Why Equity Bancshares Stock Fell Today

Shares of Equity Bancshares (NASDAQ:EQBK) fell as much as 5.7% early Thursday, then settled to close down 2.8% despite better-than-feared fourth-quarter 2023 results from the holding company for Equity Bank.

Equity Bank is positioning for future growth

For its fourth quarter of 2023, the holding company for Equity Bank delivered a net loss to common shareholders of $28.3 million, or $1.84 per share -- technically beating estimates for a slightly wider per-share loss of $1.88. Most of that red ink on the bottom line stemmed from realized losses of $50.6 million from the sale of $493.6 million in securities. The proceeds of those sales were subsequently redeployed into bond purchases, loan production, cash, and avoidance of high-cost borrowings.

Equity Bank realized a 6.1% annualized expansion in gross loans held for investment, to $50.8 million, driven largely by commercial lending categories.

In December, Equity Bancshares also announced an all-cash agreement to acquire Rockhold Bancorp, the parent company of the Bank of Kirksville. That acquisition is expected to close before the end of the current first quarter of 2024.

"Our company entered the fourth quarter positioned to take advantage of market opportunities which we expect will drive our operating growth in the future," said Equity Chairman and CEO Brad Elliott. "In addition to the transformative transactions, our teams continued to emphasize core customer creation and service, while maintaining strong credit quality."

What's next for Equity Bancshares investors?

Equity didn't announce specific forward guidance. But Elliott did suggest that its high levels of capital and on-balance sheet reserves should give the company the flexibility to allocate capital toward both organic and possible additional acquisitive growth opportunities.

In the end, this quarter didn't exactly give bullish investors much in the way of tangible catalysts to cheer -- especially in a market that hates being told to essentially hurry up and wait for growth opportunities and operating leverage to materialize. As the fruits of its positioning begin to yield positive results in the coming quarter, however, perhaps this pullback could prove to be a buying opportunity for patient long-term shareholders.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.