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Equity Bancshares (EQBK) to acquire Rockhold Bancorp

December 6, 2023 6:31 AM EST

Equity Bancshares, Inc. (NYSE: EQBK) announced today its entry into a definitive merger agreement with Rockhold Bancorp (“Rockhold”), the parent company of the Bank of Kirksville in Kirksville, Missouri. Bank of Kirksville will merge into Equity Bank, adding eight locations to Equity Bank’s current network.

“We couldn’t be more pleased to add another strong community bank to our network and continue to serve our Missouri customer base with additional locations, technology, and customized solutions for businesses and families,” said Brad Elliott, Equity Chairman & Chief Executive Officer. “Our teams continue to work diligently to add customers, colleagues, and market locations within our four-state footprint, and we’re pleased to enter Kirksville and serve a vibrant customer base.”

“We are proud of our newest chapter, joining Equity Bank. Each bank has roots in community values, and dedication to Missouri customers,” said Bank of Kirksville Chief Executive Officer Norman Belitz. “Equity is committed to our region and serves customers like ours with sophisticated loan, deposit, and online banking products.”

Under the terms of the merger agreement, Equity will pay approximately $44.3 million in cash to acquire Rockhold and Bank of Kirksville. Following completion of the merger in the first quarter of 2024, Bank of Kirksville will merge with and into Equity Bank.

The actual aggregate transaction value may be subject to adjustment based on the adjusted equity capital of Rockhold as of the closing, as further set forth in the definitive merger agreement. The closing of the transaction is subject to customary closing conditions, including regulatory approval. Rockhold’s sole shareholder has approved the transaction.

Equity expects the merger to be $0.36, or 12 percent accretive, to diluted earnings per share in 2024, and $0.45, or 14.3 percent accretive, to earnings per share in 2025 and expects the tangible book value earn back to be approximately 1.3 years.

Established in 1914, Bank of Kirksville currently operates eight locations in North Central Missouri, including three in Kirksville and one each in LaPlata, Downing, Memphis, Macon, and Moberly. Bank of Kirksville had $406 million in consolidated total assets, $344 million in total deposits, including $311 million in core deposits, and $122 million in loans as of September 30, 2023.

Equity reported $4.9 billion in consolidated total assets, deposits of $4.1 billion and gross loans of $3.3 billion as of September 30, 2023. A pro forma Equity, including eight Bank of Kirksville locations, will comprise a network of 74 bank locations, including 23 offices in Missouri, and $5.4 billion in total assets. Following the closing of the transaction, Norman Belitz, Chief Executive Officer of Bank of Kirksville, will join Equity Bank as Regional Market President.

Since 2002, Equity Bank has completed 22 combined whole-bank, deposit, or branch acquisitions, including 10 whole-bank acquisitions since the Company’s IPO in 2015.

“Stable, strong community markets, including regional hubs for education, industry, agriculture and manufacturing, are key to our success as a bank,” emphasized Mr. Elliott. “We are eager to serve our new customers in North Central Missouri, and we’re pleased to partner with Bank of Kirksville.”

Equity Bancshares, Inc. was advised by and received a fairness opinion from Stephens Inc. Norton Rose Fulbright US LLP served as legal counsel to Equity.

Bank of Kirksville was advised by and received a fairness opinion from The Capital Corporation. Stinson LLP served as legal counsel to Rockhold.

Bond Portfolio Repositioning

Equity also announced the sale of approximately $442.0 million of available-for-sale investment securities, generating an after-tax loss of approximately $38.2 million. The transaction will be neutral to tangible common equity while improving balance sheet efficiency. The assets sold are comprised primarily of treasury, agency, and mortgage-backed securities with a weighted average yield of 1.33%. The proceeds from the transaction will be re-deployed in cash, investment, and loan assets with an expected yield in excess of 5.00%. Equity anticipates the repositioning will contribute additional, annual interest income of approximately $16.2 million, producing estimated earnings per share accretion of $0.81 in 2024.

“We’re pleased to be able to reposition our bond portfolio, which we anticipate will provide significant earnings benefit in 2024,” Mr. Elliott said. “Our bankers have worked hard to build a strong capital base allowing the Company to optimize our balance sheet, driving improved earnings while maintaining capital strength and enhancing liquidity.

“The impact of each of these transactions will help drive earnings in 2024 and highlight our ability to maintain a strong balance sheet while integrating community banks,” continued Mr. Elliott. “Our proactive approach will yield future shareholder value and is within our strategy of maintaining strong capital while reviewing opportunities to enhance our banking franchise.”

Conference Call and Webcast

Equity’s Chairman and Chief Executive Officer Brad Elliott, President Rick Sems, and Chief Financial Officer Chris Navratil will hold a conference call and webcast to discuss the merger with Bank of Kirksville and the bond portfolio repositioning on December 6, 2023, at 10 a.m. eastern time; 9 a.m. central time.

A live webcast of the call will be available on the Company’s website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.

A replay of the call and webcast will be available two hours following the close of the call until December 21, 2023, accessible at investor.equitybank.com.



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