annual report 2014 the step up about the annuaL report In 2013, we launched Equity Bank Napkin Stories, a website that pays tribute to all types of entrepreneurs, and includes video profiles and business success stories from Equity Bank customers. In April 2015, we filmed four new Napkin Stories – profiling Freddy’s Frozen Custard, Midwest Quality Gloves, Martin City Brewing, and Dynamic Manufacturing. Photos from the film shoots are included in this Report. See these customer videos, and more: www.equitybanknapkinstories.com. martin cit y brewing company, LLc Owners Matt Moore and Chancie Adams opened Martin City Brewing Company first as a brewpub in 2011, featuring an extensive craft beer selection and acclaimed food. In 2014, they expanded across the street to build The Pizza and Taproom, with a state- of-the-art brewing facility and warehouse next door. Martin City Brewing Company has helped lead the revival of Martin City, Missouri, and they've begun distribution of bottled beer in Kansas City. Freddy 's Frozen custard & steakburgers We're proud to work with and partner with several franchisees of the fast-growing Freddy's chain, founded in 2002 in Wichita, Kansas. The first Freddy's store, at 21st and Tyler, still serves up steakburgers and frozen custard today. Freddy's Frozen Custard & Steakburgers are located in 23 different states in the USA. Equity Bank partners with franchisees to help service more than 30 locations in eight different states, ensuring thousands enjoy signature steakburgers and frozen custard. owner matt moore, right, with michael doyle, equity bank commercial Loan officer. nick esterline, a Freddy's franchisee, visits with equity bank at one of his Freddy's stores. 2 dynamic nc manuF ac turing Owner Jim Gibbs founded Dynamic NC almost eight years ago in Udall, Kansas, out of helping his friends construct larger parts for the aircraft industry. Three parts turned into nearly 450 deliverable items for the OEMs, and last year, Dynamic moved into a larger building with the help of Equity Bank. Today, they consider themselves a small manufacturer who can do big things. midwest QuaLit y gL oves, inc. MidWest Quality Gloves and Gear is the largest U.S. producer of leather work gloves, with two additional production facilities within a 50-mile radius of its main plant in Chillicothe, Missouri. The entire leather-cutting process is done in the main plant in order to ensure quality and efficiency. By creating strong strategic partnerships with retailers, MidWest never wavers in its commitment to give consumers high quality products at good value costs. owner Jim gibbs, right, and bryan mackey visited with david king, equity bank commercial Loan officer, center. stephen Franke, chief executive officer, left, and michael doyle, equity bank commercial Loan officer. tabLe oF contents 4 6 lEttEr to sharEholdErs financial statEmEnts 8 9 Board of dirEctors 10 honors & milEston Es Equity Bank tEam 11 timElin E 3 to my FeLL ow sharehoLders, I truly believe community banking In July 2014, the Troubled Asset Relief Program (TARP) obligation serves as a pillar of our cities, assumed through merger with First Community Bancshares was towns, suburbs, groups, and our repaid. This repayment was an important benchmark for us, lives. In 2014, we continued our and helped position us to pursue additional opportunities. mission of growing with our communities, and helping our customers reach their financial goals. In doing so, I’m pleased to report gains in net income, and new heights for us in asset growth, loan growth, and deposit volume. During the last year, we worked hard to reward loyalty among our shareholder group, whether appreciation for years of support, or flexibility to seek a return. We took advantage of several opportunities to increase our shareholder value. During the first quarter of 2014, we offered the opportunity for shareholders to exercise a tender offer, and we repurchased 1,320,660 shares for $17,221,000. We have a strong shareholder base committed to our organic growth, our growth in earnings per share, and growth in book value, plus an investment in our future. We’re in the mix. We’re positioned well with loan officers dedicated to helping customers grow, and build their businesses. In July 2014, we announced the sale of two branch locations: DeSoto, Kansas, and Spring Hill, Kansas. While we enjoyed being part of each community, each branch sat outside our core Kansas City network. We found a good partner and excellent operator for these branches with TriCentury Bank. This sale closed in November 2014. Branch consolidation is an important aspect of strategic planning, and one of the steps we must take as a company to $720,181 $653,692 2013 2014 Loans (net; dollars in thousands) We are focused on providing community bank services to entrepreneurs, consumers, and business persons of all sizes: Small business customers itching to grow, families requiring flexibility, loans, and deposit services at their fingertips, and large commercial customers. We retooled our lending functions in 2014, and our loan portfolio grew by more than 10 percent from December 31, 2013 to December 31, 2014. Our growth and our numbers indicate that we’re doing the right things: Making good decisions, making responsive decisions, and with the right people working with our communities. Secondly, this indicates an economy with increased activity – more businesses looking to invest capital in expansion or startup. And we’re in the mix. We’re positioned well with loan officers dedicated to helping customers build their businesses. In our Kansas City and Western Missouri markets, we’ve benefited from energetic leadership at the hands of Kansas City Market President Mark Parman, and Western Missouri Regional President Jody Barker. Each of these market leaders knows the territory, and more importantly, is in tune with local business climates and opportunity – and is able to $980,966 $947,144 motivate teams of strong lenders to 2013 2014 target and help our customers. deposits (dollars in thousands) provide returns on your investment. In addition, we closed a As part of our controlled expense branch location in Haddam, Kansas. strategy, we seek to make the 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 "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 Report, the Company does not undertake any obligation to update publicly or revise any forward-looking state- ments because of new information, future events or otherwise. 4 right investments in the right innovations. In June, we launched our new mobile app, Equity Bank, available on iTunes and Google Play. The app features realtime functionality, bill payment capability, account aggregation capability, and even the ability to pay your friends without a card, check, or cash. Adoption has been strong, and you truly can have an additional great relationship with Equity Bank on your phone. We’re also focused on improving in-person customer service, and in September we relocated our Webb Road branch to a new facility at 13th and Webb Road in Wichita. It's a great location for $8,987 $7,873 FinanciaL news & notes Net income of the Company was approximately $9.0 million for the year ended December 31, 2014, as compared to $7.9 million for the prior year ended December 31, 2013, an increase of $1.1 million. Net income allocable to common shareholders was $8.3 million for the year ended December 31, 2014, compared to $6.9 million for the year ended December 31, 2013. Diluted earnings per share were 2013 2014 $1.30 and $0.92 for the years ended December 31, net income (dollars in thousands) 2014 and 2013. Net interest income was approximately $41.0 million for the year ended December 31, 2014, up from $40.8 million for the comparable period in 2013. The traffic, shoppers, and our current customers. We’re net interest margin on average assets was 3.54% in $1,175,323 proud to have a new flagship branch in Wichita. $1,140,074 2014, compared to 3.47% during 2013. Non-interest income, which includes service charges, mortgage This year, 2015, is an important step up for us. We income and gains on the sale of investment securities, have ambitious goals for deposit and loan growth, and as a strong, sound bank in vibrant communities, we have the ability to serve a wide array of customers. We do all this while continuing to provide a return was $9.5 million for the 12-month period ended December 31, 2014, compared to $8.9 million for the year 2013. Non-interest expenses totaled $36.1 million, or 3.11% of average assets for 2014, compared to $35.6 million, or 3.03% of average 2013 2014 for our shareholders, through organic growth and assets for 2013. assets (dollars in thousands) business combinations. We’re in a position to Total assets at December 31, 2014 were $1.18 aggressively seek expansion and merger opportunities. billion as compared to $1.14 billion on December 31, As always, an addition to our communities must be a cultural fit as well as fiscal – and our next merger must be the right merger, and the right step up. That’s what a community bank does: We step up. For our customers, colleagues, employees, and friends, we work to make sure our communities are strong, and our bonds with customers stronger. Equity Bancshares works to step up, to deliver to you, our shareholders, as well as our customers. Thank you for your support during 2014 and in the years ahead. I am excited about the next steps to deliver shareholder value. Sincerely, $1.31 $0.93 2013 2014 earnings per share (basic) Brad Elliott Chairman & CEO Equity Bancshares, Inc. 2013. Net loans totaled $720 million, compared to $654 million a year prior. As of December 31, 2014, the allowance for loan losses was $6.0 million, or 0.82% of total loans, compared to $5.6 million, or 0.85% of total loans on December 31, 2013. Non-performing assets (non-accrual loans and Other Real Estate Owned) totaled $15.5 million at December 31, 2014, as compared to $20.3 million on December 31, 2013. Total deposits at the end of 2014 were $981 million, compared to $947 million at December 31, 2013. Core Deposits averaged 75.62% of total deposits during the current year, compared to 75.65% of total deposits in 2013. Equity Bancshares, Inc.’s book equity as of December 31, 2014 was $117.7 million, compared to $139.9 million on December 31, 2013. This change was primarily due to the first quarter 2014 stock repurchase by the Company and the July repayment of TARP funds, offset by 2014 earnings. As of December 31, 2014, the Company had 6,067,511 common shares outstanding and the common book value per share was $16.71, compared to 7,385,603 common shares and a book value of $14.62 on December 31, 2013. Diluted tangible common book value per share was $13.10 and $11.83 per share as of December 31, 2014 and 2013. 5 eQu i t y ba n c s h a r e s , in c . (Unaudited*) consoLidated baL ance sheets (dollars in thousands) 12/31/14 12/31/13 12/31/12 $ $ $ $ $ Cash & Cash Equivalents Total Investments Loans, net of allowance for loan losses of $5,963; $5,614 and $4,471 Total Other Assets Total Assets Total Deposits Total Borrowings and Other Liabilities Total Stockholders' Equity Total Liabilities & Stockholders' Equity consoLidated income statements (dollars in thousands) Net Interest Income Provision for Loan Losses Net Interest Income After Provision for Loan Losses Total Non-interest Income Total Non-interest Expense Income Before Income Taxes Provision for Income Taxes Net Income Less: Dividends and Accretion on Preferred Stock** 31,707 $ 20,620 $ 319,997 720,181 103,438 1,175,323 980,966 76,628 117,729 $ $ 353,852 653,692 111,910 1,140,074 947,144 53,057 139,873 $ $ 100,371 256,559 719,859 112,061 1,188,850 993,128 57,553 138,169 1,175,323 $ 1,140,074 $ 1,188,850 2014 2013 2012 40,978 $ 40,765 $ (1,200) 39,778 9,479 (2,583) 38,182 8,856 (36,067) (35,631) 13,190 (4,203) 8,987 (708) 11,407 (3,534) 7,873 (978) 25,570 (1,656) 23,914 4,826 (22,900) 5,840 (1,654) 4,186 (372) 3,814 Net Income Allocable to Common Stockholders $ 8,279 $ 6,895 $ net Loans & totaL deposits (dollars in thousands) totaL assets (dollars in thousands) net income aLL oc abLe to c ommon stockhoLders (dollars in thousands) cagr 26% Net Loans cagr 27% Total Deposits Net Loans Total Deposits cagr 24% cagr 72% $993,128 $947,144 $980,966 $1,188,850 $1,140,074 $1,175,323 $8,279 $6,895 $719,859 $653,692 $720,181 $479,410 $374,066 $282,404 $329,526 $609,998 $491,909 $3,814 $951 $1,371 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 6 CAGR = Compounded Annual Growth Rate su m m a r y F i n a n c i a l i nFo r m at i o n (Unaudited*) stockhoLder d ata (common) 2014 2013 2012 Basic Earnings Per Share Diluted Earnings Per Share Weighted Average Shares Diluted Weighted Average Shares 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 $ $ $ $ $ $ 1.31 1.30 $ $ 0.93 0.92 $ $ 6,299,420 6,373,149 6,067,511 6,271,158 16.71 16.13 13.54 13.07 $ $ $ $ 7,427,261 7,492,020 7,385,603 7,470,106 14.62 14.47 11.97 11.84 $ $ $ $ 0.66 0.65 5,820,054 5,863,543 7,431,513 7,475,002 14.30 14.18 11.60 11.50 12/31/14 12/31/13 reguL atory standard 9.62% 13.16% 13.86% 11.31% 16.61% 17.33% 4.00% 4.00% 8.00% *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 TARP and/or Small Business Lending Fund programs. stockhoLders' eQuit y (dollars in thousands) book v aL ue & t angibLe book v aL ue (dollars per share) return on t angibLe common eQuit y cagr 14% cagr 5.55% Tangible Book Value Book Value Tangible Book Value cagr 37% $138,169 $139,873 $117,729 $13.71 $14.17 $14.30 $14.62 $10.91 $11.08 $11.60 $11.97 $16.71 $13.54 $80,816 $70,783 10.51% 7.94% 5.63% 2.95% 2.66% 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 7 board oF direc tors brad eLLiott Chairman/CEO, Equity Bancshares, Inc., Wichita, Kansas gary aLLerheiLigen CPA/Consultant, Wichita, Kansas Jim bergL und JeFF bLoomer roger buLLer Bank Advisor, Retired President/CEO, Sunflower Bank, Salina, Kansas President/COO, Sunrise Oilfield Supply, Wichita, Kansas SVP/Regional Manager, Benjamin F. Edwards & Co., Wichita, Kansas michaeL downing Retired Owner/President, Ellis State Bank, Ellis, Kansas p. John eck greg gaeddert michaeL high randee k oger greg k ossover John mc carthy david b. moore shawn penner 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 harvey sorensen Attorney/Partner, Foulston Siefkin LLP, Wichita, Kansas Front row, LeFt to right: Michael Downing, John McCarthy, David B. Moore, Greg Kossover, Randee Koger, Gary Allerheiligen back row, LeFt to right: P.John Eck, Michael High, Shawn Penner, Harvey Sorensen, Brad Elliott, Roger Buller, Jim Berglund, Greg Gaeddert, Jeff Bloomer 8 eQuit y bank team senior Leadership brad eLLiott President | CEO patrick harbert EVP | Community Markets JuLie huber EVP | Chief Credit Officer JenniFer Johnson EVP | Chief Operations Officer Chief Information Officer greg k ossover EVP | Chief Financial Officer roL ando mayans EVP | Chief Risk Officer beth money sam pepper EVP | Retail Director EVP | Commercial Banking Leader bruce benyshek SVP | Treasurer mark parman SVP | Market President, Kansas City patrick saLmans SVP | Human Resources Director Front row, LeFt to right: Sam Pepper, Patrick Harbert, Beth Money, Greg Kossover, Julie Huber back row, LeFt to right: Bruce Benyshek, Mark Parman, Jennifer Johnson, Brad Elliott, Rolando Mayans, Patrick Salmans market Leaders Jody Barker Kent Antenen Cheryl Barnson Richard Bartel Scott Crist Randy Eaton Kelly Gilbert David King Jason Pickerell Rhonda Scott commerciaL oFFicers Matt Baty Regional President | Western Missouri operations & service Rhonda Bethe Market President | Western Kansas Jim Brunsell Market President | Sedalia Kristi Bueno VP | Assistant Controller | Wichita VP | IT Manager | Wichita VP | Compliance Officer | Wichita Market President | Warsaw John Hanley VP | Senior Marketing Director | Overland Park Market President | Higginsville Robert Musgrave VP | Assistant Controller | Wichita Business Development Officer | Warsaw Jesse Nienke VP | Systems Administrator | Wichita Market President | Warrensburg Barbara Noyes VP | Controller | Wichita Market President | Wichita West Market President | Topeka Branch Manager | Windsor retaiL Leaders Belinda DeWerff Sharon Holmes Mandi Martinson VP | Branch Manager | Hays VP | Retail Sales Manager | KC & Topeka VP | Retail Support Manager | Andover VP | Commercial Sales | Wichita Melinda Mitchell VP | Retail Sales Manager | Western Missouri VP | Retail Sales Manager | Wichita VP | Branch Manager | Warrensburg VP | Branch Manager | Topeka VP | Branch Manager | Higginsville VP | Branch Manager, Ellis Eric Clemenson VP | Commercial Loan Officer | Overland Park Micha Mohr Michael Doyle Tracey Dreiling Dale Gottschalk Larry Hillier Sherri Howard Greg Hall VP | Commercial Loan Officer | Overland Park Patty Sellers VP | Treasury Management | Wichita Janet Thayer VP | Commercial Loan Officer | Hays Debra Vickrey VP | Commercial Loan Officer | Lee's Summit Allen Weber VP | Treasury Management | Lee's Summit VP | Commercial Loan Officer | Warrensburg Mark Janczewski VP | Treasury Management | Overland Park eQuity FinanciaL services group Brian Orr VP | Investment Sales Manager | Lee's Summit Justin Kelly Steve Kelly VP | Special Assets Manager | Overland Park Sandra Rice VP | Financial Advisor | Sedalia SVP | Senior Credit Officer | Overland Park Jeremy Machain VP | Commercial Loan Officer | Wichita Chris Palmer Chris Ryan VP | Commercial Loan Officer | Higginsville VP | Commercial Loan Officer | Lee's Summit Includes officers designated as Vice President and higher. 9 honors & miLestones 2014 April. One of 16 finalists for the Wichita Business Journal's Best in Business awards, presented annually to companies achieving strong five-year performance and strong corporate citizenship. November. Brad Elliott, Most Admired Bank CEO, voted by readers of Wichita Business Journal. December. Best Places to Work, Finalist, Wichita Business Journal. 2015 February. Greg Kossover, Class of 2015 CFO Awards, Wichita Business Journal. April. Winner of the Wichita Business Journal Best in Business honors, recognizing performance and community involvement. eQuit y universit y Equity U is Equity Bank's internal leadership program, delivering real- time lessons in breakthrough thinking to future Equity Bank leaders. Graduating class members attend six sessions during the year, and the class is led by Julie Huber, EVP/Chief Credit Officer, Jennifer Johnson, EVP/Chief Operations Officer/Chief Information Officer, and Patrick Salmans, SVP/Human Resources Director. cLass oF 2013 cLass oF 2014 Matt Baty, Wichita Jim Brunsell, Wichita Greg Hall, Warrensburg Sharon Holmes, Lee's Summit Steve Kelly, Kansas City Melinda Mitchell, Lee's Summit Rob Musgrave, Wichita Jesse Nienke, Wichita Samantha Schemm, Wichita Rhonda Scott, Windsor Kent Antenen, Hays Jody Barker, Clinton Rhonda Bethe, Wichita Kristi Bueno, Wichita David King, Wichita Brian Orr, Lee's Summit Mandi Martinson, Wichita Tyler Miranda, Wichita Micha Mohr, Wichita Jason Pickerell, Topeka Patty Sellers, Warrensburg in December, our equity u classes banded together to film "equity Bank - i care!", describing what it means to work for equity Bank. "equity Bank - i care!" is available at equityBank.com and on youtube! 10 2002 Equity Bancshares, Inc. (EBI) formed by Brad Elliott, present Chairman/CEO. 2003 EBI purchases National Bank of Andover. 2004 National Bank of Andover begins operating as Equity Bank. 2005 EBI acquires first two branches in Wichita from Hillcrest Bank. 2006 EBI opens two branches in Missouri. 2008 EBI expands to Hays and Ellis, KS, acquiring Ellis State Bank. EBI opens new full-service branch in Lee's Summit, Mo. 2010 EBI completes $20 million capital raise. 2012 Equity Bank becomes state- chartered financial institution. EBI raises additional $20 million in capital. 2014 Equity Bank publishes Equity Bank mobile app with bill pay and person- to-person functionality. 2014 EBI completes repayment of TARP funds assumed through the FCB merger of 2012. 2007 EBI merges with Signature Bancshares, operates branches in Spring Hill and Haddam, KS. 2009 EBI opens two Overland Park, Kansas locations: I-435 & Roe and Antioch & 151st. 2011 EBI acquires 4 locations in Topeka from Citizens Bank & Trust. 2012 EBI acquires First Community Bancshares (FCB), bringing branch total to 28 in Kansas and Missouri. 2014 EBI repurchases more than $17 million of capital. 2014 EBI relocates Equity Bank branch to 1555 N Webb Rd in Wichita, consolidates branch network to 25. 11 kansas Andover Ellis Hays Overland Park Topeka Wichita missouri Clinton Higginsville Kansas City Knob Noster Lee’s Summit Sedalia Sweet Springs Warrensburg Warsaw Windsor Form 4010 / 04-14 © 2015 Equity Bancshares and Equity Bank