Equity Bancshares, Inc. 2026 Q3 Earnings - EQUITY BANCSHARES INC

Hello, everyone. Thank you for joining us and welcome to Equity Bank Shares third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star One again. I will now hand the conference over to Luke Pfeiffer, Director of FP&A and Investor Relations. Luke, please go ahead. Welcome, everyone, and thank you for joining Equity Bank Share's third quarter earnings call. A quick note before we begin. Today's call is being recorded and is available via webcast at investor.equitybank.com, along with our earnings release and presentation materials. Today's presentation contains forward-looking statements, which are subject to certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed after the presentation we'll open the floor up for questions and discussion a conversation we look forward to with that let me turn the call over to our chairman and ceo brad elliott good morning everyone and thank you for joining us joining me today is rick sims our bank ceo and chris navratel our cfo our third quarter shows what happens when a larger franchise starts to work together. Net income was $26.8 million or $1.29 per diluted share. Core earnings was $29 million or a $140 per share. And our core ROTC was 16.5%. percent pre-tax pre-provision earnings were 36.9 million the highest since we combined the three companies together and our efficiency ratio was 54 percent the story of the quarter is organic loan growth this improvement is something that we have focused on for the last several years loans in our legacy markets grew at an annualized rate of nearly 12 percent production was the largest in our history and for the first time since closing the acquisition total loan balances increased during the quarter under rick's leadership mark parman justin harris greg kossover craig dunn and their teams have continued to make sales calls cultivated relationships and emphasize value creation for our customers on both lending and the deposit side the results in the quarter reflect the effort and confirm the ability of our franchise to grow the balance sheet organically remaining focus on technology initiatives finding ways to automate processes enhancing lead generation and expanding the services our customers rely on provides opportunity to add operating leverage and enhance shareholder returns as the balance sheet grows i continue to be excited about the emerging technology will do in our industry and what it will do in our bank as we continue to pursue all that it offers. The funding market has tightened over the quarter as we have seen migration within both our legacy and acquired footprints. Declines are concentrated in large, rate-sensitive customers, including public funds. While our retail and treasury teams continue to grow relationships, Full-service relationships, which start with deposits, are the focus of our teams, and that will never change. We have strong strategies to deal with the pricing challenges that come during these cycles in our industry. Our branch network during these periods is the strength of equity, and we are excited to operate during these periods as we think we have a competitive advantage. mergers create financial statement noise but strategically adding core deposits and expanding markets to the equity franchise is core to what we do execution on this strategy will provide opportunity to continue the success realized in the quarter as you know on september 3rd we announced our agreement to merge lincoln bank corp the holding company of lincoln savings bank headquartered in Rhinebeck Iowa into equity. Lincoln has served the Iowa community since 1902 and operates 16 locations across central and northeast Iowa. The transaction gives us a meaningful presence in the Des Moines and Waterloo Cedar Falls area and a strong in-market deposit franchise. It is financially attractive and builds on the disciplined approach of our 15 prior transactions since 2015. Proforma will be approximately $9.1 billion as a company. We are on track to close Lincoln in the fourth quarter and momentum is building. We anticipate Lincoln will convert onto equity systems in the second quarter of 2027. We do not plan to close or consolidate any branches, which protects the customer relationships that makes this franchise so valuable. Closing on time lets us capture cost savings and earnings accretion as early as possible. Lincoln brings exceptional banking talent, deep relationships, and strong communities to the consolidated franchise. Under the continued leadership of their commercial and retail teams, we are excited for what this strategic combination will contribute to our growing company. I'm excited about the quarter and the trajectory of Equity Bank. Let me turn this over to Rick at this time. Thanks, Brad. This quarter was about organic growth and the numbers show it. Total loans grew $39 million to $5.44 billion, our first quarterly increase since the acquisitions closed. In our legacy markets, balances grew $106 million, or 2.9%, to $3.5 billion. That is nearly 12% annualized. Within our acquired markets, we continue to see period-over-period decline in balances, although it was slowed as production improved by 55% as our teams continue to find traction post-integration into equities processes. Production across the bank reached a new high. We closed $379 million in loans at an average rate of 6.9%, up $64 million or 20% from last quarter, and up $136 million or 56% from a year ago. Our legacy markets produced $279 million of that, up 11% from last quarter. Specifically, I would like to note Kansas City under the leadership of Jeff Keyes, Wichita under the ownership of Harrison Helms, Western Missouri under the leadership of Blake Moreland, Tulsa under the membership of Ryan Morris, and Western Kansas under the mentorship of Levi Goetz for the production and balances they were able to generate this quarter. Looking forward, our 75% weighted pipeline stands at $534 million, up 27% from last quarter, and line utilization was at 55.3%. We have hired 13 bankers year-to-date across Oklahoma City, Omaha, Lincoln, Wichita, and Des Moines, and those teams are still ramping up. Total deposits declined $136 million, or 2.2%, to $6.17 billion. In our legacy markets, deposits were down $102 million. Excluding public funds, which declined due to pricing pressure and seasonal payments, balances in legacy markets were effectively flat on the quarter and up 3.6% from a year ago. Average deposit balances for the period were flat. Non-interest-bearing deposits were 18.7% of total deposits, down from 20.2% in the first quarter. Rebuilding that mix and replacing brokered funding with core relationship deposits over time is a priority for our retail and treasury teams. On accounts, our legacy markets produced 6,269 accounts in the quarter, up 22% over same quarter last year. In addition, digital active users reached almost 79,000, up 10% from a year ago. 759 business accounts were opened in the quarter, which is an area of focus with the average balance per business account growing nearly 4%. Fee income momentum continued. Treasury fees grew 4% on the quarter and 11% on a year. We are just getting started there. Continued momentum from trust and wealth and mortgage banking provided additional benefit. On credit, the provision was $1.7 million and the allowance stands at 1.18% of loans. Net charge-offs were $2.1 million or 15 basis points annualized, up from 12 basis points last quarter. Non-performing assets were 1% of total assets. Non-accrual loans were $69 million. Classified assets to regulatory capital were 10.42%, down 140 basis points in the quarter. We remain comfortable with the overall credit posture of the portfolio. On Lincoln, integration planning is well underway. Local leadership and decision making will stay in place as we welcome their teammates, customers, and communities. We now operate in seven growing metro markets. We believe the best in the Midwest. And with Lincoln, we add density in Des Moines and now enter Waterloo, Cedar Falls, as well as other surrounding community markets, which gives us opportunity for future growth. I'll now turn it over to Chris. Thanks, Rick. Good morning. Net income for the quarter was $26.8 million or $129 per diluted share excluding m a expenses of 1.0 million intangible amortization of 1 8 million and securities gains core net income was 29.0 or 140 per share in line with last quarter core return on average tangible common equity was 16.5 net interest income was 72.8 million down 1 million from the second quarter the periodic decline was driven by increasing costs within the deposit portfolio, as well as declining yield on interest-earning assets. Total cost of deposits moved up seven basis points on a flat average balance. As both Brad and Rick mentioned, the market tightened for deposits as we saw the short end of the curve rise. Investment yield declined as excess discount realization from the previous quarter did not recur. Loan coupon yields declined five basis points. Net interest margin was 4.2%, down 16 basis points affected by the same drivers as net interest income as well as composition dynamics. Average earning assets increased to $6.87 billion from $680 billion driven by cash and securities which were funded by expanded borrowings. The impact of the growth is absent other changes, accretive to income, and dilutive to margin. Year-to-date margin has averaged approximately 4.30%. Looking to the fourth quarter, excluding Lincoln, we expect margin to return to the 4.25 to 4.35% range. We enter the quarter with $50 million in loan balances in excess of the average for the third quarter. The FOMC's decision to raise interest rates in September will provide a near-term benefit as contractual earning asset balances are repriced. 14% of the loan portfolio reprices daily and 22% monthly. New production is coming on at 6.91%. The spot coupon on the loan portfolio is up eight basis points to 6.48%, while production and repricing will continue to be accretive to the book. On the other side of the balance sheet, as forward rate curves continue to indicate near-term rate rise, competition is expected to continue. As Rick indicated, we are committed to continue driving deposit growth and relationship expansion, but the potential for headwinds is evident. Non-interest income was $10.8 million compared to $10,300,000 of core non-interest income last quarter. That is an increase of $0.5 million, and non-interest income represented 12.9% of total revenue, up from 11.2%. Debit and credit card, trust and wealth management, and treasury all grew. We expect fourth quarter non- interest income, exclusive of the impact of Lincoln between $10 and $11 million. Non-interest expense was $47.7 million, excluding $1 million of merger costs. Expenses were $46.7 billion, flat with the second quarter. The efficiency ratio was 54%. We expect fourth quarter non-interest expenses exclusive of the impact of Lincoln between $47 and $48 million. Provision expense was 1.7 trillion, and the allowance for credit losses was 1.18% of loans, effectively flat to the previous quarter. The allowance covers 7.7 years of current period annualized charge-offs. We continue to expect a provision run rate of roughly 1.5 to 2 million per quarter, depending on loan growth and charge-off levels. Capital remains strong. TCE closed the quarter at 9.1%, up three basis points in the period, and tangible book value per share was $32.30 compared to $33.45. The decline in per share value reflects a $35 million negative adjustment to AOCI as rates rose during the period. Excluding AOCI, tangible book-value per share grew $1.19, or roughly 3.6%. CET1 was 12.15%, and total risk-based capital was 14.94%. Capital generation was approximately $21 million for the quarter. During the period, we announced a 22% increase in our dividend to 22 cents per share. Our repurchase plan remains in place, though it is currently paused as we work to finalize the Lincoln transaction. At close, we expect pro forma TCE to total assets of approximately 8.5% and total risk-based capital of approximately 13.4%. As Brad and Rick mentioned, the Lincoln merger is continuing to progress as anticipated. As we expect a late fourth quarter close, impact of the transaction has been excluded from our forecast figures. No changes to previously announced expectations have been identified. I'll turn it back to Brad for closing remarks. Thank you, Chris. Now let's step forward and let's talk a little bit about 2027. We ended the quarter at $7.6 billion in assets. With Lincoln, we expect to be $9.1 billion as a company. Over the past year, we built a stronger franchise. In 2027, we plan to show what that franchise can do, and it comes down to four things. franchise growth our legacy markets grew loans at nearly 12 annualized and production was a record 379 million dollars the lincoln and omaha teams that's lincoln nebraska we hired our building pipelines in markets we were not present in a year ago As a transition from our recent acquisition works through the balance sheet, that growth shows up in total balances. In this quarter, we saw the first signs that we are able to grow as an organization organically. Second, Iowa. Lincoln Savings Bank contributes excellent bankers, strong communities, and additional scale to perform a balance sheet. It also positions us for further bolt-on opportunities in the state, with more than 200 banks under $2 billion in assets chartered there. We convert in the second quarter of 2027, and with half the cost savings realized in the year, 2027 is where the accretion begins. Third, customers and deposits. We have 166,000 accounts, 79,000 active digital users, and treasury platform that continues to gain momentum. Core relationship growth and a full treasury suite are the answers to growing new deposit relationships and fee income. And the early signs are in the numbers, as Rick shared in his comments. Fourth, efficiency. Expenses were flat in this quarter. We believe we can grow the balance sheet and deepen relationships without growing the cost structure at the same pace. M&A has always been part of how we have built this company. And Lincoln Savings Bank is a good example of the discipline we apply. It fits our strategy. It meets our return for shareholders. And it makes equity a better company. We remain active, but our energy is on executing what is in front of us, organic growth, integrating Lincoln, and building tangible book value for our shareholders, and increasing earnings per share. Year-to-date core earnings per share are at $4.14, which puts us in a position to surpass our $5 target for 2026. That is what this team has done every year, and we plan to keep doing it, building earnings per share as we grow the company. Thank you for joining us on the call today, and now we're happy to take your questions at this time. We will now begin the question and answer session for this earnings call. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jeff Rulis with DA Davidson. Your line is open. Please go ahead. Thanks. Good morning. Maybe a jump off from Brad, your comments as you look into 27, and I guess preliminarily, I wanted to think about maybe net loan growth, given the expectations, the organic side really coming on strong. And then I guess if you kind of think about the possible runoff from Lincoln, kind of framing, I guess, you know, this year you're kind of on pace for low single digit uh if you've asked the any acquisitions um how does how does it frame up for for 27 you know either big picture or specifically yeah so we've uh in some of the modeling and the numbers that we released jeff uh we reflected some of the runoff that we expect already in lincoln savings bank if you just smash the two companies together on asset basis it doesn't equate to 9.1 billion dollars so we think we did a better job of disclosing some of that uh shrinkage uh that naturally happens uh uh as part of the merging of the companies together so uh hopefully the modeling and analytical work that's been done on that uh in the industry is already uh better suited than we had in the last two transactions um so you know we're looking i mean rick's teams are doing a really really good job i feel very confident that the uh oklahoma group and the nebraska group are on the way to to growth uh we have really strong production out of all the rest of our teams everyone in the company from the board down to the uh line lender is all focused on doing the right thing every day so you know on an organic basis i think single digit uh upwards of that is something that we can definitely target in 2027. uh sorry braddy said is that mid single digit or it's single mid single uh yeah i don't think we're gonna get to ten percent but somewhere between uh five and seven percent is something that i think we can hit as a company with the acquisition i think without without the acquisition I think we could be actually stronger than that okay uh appreciate it and and Brad another one for you uh on the M&A side just wanted to see if kind of the shifting sands of of uh maybe rate expectations as we that new environment do you think you know that coupled with, we've heard kind of rumors of sort of as midterms approach and any potential catalyst if there's a shift on that front. I guess, so the question, you know, rates or midterm elections, do you think, do you see that having any preliminary impact to deal activity or is it kind of business as usual on that point? So, you Know, most of the things that we've done are driven by age of ownership and age of management and so those two factors still exist and so the uh conversations that i already have scheduled for this quarter um uh the reach out that uh that i've received or that we've made um you know we have four or five conversations that uh are active at this point in time um and so you know just matters on where they go i do think the rising rates will put smaller banks on the sidelines again i think their aoc i is going to go the wrong direction for them i think that's what's uh kept them from coming to market in the past a year or two and i think it will again be exacerbated um and so i do think that you know there will be a slowness in consolidation based on that um because they missed kind of a window of correction here the last six months to get something done but from our standpoint we have a lot of active conversations that you know are agnostic to that or don't have aoci uh real issues so you know i think we have a lot opportunity that we can pick and choose from as we go through the process it's not something that we uh need to do uh next year but there are conversations that could happen next year uh if the numbers work together and the strategies work in the right direction okay and it doesn't sound like the political wins are anything that you're overly concerned with or impacting conversations maybe broadly speaking they're not uh i think if there's blue wave uh that happens on the house and the senate side i think some people are going to get uh more focus on getting something done uh before the white house seat comes up in two more years so i think over the next uh 24 months i think there could be a wave of activity that comes to the marketplace uh how that affects equity bank is you know we'll just be consistent on what we're doing and how we're doing it um you know we can do one or two deals a year and and so you know we'll we'll have to pick and choose which what those opportunities look like for us okay appreciate it brad thanks your next question comes from the line of brendan nozzle with hobbit group your line is open please go ahead hey good morning everybody thanks for taking the questions morning um starting off here on the net interest margin um a bit of a soft result this quarter but you you kept the outlook for the fourth quarter of this year um there's a bunch of moving pieces in there can you kind of maybe decompose the magnitude of each of those drivers for next quarter i mean you've got uh the tailwind of asset remixing uh and the fed hike but you've also got the headwind of rising funding costs also from the fed so kind of how much did each of those work as you kind of you know worked in math on getting to your range yeah so good question brian there's there's a bit to unpack there on the on the current period results if you take in the excess liquidity that we allow to carry for the period that's seven-ish basis points of impact to net interest margin that's neutral to net interest income um so managing that you know reduced cast cash etc takes care of seven basis points at the Delta. On the changing interest rates, the Fed move adds about 10 basis points to loan yields. The increase in deposit funding is heavily realized through the end of the quarter. We're going to continue to see some migration up there, but the 10 basis point on the loan side should outpace it. So normalizing for the liquidity is $4.27, adding the impact of the additional rate movements adds a few more basis points to get you in that range of that 425, 435. Okay, got it. That's helpful. And then to the extent that we get additional rate hikes in the future, and we don't have kind of mixed considerations as well, what's like a rough ballpark estimate of kind of what each rate hike does to your margin? Yeah, it adds between three and five basis points for every 25 basis points up. Got it. Okay. Fantastic. Thanks for taking my questions. Your next question comes from the line of Matt Olney with Stevens. Your line is open. Please go ahead. Hey, good morning. Thanks taking the question. On the deposit side, it sounds like the balances in the third quarter were relatively flat in the legacy markets, ex those public funds that you highlighted. It sounds like you're expecting some nice deposit growth here in the near term. Just any more color on just the incremental cost of these new deposit flows that you're anticipating? Yeah, so I'd say a couple things. One, we're optimistic about continued remixing and opportunity in our non-interest bearing and low-cost commercial and retail aspects of the business. We went through payment of taxes in April. We've seen continuation of a relatively lower balance. So there's some opportunity there as we close out the year as balances grow into, you know, the end of the year that we typically see seasonally. So there's, there's a benefit there. As you think about a new incremental deposit, to the extent you're pulling it from call it a special or a public fund opportunity or something that's actively bid, you're seeing it up at the top end of what you would think a short-term interest rate is. But that's, you Know, most of where Rick's time is spent. Most of where his team's time is spent is on the customer relationship the development of those those customers that aren't as rate sensitive and are focused on um the the broad relationship aspects so that's where our time and efforts are but where we have to go get funding uh kind of out market it's uh more aligned with brokered funding and those kind of costs we always have a huge yeah huge a large percentage inflow of deposits in the fourth quarter because I don't remember the number of municipalities but it's somewhere between 50 and 100 municipalities that we bank across our system that have tax revenues that come in in the third quarter so we always see a nice flow of deposits into those accounts because we have their operating accounts. And Matt I want to sort of strategically and down to the tactical level one of the things that we've been doing is we're actually on accounts kind of sort of year over year, same stores. We're about 20% up in the quarter, third quarter for the number of accounts. So our teams are really driving those accounts. We've also implemented a few tools that allows them to be more proactive in identifying additional business that customers have with other banks. And so we're actively, you know, seeking that. So, you know those things take a little time on it, but those are, those are some of the tactical things we're doing that we, you Know, why we're, why We're optimistic. Obviously we've seen that in the legacy markets with the growth of loans, and we're doing more of that now on the side of deposits, and so we're positive on that. Okay. That's all great, Kyle. I appreciate that. And then I guess shifting over towards the credit side, curious what you're seeing this quarter. It looks like charge-offs were a little bit heavier, but any cleanup commentary there? And then just taking a step back with high rate expectations from here into 27 i'm curious what the credit team is is is focused on at this point thanks yeah i don't think we're i mean we're still optimistic with our credit we're we're you know obviously seeing positive results from most of our commercial customers and we cleaned up a lot of stuff in the classified had positive resolutions uh along those lines so you know we're obviously the consumers being a little bit impacted um you see that sort of in some of their deposit bases a little stressed in that with from a cost perspective um but that said um you know we're not we don't have a lot uh that's not a big piece of our of our portfolio um and we haven't seen that fully move through to to commercial so we're still very positive on the credit side at this point it seems like that the commercial business is making money uh and we see that because the average balance of our commercial account is actually up um so the average commercial customer is stronger where our consumer customer average balance is down about a thousand dollars on average per account so you can see that coming through in those two ways okay guys that's helpful thanks again your next question comes to the line of nathan race with piper sandler your line is open please go ahead hey guys good morning thanks for taking the questions um i was curious maybe rick if you can just comment on what you're seeing from a competitive uh pricing perspective on new loan production obviously you know record production in the quarter it sounds like the pipeline is pretty strong but you know just curious as you guys you know kind of expand your teams in some larger markets whether it's oklahoma city or omaha if you're seen some degradation in terms of kind of what you're getting on new loan pricing kind of relative to you know what you guys may be able to you know uh garner historically in some of the less competitive rural markets that you've operated in historically yeah sure so uh one thing i'd note again is our average uh yield on production this quarter was 6.91 so it's you know it's a creative to what we've got in our full portfolio um and and i would the answer is it depends on the market so um you know there are a couple of our markets that are more competitive on there we've got to get a little skinnier um in those transactions but we've we're still holding holding our line on most in most markets uh to make sure that we're we're covering an roe we run an rov model and make sure we cover that so we've seen some some competitive uh craziness in a few of our markets but but in the most at this point in time we're actually um and i think that's part of why you're seeing the pipeline grow is that we're in pretty good shape at this time okay great helpful and then you know just as we think about kind of excess capital management priorities in the next year you know i imagine you're probably going to be in a kind of digestive phase with lincoln at least for the next quarter or two but as you kind of just think about kind of returning excess capital shareholders into 27 um you know you just maybe brad coming on the buyback appetite giving her the stock trace today and kind of any other capital initiatives you're trying to play obviously saw the dividend hike here in 3q as well yeah so uh you know as everyone knows when there's a filing with the sec um uh companies are blocked out from repurchasing or trading in their shares so we aren't active at this point uh buying back our shares just because of the uh block out that comes with the s4 on file um but uh you know we'll continue to be active in that uh we have a board uh approval to continue to be active and that have a you know million dollar or a million shares outstanding uh authorization so um you know that's one way we'll return capital um and then i think we have plenty of ways to deploy capital through uh acquisition and organic growth um okay um and then just maybe one last one for chris obviously it's going to be a bit noisy expense wise next year but just kind of any thoughts on around the kind of legacy expense growth rate that we expect from the um equity franchise and um you know within that context you know curious to what degree some of the ai initiatives and other technology items that are laid out in the slide deck can kind of uh limit expense goes to some degree next year could you summarize that question again yeah just trying to think about the legacy operating expense growth run rate from the legacy equity franchise into next year and to what degree some of the technology initiatives and the ai implementations laid on the slide that can maybe limit expense growth to some degree into 2027. yeah i'll say around that just just generally speaking we're we're in the process of budgeting and outlook expectations so um more formality to come around this as we move forward but but you know off the top our expectation is that these initiatives over time allow us to to grow the balance sheet without growing the expense right at the same clip so as we look to next year as you look at nie the average assets and you look at efficiency ratio our our goal and expectation is that on a legacy basis that's coming down some of that comes with asset growth a lot of it comes with control of costs specific initiatives for how technology moves the needle there um are coming together but i don't have clear line of sight today to give you kind of the specifics but i can tell you we're we're focused on it we're motivated by it and and we do see that there is positive leverage to be attained there we just don't have it uh to a number that i want to you know stand on today and say it's definitively this we spent the last two days with uh a team going through some account verification and loan verification processes that are meaningful moves uh if we uh when we get those implemented uh chris's point is this stuff will trickle in you'll see it come in through the balance sheet it's not going to be a huge announcement that we're implementing this wonderful software and it's going to eliminate four percent of our efficiency ratio that that's not how these things are going to be implemented they're going to implemented as we uh as the companies all in in the industry are able to implement these things and through uh growth and through a shrinkage of uh turnover you'll see these things optimize uh fairly quickly and we're already seeing it today but it's not going to happen in stair steps it's going to happened in a gradual line understood i appreciate all the color thanks guys thank you your next question comes from the line of damon delante with kbw your line is open please go ahead hey good morning guys thanks for taking my questions um just to kind of follow up on the expense uh commentary chris just wondering if you kind of had a ballpark of kind of where first quarter 27 would start on a combined basis with lincoln and and then kind of you know a cadence over the the coming quarters throughout the year yeah the uh what i'll say on non-interest expense and really the the culmination of what is Lincoln, is the expectation on the EPS side continues to be the 27 cents. But as we have moving pieces into closing that transaction and understanding the dynamic of some various pieces we've talked about, I don't want to specifically say it's going to be non-interest expense or it's going to NII or some other component. We're fully confident that we'll get the 27 sense. It's where it comes from. So, Damon, on that one, we'll provide more explicit guidance as we get closer to close that transaction but for now um specific line items aren't aren't the way to look at it okay fair enough um and then you know i i think um brad mentioned that um proforma you guys are 9.1 billion um you know always having ongoing discussions with uh with potential suitors for m a um at this point is there anything that would hold you back from going over 10 billion in 2027 if you were to find a couple deals like do you feel you've made the necessary investment you know in the infrastructure side of things from risk management and compliance and things of that nature to uh to go over whenever that time comes or do you feel um you need to continue to do work in that regard no we we've made a lot of progress over the last three years we've been very focused on that we have a very specific operating plan on how to get to that number uh rick honestly did a good job of bringing in a couple of federal uh reserve bank uh risk employees uh that were on furlough at the time uh that helped us write that plan over a 90-day period we've been operating off of that plan and so our chief risk officer we hired 18 months ago i believe approximately has done a great job with his team and building out the processes so i feel very confident with where we sit today that if a transaction took us over tomorrow we'd be ready to to meet those challenges okay great appreciate the caller that's all that i had thank you thank you your next call comes from the line of brett rabitin with stonex group your line is open please go ahead hey guys good morning uh wanted to go back to the margin and just assuming that lincoln closes let's say early december just wanted to see if you guys could give some thoughts on the margin impact uh from lincoln and 4q aside from the standalone operation yeah the um the the impact to lincoln is currently modeled and again brett i'll uh caveat this with the moving pieces of what is the closing of lincoln in the composition of both balance sheet and income streams is a little bit in flux, but the impact of Lincoln on the run rate margin is eight to 10 basis points down. So as you think about that on a single month out of three, you're looking at two to three basis points of degradation based on, call it a December first close. Okay. Yeah, that's kind of what I was looking at. Okay, and then just, you know, I know you don't want to give margin guidance for 27 and there's a lot of variables that are in place, so to speak, but, you know, there's some definite tailwinds on the, on the loan side with the origination rates and loan repricing and, and higher rates. But, you Know, my question is, is there a risk that the margin, you now with relative to 4Q would see some additional pressure in 27, just from funding new growth, i.e. new production on the balance sheet is at a lower margin than the existing one, which is obviously better than most peers? Yeah, I think I'll say two things there. One, 436 margin in Q2, 420 today, all numbers that we're really proud of and as an industry are hard to retain. So maintaining and growing margin from here is going to be, to your point, Brett, tough. But we're focused on how can we control for credit risk challenges to the balance sheet while also growing NII over time. So we don't want to take high risk investments. We don't like to play capital poorly. But where we can grow the balance she drive NII increase, even if it's at a slight detriment to overall margin, we're OK with it because we want to get EPS and we want a tangible book value growth for our shareholders. And that's that's what's driving us at this point. So, yes, there could be some compression there based on incremental growth, but it's expansive than I. OK, yeah, perfect question or perfect answer there. And then the last one, if I could, just around M&A, you know, you're Brad, this question for Brad, your your first response around MAA, you kind of led me to a question. You've obviously been an M&A-focused institution doing a deal every quarter, two or three, and you've built out the geography quite a bit in the past few years. Do you think there's a shift to, hey, we're an organic story now, and maybe we're less interested in M&As? Or, Brad, just any thoughts on what you see as the tools to double your franchise, as you say, in every five to seven years from here? can that be more organic than it is M&A? Yeah, I think we actually traditionally have been good at organic. We actually are good at Organic today. And as Rick has helped bring some clarity to that, we're doing a really good job in our core markets of originations. I think we have a lot of room for that growth. You know, I'm most excited about this year. The number of checking accounts we have grown in our same stores, legacy markets is exceptional. Jonathan Root and that retail team have done an amazing job of growing those number of checking accounts. And I think we can just improve on that every year. So I think there is an organic story in our picture. We don't need to do another M&A transaction to be meaningful and relevant. So, you know, we're always this, the LSB transaction came up because Iowa's been on our list of places we wanted to be for the last four or five years. And its footprint is so similar to everything else we operate at Equity Bank that it fits strategically so well. I think the combined company is going to be much better than the two companies separated. And so, you know, we have other opportunities that look like that. We're going to jump on them, but it's only going to be in the footprint that we're currently in. Okay, great. First, all the color, Brad. There are no further questions at this time. This concludes today's call. Thank you for attending and you may now disconnect.