WICHITA, Kansas (July 3, 2024)- Equity Bancshares, Inc. Chairman & CEO, Brad Elliott, was featured on “The Bank Slate,” a respected industry podcast hosted by Paul Davis. Davis, the founder, is a banking and fintech consultant with more than 25 years in financial services.
Wednesday’s episode, titled “The Road Warrior,” will cover Elliott’s appetite for acquisition and the recent merger with KansasLand Bank, the promotion of Rick Sems to bank CEO, leadership’s yearly town hall meetings in their markets, and more.
Davis wrote of the bank, “There’s a lot of opportunity for Equity to buy more banks given that the Midwest has a large number of banks with less than $1 billion of assets.”
Read the Bank Slate Q & A below:
Davis: Let’s start with an overview of Equity Bank. What’s the back story?
Elliott: We started the company about 21 years ago when we bought a $30 million-asset bank with the idea of expanding it across the footprint that we’re currently in. We wanted to focus on communities that we thought we could get in and understand. We’re in Kansas City, Wichita, Tulsa, and about 65 locations spread out from the border of Kansas, the northern parts of Oklahoma and Arkansas, and two-thirds of Missouri.
Davis: You hired Rick Sems, whom I’ve known for some time, as bank president last year and recently promoted him to serve as bank CEO. How did that come together?
Elliott: We were looking for someone to come in and take ownership of running the bank on a daily basis as my role continues to grow and change over time. When we went public in 2015, I got pulled into investor relations and other things that don’t allow you to spend as much time running the financial institution.
“Having the interaction [at town meetings] and hearing what’s going on in those people’s lives is a positive for us,” Elliott says.
We got to know Rick, who was looking for an opportunity to do something different. It has been a great fit for us culturally; he has the same core values and we have the same personal values. I think it’s been a great fit for Rick, who gets to run the whole financial institution. He’s really on point and helping us grow the bank. Rick has a very entrepreneurial bent to him and he can think through what needs to happen today and what we need to look like tomorrow. He’s focused on how to take Equity Bank and make it better than when he found it.
Davis: Let’s talk about the town halls. What do you talk about?
Elliott: This is our fourth trip. We had an all-employee meeting, which happened in January. So halfway through the year, we thought it was time to go back out and see all the employees and talk about where we’re at on a strategic basis. We really focus more on their market. We go out to 15 different locations and meet with them. Everyone comes together at those locations for about an hour and a half meeting. We talk through where our company’s at — some of the things we want them to know about, where they’re at with their numbers, and what’s going on in their region.
The best part of that whole process, in my opinion, is a 15- to 30-minute Q&A at the end, which is open for them to ask anything about any topic. It really gets us out there to make sure that we know who our employees are and what they’re dealing with in the different markets they’re in. Some of the situations are really positive or maybe negative and that need to be addressed.
Davis: What kind of feedback do you get?
Elliott: There are operational things that come up that may be hindering their ability to service customers. There may be some HR things that come up regarding a hiring process or something that’s delaying them in certain ways. They love to be able to sit down and talk with us, eat dinner with us, and visit with us. Some get to the meeting an hour before it event starts. Having the interaction and hearing what’s going on in those people’s lives is a positive for us.
Davis: How’s credit quality right now?
Elliott: Credit quality is really pristine. We talk about how now is not the time to take your eye off the ball and to make sure you’re focused on all the little things that are coming up, but, honestly, we don’t see any issues. There’s there’s no sign of weakness on any front. We’re still in the lending business and we’re still trying to grow loans.
I do know that the less money you make, the harder inflation hurts you. There has to be pressure on those smaller-end customers because when eggs go up in price it doesn’t hurt someone who makes more money as much as it can hurt somebody who makes less money. So we’re watching those consumers.
Overall, the markets seem really, really strong. It’s nice to be in the Midwest where we make things. When was the last time you were in New York City and saw a manufacturing plant? We have more manufacturing jobs in Wichita, Kansas, than all of the Philadelphia Metro. Those customers are doing really well. Agriculture is doing well and oil and gas are doing well — that feeds into our economies.
Davis: Let’s talk M&A. You’re finalizing a very small acquisition. Why pursue it?
Elliott: We look at it like a branch acquisition. That deal is in a community we’re already in and in a county we’re already in where three banks operate. We will consolidate that institution into ours. It’s better to be in a two-bank county than a three-bank county. We’ve also got a great management team in that market so it will be easy to fold this in without a lot of work.
This is a way to grow that market into something the seller probably couldn’t do in the next 10 years. Even though it’s small, we’re doubling the size of it, so it gives us some efficiencies and to grow — and it eliminates a competitor. We only paid $100,000 for the institution.
Davis: What’s the broader M&A strategy?
Elliott: We’re really focused on Kansas, Missouri, Oklahoma, and Arkansas. We’re also focused on Nebraska and Iowa. We just haven’t found anything that has taken us there yet. Those are states that we think are similar in customer bases and similar in operating structures. We’d like to be able to drive to those places and get back again so we want it to be contiguous to us.
We’re looking at institutions that have $1 billion dollars in assets or less. So really, that $250 million dollars is probably our sweet spot, plus or minus. We’re really focused on how we integrate those companies into our structure. How do we bring products and services to those communities that they don’t currently have? A lot of times we can do that because we’re not competing with Bank of America, U.S. Bank, or Capital One.
We’d like to be in Oklahoma City. We’d like to be in Springfield, Missouri, and deeper in northwest Arkansas. There are other places we’d like to grow in larger communities, but we really want take what we have now and try to utilize it the best we can.
Davis: It’s still hard to make the merger math work, right?
Elliott: It’s complicated from the standpoint of the marks. A lot of times on the seller side of the portfolio, they understand their bond portfolio, but they’re not quite as familiar with their loan portfolio marks. If they went long on real estate loans, you’re going to mark that portfolio. One of the things that’s helping us is, because rates are staying where they are, those portfolios aren’t making potential sellers more money so they’re seeing the actual effects of that and they’re getting more and more interested in talking about how to how to partner up with someone.