s a must in today's world. opportunity present itself, we will review, and determine a fit. Market Leaders Economic Outlook The economy remained stable in our markets in 2013, and continues to offer evidence for optimism in the near future. Lending and loan growth potential appear on the upswing in many of our markets, and deposit It’s with tremendous pride that I give thanks to our teams throughout our market footprint. As a rule, our service staff commits to their customers each and every day. During 2013, we learned how to operate as a unit, with central staff assisting branch staff and vice versa. We also continued to add talented and dedicated market leaders, including presidents and loan officers growth is anticipated in Kansas City, especially in our markets of Lee’s in several of our locations: Hays, Topeka, Kansas City, Warrensburg, and Summit and Overland Park. Higginsville. Each boasts impressive community credentials. Importantly, Certain statements contained herein may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon the belief of the Company's management, as well as assumptions made beyond information currently available to the Company's management, and may be, but not necessarily are, identified by such words as "will", "expect", "plan", "anticipate", "target", "forecast" and "goal". Because such "forward-looking statements" are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations include competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses, and similar variables. Except as otherwise stated in this news announcement, the Company does not undertake any obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise. 4 they also inspire their teams and eagerly collaborate across locations. Additionally, we’ve added several executive leaders to our senior leadership team – including Greg Kossover, Rolando Mayans, and Sam Pepper, and we named Julie Huber our Chief Credit Officer. I’m proud of our team, and proud of our commitment to forge ahead. We’ve set our foundation for an exciting 2014, and we’ve broken ground on several implementations, functions, features, and services that will aid efficiency, increase loyalty, grow our footprint, and assist our communities and customers. As our motto reminds: “We never forget it’s your money." On behalf of Equity Bank associates and our Board of Directors, thank you for your continued support! Brad Elliott Chairman & CEO, Equity Bancshares compared to $4.8 million at the year ended December 31, 2012. Non-interest expenses totaled $35.6 million, or 3.01% of average assets, for 2013, compared to $22.9 million, or 3.19% of average assets, for 2012. Total assets at December 31, 2013 were approximately $1.14 billion, compared to approximately $1.19 billion on December 31, 2012. Net loans totaled almost $654 million, compared to almost $720 million a year prior. As of December 31, 2013, the allowance for loan losses stood at $5.6 million, compared to $4.5 million on December 31, 2012. Non-performing loans (non-accrual loans and accruing loans 90 days or more past due) and Other Real Estate Owned (“OREO”) totaled $20.5 million at December 31, 2013, as compared to $19.9 million on December 31, 2012. Total deposits at the end of 2013 were $947 million, compared to $993 million at December 31, 2012. Core Deposits increased to 75.93% of total deposits at the end of the current year, up from 75.45% of total deposits at December 31, 2012. Shareholder Equity Financial Highlights In 2013, Equity Bancshares remained in a financially strong position. With Tier 1 Capital of $129.3 million, the Company’s capital ratios exceed regulatory requirements. The Company’s Tier 1 Capital for the year ending December 31, 2012 was approximately $125.8 million. Net income was $7.87 million for the year ended December 31, 2013, as compared to $4.19 million for the prior year ended December 31, 2012, an increase of $3.68 million. Net income allocable to common shareholders was $6.9 million for the year ended December 31, 2013, an increase of $3.1 million compared to the year ended December 31, 2012. Earnings per share were $0.93 and $0.66 for the years ended December 31, 2013 and 2012. Net interest income was $40.8 million for the year ended December 31, 2013, up from $25.6 million for The Company’s equity capital as of December 31, 2013 totaled approximately $139.9 million, up from 2012, an increase of $15.2 million. The net interest $138.2 million on December 31, 2012. As of December margin on average assets was 3.47% in 2013, 31, 2013, the Company had 7,385,603 common compared to 3.54% during 2012. Non-interest shares outstanding and the book value per common income, which includes service charges, debit and share was $14.62. Tangible book value stood at credit card income and mortgage income, was $8.9 $11.97 per common share on December 31, 2013, million for the year ended December 31, 2013, compared to $11.60 as of December 31, 2012. 5 FINANCIAL STATEMENTS EQUITY BANCSHARES, INC. (Unaudited*) Balance Sheet Cash & Cash Equivalents Total Investments Loans, net of allowance for loan losses of $5,614 and $4,471 Total Other Assets Total Assets Total Deposits Total Borrowings and Other Liabilities Total Stockholders' Equity Total Liabilities & Capital Income Statement Net Interest Income Provision for Loan Losses Net Interest Income After Provision Total Non-interest Income Total Non-interest Expense Income Before Taxes Provision for Income Taxes Net Income After Taxes Less: Dividends and Accretion on Preferred Stock** Net Income Allocable to Common Shareholders Shareholder Data (Common) Basic Earnings Per Share Diluted Earnings Per Share Weighted Average Shares Outstanding Diluted Weighted Average Shares Outstanding Shares Outstanding, Period-End Diluted Shares Outstanding, Period-End Book Value Per Share Book Value Per Share - Diluted Tangible Book Value Per Share Tangible Book Value Per Share - Diluted Capital Ratios Core capital (leverage) ratio Tier 1 risk-based capital ratio Total risk-based capital ratio 12/31/13 $20,620 353,368 653,692 112,394 $1,140,074 $947,144 53,057 139,873 $1,140,074 2013 $40,765 (2,583) 38,182 8,856 (35,631) 11,407 (3,534) 7,873 (978) $6,895 2013 $0.93 $0.92 7,427,261 7,492,020 7,385,603 7,470,106 $14.62 $14.46 $11.97 $11.83 12/31/12 $100,371 256,045 719,859 112,575 $1,188,850 $993,128 57,553 138,169 $1,188,850 2012 $25,570 (1,656) 23,914 4,826 (22,900) 5,840 (1,654) 4,186 (372) $3,814 2012 $0.66 $0.65 5,820,054 5,863,543 7,431,513 7,475,002 $14.30 $14.22 $11.60 $11.53 12/31/13 Regulatory Standard 11.3% 16.6% 17.3% 4.00% 4.00% 4.00% 6 *All numbers are in thousands of dollars except for the number of shares and per share amounts. This financial information is internally prepared by bank management and is accurate to the best of our knowledge, but is not audited or reviewed. Some items in the prior year financial information were reclassified to conform to the current year presentation. **All dividends and accretion on Preferred Stock are paid to the U. S. Treasury under the CPP and/or SBLF programs. Net Loans (thousands of dollars) CAGR 18% 719,859 653,692 Total Deposits (thousands of dollars) CAGR 26% 993,128 947,144 291,761 303,412 282,404 329,526 347,247 374,066 479,410 302,688 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Net Interest Income (thousands of dollars) CAGR 28% 40,765 Total Assets (thousands of dollars) CAGR 24% 1,188,850 1,140,074 25,570 15,823 15,782 17,890 11,777 491,909 439,847 383,725 609,998 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Book Value & Tangible Book Value (dollars per share) Stockholders' Equity (thousands of dollars) CAGR 1.4% Tangible Book Value 16.31 16.51 13.71 14.17 14.30 Book Value Tangible Book Value 14.62 11.97 11.15 11.26 10.91 11.08 11.60 CAGR 28% 138,169 139,873 80,816 70,783 49,461 40,665 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 CAGR = Compounded Annual Growth Rate 7 BOARD OF DIRECTORS Brad Elliott Jim Berglund Roger Buller Michael Downing P. John Eck Greg Gaeddert Michael High Randee Koger Greg Kossover John McCarthy David B. Moore Shawn Penner Harvey Sorensen Chairman/CEO, Equity Bancshares, Inc., Wichita, Kansas Bank Advisor, Retired President/CEO, Sunflower Bank, Salina, Kansas SVP/Regional Manager, Benjamin F. Edwards & Co., Wichita, Kansas Retired Owner/President, Ellis State Bank, Ellis, Kansas Owner, AGV Corp., Eck Agency, Inc., Attica, Kansas Managing Partner, B12 Capital Partners, LLC, Kansas City, Missouri Managing Principal, Patriot Financial Partners, Philadelphia, Pennsylvania Attorney/Partner, Wise & Reber, L.C., McPherson, Kansas Chief Financial Officer, Equity Bancshares, Inc., Wichita, Kansas Chief Investment Officer, Centaur Capital Partners, Inc., Chicago, Illinois Managing Principal, Marathon Capital Holdings, Inc., San Diego, California Owner, Shamrock Development, LLC., Wichita, Kansas Attorney/Partner, Foulston Siefkin LLP, Wichita, Kansas SENIOR LEADERSHIP Brad Elliott Chairman & CEO Julie Huber EVP, Chief Credit Officer Patrick Harbert EVP, Community Markets Sam Pepper EVP, Commercial Banking Jennifer Johnson EVP, Chief Operations Officer, Chief Information Officer Greg Kossover EVP, Chief Financial Officer, Equity Bancshares, Inc. 8 Front row, left to right: Greg Gaeddert, Randee Koger, Jim Berglund, Michael Downing, Harvey Sorensen. Back row, left to right: David B. Moore, Roger Buller, Shawn Penner, Brad Elliott, Greg Kossover, John McCarthy, P. John Eck, Michael High Bruce Benyshek EVP, Chief Financial Officer, Equity Bank Rolando Mayans EVP, Chief Risk Officer Beth Money EVP, Retail Director Mark Parman Senior Vice President Patrick Salmans SVP, Human Resources Director 9 OUR MISSION Build the most attractive commercial banking franchise in our region from the perspective and positive experience of our customers, our shareholders, our associates and our peers. OUR PROMISE We never forget it's your money. HONORS It was a ‘banner’ year for Equity Bank! Check out the hardware we brought home: 2013 September. Julie Huber, Class of 2013 Women In Business, Wichita Business Journal. November. Patrick Salmans, Top HR Professionals 2013, Wichita Business Journal. December. Finalist, Best Places to Work, Wichita Business Journal. 2014 One of 16 finalists for the Wichita Business Journal’s BEST in BUSINESS awards, presented annually to companies achieving strong five-year performance and demonstrating corporate citizenship. OUR TEAM Market Leaders Jody Barker Kent Antenen Scott Crist Randy Eaton Kelly Gilbert David King Jason Pickerell Rhonda Scott Regional President, Western Missouri Brent Lathrom VP Commercial Loan Officer, De Soto Market President, Western Kansas Joe Lollis VP Commercial Loan Officer, Sedalia Market President, Higginsville Jeremy Machain VP Commercial Loan Officer, Wichita Market President, Warsaw Chris Ryan VP Commercial Loan Officer, Lee's Summit Market President, Warrensburg Jason Shaffer VP Commercial Loan Officer, Wichita Market President, Wichita West Ken Smith VP Business Development Officer, Overland Park Market President, Topeka Branch Manager, Windsor Retail Leaders Sharon Holmes VP Retail Sales Manager, KC & Topeka Operations, Credit, and Administration Steve Kelly SVP Senior Credit Officer Melinda Mitchell VP Retail Sales Manager, Western Missouri Mandi Martinson VP Retail Support Manager, Andover Rhonda Bethe Jim Brunsell Kristi Bueno John Hanley Justin Kelly Rob Musgrave Jesse Nienke Barbara Noyes Loan Officers Eric Clemenson VP Finance Officer Belinda DeWerff VP IT Director Patty Sellers VP BSA & Compliance Officer VP Senior Marketing Director Janet Thayer Debra Vickrey VP Special Assets Manager Allen Weber VP Branch Manager, Hays VP Branch Manager, Warrensburg VP Branch Manager, Topeka VP Branch Manager, Higginsville VP Branch Manager, Ellis VP Credit Manager VP Systems Administrator VP Controller Treasury Management Matt Baty VP Treasury Management Lead Mark Janczewski VP Treasury Management Officer, Overland Park Tracey Dreiling VP Treasury Management Officer, Wichita VP Commercial Loan Officer, Overland Park Sherri Howard VP Treasury Management Officer, Lee's Summit Michael Doyle VP Commercial Loan Officer, Overland Park Dale Gottschalk VP Commercial Loan Officer, Hays Equity Financial Services Group Brian Orr VP Commercial Loan Officer, Warrensburg Sandra Rice Investment Program Manager Financial Advisor, Sedalia VP Commercial Loan Officer, Lee's Summit Jill Warren Registered Sales Assistant, Higginsville Includes officers designated as Vice President and higher. Greg Hall Larry Hillier 10 TIMELINE 2002 Equity Bancshares, Inc. formed by Brad Elliott, present Chairman/CEO. 2006 Equity Bancshares, Inc. opens a loan production office in Lee's Summit, Mo., and later begins operating a full service branch in Missouri. 2004 National Bank of Andover changes name to Equity Bank. 2008 Equity Bancshares, Inc. acquires Ellis State Bank, adding locations in Hays and Ellis, Kan. A new retail branch is opened in Lee's Summit, Mo. 2010 $20 Million Capital Raise completed in October. 2012 Equity Bank becomes state-chartered financial institution in June. Equity Bancshares merges Signature Bank into Equity Bank. Equity Bancshares, Inc. acquires First Community Bancshares, Inc. on October 25. 2003 Equity Bancshares, Inc. purchases the National Bank of Andover. 2005 Equity Bancshares, Inc. purchases two Wichita branches of Hillcrest Bank. 2007 Equity Bancshares, Inc. merges with Signature Bancshares, Inc. and two Signature branches begin operating under the Equity Bank banner. 2009 Equity Bank opens the Kansas City Commercial & Retail Branch in Overland Park, Kan. at 107th & Roe in February and a new retail branch at 151st Street & Antioch in March. 2013 Announces newest branch facility at The Waterfront, 13th & Webb in Wichita. 2011 In December, Equity Bank welcomes customers after the acquisition of four Topeka locations from Citizens Bank & Trust. We never forget it's your money. Kansas Andover DeSoto Ellis Hays Overland Park Spring Hill Topeka Wichita Missouri Clinton Higginsville Kansas City Knob Noster Lee’s Summit Sedalia Sweet Springs Warrensburg Warsaw Windsor Form 4010 / 04-14 © 2014 Equity Bancshares and Equity Bank
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