Equity Bancshares, Inc. (“Equity” or the “Company”), parent company of Equity Bank, announced the entry into a definitive merger agreement with American State Bancshares, Inc. (“ASB”), the holding company of American State Bank & Trust in Wichita, Kansas. Equity will merge ASB into Equity, adding American State Bank & Trust’s 17 Kansas locations to Equity Bank’s current network. Equity and ASB expect to complete the merger in early October 2021.
“American State Bank & Trust is an excellent community bank, and its leadership and customer bases share a like mind with ours, valuing customized personal service, and entrepreneurial spirit,” said Brad Elliott, Chairman and CEO of Equity. “Kansas is home to numerous, thriving communities with customers who desire a community banking approach, and our institutions match up well in terms of mindset and geographic fit. As we welcome new customers in strong markets in north, central and southwest Kansas, we’re eager to serve alongside the dedicated leadership and employees of American State Bank & Trust.”
“We’re fortunate to find a partner that will continue our tradition of innovation for our customers and families throughout our Kansas footprint – and add additional locations, bankers and expertise near our customers’ businesses and homes,” said Lee Borck, Chairman of the Board of ASB. “Our local customers prioritize decision-making with their communities in mind, and value sophisticated technology and delivery that our customers trust. We’re pleased to join a Kansas-based bank who can help our customers continue to grow.”
Under the terms of the merger agreement, ASB will merge with and into Equity, and American State Bank & Trust will subsequently merge with and into Equity Bank in a transaction valued at approximately $73.6 million to common shareholders based on the closing price of Equity’s common stock on April 29, 2021, the date on which both parties agreed to pricing. ASB preferred shares of $6.6 million will also be redeemed upon consummation of the merger. On a pro forma consolidated basis, the combined company would have approximately $5.0 billion in consolidated total assets as of March 31, 2021.
In Kansas, the institution’s combined deposits in-state would rank No. 7 in deposit market share, and No. 4 among banks headquartered in Kansas. The combined institution would rank No. 6 in the Wichita MSA, according to the 2020 FDIC Summary of Deposits as presented by S&P Global.
Equity’s new footprint will encompass 42 locations in Kansas, including five additional locations in Equity’s market of Wichita and the surrounding metropolitan statistical area (“MSA”). ASB’s current footprint complements Equity’s with locations in Great Bend, Salina, Garden City, Belleville, Clyde, Concordia, Holcomb, Larned, Macksville, and St. John, Kansas. Equity’s full network will include 69 bank locations in Kansas, Missouri, Arkansas and Oklahoma.
Equity reported $4.2 billion in consolidated total assets, deposits of $3.6 billion and gross loans of $2.8 billion as of March 31, 2021. ASB had $779 million in consolidated total assets, $653 million in total deposits, including $622 million in core deposits, and $479 million in loans as of March 31, 2021.
“Our dedication to local decision making and community banking remains resolute, and we’ll have additional products, services and capabilities as a result of joining forces,” said Doug Thurman, President & CEO of ASB. “I’m thankful to all of our team members at American State Bank & Trust for serving their customers, time and again, with entrepreneurial spirit. It’s that mindset that matches up well with Equity and will make us a key resource for customers.”
Mr. Thurman and local ASB leaders will continue to serve as part of Equity, as the companies work to combine operations and technology, with locations rebranding as Equity Bank following consummation of the merger. Equity and ASB leadership will work with local markets, customers, and businesses beginning immediately to answer questions and help with customer needs. Upon completion of the merger, current ASB board member Lee Borck will join the Board of Directors of Equity Bancshares, Inc., and fellow ASB Directors Mr. Thurman and Max Nichols will join the Board of Directors of Equity Bank.
“Our footprints mesh together to provide a solid foundation across Kansas for our customers, adding a layer of convenience and expertise for all of us,” said Mr. Elliott. “As we join forces, it’s a homecoming for some of our banking leaders who served as leaders of a Salina-based bank during the 2000s with President and CEO Jim Berglund, who is now an Equity Board member. This team includes Larry Britegam and Trey Mowery of ASB, in addition to myself, Julie Huber, Patrick Harbert, Patrick Salmans, Dale Gottschalk, and John Hanley of Equity. We expect the pairing of community banking talent at our institutions to be a key resource for customers and colleagues.”
The merger announcement occurs after Equity’s recent completion of an FDIC-facilitated acquisition of Almena State Bank in October 2020, adding two locations in Almena and Norton, Kansas. The merger agreement with ASB marks Equity’s 18th business combination since the Company’s founding in 2002, the 10th since Equity’s initial public offering in November 2015, and is the Company’s largest combination effort to date.
The transaction is expected to be approximately 15.9% accretive to Equity’s 2022 earnings per share, excluding the impact of one-time transaction expenses, after giving effect to estimated fully phased-in transaction synergies. Estimated tangible book value per share dilution to Equity is expected to be earned back in less than three years under the crossover method including CECL “Day Two” accounting treatment. The merger is expected to generate an internal rate of return of greater than 20% for Equity.