Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report to “we,” “our,” “us,” “the Company” and “Equity” refer to Equity Bancshares, Inc. and its consolidated subsidiaries, including Equity Bank, which we sometimes refer to as “Equity Bank,” “the Bank” or “our Bank.”

The information contained in this Quarterly Report is accurate only as of the date of this Quarterly Report on Form 10-Q and as of the dates specified herein.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Item 1A - Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 17, 2016, and in Item 1A – Risk Factors of this Quarterly Report.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but ~~are~~ not limited to, the following:

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this Quarterly Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

	(Unaudited) June 30,			December 31,			(Unaudited) September 30,			December 31,
	2016			2015			2016			2015
ASSETS
Cash and due from banks	$	25,413		$	36,276		$	20,925		$	36,276
Federal funds sold		20,789			20,553			922			20,553
Cash and cash equivalents		46,202			56,829			21,847			56,829
Interest-bearing time deposits in other banks		5,245			5,245			4,995			5,245
Available-for-sale securities		74,976			130,810			102,391			130,810
Held-to-maturity securities, fair value of $324,425 and $312,802		317,509			310,539
Held-to-maturity securities, fair value of $358,225 and $312,802								349,915			310,539
Loans held for sale		4,002			3,504			3,071			3,504
Loans, net of allowance for loan losses of $6,030 and $5,506		974,080			954,849
Loans, net of allowance for loan losses of $6,080 and $5,506								949,990			954,849
Other real estate owned, net		4,898			5,811			5,647			5,811
Premises and equipment, net		39,103			39,147			39,909			39,147
Bank owned life insurance		33,052			32,555			33,301			32,555
Federal Reserve Bank and Federal Home Loan Bank stock		10,875			11,013			11,587			11,013
Interest receivable		4,323			4,540			4,712			4,540
Goodwill		18,130			18,130			18,130			18,130
Core deposit intangible, net		1,376			1,549			1,289			1,549
Other		11,086			11,206			10,298			11,206
Total assets	$	1,544,857		$	1,585,727		$	1,557,082		$	1,585,727
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	157,896		$	157,834		$	169,368		$	157,834
Total non-interest-bearing deposits		157,896			157,834			169,368			157,834
Savings, NOW, and money market		595,272			619,468			571,255			619,468
Time		443,599			438,612			437,109			438,612
Total interest-bearing deposits		1,038,871			1,058,080			1,008,364			1,058,080
Total deposits		1,196,767			1,215,914			1,177,732			1,215,914
Federal funds purchased and retail repurchase agreements		22,782			20,762			25,382			20,762
Federal Home Loan Bank advances		147,648			145,439			168,756			145,439
Bank stock loan		—			18,612			—			18,612
Subordinated debentures		9,371			9,251			9,431			9,251
Contractual obligations		2,831			3,093			2,831			3,093
Interest payable and other liabilities		7,270			5,423			11,702			5,423
Total liabilities		1,386,669			1,418,494			1,395,834			1,418,494
Commitments and contingent liabilities, see Notes 10 and 11
Stockholders’ equity, see Note 6
Preferred stock, Series C (liquidation preference of $16,372)		—			16,372			—			16,372
Common stock		97			97			97			97
Additional paid-in capital		138,480			138,077			138,546			138,077
Retained earnings		41,240			34,955			43,911			34,955
Accumulated other comprehensive loss		(1,732	)		(2,371	)		(1,409	)		(2,371	)
Employee stock loans		(242	)		(242	)		(242	)		(242	)
Treasury stock		(19,655	)		(19,655	)		(19,655	)		(19,655	)
Total stockholders’ equity		158,188			167,233			161,248			167,233
Total liabilities and stockholders’ equity	$	1,544,857		$	1,585,727		$	1,557,082		$	1,585,727

	(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,						(Unaudited) Three Months Ended September 30,					(Unaudited) Nine Months Ended September 30,
	2016			2015			2016			2015			2016		2015			2016			2015
Interest and dividend income
Loans, including fees	$	11,551		$	10,737		$	23,392		$	21,149		$	11,493	$	10,713		$	34,885		$	31,862
Securities, taxable		1,987			1,796			4,196			3,529			1,855		1,912			6,051			5,441
Securities, nontaxable		332			265			660			455			383		291			1,043			746
Federal funds sold and other		510			169			994			266			519		283			1,513			549
Total interest and dividend income		14,380			12,967			29,242			25,399			14,250		13,199			43,492			38,598
Interest expense
Deposits		1,670			1,090			3,277			2,126			1,707		1,283			4,984			3,409
Federal funds purchased and retail repurchase agreements		14			14			26			30			16		17			42			47
Federal Home Loan Bank advances		345			88			677			126			386		141			1,063			267
Bank stock loan		—			149			—			300			—		146			—			446
Subordinated debentures		157			160			310			318			159		162			469			480
Total interest expense		2,186			1,501			4,290			2,900			2,268		1,749			6,558			4,649
Net interest income		12,194			11,466			24,952			22,499			11,982		11,450			36,934			33,949
Provision for loan losses		532			605			1,255			1,330			104		537			1,359			1,867
Net interest income after provision for loan losses		11,662			10,861			23,697			21,169			11,878		10,913			35,575			32,082
Non-interest income
Service charges and fees		807			615			1,586			1,170			851		653			2,437			1,823
Debit card income		728			540			1,405			981			722		556			2,127			1,537
Mortgage banking		335			375			577			578			442		277			1,019			855
Increase in value of bank owned life insurance		246			231			497			466			249		234			746			700
Net gain from securities transactions		59			2			479			370			—		—			479			370
Other		277			285			606			880			263		312			869			1,192
Total non-interest income		2,452			2,048			5,150			4,445			2,527		2,032			7,677			6,477
Non-interest expense
Salaries and employee benefits		5,246			4,862			10,458			9,584			5,391		4,659			15,849			14,243
Net occupancy and equipment		1,068			1,020			2,162			2,126			1,159		952			3,321			3,078
Data processing		869			727			1,707			1,381			883		746			2,590			2,127
Professional fees		568			441			1,017			912			527		498			1,544			1,410
Advertising and business development		330			277			548			568			353		295			901			863
Telecommunications		287			198			518			379			285		203			803			582
FDIC insurance		255			175			513			351			240		217			753			568
Courier and postage		158			126			303			263			179		112			482			375
Amortization of core deposit intangible		86			61			173			121			87		61			260			182
Loan expense		168			118			260			178			153		94			413			272
Other real estate owned		(58	)		56			8			121			156		53			164			174
Loss on debt extinguishment		—			—			58			316			—		—			58			316
Merger expenses														237		77			237			77
Other		964			966			1,905			1,745			1,084		899			2,989			2,644
Total non-interest expense		9,941			9,027			19,630			18,045			10,734		8,866			30,364			26,911
Income before income taxes		4,173			3,882			9,217			7,569			3,671		4,079			12,888			11,648
Provision for income taxes		1,327			1,313			2,931			2,559			1,000		1,343			3,931			3,902
Net income		2,846			2,569			6,286			5,010			2,671		2,736			8,957			7,746
Dividends and discount accretion on preferred stock		—			(43	)		(1	)		(86	)		—		(43	)		(1	)		(129	)
Net income allocable to common stockholders	$	2,846		$	2,526		$	6,285		$	4,924		$	2,671	$	2,693		$	8,956		$	7,617
Basic earnings per share	$	0.35		$	0.40		$	0.77		$	0.79		$	0.32	$	0.43		$	1.09		$	1.21
Diluted earnings per share	$	0.34		$	0.40		$	0.75		$	0.78		$	0.32	$	0.43		$	1.07		$	1.21

	(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,						(Unaudited) Three Months Ended September 30,						(Unaudited) Nine Months Ended September 30,
	2016			2015			2016			2015			2016			2015			2016			2015
Net income	$	2,846		$	2,569		$	6,286		$	5,010		$	2,671		$	2,736		$	8,957		$	7,746
Other comprehensive income:
Unrealized holding gains (losses) arising during the period on available-for-sale securities		425			(650	)		1,633			(271	)		355			826			1,988			555
Amortization of unrealized losses on held-to-maturity securities		152			160			292			423			165			167			457			590
Reclassification adjustment for net gains included in net income		(473	)		(2	)		(893	)		(370	)		—			—			(893	)		(370	)
Total other comprehensive income (loss)		104			(492	)		1,032			(218	)		520			993			1,552			775
Tax effect		(42	)		188			(393	)		84			(197	)		(379	)		(590	)		(295	)
Other comprehensive income (loss), net of tax		62			(304	)		639			(134	)		323			614			962			480
Comprehensive income	$	2,908		$	2,265		$	6,925		$	4,876		$	2,994		$	3,350		$	9,919		$	8,226

	Preferred Stock			Common Stock																					Preferred Stock			Common Stock				Additional					Accumulated Other			Employee						Total
	Series C			Shares Outstanding		Amount		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (loss)			Employee Stock Loans			Treasury Stock			Total Stockholders’ Equity			Series C			Shares Outstanding		Amount		Paid-In Capital		Retained Earnings			Comprehensive Income (loss)			Stock Loans			Treasury Stock			Stockholders’ Equity
Balance at January 1, 2015	$	16,359			6,067,511	$	76	$	98,398	$	24,832		$	(2,281	)	$	—		$	(19,655	)	$	117,729		$	16,359			6,067,511	$	76	$	98,398	$	24,832		$	(2,281	)	$	—		$	(19,655	)	$	117,729
Net income		—			—		—		—		5,010			—			—			—			5,010			—			—		—		—		7,746			—			—			—			7,746
Other comprehensive income, net of tax effects		—			—		—		—		—			(134	)		—			—			(134	)		—			—		—		—		—			480			—			—			480
Accretion of discount on preferred stock		4			—		—		—		(4	)		—			—			—			—			6			—		—		—		(6	)		—			—			—			—
Stock based compensation		—			—		—		216		—			—			—			—			216			—			—		—		256		—			—			—			—			256
Common stock issued upon termination of restricted stock unit plan, net of employee stock loans		—			203,216		2		222		—			—			(1,215	)		—			(991	)		—			203,216		2		222		—			—			(1,215	)		—			(991	)
Repayment on employee stock loans																										—			—		—		—		—			—			957			—			957
Cash dividends declared and accrued on preferred stock		—			—		—		—		(82	)		—			—			—			(82	)		—			—		—		—		(123	)		—			—			—			(123	)
Balance at June 30, 2015	$	16,363			6,270,727	$	78	$	98,836	$	29,756		$	(2,415	)	$	(1,215	)	$	(19,655	)	$	121,748
Balance at September 30, 2015																									$	16,365			6,270,727	$	78	$	98,876	$	32,449		$	(1,801	)	$	(258	)	$	(19,655	)	$	126,054

Balance at January 1, 2016	$	16,372			8,211,727	$	97	$	138,077	$	34,955		$	(2,371	)	$	(242	)	$	(19,655	)	$	167,233		$	16,372			8,211,727	$	97	$	138,077	$	34,955		$	(2,371	)	$	(242	)	$	(19,655	)	$	167,233
Net income		—			—		—		—		6,286			—			—			—			6,286			—			—		—		—		8,957			—			—			—			8,957
Other comprehensive income, net of tax effects		—			—		—		—		—			639			—			—			639			—			—		—		—		—			962			—			—			962
Retirement of preferred stock		(16,372	)		—		—		—		—			—			—			—			(16,372	)		(16,372	)		—		—		—		—			—			—			—			(16,372	)
Stock based compensation		—			—		—		282		—			—			—			—			282			—			—		—		348		—			—			—			—			348
Common stock issued upon exercise of stock options		—			7,688		—		121		—			—			—			—			121			—			7,688		—		121		—			—			—			—			121
Cash dividends declared and accrued on preferred stock		—			—		—		—		(1	)		—			—			—			(1	)		—			—		—		—		(1	)		—			—			—			(1	)
Balance at June 30, 2016	$	—			8,219,415	$	97	$	138,480	$	41,240		$	(1,732	)	$	(242	)	$	(19,655	)	$	158,188
Balance at September 30, 2016																									$	—			8,219,415	$	97	$	138,546	$	43,911		$	(1,409	)	$	(242	)	$	(19,655	)	$	161,248

	(Unaudited) June 30,						(Unaudited) September 30,
	2016			2015			2016			2015
Cash flows from operating activities
Net income	$	6,286		$	5,010		$	8,957		$	7,746
Adjustments to reconcile net income to net cash from operating activities:
Stock based compensation		282			216			348			256
Depreciation		841			817			1,258			1,240
Provision for loan losses		1,255			1,330			1,359			1,867
Net accretion (amortization) of purchase valuation adjustments		192			(272	)		445			49
Amortization of premiums and discounts on securities		1,265			1,074			2,011			1,714
Amortization of intangibles		176			121			264			182
Deferred income taxes		(34	)		(57	)		(56	)		(85	)
FHLB stock dividends		(327	)		(96	)		(511	)		(232	)
Loss (gain) on sales and valuation adjustments on other real estate owned		(142	)		18			(129	)		(41	)
Net loss (gain) on securities transactions		(479	)		(370	)		(479	)		(370	)
Loss (gain) on disposal of premise and equipment	(39		)		(9	)		(40	)		11
Loss (gain) on sales of loans		(496	)		(492	)		(883	)		(719	)
Originations of loans held for sale		(21,987	)		(22,341	)		(36,037	)		(31,608	)
Proceeds from the sale of loans held for sale		21,985			21,479			37,354			31,278
Increase in the value of bank owned life insurance		(497	)		(466	)		(746	)		(700	)
Change in fair value of derivatives recognized in earnings		4			16			8			13
Net change in:
Interest receivable		217			(389	)		(172	)		(786	)
Other assets		(314	)		4			265			(552	)
Interest payable and other liabilities		(918	)		359			104			1,902
Net cash provided by (used in) operating activities		7,270			5,952			13,320			11,165
Cash flows to investing activities
Purchases of available-for-sale securities		(25,576	)		(44,543	)		(56,056	)		(83,968	)
Purchases of held-to-maturity securities		(25,811	)		(69,064	)		(69,959	)		(77,450	)
Proceeds from sales, calls, pay-downs, and maturities of available-for-sale securities		82,774			25,066			86,066			27,429
Proceeds from calls, pay-downs and maturities of held-to-maturity securities		19,677			23,419			34,472			34,783
Net change in interest-bearing time deposits in other banks	―				250			250			750
Net change in loans		(21,038	)		(107,860	)		1,457			(124,751	)
Purchase of premises and equipment		(863	)		(5,117	)		(2,086	)		(5,420	)
Proceeds from sale of premise and equipment	175				15			208			15
Net redemption (purchase) of FHLB and FRB stock		465			(6,555	)		(63	)		(9,507	)
Proceeds from sale of other real estate owned		2,391			538			2,830			1,613
Net cash provided by (used in) investing activities		32,194			(183,851	)		(2,881	)		(236,506	)
Cash flows (to) from financing activities
Net increase (decrease) in deposits		(19,153	)		22,986			(38,191	)		46,473
Net change in federal funds purchased and retail repurchase agreements		2,020			(1,062	)		4,620			(3,030	)
Net borrowings (payments) on Federal Home Loan Bank line of credit		2,209			150,312			23,317			174,265
Principal payments on Federal Home Loan Bank term advances	―				(4,432	)	―				(4,432	)
Proceeds from bank stock loan							―				5,014
Principal payments on bank stock loan		(18,612	)		(777	)		(18,612	)		(1,166	)
Issuance of employee stock loans		—			(1,215	)		—			(1,215	)
Principal payments on employee stock loans								—			957
Proceeds from the exercise of employee stock options		109			—			109			—
Redemption of Series C preferred stock		(16,372	)		—			(16,372	)		—
Net change in contractual obligations		(262	)		(136	)		(262	)		(143	)
Dividends paid on preferred stock		(42	)		(82	)		(42	)		(123	)
Excess tax benefits recognized in termination of restricted stock unit plan		—			224			—			224
Excess tax benefits recognized on exercise of employee stock options		12			—			12			—
Net cash provided by (used in) financing activities		(50,091	)		165,818			(45,421	)		216,824
Net change in cash and cash equivalents		(10,627	)		(12,081	)		(34,982	)		(8,517	)
Cash and cash equivalents, beginning of period		56,829			31,707			56,829			31,707
Ending cash and cash equivalents	$	46,202		$	19,626
Supplemental cash flow information:
Interest paid	$	4,167		$	2,877
Income taxes paid, net of refunds		1,580			2,090
Supplemental noncash disclosures:
Other real estate owned acquired in settlement of loans		1,336			2,543
Preferred stock dividends payable at period end	―				41
Securities purchased but not settled	1,954				—
Loans purchased but not settled	―				5,000

The interim consolidated financial statements include the accounts of Equity Bancshares, Inc., its wholly owned subsidiary, Equity Bank, and Equity Bank’s wholly owned subsidiary, SA Holdings, Inc. These entities are collectively referred to as the “Company”. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial information. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, the interim statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis and all such adjustments are of a normal recurring nature. These financial statements and the accompanying notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2016. Operating results for ~~six~~the nine months ended ~~June~~September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or any other period.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which amended existing guidance related to revenue from contracts with customers. This amendment supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this amendment specifies the accounting for some costs to obtain or fulfill a contract with a customer. These amendments are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The amendments should be applied retrospectively to all periods presented or retrospectively with the cumulative effect recognized at the date of initial application. The Company is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

In January 2016, FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The main provisions of the update are to eliminate the available-for-sale classification of accounting for equity securities and to adjust fair value disclosures for financial instruments carried at amortized costs such that the disclosed fair values represent an exit price as opposed to an entry price. The amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those years. Generally, early adoption of the amendments in this update is not permitted. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

In February 2016, FASB issued ASU 2016-02, Leases, with the intention of improving financial reporting about leasing transactions. The ASU requires all lessees to recognize lease assets and lease liabilities on the balance sheet. Lessor accounting is largely unchanged by the ASU, however disclosures about the amount, timing, and uncertainty of cash flows arising from leases are required of both lessees and lessors. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach provides for optional practical expedients when applying the ASU to leases that commenced before the effective date of the ASU. The Company is currently evaluating the impact of this new accounting standard on the consolidated financial statements but expects that assets and liabilities will increase to reflect the impact of this standard.

In March 2016, FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which will change how the Company accounts for certain aspects of share-based payments to employees. Under the guidance, excess tax benefits

generated when the tax-return deductible compensation expense for the award exceeds the cumulative compensation cost recognized for financial reporting purposes will be recorded as an income tax benefit in the income statement rather than being recognized directly to additional paid-in capital. The accounting for an employee’s use of shares to satisfy the Company’s statutory income tax withholding obligation and for forfeitures is also changing. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and all guidance will be applied prospectively. The Company is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses, which will change how the Company measures credit losses for most of its financial assets. ~~For~~This guidance is applicable to loans held for investment, off-balance-sheet credit exposures, such as loan commitments and standby letters of credit, and held-to-maturity investment securities. The Company will be required to use a new forward-looking expected loss model that is anticipated to result in the earlier recognition of allowances for losses. For available-for-sale securities with unrealized losses, the Company will measure credit losses in a manner similar to current practice, but will recognize those credit losses as allowances rather than reductions in the amortized cost of the securities. In addition, the ASU requires significantly more disclosure including information about credit quality by year of origination for most loans. The ASU is effective for the Company beginning in the first quarter of 2020. Generally, the amendments will be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating the impact of this new accounting standard on the consolidated financial statements.

In August 2016, FASB issued accounting standards update No. 2016-15, Statement of Cash Flows (Topic 230). This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice of how certain cash receipts and cash payments are presented and classified in the statement of cash flow. The amendments in this update are effective for fiscal years and interim periods beginning after December 15, 2017; however early adoption is permitted. Management is currently in the process of evaluating the impact of the update on the Company’s statement of cash flows.

The amortized cost and fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2016
September 30, 2016
Available-for-sale securities
U.S. government-sponsored entities	$	4,745	$	—	$	(26	)	$	4,719	$	4,756	$	27		—		$	4,783
Residential mortgage-backed securities (issued by government-sponsored entities)		65,584		466		(57	)		65,993		92,672		689		—			93,361
Corporate		3,000		—		(19	)		2,981		3,000		10		—			3,010
Small Business Administration loan pools		249		22		—			271		211		18		—			229
State and political subdivisions		501		7		—			508		500		7		—			507
Equity securities		500		4		—			504		500		1		—			501
	$	74,579	$	499	$	(102	)	$	74,976	$	101,639	$	752	$	—		$	102,391
December 31, 2015
Available-for-sale securities
U.S. government-sponsored entities	$	17,090	$	23	$	(77	)	$	17,036	$	17,090	$	23	$	(77	)	$	17,036
Residential mortgage-backed securities (issued by government-sponsored entities)		109,784		234		(497	)		109,521		109,784		234		(497	)		109,521
Corporate		3,000		—		(46	)		2,954		3,000		—		(46	)		2,954
Small Business Administration loan pools		275		22		—			297		275		22		—			297
State and political subdivisions		504		4		—			508		504		4		—			508
Equity securities		500		—		(6	)		494		500		—		(6	)		494
	$	131,153	$	283	$	(626	)	$	130,810	$	131,153	$	283	$	(626	)	$	130,810

The amortized cost and fair value of held-to-maturity securities and the related gross unrecognized gains and losses were as follows:

	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value		Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
June 30, 2016
September 30, 2016
Held-to-maturity securities
U.S. Government-sponsored entities	$	2,188	$	—	$	—		$	2,188
Residential mortgage-backed (securities issued by government sponsored entities)		233,302		4,058		(4	)		237,356	$	257,008	$	5,294	$	(4	)	$	262,298
Corporate		12,985		279		(546	)		12,718		12,987		289		(221	)		13,055
Small Business Administration loan pools		2,636		61		—			2,697		2,399		66		—			2,465
State and political subdivisions		66,398		3,078		(10	)		69,466		77,521		2,941		(55	)		80,407
	$	317,509	$	7,476	$	(560	)	$	324,425	$	349,915	$	8,590	$	(280	)	$	358,225
December 31, 2015
Held-to-maturity securities
U.S. Government-sponsored entities	$	2,669	$	—	$	(26	)	$	2,643	$	2,669	$	—	$	(26	)	$	2,643
Residential mortgage-backed (securities issued by government sponsored entities)		230,554		1,208		(769	)		230,993		230,554		1,208		(769	)		230,993
Corporate		12,983		135		(360	)		12,758		12,983		135		(360	)		12,758
Small Business Administration loan pools		2,863		17		(5	)		2,875		2,863		17		(5	)		2,875
State and political subdivisions		61,470		2,077		(14	)		63,533		61,470		2,077		(14	)		63,533
	$	310,539	$	3,437	$	(1,174	)	$	312,802	$	310,539	$	3,437	$	(1,174	)	$	312,802

The tables above present unrecognized losses on held-to-maturity securities since date of designation.

The fair value and amortized cost of debt securities at ~~June~~September 30, 2016, by contractual maturity, is shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	2,259	$	2,277	$	—	$	—	$	3,103	$	3,123
One to five years		501		508		19,722		20,447		500		507		16,941		17,664
Five to ten years		7,745		7,699		22,366		23,941		7,756		7,793		22,105		23,660
After ten years		249		272		39,860		40,404		211		229		50,758		51,480
Mortgage-backed securities		65,584		65,993		233,302		237,356		92,672		93,361		257,008		262,298
Total debt securities	$	74,079	$	74,472	$	317,509	$	324,425	$	101,139	$	101,890	$	349,915	$	358,225

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was approximately ~~$295,301~~$296,479 at ~~June~~September 30, 2016 and $368,926 at December 31, 2015.

At September 30, 2016, we had no available-for-sale securities with unrealized losses. The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at ~~June~~September 30, 2016 and December 31, 2015:

	Less Than 12 Months					12 Months or More					Total					Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 2016
Available-for-sale securities
U.S. Government-sponsored entities	$	4,719	$	(26	)	$	—	$	—		$	4,719	$	(26	)
Residential mortgage-backed (issued by government-sponsored entities)		10,306		(57	)		—		—			10,306		(57	)
Corporate		2,981		(19	)		—		—			2,981		(19	)
Total temporarily impaired securities	$	18,006	$	(102	)	$	—	$	—		$	18,006	$	(102	)
December 31, 2015
Available-for-sale securities
U.S. Government-sponsored entities	$	9,923	$	(77	)	$	—	$	—		$	9,923	$	(77	)	$	9,923	$	(77	)	$	—	$	—		$	9,923	$	(77	)
Residential mortgage-backed (issued by government-sponsored entities)		89,235		(497	)		—		—			89,235		(497	)		89,235		(497	)		—		—			89,235		(497	)
Corporate		2,954		(46	)		—		—			2,954		(46	)		2,954		(46	)		—		—			2,954		(46	)
Equity securities		—		—			494		(6	)		494		(6	)		—		—			494		(6	)		494		(6	)
Total temporarily impaired securities	$	102,112	$	(620	)	$	494	$	(6	)	$	102,606	$	(626	)	$	102,112	$	(620	)	$	494	$	(6	)	$	102,606	$	(626	)

	Less Than 12 Months					12 Months or More					Total					Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 2016
September 30, 2016																��
Held-to-maturity securities
Residential mortgage-backed (issued by government-sponsored entities)		10,469		(15	)		35,829		(189	)		46,298		(204	)	$	6,594	$	(4	)	$	11,513	$	(98	)	$	18,107	$	(102	)
Corporate		—		—			7,103		(546	)		7,103		(546	)		—		—			7,445		(221	)		7,445		(221	)
Small Business Administration loan pools		—		—			1,467		(8	)		1,467		(8	)		—		—			1,357		(2	)		1,357		(2	)
State and political subdivisions		2,725		(10	)		—		—			2,725		(10	)		9,272		(57	)		—		—			9,272		(57	)
Total temporarily impaired securities	$	13,194	$	(25	)	$	44,399	$	(743	)	$	57,593	$	(768	)	$	15,866	$	(61	)	$	20,315	$	(321	)	$	36,181	$	(382	)
December 31, 2015
Held-to-maturity securities
U.S. Government-sponsored entities	$	2,643	$	(26	)	$	—	$	—		$	2,643	$	(26	)	$	2,643	$	(26	)	$	—	$	—		$	2,643	$	(26	)
Residential mortgage-backed (issued by government-sponsored entities)		99,181		(1,077	)		87,992		(1,629	)		187,173		(2,706	)		99,181		(1,077	)		87,992		(1,629	)		187,173		(2,706	)
Corporate		5,505		(12	)		7,253		(360	)		12,758		(372	)		5,505		(12	)		7,253		(360	)		12,758		(372	)
Small Business Administration loan pools		1,315		(5	)		1,560		(40	)		2,875		(45	)		1,315		(5	)		1,560		(40	)		2,875		(45	)
State and political subdivisions		3,180		(29	)		6,300		(77	)		9,480		(106	)		3,180		(29	)		6,300		(77	)		9,480		(106	)
Total temporarily impaired securities	$	111,824	$	(1,149	)	$	103,105	$	(2,106	)	$	214,929	$	(3,255	)	$	111,824	$	(1,149	)	$	103,105	$	(2,106	)	$	214,929	$	(3,255	)

The tables above present unrealized losses on held-to-maturity securities since the date of purchase, independent of the impact associated with changes in cost basis upon transfer from the available-for-sale designation to the held-to-maturity designation. As of ~~June~~September 30, 2016, the Company held 40 available-for-sale securities and 2925 held-to-maturity securities in an unrealized loss position.

Unrealized losses on securities have not been recognized into income because the security issuers are of high credit quality, management does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the securities approach maturity.

During the ~~three~~nine months ended ~~June~~September 30, 2016, the Company recorded an other-than-temporary impairment loss in the amount of ~~$415,~~$414, reflected in net gains from securities transactions. The impairment loss reflects the difference between the amortized cost of the Company’s investment in AgriBank 9.125% subordinated notes, due July 2019 and the fair value attributable to AgriBank’s redemption call of those notes.

The proceeds from sales and the associated gains and losses on available-for-sale securities reclassified from other comprehensive income to income are listed below:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015		2016		2015		2016		2015
Proceeds	$	50,499	$	12,702	$	70,957	$	29,807	$	—	$	—	$	70,957	$	17,105
Gross gains		473		2		893		370		—		—		893		370
Gross losses		—		—		—		—		—		—		—		—
Income tax expense on net realized gains		181		1		342		142		—		—		342		142

Categories of loans at ~~June~~September 30, 2016 and December 31, 2015 include:

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
Commercial real estate	$	413,499		$	397,017		$	417,496		$	397,017
Commercial and industrial		253,468			262,032			234,977			262,032
Residential real estate		262,387			250,216			252,919			250,216
Agricultural real estate		16,565			18,180			15,991			18,180
Consumer		17,899			17,103			17,870			17,103
Agricultural		16,292			15,807			16,817			15,807
Total loans		980,110			960,355			956,070			960,355
Allowance for loan losses		(6,030	)		(5,506	)		(6,080	)		(5,506	)
Net loans	$	974,080		$	954,849		$	949,990		$	954,849

The Company has participated in mortgage finance loans with another institution, ~~“the originator.”~~(the “originator”). These mortgage finance loans consist of ownership interests purchased in single family residential mortgages funded through the originator’s mortgage finance group. These loans are typically on the Company’s balance sheet for 10 to 20 days. The Company ceased participation in the program during 2016, and at ~~June~~September 30, 2016 and December 31, 2015, the Company had balances of $-$0 and $18,852 in mortgage finance loans classified as commercial and industrial.

From time to time the Company has purchased pools of residential real estate loans originated by other financial institutions to hold for investment with the intent to diversify the residential real estate portfolio. In the ~~quarter ended June 30,~~first nine months of 2016, the Company purchased a pool of residential real estate loans totaling $19,641. As of ~~June~~September 30, 2016 and December 31, 2015, residential real estate loans include ~~$88,326~~$80,371 and $74,738 of purchased residential real estate loans from these pools of residential real estate loans.

Over-draft deposit accounts are reclassified and included in consumer loans above. These accounts totaled ~~$301~~$256 at ~~June~~September 30, 2016 and $280 at December 31, 2015.

The following tables present the activity in the allowance for loan losses by class for the three-month periods ended ~~June~~September 30, 2016 and 2015:

June 30, 2016	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate		Consumer			Agricultural			Total
September 30, 2016																					Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural		Total
Allowance for loan losses:
Beginning balance	$	2,275		$	1,563		$	1,940		$	41	$	79		$	82		$	5,980		$	2,308		$	1,574		$	1,917		$	41		$	127		$	63	$	6,030
Provision for loan losses		196			16			157			—		182			(19	)		532			307			(126	)		(285	)		(2	)		207			3		104
Loans charged-off		(190	)		(7	)		(200	)		—		(153	)		—			(550	)		(52	)		(11	)		(30	)		—			(96	)		—		(189	)
Recoveries		27			2			20			—		19			—			68			32			26			51			1			25			—		135
Total ending allowance balance	$	2,308		$	1,574		$	1,917		$	41	$	127		$	63		$	6,030		$	2,595		$	1,463		$	1,653		$	40		$	263		$	66	$	6,080

June 30, 2015	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural			Total
September 30, 2015																						Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural		Total
Allowance for loan losses:
Beginning balance	$	3,079		$	1,959		$	1,267		$	138		$	56		$	66		$	6,565		$	1,913		$	2,228		$	1,345		$	25		$	90		$	42	$	5,643
Provision for loan losses		256			267			143			(113	)		76			(24	)		605			(44	)		493			20			(2	)		68			2		537
Loans charged-off		(1,428	)		(2	)		(72	)		—			(59	)		—			(1,561	)		(8	)		(1,181	)		(2	)		—			(64	)		—		(1,255	)
Recoveries		6			4			7			—			17			—			34			79			—			18			—			15			1		113
Total ending allowance balance	$	1,913		$	2,228		$	1,345		$	25		$	90		$	42		$	5,643		$	1,940		$	1,540		$	1,381		$	23		$	109		$	45	$	5,038

The following tables present the activity in the allowance for loan losses by class for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015:

June 30, 2016	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural			Total
September 30, 2016																						Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural			Total
Allowance for loan losses:
Beginning balance	$	2,051		$	1,366		$	1,824		$	29		$	187		$	49		$	5,506		$	2,051		$	1,366		$	1,824		$	29		$	187		$	49		$	5,506
Provision for loan losses		449			261			315			35			179			16			1,255			756			135			30			33			386			19			1,359
Loans charged-off		(224	)		(62	)		(248	)		(23	)		(281	)		(3	)		(841	)		(276	)		(73	)		(278	)		(23	)		(377	)		(3	)		(1,030	)
Recoveries		32			9			26			—			42			1			110			64			35			77			1			67			1			245
Total ending allowance balance	$	2,308		$	1,574		$	1,917		$	41		$	127		$	63		$	6,030		$	2,595		$	1,463		$	1,653		$	40		$	263		$	66		$	6,080

June 30, 2015	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural			Total
September 30, 2015																						Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Agricultural Real Estate			Consumer			Agricultural			Total
Allowance for loan losses:
Beginning balance	$	2,897		$	1,559		$	1,190		$	148		$	81		$	88		$	5,963		$	2,897		$	1,559		$	1,190		$	148		$	81		$	88		$	5,963
Provision for loan losses		430			670			303			(123	)		96			(46	)		1,330			387			1,164			321			(125	)		164			(44	)		1,867
Loans charged-off		(1,456	)		(8	)		(156	)		—			(119	)		—			(1,739	)		(1,464	)		(1,190	)		(158	)		—			(182	)		—			(2,994	)
Recoveries		42			7			8			—			32			—			89			120			7			28			—			46			1			202
Total ending allowance balance	$	1,913		$	2,228		$	1,345		$	25		$	90		$	42		$	5,643		$	1,940		$	1,540		$	1,381		$	23		$	109		$	45		$	5,038

The following tables present the recorded investment in loans and the balance in the allowance for loan losses by portfolio and class based on impairment method as of ~~June~~September 30, 2016 and December 31, 2015:

June 30, 2016	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Consumer		Agricultural		Total
September 30, 2016															Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Consumer		Agricultural		Total
Allowance for loan losses:
Individually evaluated for impairment	$	238	$	6	$	73	$	—	$	26	$	—	$	343	$	354	$	6	$	101	$	—	$	26	$	—	$	487
Collectively evaluated for impairment		2,070		1,568		1,844		41		101		63		5,687		2,241		1,457		1,552		40		237		66		5,593
Purchase credit impaired loans		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	2,308	$	1,574	$	1,917	$	41	$	127	$	63	$	6,030	$	2,595	$	1,463	$	1,653	$	40	$	263	$	66	$	6,080
Loan Balance:
Individually evaluated for impairment	$	2,029	$	770	$	1,710	$	656	$	314	$	236	$	5,715	$	2,031	$	715	$	2,345	$	447	$	309	$	31	$	5,878
Collectively evaluated for impairment		407,569		252,698		259,411		15,909		17,576		16,056		969,219		412,421		234,262		249,336		15,544		17,552		16,786		945,901
Purchase credit impaired loans		3,901		—		1,266		—		9		—		5,176		3,044		—		1,238		—		9		—		4,291
Total	$	413,499	$	253,468	$	262,387	$	16,565	$	17,899	$	16,292	$	980,110	$	417,496	$	234,977	$	252,919	$	15,991	$	17,870	$	16,817	$	956,070

December 31, 2015	Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Consume		Agricultural		Total		Commercial Real Estate		Commercial and Industrial		Residential Real Estate		Agricultural Real Estate		Consumer		Agricultural		Total
Allowance for loan losses:
Individually evaluated for impairment	$	190	$	6	$	66	$	—	$	7	$	—	$	269	$	190	$	6	$	66	$	—	$	7	$	—	$	269
Collectively evaluated for impairment		1,861		1,360		1,758		29		180		49		5,237		1,861		1,360		1,758		29		180		49		5,237
Purchase credit impaired loans		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	2,051	$	1,366	$	1,824	$	29	$	187	$	49	$	5,506	$	2,051	$	1,366	$	1,824	$	29	$	187	$	49	$	5,506
Loan Balance:
Individually evaluated for impairment	$	2,893	$	1,182	$	1,491	$	—	$	72	$	95	$	5,733	$	2,893	$	1,182	$	1,491	$	—	$	72	$	95	$	5,733
Collectively evaluated for impairment		389,756		260,850		247,368		18,180		17,000		15,712		948,866		389,756		260,850		247,368		18,180		17,000		15,712		948,866
Purchase credit impaired loans		4,368		—		1,357		—		31		—		5,756		4,368		—		1,357		—		31		—		5,756
Total	$	397,017	$	262,032	$	250,216	$	18,180	$	17,103	$	15,807	$	960,355	$	397,017	$	262,032	$	250,216	$	18,180	$	17,103	$	15,807	$	960,355

The following table presents information related to impaired loans, excluding purchased credit impaired loans which have not deteriorated since acquisition, by class of loans as of ~~June~~September 30, 2016 and December 31, 2015. The recorded investment in loans excludes accrued interest receivable due to immateriality.

	June 30, 2016						December 31, 2015						September 30, 2016						December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial real estate	$	4,179	$	1,962	$	—	$	563	$	536	$	—	$	3,325	$	1,208	$	—	$	563	$	536	$	—
Commercial and industrial		1,668		710		—		2,668		1,119		—		1,660		660		—		2,668		1,119		—
Residential real estate		1,169		921		—		984		585		—		1,580		1,336		—		984		585		—
Agricultural real estate		696		656		—		—		—		—		494		447		—		—		—		—
Consumer		115		50		—		—		—		—		115		49		—		—		—		—
Agricultural		241		236		—		95		95		—		36		32		—		95		95		—
Subtotal		8,068		4,535		—		4,310		2,335		—		7,210		3,732		—		4,310		2,335		—

With an allowance recorded:
Commercial real estate		927		897		238		4,217		3,176		190		892		859		354		4,217		3,176		190
Commercial and industrial		66		60		6		93		63		6		61		54		6		93		63		6
Residential real estate		823		789		73		697		660		66		1,052		1,009		101		697		660		66
Agricultural real estate		—		—		—		—		—		—		—		—		—		—		—		—
Consumer		319		264		26		75		72		7		316		260		26		75		72		7
Agricultural		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal		2,135		2,010		343		5,082		3,971		269		2,321		2,182		487		5,082		3,971		269
Total	$	10,203	$	6,545	$	343	$	9,392	$	6,306	$	269	$	9,531	$	5,914	$	487	$	9,392	$	6,306	$	269

The ~~table~~tables below ~~presents~~present average recorded investment and interest income related to impaired loans for the three months and nine months ended ~~June~~September 30, 2016 and 2015. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality.

	As of and for the three months ended								As of and for the three months ended
	June 30, 2016				June 30, 2015				September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,464	$	4	$	795	$	7	$	1,760	$	2	$	606	$	—
Commercial and industrial		716		—		555		7		697		—		744		4
Residential real estate		652		3		675		—		1,004		12		563		—
Agricultural real estate		698		—		83		—		589		—		—		—
Consumer		14		—		—		—		49		—		—		—
Agricultural		104		1	―			—		184		—		—		—
Subtotal		3,648		8		2,108		14		4,283		14		1,913		4

With an allowance recorded:
Commercial real estate		2,036		4		3,513		5		849		10		2,705		37
Commercial and industrial		117		—		1,690		22		57		—		1,985		—
Residential real estate		911		3		611		2		931		10		704		10
Agricultural real estate		—		—		84		—		—		—		—		—
Consumer		217		5		38		—		263		1		27		—
Agricultural		61		—		—		—		—		5		—		—
Subtotal		3,342		12		5,936		29		2,100		26		5,421		47
Total	$	6,990	$	20	$	8,044	$	43	$	6,383	$	40	$	7,334	$	51

The table below presents average recorded investment and interest income related to impaired loans for the six months ended June 30, 2016 and 2015. Interest income recognized in the following table was substantially recognized on the cash basis. The recorded investment in loans excludes accrued interest receivable due to immateriality.

The following tables present the aging of the recorded investment in past due loans as of ~~June~~September 30, 2016 and December 31, 2015, by portfolio and class of loans:

June 30, 2016	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
September 30, 2016													30 - 59 Days Past Due		60 - 89 Days Past Due		Greater Than 90 Days Past Due Still On Accrual		Nonaccrual		Loans Not Past Due		Total
Commercial real estate	$	840	$	—	$	—	$	3,403	$	409,256	$	413,499	$	1,007	$	7	$	—	$	2,570	$	413,912	$	417,496
Commercial and industrial		135		—		—		770		252,563		253,468		89		1,080		—		715		233,093		234,977
Residential real estate		137		824		—		2,467		258,959		262,387		118		42		—		3,077		249,682		252,919
Agricultural real estate		—		—		—		656		15,909		16,565		223		—		—		447		15,321		15,991
Consumer		72		2		—		323		17,502		17,899		71		—		—		317		17,482		17,870
Agricultural		—		—		—		236		16,056		16,292		23		—		—		31		16,763		16,817
Total	$	1,184	$	826	$	—	$	7,855	$	970,245	$	980,110	$	1,531	$	1,129	$	—	$	7,157	$	946,253	$	956,070

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. The Company uses the following definitions for risk ratings:

Pass: Loans classified as pass do not have any noted weaknesses and repayment of the loan is expected.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The risk category of loans by class of loans is as follows as of ~~June~~September 30, 2016 and December 31, 2015:

June 30, 2016	Pass		Special Mention		Substandard		Doubtful		Total
September 30, 2016											Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate	$	406,266	$	—	$	7,233	$	—	$	413,499	$	410,949	$	—	$	6,547	$	—	$	417,496
Commercial and industrial		252,826		—		642		—		253,468		232,461		—		2,516		—		234,977
Residential real estate		259,592		—		2,795		—		262,387		249,516		—		3,403		—		252,919
Agricultural real estate		15,552		—		1,013		—		16,565		15,187		—		804		—		15,991
Consumer		17,587		—		312		—		17,899		17,553		—		317		—		17,870
Agricultural		16,052		—		240		—		16,292		16,474		—		343		—		16,817
Total	$	967,875	$	—	$	12,235	$	—	$	980,110	$	942,140	$	—	$	13,930	$	—	$	956,070

The Company has acquired loans, for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The recorded investments in purchase credit impaired loans as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
Contractually required principal payments	$	6,759		$	7,550		$	5,734		$	7,550
Discount		(1,583	)		(1,794	)		(1,443	)		(1,794	)
Recorded investment	$	5,176		$	5,756		$	4,291		$	5,756

The accretable yield associated with these loans was ~~$818~~$798 and $935 as of ~~June~~September 30, 2016 and December 31, 2015. The interest income recognized on these loans for the three-month and ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015 was ~~$86, $238, $204~~$196, $434, $223 and ~~$371.~~$593. For the three-month and ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015, no provision for loan losses was recorded for these loans.

The Company had no loans modified under troubled debt restructurings as of ~~June~~September 30, 2016 or December 31, 2015.

The Company is exposed to interest-rate risk primarily from the effect of interest rate changes on its interest-earning assets and its sources of funding these assets. The Company will periodically enter into interest rate swaps or interest rate caps/floors to manage certain interest rate risk exposure.

The Company periodically enters into interest rate swaps to hedge the fair value of certain commercial real estate loans. These transactions are designated as fair value hedges. In this type of transaction, the Company typically receives from the counterparty a variable-rate cash flow based on the one-month London Interbank Offered Rate (“LIBOR”) plus a spread to this index and pays a fixed-rate cash flow equal to the customer loan rate. At ~~June~~September 30, 2016, the portfolio of interest rate swaps had a weighted average maturity of ~~8.0~~7.8 years, a weighted average pay rate of ~~3.79%~~5.03% and a weighted average rate received of ~~2.92%~~3.77%. At December 31,

2015, the portfolio of interest rate swaps had a weighted average maturity of 10.0 years, a weighted average pay rate of 4.45% and a weighted average rate received of 2.37%.

In 2009, the Company purchased an interest rate cap derivative to assist with interest rate risk management. This derivative is not designated as a hedging instrument but rather as a stand-alone derivative. At ~~June~~September 30, 2016, the interest rate cap had a term of ~~3.4~~3.1 years and a cap rate of 4.50%. At December 31, 2015, the interest rate cap had a term of 3.9 years and a cap rate of 4.50%.

The notional amount of a derivative contract is a factor in determining periodic interest payments or cash flows received or paid. The notional amount of derivatives serves as a level of involvement in various types of derivatives. The notional amount does not represent the Company’s overall exposure to credit or market risk, generally, the exposure is significantly smaller.

The following table shows the notional balances and fair values (including net accrued interest) of the derivatives outstanding by derivative type at ~~June~~September 30, 2016 and December 31, 2015:

	June 30, 2016							December 31, 2015							September 30, 2016							December 31, 2015
	Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities			Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps	$	20,872	$	—	$	1,098		$	12,284	$	—	$	246		$	20,501	$	—	$	1,003		$	12,284	$	—	$	246
Total derivatives designated as hedging relationships		20,872		—		1,098			12,284		—		246			20,501		—		1,003			12,284		—		246
Derivatives not designated as hedging instruments:
Interest rate caps/floors		3,003		—		—			3,140		2		—			2,935		1		—			3,140		2		—
Total derivatives not designated as hedging instruments		3,003		—		—			3,140		2		—			2,935		1		—			3,140		2		—
Total	$	23,875		—		1,098		$	15,424		2		246		$	23,436		1		1,003		$	15,424		2		246
Cash collateral				—		(1,160	)				—		(270	)				—		(1,160	)				—		(270	)
Netting adjustments				62		62					24		24					157		157					24		24
Net amount presented in Balance Sheet			$	62	$	—				$	26	$	—				$	158	$	—				$	26	$	—

For the three-month and ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015, the Company recorded net ~~losses~~gains/(losses) on derivatives and hedging activities:

	Three months ended						Six months ended						Three months ended					Nine months ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015			September 30, 2016		September 30, 2015			September 30, 2016			September 30, 2015
Derivatives designated as hedging instruments:
Interest rate swaps	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—
Total net gain (loss) related to fair value hedge ineffectiveness		—			—			—			—			—		—			—			—
Derivatives not designated as hedging instruments:
Economic hedges:
Interest rate caps/floors		(1	)		(1	)		(2	)		(6	)		1		(3	)		(1	)		(9	)
Total net gains (losses) related to derivatives not designated as hedging instruments		(1	)		(1	)		(2	)		(6	)		1		(3	)		(1	)		(9	)
Net gains (losses) on derivatives and hedging activities	$	(1	)	$	(1	)	$	(2	)	$	(6	)	$	1	$	(3	)	$	(1	)	$	(9	)

The following table shows the recorded net gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Company’s net interest income for the three-month periods ended ~~June~~September 30, 2016 and 2015.

	June 30, 2016										September 30, 2016
	Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives		Gain/(Loss) on Hedged Items			Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	(325	)	$	325	$	—	$	(47	)	$	100	$	(100	)	$	—	$	(50	)
Total	$	(325	)	$	325	$	—	$	(47	)	$	100	$	(100	)	$	—	$	(50	)

	June 30, 2015										September 30, 2015
	Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	(15	)	$	15	$	—	$	(10	)	$	(342	)	$	342	$	—	$	(37	)
Total	$	(15	)	$	15	$	—	$	(10	)	$	(342	)	$	342	$	—	$	(37	)

The following table shows the recorded net gains (losses) on derivatives and the related hedged items in fair value hedging relationships and the impact of those derivatives on the Company’s net interest income for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015.

	June 30, 2016										September 30, 2016
	Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	(850	)	$	850	$	—	$	(86	)	$	(750	)	$	750	$	—	$	(136	)
Total	$	(850	)	$	850	$	—	$	(86	)	$	(750	)	$	750	$	—	$	(136	)

	June 30, 2015										September 30, 2015
	Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income			Gain/(Loss) on Derivatives			Gain/(Loss) on Hedged Items		Net Fair Value Hedge Ineffectiveness		Effect of Derivatives on Net Interest Income
Commercial real estate loans	$	(15	)	$	15	$	—	$	(10	)	$	(357	)	$	357	$	—	$	(47	)
Total	$	(15	)	$	15	$	—	$	(10	)	$	(357	)	$	357	$	—	$	(47	)

Federal funds purchased and retail repurchase agreements as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

June 30,

2016

December 31,

2015

September 30,

2016

December 31,

2015

Federal funds purchased

—

Retail repurchase agreements

22,782

20,762

25,382

20,762

The Company has available federal funds lines of credit with its correspondent banks.

Securities sold under agreements to repurchase (retail repurchase agreements) consist of obligations of the Company to other parties. The obligations are secured by residential mortgage-backed securities held by the Company with a fair value of ~~$23,993~~$25,027 and $25,756 at ~~June~~September 30, 2016 and December 31, 2015. The agreements are on a day-to-day basis and can be terminated on demand.

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
Year-to-date average daily balance during the period	$	21,742		$	24,853		$	22,680		$	24,853
Maximum month-end balance during the period	$	22,782		$	27,951		$	25,382		$	27,951
Weighted average interest rate at period-end		0.26	%		0.24	%		0.28	%		0.24	%

Federal Home Loan Bank advances as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Federal Home Loan Bank line of credit advances	$	147,648	$	145,439	$	168,756	$	145,439
Federal Home Loan Bank fixed rate term advances		—		—		—		—
Total Federal Home Loan Bank advances	$	147,648	$	145,439	$	168,756	$	145,439

At ~~June~~September 30, 2016, the Company had ~~$147,648~~$168,756 drawn against its line of credit at a weighted average rate of 0.54%. At December 31, 2015, the $145,439 drawn against the Federal Home Loan Bank line of credit was at a weighted average rate of 0.48%.

In February 2015, all of the Company’s Federal Home Loan Bank term advances were prepaid. The Company recorded a loss on debt extinguishment of $316 for the ~~six~~nine months ended ~~June~~September 30, 2015 in connection with the prepayment of the Federal Home Loan Bank term advances.

At June 30, 2016 and December 31, 2015, the Company had undisbursed advance commitments (letters of credit) with the Federal Home Loan Bank of $5,000 and $0. These letters of credit were obtained in lieu of pledging securities to secure public fund deposits that are over the FDIC insurance limit. The letter of credit outstanding at June 30, 2016 matures on July 25, 2016.

The advances ~~and letters of credit~~ were collateralized by certain qualifying loans totaling ~~$303,252~~$336,666 and $318,759 at ~~June~~September 30, 2016 and December 31, 2015. Based on this collateral and the Company’s holdings of Federal Home Loan Bank stock, the Company was eligible to borrow an additional ~~$149,841~~$167,146 and $172,557 at ~~June~~September 30, 2016 and December 31, 2015.

In July 2014, the Company borrowed $15,540 from an unaffiliated financial institution, secured by the Company’s stock in Equity Bank. In September 2015, the Company amended and restated the loan agreement and borrowed an additional $5,014. At December 31, 2015, $18,612 was outstanding on the bank stock loan at a fixed rate of 4.00% (computed on the basis of a 360-day year and the actual number of days elapsed) until July 2019. This borrowing was repaid on January 4, 2016 using proceeds from the Company’s initial public offering (“IPO”).

On January 28, 2016, the Company entered into a new agreement with the same lender that provides for a maximum borrowing facility of $20,000, secured by the Company’s stock in Equity Bank. The borrowing facility will mature on January 26, 2017. Each draw of funds on the facility will create a separate note that is repayable over a term of five years. Each note will bear interest at a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily. Accrued interest and principal payments will be due quarterly with one final payment of unpaid principal and interest due at the end of the five year term of each separate note. The Company is also required to pay an unused commitment fee in an amount equal to twenty basis points per annum on the unused portion of the maximum borrowing facility.

The terms of the borrowing facility require the Company and Equity Bank to maintain minimum capital ratios and other covenants. The Company believes it is in compliance with the terms of the borrowing facility and has not been otherwise notified of noncompliance.

On November 16, 2015, the Company completed an IPO of 2,231,000 shares of Class A common stock, $0.01 par value. The Company sold 1,941,000 shares and selling stockholders sold 290,000 shares, which included 273,000 shares of Class A common stock that were issued upon the automatic conversion of an equal number of shares of Class B common stock as a result of the offering. All shares issued and sold in the IPO were registered under the Securities Act pursuant to a Registration Statement on Form S-1, which was declared effective by the SEC on November 10, 2015. The Company’s net proceeds were $38,945 after subtraction of underwriting discounts and commissions and offering expenses.

The Company’s articles of incorporation provide for the issuance of 10,000,000 shares of preferred stock. At December 31, 2015, the Company had 16,372 shares of Series C, senior non-cumulative perpetual preferred stock (“Series C preferred stock”) with a par value of $0.01 per share and a dividend rate of 1.0% issued and outstanding. The Company issued the Series C preferred stock having a per share liquidation amount of $1,000 per share to the United States Treasury as part of the Small Business Lending Fund. The Series C preferred stock qualified as Tier 1 capital. A portion of the proceeds of the IPO were used to redeem the Series C preferred stock on January 4, 2016 at liquidation amount of $16,372.

The Company’s articles of incorporation provide for the issuance of 45,000,000 shares of Class A voting common stock (“Class A common stock”) and 5,000,000 shares of Class B non-voting common stock (“Class B common stock”), both of which have a par value of $0.01.

The following table presents shares that were issued and were held in treasury or were outstanding at ~~June~~September 30, 2016 and December 31, 2015:

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
Class A common stock – issued		8,593,027			8,421,060			8,593,027			8,421,060
Class A common stock – held in treasury		(1,271,043	)		(1,271,043	)		(1,271,043	)		(1,271,043	)
Class A common stock – outstanding		7,321,984			7,150,017			7,321,984			7,150,017
Class B common stock – issued		1,132,334			1,296,613			1,132,334			1,296,613
Class B common stock – held in treasury		(234,903	)		(234,903	)		(234,903	)		(234,903	)
Class B common stock – outstanding		897,431			1,061,710			897,431			1,061,710

Agreements with certain owners of Class B common stock require the Company to issue Class A common stock to replace an equal number of Class B common stock in the event of a future transfer from the owner to an unaffiliated party. The Class B common stock owner may require this exchange in certain stipulated transactions including the transfer of shares of Class B common stock to: (1) the Company or its bank subsidiary, (2) in a widespread public distribution, (3) a transfer in which no transferee receives two percent or more of any class of the Company’s voting securities, or (4) to a transferee that would control more than fifty percent of the Company’s voting securities without any transfer from the purchaser.

In connection with the termination of the Company’s restricted stock unit plan (“RSUP”), 203,216 shares of Class A common stock were issued in May 2015 to employees with vested restricted stock units. Additional paid-in capital includes $224 of tax benefits in excess of those previously provided in connection with stock compensation expense. Also in connection with the termination of the RSUP, the Company agreed to loan electing participants an amount equal to each participant’s federal and state income tax withholding obligation associated with the stock issuance. These loans totaling $242 at ~~June~~September 30, 2016 and $242 at December 31, 2015, are collateralized with the shares received, have a maturity date of December 31, 2016 and have an interest rate of 0.56%.

At ~~June~~September 30, 2016 and December 31, 2015, accumulated other comprehensive income consisted of (i) the after tax effect of unrealized gains (losses) on available-for-sale securities and (ii) the after tax effect of unamortized unrealized gains (losses) on securities transferred from the available-for-sale designation to the held-to-maturity designation.

Components of accumulated other comprehensive income as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

	Available-for- Sale Securities			Held-to- Maturity Securities			Accumulated Other Comprehensive Income			Available-for- Sale Securities			Held-to- Maturity Securities			Accumulated Other Comprehensive Income
June 30, 2016
September 30, 2016
Net unrealized or unamortized gains (losses)	$	397		$	(3,199	)	$	(2,802	)	$	752		$	(3,034	)	$	(2,282	)
Tax effect		(152	)		1,222			1,070			(288	)		1,161			873
	$	245		$	(1,977	)	$	(1,732	)	$	464		$	(1,873	)	$	(1,409	)
December 31, 2015
Net unrealized or unamortized gains (losses)	$	(343	)	$	(3,491	)	$	(3,834	)	$	(343	)	$	(3,491	)	$	(3,834	)
Tax effect		128			1,335			1,463			128			1,335			1,463
	$	(215	)	$	(2,156	)	$	(2,371	)	$	(215	)	$	(2,156	)	$	(2,371	)

Banks and bank holding companies (on a consolidated basis) are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. Beginning in January 2016, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers. Management believes as of ~~June~~September 30, 2016 and December 31, 2015, that the Company and Equity Bank meet all capital adequacy requirements to which they are subject, including the capital conservation buffer requirement.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as are asset growth and acquisitions, and capital restoration plans are required.

As of ~~June~~September 30, 2016, management believes that the Company meets all capital adequacy requirements to which they are subject and the most recent notifications from the federal regulatory agencies categorized Equity Bank as well capitalized under the regulatory framework for prompt corrective action, including the capital conservation buffer. To be categorized as well capitalized, Equity Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed Equity Bank’s category.

The Company’s and Equity Bank’s capital amounts and ratios at ~~June~~September 30, 2016 and December 31, 2015 are presented in the ~~tables~~table below. Ratios provided for Equity Bancshares, Inc. represent the ratios of the Company on a consolidated basis.

	Actual					Minimum Required for Capital Adequacy Purposes						To Be Well Capitalized Under Prompt Corrective Provisions					Actual					Minimum Required for Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Provisions
	Amount		Ratio			Amount		Ratio			Amount			Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2016
September 30, 2016
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	158,238		14.45	%	$	87,598		8.0	%	$	N/A		N/A			$	161,156		15.02	%	$	85,863		8.0	%	$	N/A	N/A
Equity Bank		144,892		13.22	%		87,707		8.0	%			109,634		10.0	%		145,121		13.50	%		85,968		8.0	%		107,460		10.0	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		152,208		13.90	%		65,698		6.0	%		N/A		N/A				155,076		14.45	%		64,397		6.0	%	N/A		N/A
Equity Bank		138,862		12.67	%		65,780		6.0	%			87,707		8.0	%		139,041		12.94	%		64,476		6.0	%		85,968		8.0	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		142,837		13.04	%		49,274		4.5	%		N/A		N/A				145,645		13.57	%		48,298		4.5	%	N/A		N/A
Equity Bank		138,862		12.67	%		49,335		4.5	%			71,262		6.5	%		139,041		12.94	%		48,357		4.5	%		69,849		6.5	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		152,208		9.32	%		65,352		4.0	%		N/A		N/A				155,076		9.42	%		65,882		4.0	%	N/A		N/A
Equity Bank		138,862		8.49	%		65,407		4.0	%			81,759		5.0	%		139,041		8.44	%		65,935		4.0	%		82,419		5.0	%
December 31, 2015
Total capital to risk weighted assets
Equity Bancshares, Inc.	$	156,358		14.35	%	$	87,146		8.0	%	$	N/A		N/A			$	156,358		14.35	%	$	87,146		8.0	%	$	N/A	N/A
Equity Bank		139,275		12.77	%		87,256		8.0	%			109,070		10.0	%		139,275		12.77	%		87,256		8.0	%		109,070		10.0	%
Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		150,852		13.85	%		65,359		6.0	%		N/A		N/A				150,852		13.85	%		65,359		6.0	%	N/A		N/A
Equity Bank		133,769		12.26	%		65,442		6.0	%			87,256		8.00	%		133,769		12.26	%		65,442		6.0	%		87,256		8.00	%
Common equity Tier 1 capital to risk weighted assets
Equity Bancshares, Inc.		134,480		12.35	%		49,019		4.5	%		N/A		N/A				134,480		12.35	%		49,019		4.5	%	N/A		N/A
Equity Bank		133,769		12.26	%		49,082		4.5	%			70,896		6.5	%		133,769		12.26	%		49,082		4.5	%		70,896		6.5	%
Tier 1 leverage to average assets
Equity Bancshares, Inc.		150,852		9.47	%		63,728		4.0	%		N/A		N/A				150,852		9.47	%		63,728		4.0	%	N/A		N/A
Equity Bank		133,769		8.39	%		63,790		4.0	%			79,737		5.0	%		133,769		8.39	%		63,790		4.0	%		79,737		5.0	%

Equity Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.

The following table presents earnings per share for the three and ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

Average outstanding stock options of ~~128,921~~87,992 and ~~209,263~~123,700 for the three-month periods ended ~~June~~September 30, 2016 and 2015 and ~~130,973~~88,536 and ~~209,297~~124,506 for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015 were not included in the computation of diluted earnings per share because the options were antidilutive.

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to disclose the fair value of its financial instruments. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For disclosure purposes, the Company groups its financial and non-financial assets and liabilities into three different levels based on the nature of the instrument and the availability and reliability of the information that is used to determine fair value. The three levels of inputs that may be used to measure fair values are defined as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Level 1 inputs are considered to be the most transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (Level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. Although, in some instances, third party price indications may be available, limited trading activity can challenge the implied value of those quotations.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of each instrument under the hierarchy:

The fair values of securities available-for-sale are carried at fair value on a recurring basis. To the extent possible, observable quoted prices in an active market are used to determine fair value and, as such, these securities are classified as Level 1. For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities, generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). The Company’s available-for-sale securities, including U.S. Government sponsored agencies, residential mortgage-backed securities (all of which are issued or guaranteed by government sponsored agencies), corporate securities, Small Business Administration securities, and State and Political Subdivision ~~securities, and equity~~ securities are classified as Level 2.

The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate yield curves (Level 2 inputs) adjusted for credit risk attributable to the seller of the interest rate derivative. Cash collateral received from or delivered to a derivative counterparty is classified as Level 1.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	June 30, 2016							September 30, 2016
	(Level 1)			(Level 2)		(Level 3)		(Level 1)			(Level 2)		(Level 3)
Assets:
Available-for-sale securities:
U.S. government-sponsored entities	$	—		$	4,719	$	—	$	—		$	4,783	$	—
Residential mortgage-backed securities (issued by government-sponsored entities)		—			65,993		—		—			93,361		—
Corporate		—			2,981		—		—			3,010		—
Small Business Administration loan pools		—			271		—		—			229		—
State and political subdivisions		—			508		—		—			507		—
Equity securities		504			—		—		501			—		—
Derivative assets:
Derivative assets		—			—		—		—			1		—
Cash collateral held by counterparty		62			—		—		157			—		—
Total derivative assets (included in other assets)		62			—		—		157			1		—
Total assets	$	566		$	74,472	$	—	$	658		$	101,891	$	—
Liabilities:
Derivative liabilities:
Interest rate swaps	$	—		$	1,098	$	—	$	—		$	1,003	$	—
Cash collateral held by counterparty		(1,098	)		—		—		(1,003	)		—		—
Total derivative liabilities (included in other liabilities)		(1,098	)		1,098		—		(1,003	)		1,003		—
Total liabilities	$	(1,098	)	$	1,098	$	—	$	(1,003	)	$	1,003	$	—

There were no material transfers between levels during the ~~six~~nine months ended ~~June~~September 30, 2016 or the year ended December 31, 2015. The Company’s policy is to recognize transfers into or out of a level as of the end of a reporting period.

Certain assets are measured at fair value on a non-recurring basis when there is evidence of impairment. The fair value of impaired securities is determined as discussed previously for available-for-sale securities. The fair values of impaired loans with specific allocations of the allowance for loan losses are generally based on recent real estate appraisals of the collateral less estimated cost to sell. Declines in the fair values of other real estate owned subsequent to their initial acquisitions are also based on recent real estate appraisals less selling costs.

Real estate appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

	June 30, 2016						September 30, 2016
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Held-to-maturity securities:
U.S. government-sponsored entities	$	—	$	2,188	$	—
Impaired loans:
Commercial real estate	$	—	$	—	$	659	$	—	$	—	$	505
Commercial and industrial		—		—		54		—		—		48
Residential real estate		—		—		716		—		—		908
Other		—		—		238		—		—		234
Other real estate owned:
Commercial real estate		—		—		524		—		—		523
Residential real estate		—		—		288		—		—		445

The Company did not record any liabilities for which the fair value was measured on a non-recurring basis at ~~June~~September 30, 2016 or at December 31, 2015.

Valuations of impaired loans and other real estate owned utilize third party appraisals or broker price opinions, and were classified as Level 3 due to the significant judgment involved. Appraisals may include the utilization of unobservable inputs, subjective factors, and quantitative data to estimate fair market value.

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized with Level 3 of the fair value hierarchy:

Fair Value

Valuation

Technique

Unobservable

Input

Range

(weighted average)

Fair Value

Valuation

Technique

Unobservable

Input

Range

(weighted average)

June 30, 2016

September 30, 2016

Impaired loans

1,667

Sales Comparison

Approach

Adjustments for

differences between

comparable sales

6%-10% (8%)

1,695

Sales Comparison

Approach

Adjustments for

differences between

comparable sales

6%-10% (8%)

December 31, 2015

Impaired loans

3,702

Sales Comparison

Approach

Adjustments for

differences between

comparable sales

7% -29% (18%)

3,702

Sales Comparison

Approach

Adjustments for

differences between

comparable sales

7%-29% (18%)

Carrying amount and estimated fair values of financial instruments at period end were as follows as of the date indicated:

	June 30, 2016													September 30, 2016
	Carrying Amount			Estimated Fair Value			Level 1			Level 2		Level 3		Carrying Amount			Estimated Fair Value			Level 1			Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	46,202		$	46,202		$	46,202		$	—	$	—	$	21,847		$	21,847		$	21,847		$	—	$	—
Interest bearing deposits		5,245			5,245			—			5,245		—		4,995			4,995			—			4,995		—
Available-for-sale securities		74,976			74,976			504			74,472		—		102,391			102,391			501			101,890		—
Held-to-maturity securities		317,509			324,425			—			324,425		—		349,915			358,225			—			358,225		—
Loans held for sale		4,002			4,002			—			4,002		—		3,071			3,071	��		—			3,071		—
Loans, net of allowance for loan losses		974,080			973,266			—			—		973,266		949,990			946,120			—			—		946,120
Federal Reserve Bank and Federal Home Loan Bank stock		10,875		N/A			N/A			N/A		N/A			11,587		N/A			N/A			N/A		N/A
Interest receivable		4,323			4,323			—			4,323		—		4,712			4,712			—			4,712		—
Derivative assets		—			—			—			—		—		—			—			—			—		—
Cash collateral held by derivative counterparty		62			62			62			—		—		157			157			157			—		—
Total derivative assets		62			62			62			—		—		157			157			157			—		—
Total assets	$	1,437,274		$	1,432,501		$	46,768		$	412,467	$	973,266	$	1,448,665		$	1,441,518		$	22,505		$	472,893	$	946,120
Financial liabilities:
Deposits	$	1,196,767		$	1,203,618		$	—		$	1,203,618	$	—	$	1,177,732		$	1,184,476		$	—		$	1,184,476	$	—
Federal funds purchased and retail repurchase agreements		22,782			22,782			—			22,782		—		25,382			25,382			—			25,382		—
Federal Home Loan Bank advances		147,648			147,648			—			147,648		—		168,756			168,756			—			168,756		—
Subordinated debentures		9,371			9,371			—			9,371		—		9,431			9,431			—			9,431		—
Contractual obligations		2,831			2,831			—			2,831		—		2,831			2,831			—			2,831		—
Interest payable		558			558			—			558		—		567			567			—			567		—
Derivative liabilities		1,098			1,098			—			1,098		—		1,003			1,003			—			1,003		—
Cash collateral held by derivative counterparty		(1,098	)		(1,098	)		(1,098	)		—		—		(1,003	)		(1,003	)		(1,003	)		—		—
Total derivative liabilities		—			—			(1,098	)		1,098		—		—			—			(1,003	)		1,003		—
Total liabilities	$	1,379,957		$	1,386,808		$	(1,098	)	$	1,387,906	$	—	$	1,384,699		$	1,391,443		$	(1,003	)	$	1,392,446	$	—

	December 31, 2015
	Carrying Amount			Estimated Fair Value			Level 1			Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	56,829		$	56,829		$	56,829		$	—	$	—
Interest bearing deposits		5,245			5,245			—			5,245		—
Available-for-sale securities		130,810			130,810			—			130,810		—
Held-to-maturity securities		310,539			312,802			—			312,802		—
Loans held for sale		3,504			3,504			—			3,504		—
Loans, net of allowance for loan losses		954,849			957,039			—			—		957,039
Federal Reserve Bank and Federal Home Loan Bank stock		11,013		N/A			N/A			N/A		N/A
Interest receivable		4,540			4,540			—			4,540		—
Derivative assets		2			2			—			2		—
Cash collateral held by derivative counterparty		24			24			24			—		—
Total derivative assets		26			26			24			2		—
Total assets	$	1,477,355		$	1,470,795		$	56,853		$	456,903	$	957,039
Financial liabilities:
Deposits	$	1,215,914		$	1,220,657		$	—		$	1,220,657	$	—
Federal funds purchased and retail repurchase agreements		20,762			20,762			—			20,762		—
Federal Home Loan Bank advances		145,439			145,439			—			145,439		—
Bank stock loan		18,612			18,612			—			18,612		—
Subordinated debentures		9,251			9,251			—			9,251		—
Contractual obligations		3,093			3,093			—			3,093		—
Interest payable		737			737			—			737		—
Derivative liabilities		246			246			—			246		—
Cash collateral held by derivative counterparty		(246	)		(246	)		(246	)		—		—
Total derivative liabilities		—			—			(246	)		246		—
Total liabilities	$	1,413,808		$	1,418,551		$	(246	)	$	1,418,797	$	—

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

Cash and cash equivalents and interest-bearing deposits: The carrying amounts of cash and short-term instruments approximate fair values.

Held-to-maturity securities: The fair value of held-to-maturity securities are determined in a manner consistent with available-for-sale securities which has been previously discussed.

Loans held for sale: The fair values of loans held for sale are based on quoted market prices for loans with similar characteristics.

Loans: Fair values of variable rate loans that reprice frequently and with no significant change in credit risk are based on carrying values. Fair values of other loans are estimated using discounted cash flows analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Federal Reserve Bank and Federal Home Loan Bank stock: It is not practical to determine the fair value of Federal Reserve Bank and Federal Home Loan Bank stock due to restrictions placed on its transferability.

Interest receivable and interest payable: The carrying amounts of accrued interest receivable and payable approximate their fair values.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount). The carrying amount of variable rate, fixed-term money market accounts and

certificates of deposit approximate their fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered.

Federal funds purchased and retail repurchase agreements: Federal funds purchased and retail repurchase agreements mature daily and may be terminated at any time. The carrying amounts of these financial instruments approximate their fair values.

Federal Home Loan Bank Advances: The carrying amounts of draws against the Company’s line of credit at the Federal Home Loan Bank approximate their fair values. The fair values of fixed rate term advances are determined using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements.

Bank stock loan: The fair value of the bank stock loan was estimated using a discounted cash flow analysis based on current borrowing rates for similar types of borrowing arrangements.

Subordinated debentures: Subordinated debentures are carried at the outstanding principal balance less an unamortized fair value adjustment from the date of assumption. The outstanding principal balance, net of this adjustment, approximates their fair value.

Contractual obligations: The carrying value of contractual obligations approximates their fair value.

The Company extends credit for commercial real estate mortgages, residential mortgages, working capital financing and loans to businesses and consumers.

Commitments to Originate Loans and Available Lines of Credit: Commitments to originate loans and available lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments and lines of credit may expire without being drawn upon, the total commitment and lines of credit amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. Mortgage loans in the process of origination represent amounts that the Company plans to fund within a normal period of 60 to 90 days, and which are intended for sale to investors in the secondary market.

The contractual amounts of commitments to originate loans and available lines of credit as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	27,581	$	56,792	$	30,261	$	55,694	$	18,118	$	48,342	$	30,261	$	55,694
Mortgage loans in the process of origination		11,071		2,783		5,116		1,941		7,899		1,085		5,116		1,941
Unused lines of credit		40,969		70,466		44,392		55,769		26,396		61,265		44,392		55,769

The fixed rate loan commitments have interest rates ranging from ~~2.15%~~3.01% to ~~8.50%~~12.0% and maturities ranging from ~~4 months~~1 month to 60133 months.

Standby Letters of Credit: Standby letters of credit are irrevocable commitments issued by the Company to guarantee the performance of a customer to a third party once specified pre-conditions are met. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.

The contractual amounts of standby letters of credit as of ~~June~~September 30, 2016 and December 31, 2015 were as follows:

The Company is party to various matters of litigation in the ordinary course of business. The Company periodically reviews all outstanding pending or threatened legal proceedings and determines if such matters will have an adverse effect on the business, financial condition or results of operations or cash flows. A loss contingency is recorded when the outcome is probable and reasonably able to be estimated. The following loss contingency has been identified by the Company as reasonably possible to result in an unfavorable outcome for the Company or the Bank.

Equity Bank is a party to a February 3, 2015 lawsuit filed against it by CitiMortgage, Inc. The lawsuit involves an alleged breach of contract related to loan repurchase obligations and damages of $2,700 plus pre-judgment and post-judgment interest. At this stage of the litigation it is difficult to estimate any potential loss, however Equity Bank believes it has numerous and meritorious defenses to the claims and anticipates contesting the matter vigorously. The Company currently does not believe that it is probable that this legal matter will result in an unfavorable outcome for the Company or Equity Bank.

Except for the above mentioned lawsuit, there are no other outstanding claims for potential repurchase or indemnification demands regarding mortgage loans originated by Equity Bank and sold to investors. However, the Company believes there is possible risk it may face similar demands based on comparable demands loan aggregators are facing from their investors, including Government Sponsored Entities such as Freddie Mac and Fannie Mae, and or settlement agreements loan aggregators have entered into with those investors. The amount of potential loss and outcome of such possible litigation, if it were commenced, is uncertain and the Company would vigorously contest any claims.

On July 14, 2016, the Company entered into a definitive ~~reorganization~~ agreement pursuant to which it will acquire Community First Bancshares, Inc. ~~(CFBI)~~(“CFBI”) through the merger of CFBI with and into the Company, with the Company surviving the merger. CFBI is the holding company of Community First Bank, which has five branch locations in Arkansas: Harrison (2), Berryville, Eureka Springs, and Pea Ridge. After receiving the necessary regulatory approvals and the approvals of CFBI’s and the Company’s stockholders, the transaction closed on November 10, 2016.

On October 20, 2016, the Company entered into a definitive merger agreement to acquire all the common stock of Prairie State Bancshares, Inc. (“Prairie”), headquartered in Hoxie, Kansas, the holding company of State Bank. Prairie conducts business through three State Bank branches located in Hoxie, Grinnell and Quinter, Kansas. The transaction is expected to close in the ~~fourth~~first quarter of ~~2016,~~2017, subject to customary closing conditions, including the receipt of regulatory approval and the ~~approvals~~approval of ~~the Company’s and CFBI’s~~Prairie’s stockholders.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K filed with the SEC on March 17, 2016 and our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. See “Cautionary Note Regarding Forward-Looking Statements.” Also, see the risk factors and other cautionary statements described under the heading “Item 1A: Risk Factors” included in the Annual Report on Form 10-K and in Item 1A of this Quarterly Report. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

This discussion and analysis of our financial condition and results of operation includes the following sections:

We are a bank holding company headquartered in Wichita, Kansas. Our wholly-owned banking subsidiary, Equity Bank, provides a broad range of financial services primarily to businesses and business owners as well as individuals through our network of 29 full service branches located in Kansas and Missouri. As of ~~June~~September 30, 2016, we had consolidated total assets of ~~$1.54~~$1.56 billion, total loans held for investment of ~~$974.1~~$950.0 million (net of allowances), total deposits of ~~$1.20~~$1.18 billion and total stockholders’ equity of ~~$158.2~~$161.2 million. During the three-month periods ended ~~June~~September 30, 2016 and ~~June~~September 30, 2015, net income was ~~$2.8~~$2.7 million and ~~$2.6~~$2.7 million and for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and ~~June~~September 30, 2015, net income was ~~$6.3~~$9.0 million and ~~$5.0~~$7.7 million.

Selected Financial Data for the periods indicated (dollars in thousands, except per share amounts):

	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Statement of Income Data (for the quarterly period ended)
Interest and dividend income	$	14,380		$	14,862		$	14,430		$	13,199		$	12,967		$	14,250		$	14,380		$	14,862		$	14,430		$	13,199
Interest expense		2,186			2,104			2,117			1,749			1,501			2,268			2,186			2,104			2,117			1,749
Net interest income		12,194			12,758			12,313			11,450			11,466			11,982			12,194			12,758			12,313			11,450
Provision for loan losses		532			723			1,180			537			605			104			532			723			1,180			537
Net gain on acquisition		—			—			682			—			—			—			—			—			682			—
Net gain from securities transactions		59			420			386			—			2			—			59			420			386			—
Other non-interest income		2,393			2,278			2,257			2,032			2,046			2,527			2,393			2,278			2,257			2,032
Merger expenses		—			—			1,614			77			—			237			—			—			1,614			77
Loss on debt extinguishment		—			58			—			—			—			—			—			58			—			—
Other non-interest expense		9,941			9,631			10,050			8,789			9,027			10,497			9,941			9,631			10,050			8,789
Income before income taxes		4,173			5,044			2,794			4,079			3,882			3,671			4,173			5,044			2,794			4,079
Provision for income taxes		1,327			1,604			240			1,343			1,313			1,000			1,327			1,604			240			1,343
Net income		2,846			3,440			2,554			2,736			2,569			2,671			2,846			3,440			2,554			2,736
Dividends and discount accretion on preferred stock		—			(1	)		(48	)		(43	)		(43	)		—			—			(1	)		(48	)		(43	)
Net income allocable to common stockholders		2,846			3,439			2,506			2,693			2,526			2,671			2,846			3,439			2,506			2,693
Basic earnings per share	$	0.35		$	0.42		$	0.35		$	0.43		$	0.40		$	0.32		$	0.35		$	0.42		$	0.35		$	0.43
Diluted earnings per share	$	0.34		$	0.41		$	0.34		$	0.43		$	0.40		$	0.32		$	0.34		$	0.41		$	0.34		$	0.43
Balance Sheet Data (at period end)
Cash and cash equivalents	$	46,202		$	44,586		$	56,829		$	23,193		$	19,626		$	21,847		$	46,202		$	44,586		$	56,829		$	23,193
Available-for-sale securities		74,976			113,821			130,810			109,906			72,103			102,391			74,976			113,821			130,810			109,906
Held-to-maturity securities		317,509			301,931			310,539			303,695			306,100			349,915			317,509			301,931			310,539			303,695
Loans held for sale		4,002			3,200			3,504			1,948			2,251			3,071			4,002			3,200			3,504			1,948
Gross loans held for investment		980,110			938,055			960,355			855,676			834,740			956,070			980,110			938,055			960,355			855,676
Allowance for loan losses		6,030			5,980			5,506			5,038			5,643			6,080			6,030			5,980			5,506			5,038
Loans held for investment, net of allowance for loan losses		974,080			932,075			954,849			850,638			829,097			949,990			974,080			932,075			954,849			850,638
Goodwill and core deposit intangibles, net		19,506			19,592			19,679			19,056			19,116			19,419			19,506			19,592			19,679			19,056
Mortgage servicing asset		26			28			29			—			—			25			26			28			29			—
Total assets		1,544,857			1,528,729			1,585,727			1,413,355			1,350,719			1,557,082			1,544,857			1,528,729			1,585,727			1,413,355
Total deposits		1,196,767			1,234,165			1,215,914			1,027,650			1,003,919			1,177,732			1,196,767			1,234,165			1,215,914			1,027,650
Borrowings		179,801			130,651			194,064			241,254			214,566			203,569			179,801			130,651			194,064			241,254
Total liabilities		1,386,669			1,373,637			1,418,494			1,287,301			1,228,971			1,395,834			1,386,669			1,373,637			1,418,494			1,287,301
Total stockholders’ equity		158,188			155,092			167,233			126,054			121,748			161,248			158,188			155,092			167,233			126,054
Tangible common equity*		138,656			135,472			131,153			90,633			86,269			141,804			138,656			135,472			131,153			90,633
Performance ratios
Return on average assets (ROAA) annualized		0.69	%		0.83	%		0.63	%		0.77	%		0.80	%		0.64	%		0.69	%		0.83	%		0.63	%		0.77	%
Return on average equity (ROAE) annualized		7.32	%		8.99	%		7.23	%		8.78	%		8.58	%		6.65	%		7.32	%		8.99	%		7.23	%		8.78	%
Return on average tangible common equity (ROATCE) annualized*		8.64	%		10.55	%		9.18	%		12.26	%		12.02	%		7.94	%		8.64	%		10.55	%		9.18	%		12.26	%
Yield on loans annualized		4.89	%		5.04	%		4.95	%		5.11	%		5.58	%		4.72	%		4.89	%		5.04	%		4.95	%		5.11	%
Cost of interest-bearing deposits annualized		0.64	%		0.61	%		0.61	%		0.57	%		0.52	%		0.66	%		0.64	%		0.61	%		0.61	%		0.57	%
Net interest margin annualized		3.18	%		3.33	%		3.26	%		3.48	%		3.89	%		3.06	%		3.18	%		3.33	%		3.26	%		3.48	%
Efficiency ratio*		68.15	%		64.05	%		68.98	%		65.19	%		66.81	%		72.35	%		68.15	%		64.05	%		68.98	%		65.19	%
Non-interest income / average assets annualized		0.60	%		0.65	%		0.82	%		0.57	%		0.64	%		0.60	%		0.60	%		0.65	%		0.82	%		0.57	%
Non-interest expense / average assets annualized		2.42	%		2.35	%		2.87	%		2.49	%		2.82	%		2.56	%		2.42	%		2.35	%		2.87	%		2.49	%
Capital Ratios
Tier 1 Leverage Ratio		9.32	%		9.10	%		9.47	%		7.94	%		8.44	%		9.42	%		9.32	%		9.10	%		9.47	%		7.94	%
Common Equity Tier 1 Capital Ratio		13.04	%		13.13	%		12.35	%		9.44	%		9.47	%		13.57	%		13.04	%		13.13	%		12.35	%		9.44	%
Tier 1 Risk Based Capital Ratio		13.90	%		14.01	%		13.85	%		11.08	%		11.17	%		14.45	%		13.90	%		14.01	%		13.85	%		11.08	%
Total Risk Based Capital Ratio		14.45	%		14.57	%		14.35	%		11.58	%		11.76	%
Equity / Assets		10.24	%		10.15	%		10.55	%		8.92	%		9.01	%
Tangible common equity to tangible assets*		9.09	%		8.98	%		8.37	%		6.50	%		6.48	%
Book value per share	$	19.25		$	18.89		$	18.37		$	17.49		$	16.81
Tangible common book value per share*	$	16.87		$	16.50		$	15.97		$	14.45		$	13.76
Tangible common book value per diluted share*	$	16.64		$	16.29		$	15.74		$	14.39		$	13.72

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2.

Our significant accounting policies are integral to understanding the results reported. Our accounting policies are described in detail in Note 1 to the December 31, 2015 audited financial statements included in our Annual Report on Form 10-K filed with the SEC on March 17, 2016. We believe that of our significant accounting policies, the following may involve a higher degree of judgement and complexity. We have identified the following accounting policies and estimates that, due to the difficult, subjective or complex judgements and assumptions inherent in those policies and estimates and the potential sensitivity of our financial statements to those judgements and assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of our financial statements are appropriate.

Business Combinations: We apply the acquisition method of accounting for business combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100% of the assets acquired and liabilities assumed at their acquisition date fair values. We use valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identified intangible assets and liabilities assumed is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred.

Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of previous charge-offs and an allowance for loan losses, and for purchased loans, net of unamortized purchase premiums and discounts. Interest income is accrued on the unpaid principal balance.

Purchased Credit Impaired Loans: As a part of acquisitions, we acquired certain loans for which there was, at acquisition, evidence of deterioration of credit quality since origination. These purchased credit impaired loans were recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. Such purchased credit impaired loans are accounted for individually. We estimate the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of the amount paid are recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (non-accretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of the expected cash flows is less than the carrying amount, a loss is recorded. If the present value of the expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

Nonaccrual Loans: Generally, loans are designated as nonaccrual when either principal or interest payments are 90 days or more past due based on contractual terms unless the loan is well secured and in the process of collection. Consumer loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed against income. Future interest income may be recorded on a cash basis after recovery of principal is reasonably assured. Nonaccrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Impaired Loans: A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect all contractual principal and interest due according to the terms of the loan agreement. All loans are individually evaluated for impairment. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate or on the value of the underlying collateral if the loan is collateral dependent. We evaluate the collectability of both principal and interest when assessing the need for a loss accrual.

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length

of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Troubled Debt Restructurings: In cases where a borrower experiences financial difficulties and we make certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructured loan and classified as impaired. Generally, a nonaccrual loan that is a troubled debt restructuring remains on nonaccrual until such time that repayment of the remaining principal and interest is not in doubt, and the borrower has a period of satisfactory repayment performance.

Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values,

economic conditions, and other factors. A loan review process, independent of the loan approval process, is utilized by management to verify loans are being made and administered in accordance with company policy, to review loan risk grades and potential losses, to verify that potential problem loans are receiving adequate and timely corrective measures to avoid or reduce losses, and to assist in the verification of the adequacy of the loan loss reserve. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported net at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the sale of the collateral. Troubled debt restructurings are separately identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, we determine the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance for loan losses covers non-impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio and class and is based on the actual loss history experienced by us. This actual loss experience is then adjusted by comparing current conditions to the conditions that existed during the loss history. We consider the changes related to (i) lending policies, (ii) economic conditions, (iii) nature and volume of the loan portfolio and class, (iv) lending staff, (v) volume and severity of past due, non-accrual, and risk graded loans, (vi) loan review system, (vii) value of underlying collateral for collateral dependent loans, (viii) concentration levels, and (ix) effects of other external factors.

Goodwill and Core Deposit Intangibles: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. Core deposit intangibles are acquired customer relationships arising from whole bank and branch acquisitions. Core deposit intangibles are initially measured at fair value and then are amortized over their estimated useful lives using an accelerated method. The useful lives of the core deposits are estimated to generally be between seven and ten years. Goodwill and core deposit intangibles are assessed at least annually for impairment and any such impairment is recognized and expensed in the period identified. We have selected December 31 as the date to perform our annual goodwill impairment test. Goodwill is the only intangible asset with an indefinite useful life.

Fair Value: Fair values of assets and liabilities are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, collateral values and other factors, especially in the absence of broad markets for particular assets and liabilities. Changes in assumptions or in market conditions could materially affect the estimates.

Emerging Growth Company: Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the ~~Financial Accounting Standards Board (“FASB”)~~FASB or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have irrevocably elected to adopt new accounting standards within the public company adoption period.

We may take advantage of some of the reduced regulatory and reporting requirements that are available to us so long as the Company qualifies as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

There have been no material changes in our critical accounting policies from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 17, 2016.

We generate most of our revenue from interest income and fees on loans, interest and dividends on investment securities and non-interest income, such as service charges and fees, debit card income and mortgage banking income. We incur interest expense on deposits and other borrowed funds and non-interest expense, such as salaries and employee benefits and occupancy expenses. On October 9, 2015, we completed our acquisition of First Independence Corporation and its subsidiary, First Federal Savings & Loan of Independence, Kansas, collectively referred to as “First Independence”. The acquisition of First Independence added four branch locations in southeast Kansas. Results of operations of First Independence were included in our financial results beginning October 10, 2015.

Changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities and stockholders’ equity, are usually the largest

drivers of periodic change in net interest income. Fluctuations in interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Kansas and Missouri, as well as developments affecting the commercial, consumer and real estate sectors within these markets.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015:

Net income for the three months ended ~~June~~September 30, 2016 was ~~$2.8~~$2.7 million as compared to net income of ~~$2.6~~$2.7 million for the three months ended ~~June~~September 30, 2015. Net income allocable to common stockholders also was ~~$2.8~~$2.7 million for the three months ended ~~June~~September 30, 2016, compared to ~~$2.5~~$2.7 million for the three months ended ~~June~~September 30, 2015, ~~an increase~~a decrease of ~~$320~~$22 thousand, or ~~12.7%~~0.8%. On January 4, 2016, we redeemed the Series C preferred stock initially issued to the U.S. Treasury in 2011 as part of the Small Business Lending Fund. During 2015, the Series C preferred stock paid dividends at a rate of 1.0% on the $16.4 million outstanding. Net income allocable to common stock holders for the ~~second~~third quarter of 2016 increased $43 thousand due to redemption of the preferred stock. Also, during the three-month period ended ~~June~~September 30, 2016, increases in net interest income of ~~$728~~$532 thousand and non-interest income of ~~$404~~$495 thousand were ~~partially~~ offset by an increase in non-interest expense of ~~$917 thousand~~$1.9 million when compared to the three-month period ended ~~June~~September 30, 2015. The changes in the components of net income are discussed in more detail in the following sections of “Results of Operations.”

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015:

Net income for the ~~six~~nine months ended ~~June~~September 30, 2016 was ~~$6.3~~$9.0 million as compared to net income of ~~$5.0~~$7.7 million for the ~~six~~nine months ended ~~June~~September 30, 2015. Net income allocable to common stockholders also was ~~$6.3~~$9.0 million for the ~~six~~nine months ended ~~June~~September 30, 2016, compared to ~~$4.9~~$7.6 million for the ~~six~~nine months ended ~~June~~September 30, 2015, an increase of ~~$1.4~~$1.3 million, or ~~27.6%~~17.6%. On January 4, 2016, we redeemed the Series C preferred stock initially issued to the U.S. Treasury in 2011 as part of the Small Business Lending Fund. During 2015, the Series C preferred stock paid dividends at a rate of 1.0% on the $16.4 million outstanding. Net income allocable to common stock holders for the first ~~six~~nine months of 2016 increased ~~$85~~$128 thousand due to redemption of the preferred stock. Also, during the ~~six-month~~nine-month period ended ~~June~~September 30, 2016, increases in net interest income of ~~$2.4~~$3.0 million and non-interest income of ~~$705 thousand~~$1.2 million were partially offset by an increase in non-interest expense of ~~$1.6~~$3.5 million when compared to the ~~six-month~~nine-month period ended ~~June~~September 30, 2015. The changes in the components of net income are discussed in more detail in the following sections of “Results of Operations.”

Net interest income is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. To evaluate net interest income, management measures and monitors (1) yields on loans and other interest-earning assets, (2) the costs of deposits and other funding sources, (3) the net interest spread and (4) net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources of funds. Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change,” and it is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a “yield/rate change.”

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the ~~three-month periods~~three months ended ~~June~~September 30, 2016 and 2015. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

	For the Three Months Ended June 30,														For the Three Months Ended September 30,
	2016							2015							2016							2015
(Dollars in thousands)	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾
Interest-earning assets:
Loans⁽¹⁾	$	950,243	$	11,551		4.89	%	$	772,215	$	10,737		5.58	%	$	968,402	$	11,493		4.72	%	$	831,553	$	10,713		5.11	%
Taxable securities		362,724		1,987		2.20	%		332,251		1,796		2.17	%		357,365		1,855		2.07	%		351,156		1,912		2.16	%
Nontaxable securities		49,371		332		2.71	%		44,454		265		2.39	%		57,011		383		2.67	%		46,546		291		2.48	%
Federal funds sold and other		179,067		510		1.15	%		32,973		169		2.06	%		172,733		519		1.20	%		75,406		283		1.49	%
Total interest-earning assets		1,541,405	$	14,380		3.75	%		1,181,893	$	12,967		4.40	%		1,555,511	$	14,250		3.65	%		1,304,661	$	13,199		4.01	%
Non-interest-earning assets:
Other real estate owned, net		6,069							5,907							5,004							6,349
Premises and equipment, net		38,861							36,730							39,523							38,130
Bank owned life insurance		32,890							29,044							33,138							29,275
Goodwill and core deposit intangible, net		19,570							19,143							19,483							19,082
Other non-interest-earning assets		16,522							12,388							15,875							12,575
Total assets	$	1,655,317						$	1,285,105						$	1,668,534						$	1,410,072
Interest-bearing liabilities:
Interest-bearing demand deposits	$	295,516	$	198		0.27	%	$	258,913	$	160		0.25	%	$	278,061	$	192		0.28	%	$	241,726	$	142		0.23	%
Savings and money market		313,545		323		0.41	%		244,407		202		0.33	%		304,999		316		0.41	%		257,729		248		0.38	%
Savings, NOW and money market		609,061		521		0.34	%		503,320		362		0.29	%		583,060		508		0.35	%		499,455		390		0.31	%
Certificates of deposit		436,723		1,149		1.06	%		340,981		728		0.86	%		439,095		1,199		1.09	%		387,251		893		0.92	%
Total interest-bearing deposits		1,045,784		1,670		0.64	%		844,301		1,090		0.52	%		1,022,155		1,707		0.66	%		886,706		1,283		0.57	%
FHLB term and line of credit advances		253,067		345		0.55	%		133,103		88		0.26	%		280,254		386		0.55	%		210,136		141		0.27	%
Bank stock loan		—		—		0.00	%		14,498		149		4.11	%		—		—		0.00	%		14,167		146		4.10	%
Subordinated borrowings		9,334		157		6.74	%		9,062		160		7.08	%		9,392		159		6.76	%		9,140		162		7.01	%
Other borrowings		22,230		14		0.24	%		25,301		14		0.24	%		24,535		16		0.26	%		25,563		17		0.25	%
Total interest-bearing liabilities		1,330,415	$	2,186		0.66	%		1,026,265	$	1,501		0.59	%		1,336,336	$	2,268		0.68	%		1,145,712	$	1,749		0.61	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		159,077							132,270							162,562							133,949
Non-interest-bearing liabilities		9,422							6,504							9,749							6,816
Stockholders’ equity		156,403							120,066							159,887							123,595
Total liabilities and stockholders’ equity	$	1,655,317						$	1,285,105						$	1,668,534						$	1,410,072
Net interest income			$	12,194						$	11,466						$	11,982						$	11,450
Interest rate spread						3.09	%						3.81	%						2.97	%						3.40	%
Net interest margin⁽²⁾						3.18	%						3.89	%						3.06	%						3.48	%
Total cost of deposits, including non-interest bearing deposits	$	1,204,861	$	1,670		0.56	%	$	976,571	$	1,090		0.45	%	$	1,184,717	$	1,707		0.57	%	$	1,020,655	$	1,283		0.50	%
Average interest-earning assets to interest-bearing liabilities						115.86	%						115.16	%						116.40	%						113.87	%

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the three-month periods ended ~~June~~September 30, 2016 and 2015.

	Increase (Decrease) Due to:						Total Increase /			Increase (Decrease) Due to:						Total Increase /
(Dollars in thousands)	Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)			Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)
Interest-earning assets:
Loans	$	2,274		$	(1,460	)	$	814		$	1,669		$	(889	)	$	780
Taxable securities		167			24			191			32			(89	)		(57	)
Nontaxable securities		31			36			67			70			22			92
Federal funds sold and other		447			(106	)		341			302			(66	)		236
Total interest-earning assets	$	2,919		$	(1,506	)	$	1,413		$	2,073		$	(1,022	)	$	1,051
Interest-bearing liabilities:
Savings, NOW and money market	$	89		$	70		$	159		$	70		$	48		$	118
Certificates of deposit		230			191			421			130			176			306
Total interest-bearing deposits		319			261			580			200			224			424
FHLB term and line of credit advances		117			140			257			60			185			245
Bank stock loan		(149	)		—			(149	)		(146	)		—			(146	)
Subordinated borrowings		5			(8	)		(3	)		3			(6	)		(3	)
Other borrowings		—			—			—			(1	)		—			(1	)
Total interest-bearing liabilities	$	292		$	393		$	685		$	116		$	403		$	519
Net Interest Income	$	2,627		$	(1,899	)	$	728		$	1,957		$	(1,425	)	$	532

Net interest income before the provision for loan losses for the three months ended ~~June~~September 30, 2016 was ~~$12.2~~$12.0 million compared with $11.5 million for the three months ended ~~June~~September 30, 2015, an increase of ~~$728~~$532 thousand, or ~~6.4%~~4.6%. Interest income for the three months ended ~~June~~September 30, 2016 was ~~$14.4~~$14.3 million, an increase of ~~$1.4~~$1.1 million, or ~~10.9%~~8.0%, from ~~$13.0~~$13.2 million for the three months ended ~~June~~September 30, 2015. Interest income increased primarily due to an increase in the average volume of interest-earning assets due in large part to growth in loan balances during the period. Interest expense for the three months ended ~~June~~September 30, 2016 was ~~$2.2~~$2.3 million, an increase of ~~$685~~$519 thousand, or ~~45.6%~~29.7%, from ~~$1.5~~$1.7 million for the three months ended ~~June~~September 30, 2015. The increase in interest expense was primarily due to an increase in the average rate paid on interest-bearing liabilities.

Interest income on loans, including loan fees which consist of fees for loan origination, renewal, prepayment, covenant breakage and loan modification, was ~~$11.6~~$11.5 million for the three months ended ~~June~~September 30, 2016, an increase of ~~$814~~$780 thousand, or ~~7.6%~~7.3%, compared with the three months ended ~~June~~September 30, 2015. This increase was due to an increase in average loans, partially offset by a decrease in the average yield on the loan portfolio. The increase in average loan volume was primarily from increases in average loan volume of ~~$119.1~~$83.1 million in mortgage loans, ~~$26.5~~$39.3 million in commercial real estate loans, ~~$21.8~~$6.7 million in commercial and industrial loans ~~$9.0~~and $8.0 million in consumer ~~loans and $1.7 million in average loan volume of agricultural~~ loans. The average yield on loans was ~~4.89%~~4.72% for the three months ended ~~June~~September 30, 2016 and ~~5.58%~~5.11% for the three months ended ~~June~~September 30, 2015. The average yield on loans excluding loan fees was ~~4.64%~~4.57% for the three months ended ~~June~~September 30, 2016 and ~~5.10%~~4.82% for the three months ended ~~June~~September 30, 2015. The decrease in yield excluding loan fees was primarily due to decreases in average yields on commercial loans, mortgage loans and agricultural loans. The decrease in yield on commercial loans was the result of loan growth in a lower interest rate environment and the payoff of older higher yielding loans. The decrease in the yield on mortgage loans is due to the pay down of higher-rate older loans and origination and purchase of new loans in a low interest rate environment. The decrease in yield on agricultural loans was the result of pay downs of higher-rate, higher-credit-risk loans. Interest income on all securities was ~~$2.3~~$2.2 million for the quarter ended ~~June~~September 30, 2016, an increase of ~~$258~~$35 thousand when compared to the quarter ended ~~June~~September 30, 2015. The increase was due to the increase in average total securities of ~~$35.4~~$16.7 million and a ~~seven~~five basis point ~~increase~~decrease in the average yield on the securities portfolio. The increase in the average volume of securities was due to the purchase of additional mortgage-backed securities and municipal securities.

Interest expense was ~~$2.2~~$2.3 million for the three months ended ~~June~~September 30, 2016, an increase of ~~$685~~$519 thousand over interest expense of ~~$1.5~~$1.7 million for the three months ended ~~June~~September 30, 2015. The change in interest expense was primarily due to an increase of ~~$304.2~~$190.6 million in the average volume of interest-bearing liabilities. Average savings, NOW and money market deposits increased ~~$105.7~~$83.6 million for the three months ended ~~June~~September 30, 2016 when compared to the three months ended ~~June~~September 30, 2015, and the average rate on these interest-bearing deposits increased from ~~0.29%~~0.31% to ~~0.34%~~0.35% for the same periods. The average balance increase in interest-bearing deposits is the result of actively managing deposits as a funding vehicle and expansion of our customer base. The increase in rate on interest-bearing deposits iswas the result of actively managing the rates on this funding source to remain competitive in the market place. Average certificates of deposit increased ~~$95.7~~$51.8 million for the three months ended ~~June~~September 30, 2016 compared to the three months ended ~~June~~September 30, 2015, and the average rate increased from ~~0.86%~~0.92% to ~~1.06%~~1.09% for the same period. The increase in interest expense on certificates of deposit was primarily due to the increase in longer term higher rate certificates of deposits. In February 2015, we prepaid older higher cost FHLB term advances and began using the FHLB line of credit advance option, which is pre-payable without a fee and resulted in a much lower funding cost. In January 2016, we repaid our bank stock loan using $18.6 million of the proceeds from the 2015 IPO. Total cost of funds increased seven basis points to ~~0.66%~~0.68% for the three months ended ~~June~~September 30, 2016 from ~~0.59%~~0.61% for the three months ended ~~June~~September 30, 2015.

Net interest margin was ~~3.18%~~3.06% for the three months ended ~~June~~September 30, 2016, a decrease of 7142 basis points when compared with net interest margin of ~~3.89%~~3.48% for the three months ended ~~June~~September 30, 2015. The decline in our net interest margin for the three months ended ~~June~~September 30, 2016 is primarily due to the decrease in overall yield on interest-earnings assets and the continued utilization of an existing “leverage” or “spread” opportunity. The decrease in yield on interest-earning assets is primarily due to growth in a continually low interest rate environment, lower loan originations, and the pay down of older higher yielding assets. The spread opportunity involves borrowing overnight on our line of credit with the FHLB and investing the proceeds in FHLB stock, federal funds sold and other overnight assets, such as money market accounts in other financial ~~institutions, resulting in a positive spread of approximately 43 basis points.~~institutions. We utilize the spread opportunity to generate additional income. We can reduce or terminate the spread opportunity each business day and we do not presently anticipate that this opportunity ~~would~~will be part of our core earnings stream or strategy. Our net interest margin without the spread opportunity would have been approximately ~~3.48%~~3.33% for the three months ended ~~June~~September 30, ~~2016. The spread opportunity did not begin until late June of 2015~~2016 and ~~would have only a minimal impacted to the net interest margin reported~~3.58% for the three months ended ~~June~~September 30, 2015. These changes, including the spread opportunity, resulted in an increase in net interest income of ~~$728~~$532 thousand, an increase in average interest-earning assets of ~~$370.2~~$250.9 million and a decrease in net interest margin of 7142 basis points when comparing the three-month periods ended ~~June~~September 30, 2016 and 2015.

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

	For the Six Months Ended June 30,														For the Nine Months Ended September 30,
	2016							2015							2016							2015
(Dollars in thousands)	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽³⁾⁽⁴⁾
Interest-earning assets:
Loans⁽¹⁾	$	947,305	$	23,392		4.97	%	$	755,426	$	21,149		5.65	%	$	954,388	$	34,885		4.88	%	$	781,080	$	31,862		5.45	%
Taxable securities		369,565		4,196		2.28	%		308,983		3,529		2.30	%		365,469		6,051		2.21	%		323,195		5,441		2.25	%
Nontaxable securities		49,200		660		2.70	%		40,278		455		2.28	%		51,822		1,043		2.69	%		42,390		746		2.35	%
Federal funds sold and other		176,031		994		1.14	%		27,849		266		1.93	%		174,923		1,513		1.16	%		43,876		549		1.67	%
Total interest-earning assets		1,542,101	$	29,242		3.81	%		1,132,536	$	25,399		4.52	%		1,546,602	$	43,492		3.76	%		1,190,541	$	38,598		4.33	%
Non-interest-earning assets:
Other real estate owned, net		5,934							5,403							5,622							5,722
Premises and equipment, net		38,938							35,261							39,135							36,228
Bank owned life insurance		32,766							28,928							32,891							29,045
Goodwill and core deposit intangible, net		19,617							19,173							19,572							19,142
Other non-interest-earning assets		17,130							13,053							16,678							12,893
Total assets	$	1,656,486						$	1,234,354						$	1,660,500						$	1,293,571
Interest-bearing liabilities:
Interest-bearing demand deposits	$	306,284	$	400		0.26	%	$	266,455	$	332		0.25	%	$	296,807	$	593		0.27	%	$	258,122	$	475		0.25	%
Savings and money market		309,766		627		0.41	%		244,852		381		0.31	%		308,165		943		0.41	%		249,192		629		0.34	%
Savings, NOW and money market		616,050		1,027		0.34	%		511,307		713		0.28	%		604,972		1,536		0.34	%		507,314		1,104		0.29	%
Certificates of deposit		437,151		2,250		1.03	%		339,155		1,413		0.84	%		437,804		3,448		1.05	%		355,363		2,305		0.87	%
Total interest-bearing deposits		1,053,201		3,277		0.63	%		850,462		2,126		0.50	%		1,042,776		4,984		0.64	%		862,677		3,409		0.53	%
FHLB term and line of credit advances		251,009		677		0.54	%		78,519		126		0.32	%		260,829		1,063		0.54	%		122,874		267		0.29	%
Bank stock loan		307		—		0.09	%		14,694		300		4.11	%		204		—		0.09	%		14,517		446		4.11	%
Subordinated borrowings		9,306		310		6.69	%		9,024		318		7.11	%		9,335		469		6.72	%		9,063		480		7.08	%
Other borrowings		21,742		26		0.24	%		25,721		30		0.24	%		22,680		42		0.25	%		25,668		47		0.24	%
Total interest-bearing liabilities		1,335,565	$	4,290		0.65	%		978,420	$	2,900		0.60	%		1,335,824	$	6,558		0.66	%		1,034,799	$	4,649		0.60	%
Non-interest-bearing liabilities and stockholders’ equity:
Non-interest-bearing checking accounts		156,598							130,340							158,601							131,556
Non-interest-bearing liabilities		9,157							5,980							9,324							6,261
Stockholders’ equity		155,166							119,614							156,751							120,955
Total liabilities and stockholders’ equity	$	1,656,486						$	1,234,354						$	1,660,500						$	1,293,571
Net interest income			$	24,952						$	22,499						$	36,934						$	33,949
Interest rate spread						3.16	%						3.92	%						3.10	%						3.73	%
Net interest margin⁽²⁾						3.25	%						4.01	%						3.19	%						3.81	%
Total cost of deposits, including non-interest bearing deposits	$	1,209,799	$	3,277		0.54	%	$	980,802	$	2,126		0.44	%	$	1,201,377	$	4,984		0.55	%	$	994,233	$	3,409		0.46	%
Average interest-earning assets to interest-bearing liabilities						115.46	%						115.75	%						115.78	%						115.05	%

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015.

	Increase (Decrease) Due to:						Total Increase /			Increase (Decrease) Due to:						Total Increase /
(Dollars in thousands)	Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)			Volume⁽¹⁾			Yield/Rate⁽¹⁾			(Decrease)
Interest-earning assets:
Loans	$	4,939		$	(2,696	)	$	2,243		$	6,569		$	(3,546	)	$	3,023
Taxable securities		688			(21	)		667			700			(90	)		610
Nontaxable securities		111			94			205			180			117			297
Federal funds sold and other		878			(150	)		728			1,181			(217	)		964
Total interest-earning assets	$	6,616		$	(2,773	)	$	3,843		$	8,630		$	(3,736	)	$	4,894
Interest-bearing liabilities:
Savings, NOW and money market	$	167		$	147		$	314		$	241		$	191		$	432
Certificates of deposit		461			376			837			594			549			1,143
Total interest-bearing deposits		628			523			1,151			835			740			1,575
FHLB term and line of credit advances		420			131			551			448			348			796
Bank stock loan		(150	)		(150	)		(300	)		(224	)		(222	)		(446	)
Subordinated borrowings		10			(18	)		(8	)		14			(25	)		(11	)
Other borrowings		(4	)		—			(4	)		(5	)		—			(5	)
Total interest-bearing liabilities	$	904		$	486		$	1,390		$	1,068		$	841		$	1,909
Net Interest Income	$	5,712		$	(3,259	)	$	2,453		$	7,562		$	(4,577	)	$	2,985

Net interest income before the provision for loan losses for the ~~six~~nine months ended ~~June~~September 30, 2016 was ~~$25.0~~$36.9 million compared with ~~$22.5~~$33.9 million for the ~~six~~nine months ended ~~June~~September 30, 2015, an increase of ~~$2.5~~$3.0 million, or ~~10.9%~~8.8%. Interest income for the ~~six~~nine months ended ~~June~~September 30, 2016 was ~~$29.2~~$43.5 million, an increase of ~~$3.8~~$4.9 million, or ~~15.1%~~12.7%, from ~~$25.4~~$38.6 million for the ~~six~~nine months ended ~~June~~September 30, 2015. Interest income increased primarily due to an increase in the average volume of interest-earning assets due in large part to growth in loan balances during the period. Interest expense for the ~~six~~nine months ended ~~June~~September 30, 2016 was ~~$4.3~~$6.6 million, an increase of ~~$1.4~~$1.9 million, or ~~47.9%~~41.1%, from ~~$2.9~~$4.6 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The increase in interest expense was primarily due to an increase in the average volume of interest-bearing liabilities.

Interest income on loans, including loan fees which consist of fees for loan origination, renewal, prepayment, covenant breakage and loan modification, was ~~$23.4~~$34.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016, an increase of ~~$2.2~~$3.0 million, or ~~10.6%~~9.5%, compared with the ~~six~~nine months ended ~~June~~September 30, 2015. This increase was due to an increase in average loans, partially offset by a decrease in the average yield on the loan portfolio. The increase in average loan volume was primarily from increases in average loan volume of ~~$128.1~~$112.9 million in mortgage loans, ~~$34.4~~$25.0 million in commercial and industrial loans, ~~$19.9~~$26.4 million in commercial real estate loans, ~~$9.9~~and $8.7 million in consumer ~~loans and $334 thousand in average loan volume of agricultural~~ loans. The average yield on loans was ~~4.97%~~4.88% for the ~~six~~nine months ended ~~June~~September 30, 2016 and ~~5.65%~~5.45% for the ~~six~~nine months ended ~~June~~September 30, 2015. The average yield on loans excluding loan fees was ~~4.67%~~4.66% for the ~~six~~nine months ended ~~June~~September 30, 2016 and ~~5.07%~~4.98% for the ~~six~~nine months ended ~~June~~September 30, 2015. The decrease in yield excluding loan fees was primarily due to decreases in average yields on commercial loans, mortgage loans and agricultural loans. The decrease in yield on commercial loans was the result of loan growth in a lower interest rate environment and the payoff of older higher yielding loans. The decrease in the yield on mortgage loans is due to the pay down of higher-rate older loans and origination and purchase of new loans in a low interest rate environment. The decrease in yield on agricultural loans was the result of pay downs of higher-rate, higher-credit-risk loans. Interest income on all securities was ~~$4.9~~$7.1 million for the ~~six-months~~nine-months ended ~~June~~September 30, 2016, an increase of ~~$872~~$907 thousand when compared to the ~~six-months~~nine-months ended ~~June~~September 30, 2015. The increase was due to the increase in average total securities of ~~$69.5~~$51.7 million and a ~~three~~one basis point increase in the average yield on the securities portfolio. The increase in the average volume of securities was due to the purchase of additional mortgage-backed securities and municipal securities.

Interest expense was ~~$4.3~~$6.6 million for the ~~six~~nine months ended ~~June~~September 30, 2016, an increase of ~~$1.4~~$1.9 million over interest expense of ~~$2.9~~$4.6 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The change in interest expense was primarily due to an increase of ~~$357.1~~$301.0 million in the average volume of interest-bearing liabilities. Average savings, NOW and money market deposits increased ~~$104.7~~$97.7 million for the ~~six~~nine months ended ~~June~~September 30, 2016 when compared to the ~~six~~nine months ended ~~June~~September 30, 2015, and the average rate on these interest-bearing deposits increased from ~~0.50%~~0.29% to ~~0.63%~~0.34% for the same periods. The average balance increase in interest-bearing deposits iswas the result of actively managing deposits as a funding vehicle and expansion of our customer base. The increase in rate on interest-bearing deposits is the result of actively managing the rates on this funding source to remain competitive in the market place. Average certificates of deposit increased ~~$98.0~~$82.4 million for the ~~six~~nine months ended ~~June~~September 30, 2016 compared to the ~~six~~nine months ended ~~June~~September 30, 2015, and the average rate increased from ~~0.84%~~0.87% to ~~1.03%~~1.05% for the same period. The increase in interest expense on certificates of deposit was primarily due to the increase in longer term higher rate certificates of deposits. In February 2015, we prepaid older higher cost FHLB term advances and began using the FHLB line of credit advance option, which is pre-payable without a fee and resulted in a much lower funding cost. In January 2016, we repaid our bank stock loan using $18.6 million of the proceeds from the 2015 IPO. Total cost of funds increased ~~five~~six basis points to ~~0.65%~~0.66% for the ~~six~~nine months ended ~~June~~September 30, 2016 from 0.60% for the ~~three~~nine months ended ~~June~~September 30, 2015.

Net interest margin was ~~3.25%~~3.19% for the ~~six~~nine months ended ~~June~~September 30, 2016, a decrease of 7662 basis points when compared with net interest margin of ~~4.01%~~3.81% for the ~~six~~nine months ended ~~June~~September 30, 2015. The decline in our net interest margin for the ~~six~~nine months ended ~~June~~September 30, 2016 is primarily due to the decrease in overall yield on interest-earnings assets and the continued utilization of an existing “leverage” or “spread” opportunity. The decrease in yield on interest-earning assets is primarily due to growth in a continually low interest rate environment, lower loan originations, and the pay down of older higher yielding assets. The spread opportunity involves borrowing overnight on our line of credit with the FHLB and investing the proceeds in FHLB stock, federal funds sold and other overnight assets, such as money market accounts in other financial ~~institutions, resulting in a positive spread of approximately 43 basis points.~~institutions. We utilize the spread opportunity to generate additional ~~income. We~~income and can reduce or terminate the spread opportunity each business day and we do not presently anticipate that this opportunity ~~would~~will be part of our core earnings stream or strategy. Our net interest margin without the spread opportunity would have been approximately ~~3.55%~~3.48% for the ~~six~~nine months ended ~~June~~September 30, ~~2016. The spread opportunity did not begin until late June of 2015~~2016 and ~~would have only a minimal impacted to the net interest margin reported~~3.85% for the ~~six~~nine months ended ~~June~~September 30, 2015. These changes, including the spread opportunity, resulted in an increase in net interest income of ~~$2.5~~$3.0 million, an increase in average interest-earning assets of ~~$409.6~~$356.1 million and a decrease in net interest margin of 7662 basis points when comparing the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015.

We maintain an allowance for loan losses for probable incurred credit losses. The allowance for loan losses is increased by a provision for loan losses, which is a charge to earnings, and subsequent recoveries of amounts previously charged-off, but is decreased by charge-offs when the collectability of a loan balance is unlikely. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the loan portfolio, information about specific borrower situations and estimated collateral values, discounted cash flows, economic conditions, and other factors including regulatory guidance, as described in ”Financial Condition—Allowance for loan losses.” As these factors change, the amount of the loan loss provision changes.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015: The provision for loan losses for the three months ended ~~June~~September 30, 2016 was ~~$532~~$104 thousand compared with ~~$605~~$537 thousand for the three months ended ~~June~~September 30, 2015. Net charge-offs for the three months ended ~~June~~September 30, 2016 were ~~$482~~$54 thousand compared to net charge-offs of ~~$1.5~~$1.1 million for the three months ended ~~June~~September 30, 2015. For the three months ended ~~June~~September 30, 2016, gross charge-offs were ~~$550~~$189 thousand offset by gross recoveries of ~~$68~~$135 thousand. In comparison, gross charge-offs were ~~$1.6~~$1.3 million for the three months ended ~~June~~September 30, 2015 offset by gross recoveries of ~~$34~~$113 thousand.

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015: The provision for loan losses for the ~~six~~nine months ended ~~June~~September 30, 2016 was ~~$1.3~~$1.4 million compared with ~~$1.3~~$1.9 million for the ~~six~~nine months ended ~~June~~September 30, 2015. Net charge-offs for the ~~six~~nine months ended ~~June~~September 30, 2016 were ~~$731~~$785 thousand compared to net charge-offs of ~~$1.7~~$2.8 million for the ~~six~~nine months ended ~~June~~September 30, 2015. For the ~~six~~nine months ended ~~June~~September 30, 2016, gross charge-offs were ~~$841 thousand~~$1.0 million offset by gross recoveries of ~~$110~~$245 thousand. In comparison, gross charge-offs were ~~$1.7~~$3.0 million for the ~~six~~nine months ended ~~June~~September 30, 2015 offset by gross recoveries of ~~$89~~$202 thousand.

The primary sources of non-interest income are service charges and fees, debit card income, mortgage banking income, increases in the value of bank owned life insurance, investment referral income, the recovery of zero-basis purchased loans, and net gain from securities transactions. Non-interest income does not include loan origination or other loan fees which are recognized as an adjustment to yield using the interest method.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015: The following table provides a comparison of the major components of non-interest income for the three months ended ~~June~~September 30, 2016 and 2015:

					2016 vs. 2015										2016 vs. 2015
(Dollars in thousands)	2016		2015		Change			%			2016		2015		Change			%
Service charges and fees	$	807	$	615	$	192			31.2	%	$	851	$	653	$	198			30.3	%
Debit card income		728		540		188			34.8	%		722		556		166			29.9	%
Mortgage banking		335		375		(40	)		(10.7	)%		442		277		165			59.6	%
Increase in value of bank owned life insurance		246		231		15			6.5	%		249		234		15			6.4	%
Investment referral income		120		136		(16	)		(11.8	)%		95		154		(59	)		-38.3	%
Recovery on zero-basis purchased loans		15		18		(3	)		(16.7	)%		28		11		17			154.5	%
Other		142		131		11			8.4	%		140		147		(7	)		-4.8	%
Sub-Total		2,393		2,046		347			17.0	%		2,527		2,032		495			24.4	%
Net gain from securities transactions		59		2		57			2,850.0	%		—		—		—			—
Total non-interest income	$	2,452	$	2,048	$	404			19.7	%	$	2,527	$	2,032	$	495			24.4	%

For the three months ended ~~June~~September 30, 2016, non-interest income totaled $2.5 million, an increase of ~~$404~~$495 thousand, or ~~19.7%~~24.4%, compared with the three months ended ~~June~~September 30, 2015. The increase was primarily due to increases in service charges and fees, ~~and~~ debit card income, and mortgage banking income, partially offset by ~~decreases~~a decrease in ~~mortgage banking and recovery on zero-basis purchased loans.~~investment referral income. Service charges and fees increased ~~$192~~$198 thousand from ~~$615~~$653 thousand at ~~June~~September 30, 2015 to ~~$807~~$851 thousand at ~~June~~September 30, 2016, ~~and~~ debit card income increased ~~$188~~$166 thousand for the same period from ~~$540~~$556 thousand at ~~June~~September 30, 2015 to ~~$728~~$722 thousand at ~~June~~September 30, 2016, and mortgage banking increased $165 thousand from $277 at September 30, 2015 to $442 thousand at September 30, 2016. Our principal source of service charges and fees is non-sufficient funds charges, which are cyclical in nature and generally fluctuate with the change in volume of transaction deposit accounts and economic conditions impacting our customers. In addition, ~~$163~~$167 thousand of the increase in service charges and fees and ~~$151~~$148 thousand of the increase in debit card income are attributable to the addition of accounts and higher transaction volumes associated with the First Independence acquisition. The increase in mortgage banking income was associated with greater mortgage loan sales in the current quarter.

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015: The following table provides a comparison of the major components of non-interest income for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015:

					2016 vs. 2015										2016 vs. 2015
(Dollars in thousands)	2016		2015		Change			%			2016		2015		Change			%
Service charges and fees	$	1,586	$	1,170	$	416			35.6	%	$	2,437	$	1,823	$	614			33.7	%
Debit card income		1,405		981		424			43.2	%		2,127		1,537		590			38.4	%
Mortgage banking		577		578		(1	)		(0.2	)%		1,019		855		164			19.2	%
Increase in value of bank owned life insurance		497		466		31			6.7	%		746		700		46			6.6	%
Investment referral income		243		293		(50	)		(17.1	)%		337		447		(110	)		-24.6	%
Recovery on zero-basis purchased loans		41		356		(315	)		(88.5	)%		70		367		(297	)		-80.9	%
Other		322		231		91			39.4	%		462		378		84			22.2	%
Sub-Total		4,671		4,075		596			14.6	%		7,198		6,107		1,091			17.9	%
Net gain from securities transactions		479		370		109			29.5	%		479		370		109			29.5	%
Total non-interest income	$	5,150	$	4,445	$	705			15.9	%	$	7,677	$	6,477	$	1,200			18.5	%

For the ~~six~~nine months ended ~~June~~September 30, 2016, non-interest income totaled ~~$5.2~~$7.7 million, an increase of ~~$705 thousand,~~$1.2 million, or ~~15.9%~~18.5%, compared with the ~~six~~nine months ended ~~June~~September 30, 2015. The increase was primarily due to increases in service charges and fees, ~~and~~ debit card income, and mortgage banking income, partially offset by ~~a decrease~~decreases in investment referral income and recovery on zero-basis purchased loans. In connection with acquisitions, we receive the rights to certain loans that were previously charged off by the acquired bank. At acquisition, there was no expectation of future cash flows from these previously charged-off loans and thus they were assigned a zero basis. Subsequent to acquisition, we have received cash payments on ~~such~~certain of these loans. Timing and receipt

of such payments, if any, are not easily predictable. Service charges and fees increased ~~$416~~$614 thousand from ~~$1.2~~$1.8 million at ~~June~~September 30, 2015 to ~~$1.6~~$2.4 million at ~~June~~September 30, 2016, and debit card income increased ~~$424~~$590 thousand for the same period from ~~$981 thousand~~$1.5 million at ~~June~~September 30, 2015 to ~~$1.4~~$2.1 million at ~~June~~September 30, 2016. Our principal source of service charges and fees is non-sufficient funds charges, which are cyclical in nature and generally fluctuate with the change in volume of

transaction deposit accounts and economic conditions impacting our customers. In addition, ~~$324~~$491 thousand of the increase in service charges and fees and ~~$324~~$472 thousand of the increase in debit card income are attributable to the addition of accounts and higher transaction volumes associated with the First Independence acquisition.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015: For the three months ended ~~June~~September 30, 2016, non-interest expense totaled ~~$9.9~~$10.7 million, an increase of ~~$914 thousand,~~$1.9 million, or ~~10.1%~~21.1%, compared with the three months ended ~~June~~September 30, 2015. The overall increase was primarily due to an increase in salaries and employee benefits of ~~$384~~$732 thousand, an increase in net occupancy and equipment of $207 thousand, an increase in other expense of $185 thousand, an increase in merger expenses of $160 thousand, an increase in data processing of ~~$142~~$137 thousand and an increase ~~in professional fees of $127 thousand, partially offset by a decrease~~ in other real estate owned of ~~$114~~$103 thousand. Non-interest expense for the three-month period ended ~~June~~September 30, 2016 includes ~~$430~~$456 thousand of incremental operating expenses attributable to the four branch locations acquired with the First Independence acquisition. These items and other changes in the various components of non-interest expense are discussed in more detail below.

The following table provides a comparison of the major components of non-interest expense for the three months ended ~~June~~September 30, 2016 and 2015.

						2016 vs. 2015										2016 vs. 2015
(Dollars in thousands)	2016			2015		Change			%			2016		2015		Change		%
Salaries and employee benefits	$	5,246		$	4,862	$	384			7.9	%	$	5,391	$	4,659	$	732		15.7	%
Net occupancy and equipment		1,068			1,020		48			4.7	%		1,159		952		207		21.7	%
Data processing		869			727		142			19.5	%		883		746		137		18.4	%
Professional fees		568			441		127			28.8	%		527		498		29		5.8	%
Advertising and business development		330			277		53			19.1	%		353		295		58		19.7	%
Telecommunications		287			198		89			44.9	%		285		203		82		40.4	%
FDIC insurance		255			175		80			45.7	%		240		217		23		10.6	%
Courier and postage		158			126		32			25.4	%		179		112		67		59.8	%
Loan expense		168			118		50			42.4	%		153		94		59		62.8	%
Amortization of core deposit intangible		86			61		25			41.0	%		87		61		26		42.6	%
Other real estate owned		(58	)		56		(114	)		(203.6	)%		156		53		103		194.3	%
Other		964			966		(2	)		(0.2	)%		1,084		899		185		20.6	%
Sub-Total		9,941			9,027		914			10.1	%		10,497		8,789		1,708		19.4	%
Merger expenses													237		77		160		207.8	%
Loss on debt extinguishment		—			—		—			—			—		—		—		—
Total non-interest expense	$	9,941		$	9,027	$	914			10.1	%	$	10,734	$	8,866	$	1,868		21.1	%

Salaries and employee benefits: Salaries and benefits were ~~$5.2~~$5.4 million for the three months ended ~~June~~September 30, 2016, as compared to ~~$4.9~~$4.7 million for the three months ended ~~June~~September 30, 2015. The increase in salaries and benefits of ~~$384~~$732 thousand includes approximately ~~$287~~$278 thousand attributable to the First Independence ~~acquisition, including $21 thousand associated with our assumption of obligations related to First Independence’s participation in the Pentegra Defined Benefit Plan for Financial Institutions.~~acquisition. Included in salaries and employee benefits is stock based compensation expense of $67 thousand for the three months ended ~~June~~September 30, 2016 and ~~$41~~$40 thousand in the comparable period of 2015. The increase of ~~$26~~$27 thousand in stock based compensation is attributable to options granted at December 31, 2015. The remaining ~~$71~~$387 thousand increase in salaries and benefits reflect cost-of-living/merit raises and the addition of lending, customer service and operations staff.

resulted in a decrease in building rent but was offset by an increase in depreciation expense. In addition, the 2016 expenses include expenses for four branches that were part of the acquisition of First Independence.

Data processing: Data processing expenses were ~~$869~~$883 thousand and ~~$727~~$746 thousand for the three-month periods ended ~~June~~September 30, 2016 and 2015. The increase of ~~$142~~$137 thousand was principally due to increased debit card processing costs as usage has increased.

Professional fees: Professional fees, including regulatory assessments were ~~$568~~$527 thousand for the three months ended ~~June~~September 30, 2016 and ~~$441~~$498 thousand for the three months ended ~~June~~September 30, 2015. ~~Included in second-quarter-2016 professional fees was $87 thousand related to a prospective acquisition which did not result in a definitive agreement.~~ Other increases in professional fees are associated with the reporting requirements of being a public company.

Other real estate owned: Other real estate owned expenses, including provision for unrealized losses were ~~$100~~$169 thousand for the three months ended ~~June~~September 30, 2016, offset by gains on the sale of other real estate owned of ~~$158~~$13 thousand. For the three months ended ~~June~~September 30, 2015, other real estate owned expenses, including provision for unrealized losses were ~~$78~~$112 thousand, offset by gains on the sale of other real estate owned of ~~$22~~$59 thousand.

Other: Other non-interest expenses, which consist of, subscriptions; memberships and dues; employee expenses including travel, meals, entertainment and education; supplies; printing; insurance; account related losses; correspondent bank fees; customer program expenses; losses net of gains on the sale of fixed assets and other operating expenses such as settlement of claims, were ~~$964~~$1.1 million for the three months ended September 30, 2016 and $899 thousand for the three months ended ~~June 30, 2016 and $966 thousand for the three months ended June~~September 30, 2015. The $2$185 thousand ~~decrease~~increase in other non-interest expenses was attributable to a settlement of $180 thousand, offset by stock listing and transfer services and investor relations costs associated with being a public company, increased deposit customer program expenses associated with additional deposit customers taking advantage of the benefit of free ATM usage anywhere in the United States, as well as incremental operating costs attributable to the acquired First Independence branches.

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015: For the ~~six~~nine months ended ~~June~~September 30, 2016, non-interest expense totaled ~~$19.6~~$30.4 million, an increase of ~~$1.6~~$3.5 million, or ~~8.8%~~12.8%, compared with the ~~six~~nine months ended ~~June~~September 30, 2015. The overall increase was primarily due to an increase in salaries and employee benefits of ~~$874 thousand,~~$1.6 million, an increase in data processing of ~~$326~~$463 thousand, an increase in other expense of $345 thousand, an increase in net occupancy and equipment of $243 thousand, an increase in telecommunications of $221 thousand, an increase in FDIC insurance of ~~$162~~$185 and an increase in ~~other~~merger expense of $160 thousand, partially offset by ~~decreases~~a decrease in loss on debt extinguishment of $258 ~~thousand and other real estate owned of $113~~ thousand. Non-interest expense for the ~~six-month~~nine-month period ended ~~June~~September 30, 2016 includes ~~$899 thousand~~$1.3 million of incremental operating expenses attributable to the four branch locations acquired with the First Independence acquisition. These items and other changes in the various components of non-interest expense are discussed in more detail below.

The following table provides a comparison of the major components of non-interest expense for the ~~six~~nine months ended ~~June~~September 30, 2016 and 2015.

						2016 vs. 2015										2016 vs. 2015
(Dollars in thousands)	2016		2015			Change			%			2016		2015		Change			%
Salaries and employee benefits	$	10,458	$	9,584		$	874			9.1	%	$	15,849	$	14,243	$	1,606			11.3	%
Net occupancy and equipment		2,162		2,126			36			1.7	%		3,321		3,078		243			7.9	%
Data processing		1,707		1,381			326			23.6	%		2,590		2,127		463			21.8	%
Professional fees		1,017		912			105			11.5	%		1,544		1,410		134			9.5	%
Advertising and business development		548		568			(20	)		(3.5	)%		901		863		38			4.4	%
Telecommunications		518		379			139			36.7	%		803		582		221			38.0	%
FDIC insurance		513		351			162			46.1	%		753		568		185			32.6	%
Courier and postage		303		263			40			15.2	%		482		375		107			28.5	%
Loan expense		260		178			82			46.1	%		413		272		141			51.8	%
Amortization of core deposit intangible		173		121			52			43.0	%		260		182		78			42.9	%
Other real estate owned		8		121			(113	)		(93.4	)%		164		174		(10	)		-5.7	%
Other		1,905		1,745			160			9.2	%		2,989		2,644		345			13.0	%
Sub-Total		19,572		17,729			1,843			10.4	%		30,069		26,518		3,551			13.4	%
Merger expenses													237		77		160			207.8	%
Loss on debt extinguishment		58		316	��		(258	)		(81.6	)%		58		316		(258	)		-81.6	%
Total non-interest expense	$	19,630	$	18,045		$	1,585			8.8	%	$	30,364	$	26,911	$	3,453			12.8	%

Salaries and employee benefits: Salaries and benefits were ~~$10.5~~$15.9 million for the ~~six~~nine months ended ~~June~~September 30, 2016, as compared to ~~$9.6~~$14.2 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The increase in salaries and benefits of ~~$874 thousand~~$1.6 million includes approximately ~~$567~~$809 thousand attributable to the First Independence ~~acquisition, including $42 thousand associated with our assumption of obligations related to First Independence’s participation in the Pentegra Defined Benefit Plan for Financial Institutions.~~acquisition. Included in salaries and employee benefits is stock-based compensation expense of ~~$135~~$202 thousand for the ~~six~~nine months ended ~~June~~September 30, 2016 and ~~$81~~$122 thousand in the comparable period of 2015. The increase of ~~$54~~$80 thousand in stock-based compensation is attributable to options

granted at December 31, 2015. The remaining ~~$253~~$595 thousand increase in salaries and benefits reflect cost-of-living/merit raises and the addition of lending, customer service and operations staff.

Net occupancy and equipment: Net occupancy and equipment includes expenses related to the use of premises and equipment, such as depreciation, operating lease payments, repairs and maintenance, insurance, property taxes and utilities, and is net of incidental rental income of excess facilities. Occupancy expenses were ~~$2.2~~$3.3 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and ~~$2.1~~$3.1 million for the ~~six~~nine months ended ~~June~~September 30, 2015. The purchase of the corporate headquarters building in April 2015 resulted in a decrease in building rent but was offset by an increase in depreciation expense. In addition, the 2016 expenses include expenses for four branches that were part of the acquisition of First Independence.

Data processing: Data processing expenses were ~~$1.7~~$2.6 million and ~~$1.4~~$2.1 million for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and 2015. The increase of ~~$326~~$463 thousand was principally due to increased debit card processing costs as usage has increased.

Professional fees: Professional fees, including regulatory assessments were ~~$1.1million~~$1.5 million for the ~~six~~nine months ended ~~June~~September 30, 2016 and ~~$912 thousand~~$1.4 million for the ~~six~~nine months ended ~~June~~September 30, 2015. Increased legal expenses associated with a 2016 prospective acquisition, which did not result in a definitive agreement, were partially offset by reduced legal fees related to the June 2015 settlement of a lawsuit. Other increasesIncreases in professional fees are principally associated with the reporting requirements of being a public company.

Other real estate owned: Other real estate owned expenses, including provision for unrealized losses were ~~$168~~$337 thousand for the ~~six~~nine months ended ~~June~~September 30, 2016, offset by gains on the sale of other real estate owned of ~~$160~~$173 thousand. For the ~~six~~nine months ended ~~June~~September 30, 2015, other real estate owned expenses, including provision for unrealized losses were ~~$190~~$302 thousand, offset by gains on the sale of other real estate owned of ~~$69~~$128 thousand.

associated with being a public company, increased deposit customer program expenses associated with additional deposit customers taking advantage of the benefit of free ATM usage anywhere in the United States, as well as incremental operating costs attributable to the acquired First Independence branches.

Loss on extinguishment of debt: In the first quarter of 2015, we chose to incur a $316 thousand loss on extinguishment of debt due to the prepayment of all of our FHLB term advances. The weighted average rate of the FHLB term advances was 3.82%, and to the extent that additional funding was needed our FHLB line of credit has a lower cost of funds. In the first quarter of 2016, we paid our bank stock loan and wrote off the deferred debt issuance costs associated with this loan resulting in the loss on debt extinguishment in the first ~~six~~nine months of 2016.

The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of our performance and is not defined under GAAP. For a reconciliation of Non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2. Our efficiency ratio is computed by dividing non-interest expense, excluding merger expenses and loss on debt extinguishment by the sum of net interest income and non-interest income, excluding net gain from securities transactions. Generally, an increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease would indicate a more efficient allocation of resources.

Our efficiency ratio was ~~68.1%~~72.4% for the three months ended ~~June~~September 30, 2016, compared with ~~66.8%~~65.2% for the three months ended ~~June~~September 30, 2015. The increase was primarily due to increased non-interest expense, as discussed in “Results of Operations – Non-Interest Expense.”

Our efficiency ratio was ~~66.1%~~68.1% for the ~~six~~nine months ended ~~June~~September 30, 2016, compared with ~~66.7%~~66.2% for the ~~six~~nine months ended ~~June~~September 30, 2015. The decrease was primarily due to increased net interest income, as discussed in “Results of Operations – Net Interest Income and Net Interest Margin Analysis,” and increased non-interest ~~income.~~expense.

The amount of income tax expense is influenced by the amount of pre-tax income, the amounts of tax-exempt investment income, non-taxable life insurance income, non-deductible expenses and available federal income tax credits.

Three months ended ~~June~~September 30, 2016 compared with three months ended ~~June~~September 30, 2015: For the three months ended ~~June~~September 30, 2016, income tax expense was ~~$1.3~~$1.0 million compared with $1.3 million for the three months ended ~~June~~September 30, 2015. ~~Although income before income taxes was higher in the second quarter of 2016 as compared to the second quarter of 2015, our~~Our effective tax rate for the ~~second~~third quarter of 2016 was lower at ~~31.8%~~27.2% as compared to ~~33.8%~~32.9% for the ~~second~~third quarter of 2015. The U.S. statutory rate was 35.0% for both periods. The lower effective income tax rate for 2016 ~~is principally due to the benefit of increased income tax credits from investment in qualified affordable housing projects, including additional tax credits acquired~~reflects a reduction in the ~~First Independence acquisition.~~estimated effective tax rate expected to be applicable for the full year of 2016 from 31.8% to 30.5%. At September 30, 2016, the effective tax expected to be applicable for the full year of 2016 was reduced to reflect lower anticipated income before taxes and proportionately higher tax-exempt income.

~~Six~~Nine months ended ~~June~~September 30, 2016 compared with ~~six~~nine months ended ~~June~~September 30, 2015: For the ~~six~~nine months ended ~~June~~September 30, 2016, income tax expense was ~~$2.9~~$3.9 million compared with ~~$2.6~~$3.9 million for the ~~six~~nine months ended ~~June~~September 30, ~~2015. The increase in income tax expense was primarily attributable to increased pre-tax income in 2016, partially offset by a lower effective tax rate in 2016 as compared to~~ 2015. Our effective tax rate for the first ~~six~~nine months of 2016 was ~~31.8%~~30.5% as compared to ~~33.8%~~33.5% for the first ~~six~~nine months of 2015. The ~~U.S. statutory rate was 35.0%~~effective tax rates for ~~both periods.~~each of the comparable periods reflect the levels of tax-exempt income, non-taxable life insurance income and federal income tax credits estimated to be included in our financial results for the applicable full fiscal years. The lower effective ~~income~~ tax rate ~~for the first six months of~~in 2016 is principally due to the benefit of higher levels of tax-exempt income and increased income tax credits from ~~investment~~investments in qualified affordable housing projects, including an additional ~~tax credits~~project acquired in the First Independence acquisition.

Our consolidated financial statements and related notes included elsewhere in this ~~quarterly report~~Quarterly Report have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or recession.

Unlike many industrial companies, substantially all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates may not necessarily move in the same direction or in the same magnitude as the prices of goods and services. However, other operating expenses do reflect general levels of inflation.

Our total assets decreased ~~$40.9~~$28.6 million, or ~~2.6%~~1.8%, from $1.59 billion at December 31, 2015, to ~~$1.54~~$1.56 billion at ~~June~~September 30, 2016. The decrease in total assets was primarily from decreases of ~~$48.9 million in investment securities and $10.6~~$35.0 million in cash and cash equivalents and $4.9 million in net loans held for investment partially offset by an increase of ~~$19.2~~$11.0 million in ~~net loans held for investment.~~investment securities. Our total liabilities decreased ~~$31.8~~$22.7 million, or ~~2.2%~~1.6%, from $1.42 billion at December 31, 2015 to ~~$1.39~~$1.40 billion at ~~June~~September 30, 2016. The decrease in total liabilities was primarily from decreases in total deposits of ~~$19.1~~$38.2 million and repayment of the bank stock loan of $18.6 million, partially offset by increases in FHLB ~~advance~~advances of ~~$2.2~~$23.3 million, increases in interest payable and other liabilities of $6.3 million, and increases in federal funds purchased and retail repurchase agreements of ~~$2.0~~$4.6 million. Our total stockholders’ equity decreased ~~$9.0~~$6.0 million, or ~~5.4%~~3.6%, from $167.2 million at December 31, 2015 to ~~$158.2~~$161.2 million at ~~June~~September 30, 2016. The decrease in total stockholders’ equity was primarily from redemption of Series C preferred stock of $16.4 million, partially offset by an increase in retained earnings of ~~$6.3~~$9.0 million, an increase in the value of the securities portfolio recognized in other accumulated comprehensive earnings of ~~$639~~$962 thousand and an increase in additional paid-in capital of ~~$403~~$469 thousand.

Loans are our largest category of earning assets and typically provide higher yields than other types of earning assets. At ~~June~~September 30, 2016, our gross loans held for portfolio totaled ~~$980.1~~$956.1 million, ~~an increase~~a decrease of ~~$19.8~~$4.3 million, or ~~2.1%~~0.4%, compared with December 31, 2015. The overall ~~increase~~decrease in loan volume consisted of ~~$17.8~~$27.1 million ~~or 90.2%,~~ from commercial and industrial, $8.9 million from commercial real estate, ~~construction; $12.2~~and $2.2 million ~~or 61.6%, from residential real estate; $796 thousand, or 4.0%, from consumer; and $485 thousand, or 2.5%,~~ from agricultural real estate, but were partially offset by ~~decreases~~increases of ~~$8.6~~$29.4 million ~~or 43.4%,~~ from ~~commercial and industrial; $1.6~~real estate construction, $2.7 million ~~or 8.2%,~~from residential real estate, $1.0 million from agricultural ~~real estate;~~ and ~~$1.3 million, or 6.7%,~~$767 thousand from ~~commercial real estate.~~consumer. We also had loans classified as held for sale totaling ~~$4.0~~$3.1 million at ~~June~~September 30, 2016.

Our loan portfolio consists of various types of loans, most of which are made to borrowers located in the Wichita and Kansas City ~~MSAs,~~Metropolitan Statistical Areas (“MSAs”), as well as various community markets throughout Kansas and Missouri. The majority of our loan portfolio consists of commercial and industrial and commercial real estate loans and a substantial portion of our borrowers’ ability to honor their obligations is dependent on local economic conditions in Kansas and Missouri. As of ~~June~~September 30, 2016, there was no concentration of loans to any one type of industry exceeding 10% of total loans.

At ~~June~~September 30, 2016, total loans were ~~81.9%~~81.2% of deposits and ~~63.4%~~61.4% of total assets. At December 31, 2015, total loans were 79.0% of deposits and 60.6% of total assets.

The organic, or non-acquired, ~~growth~~changes in our loan portfolio isare attributable to our ability to attract new customers from other financial institutions and overall growth in our markets. Several new lenders have been hired in our markets, and we believe these lenders have been successful in transitioning their former clients and attracting new clients. Lending activities originate from the

efforts of our lenders, with an emphasis on lending to individuals, professionals, small to medium-sized businesses and commercial companies located in the Wichita and Kansas City MSAs, as well as community markets in both Kansas and Missouri.

We provide commercial lines of credit, working capital loans, commercial real estate-backed loans (including loans secured by owner occupied commercial properties), term loans, equipment financing, acquisition, expansion and development loans, borrowing base loans, real estate construction loans, homebuilder loans, SBA loans, agricultural and agricultural real estate loans, letters of credit and other loan products to national and regional companies, real estate developers, mortgage lenders, manufacturing and industrial companies and other businesses. The types of loans we make to consumers include residential real estate loans, home equity loans, home equity lines of credit, installment loans, unsecured and secured personal lines of credit, overdraft protection and letters of credit.

The following table summarizes our loan portfolio by type of loan as of the dates indicated:

	June 30,					December 31,
	2016					2015					September 30, 2016					December 31, 2015
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	$	253,468		25.8	%	$	262,032		27.3	%	$	234,977		24.6	%	$	262,032		27.3	%
Real estate loans:
Commercial real estate		341,766		34.9	%		343,096		35.7	%		334,213		35.0	%		343,096		35.7	%
Real estate construction		71,733		7.3	%		53,921		5.6	%		83,283		8.7	%		53,921		5.6	%
Residential real estate		262,387		26.8	%		250,216		26.1	%		252,919		26.5	%		250,216		26.1	%
Agricultural real estate		16,565		1.7	%		18,180		1.9	%		15,991		1.7	%		18,180		1.9	%
Total real estate loans		692,451		70.7	%		665,413		69.3	%		921,383		96.5	%		665,413		96.6	%
Consumer		17,899		1.8	%		17,103		1.8	%		17,870		1.9	%		17,103		1.8	%
Agricultural		16,292		1.7	%		15,807		1.6	%		16,817		1.6	%		15,807		1.6	%
Total loans held for investment	$	980,110		100.0	%	$	960,355		100.0	%	$	956,070		100.0	%	$	960,355		100.0	%
Total loans held for sale	$	4,002		100.0	%	$	3,504		100.0	%	$	3,071		100.0	%	$	3,504		100.0	%
Total loans (net of allowances)	$	974,080		100.0	%	$	954,849		100.0	%	$	949,990		100.0	%	$	954,849		100.0	%

Commercial and industrial: Commercial and industrial loans include loans used to purchase fixed assets, to provide working capital, or meet other financing needs of the business. Our commercial and industrial portfolio totaled ~~$253.5~~$235.0 million at ~~June~~September 30, 2016, a decrease of ~~$8.6~~$27.1 million, or ~~3.3%~~10.3%, compared to December 31, 2015. Excluding a decline in mortgage finance loan participation balances of $18.9 million, the commercial and industrial portfolio saw ~~an increase~~a decrease of ~~$10.3~~$8.2 million compared to December 31, 2015.

Commercial real estate: Commercial real estate loans include all loans secured by nonfarm nonresidential properties and by multifamily residential properties, as well as 1-4 family investment-purpose real estate loans. Our commercial real estate loans were ~~$341.8~~$334.2 million at ~~June~~September 30, 2016, a decrease of ~~$1.3~~$8.9 million, or ~~0.4%~~2.6%, compared to December 31, 2015.

Real estate construction: Real estate construction loans include loans made for the purpose of acquisition, development, or construction of real property, both commercial and consumer. Our real estate construction portfolio totaled ~~$71.7~~$83.3 million at ~~June~~September 30, 2016, an increase of ~~$17.8~~$29.4 million, or ~~33.0%~~54.5%, compared to December 31, 2015.

Residential real estate: Residential real estate loans include loans secured by primary or secondary personal residences. Our residential real estate portfolio totaled ~~$262.4~~$252.9 million at ~~June~~September 30, 2016, an increase of ~~$12.2~~$2.7 million, or ~~4.9%~~1.1%, compared to December 31, 2015. In May 2016, we purchased a pool of residential mortgages totaling $19.7 million in an effort to diversify our loan portfolio and increase interest income. Our purchased residential real estate loans totaled ~~$88.3~~$80.4 million at ~~June~~September 30, 2016, an increase of ~~$13.6~~$5.6 million compared to December 31, 2015, or ~~111.6%~~208.4% of the overall increase in residential real estate loans.

Agricultural real estate, Agricultural, Consumer and other: Agricultural real estate loans are loans related to farmland. Agricultural loans are primarily operating lines subject to annual farming revenues including productivity/yield of the agricultural commodities produced. Consumer loans are generally secured by consumer assets, but may be unsecured. These three loan pools form an immaterial portion of our overall loan portfolio.

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with predetermined interest rates and floating rates in each maturity range as of ~~June~~September 30, 2016 are summarized in the following table:

	As of June 30, 2016								As of September 30, 2016
	One year or less		After one year through five years		After five years		Total		One year or less		After one year through five years		After five years		Total
	(Dollars in thousands)								(Dollars in thousands)
Commercial and industrial	$	92,078	$	119,015	$	42,375	$	253,468	$	96,175	$	100,028	$	38,774	$	234,977
Real Estate:
Commercial real estate		77,261		173,298		91,207		341,766		67,735		165,522		100,956		334,213
Real estate construction		30,278		32,592		8,863		71,733		34,406		35,823		13,054		83,283
Residential real estate		5,654		8,464		248,269		262,387		6,179		6,890		239,850		252,919
Agricultural real estate		5,266		4,920		6,379		16,565		4,639		5,173		6,179		15,991
Total real estate		118,459		219,274		354,718		692,451		112,959		213,408		360,039		686,406
Consumer		1,926		10,535		5,438		17,899		1,794		10,477		5,599		17,870
Agricultural		10,071		4,486		1,735		16,292		10,175		4,984		1,658		16,817
Total	$	222,534	$	353,310	$	404,266	$	980,110	$	221,103	$	328,897	$	406,070	$	956,070
Loans with a predetermined fixed interest rate		106,091		210,082		131,181		447,354		101,583		200,556		128,365		430,504
Loans with an adjustable/floating interest rate		116,443		143,228		273,085		532,756		119,520		128,341		277,705		525,566
Total	$	222,534	$	353,310	$	404,266	$	980,110	$	221,103	$	328,897	$	406,070	$	956,070

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with predetermined interest rates and floating rates in each maturity range as of December 31, 2015 are summarized in the following table:

We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans are analyzed individually and classified based on credit risk. Consumer loans are considered pass credits unless downgraded due to payment status or reviewed as part of a larger credit relationship. We use the following definitions for risk ratings:

Pass: Loans classified as pass do not have any noted weaknesses and repayment of the loan is expected.

Special Mention ~~Mention:~~: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of our credit position at some future date.

The risk category of loans by class of loans is as follows as of ~~June~~September 30, 2016:

	As of June 30, 2016										As of September 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Total		Pass		Special Mention		Substandard		Doubtful		Total
	(Dollars in thousands)										(Dollars in thousands)
Commercial and industrial	$	252,826	$	—	$	642	$	—	$	253,468	$	232,461	$	—	$	2,516	$	—	$	234,977
Real estate:
Commercial real estate		335,011	―			6,755	―			341,766		328,402		—		5,811		—		334,213
Real estate construction		71,255	―			478	―			71,733		82,547		—		736		—		83,283
Residential real estate		259,592	―			2,795	―			262,387		249,516		—		3,403		—		252,919
Agricultural real estate		15,552	―			1,013	―			16,565		15,187		—		804		—		15,991
Total real estate		681,410	―			11,041	―			692,451		675,652		—		10,754		—		686,406
Consumer		17,587	―			312	―			17,899		17,553		—		317		—		17,870
Agricultural		16,052	―			240	―			16,292		16,474		—		343		—		16,817
Total	$	967,875	$	—	$	12,235	$	—	$	980,110	$	942,140	$	—	$	13,930	$	—	$	956,070

The risk category of loans by class of loans is as follows as of December 31, 2015:

At ~~June~~September 30, 2016, loans considered pass rated credits increased to ~~98.8%~~98.5% of total loans, up from 98.4% of total loans at December 31, 2015. Classified loans were ~~$12.2~~$13.9 million at ~~June~~September 30, 2016, a decrease of ~~$3.1~~$1.4 million, or ~~20.3%~~9.3%, from $15.4 million at December 31, 2015. The decrease primarily resulted from our continued focus on resolving classified loans in a timely ~~manner as well as economic improvement in our principal markets.~~manner.

The following table presents information regarding nonperforming assets at the dates indicated:

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
	(Dollars in thousands)						(Dollars in thousands)
Nonaccrual loans	$	7,855		$	8,197		$	7,157		$	8,197
Accruing loans 90 or more days past due	―				35			—			35
Restructured loans-accruing	―			―				—			—
OREO acquired through foreclosure, net		4,898			5,811			5,647			5,811
Total nonperforming assets	$	12,753		$	14,043		$	12,804		$	14,043
Ratios:
Nonperforming assets to total assets		0.83	%		0.89	%		0.82	%		0.89	%
Nonperforming assets to total loans plus OREO		1.29	%		1.45	%		1.33	%		1.45	%

Nonperforming assets (“NPAs”) include loans on nonaccrual status, accruing loans 90 or more days past due, restructured loans, and other real estate acquired through foreclosure. Impaired loans do not include purchased loans that were identified upon acquisition as having experienced credit deterioration since origination (“purchased credit impaired loans” or “PCI loans”). See the “Critical Accounting Policies” section for information regarding the review of loans for determining the allowance for loan loss and impairment.

Generally, loans are designated as nonaccrual when either principal or interest payments are 90 days or more past due based on contractual terms, unless the loan is well secured and in the process of collection. Consumer loans are typically charged off no later than 180 days past due. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. When a loan is placed on nonaccrual status, unpaid interest credited to income is reversed against income. Future interest income may be recorded on a cash basis after recovery of principal is reasonably assured. Nonaccrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

We had ~~$7.9~~$7.2 million in nonperforming loans at ~~June~~September 30, 2016, compared with $8.2 million at December 31, 2015. The nonperforming loans at ~~June~~September 30, 2016 consisted of 9693 separate credits and 82 separate borrowers. We had no non-performing loan relationships with an outstanding balance in excess of $1.0 million as of ~~June~~September 30, 2016.

There are several procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by lenders, and also monitor delinquency levels for any negative or adverse trends. In accordance with applicable regulation, appraisals or evaluations are required to independently value real estate and, as an important element, to consider when underwriting loans secured in part or in whole by real estate. The value of real estate collateral provides additional support to the borrower’s credit capacity. There can be no ~~assurance;~~assurance, however, that our loan portfolio will not become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

Potential problem loans consist of loans that are performing in accordance with contractual terms, but for which management has concerns about the borrower’s ability to comply with repayment terms because of the borrower’s potential financial difficulties. Potential problem loans are assigned a grade of special mention or substandard. At ~~June~~September 30, 2016, the Company had ~~$4.4~~$6.8 million in potential problem loans which were not included in either non-accrual or 90 days past due categories, compared to $7.1 million at December 31, 2015.

With respect to potential problem loans, all monitored and under-performing loans are reviewed and evaluated to determine if they are impaired. If we determine that a loan is impaired, then we evaluate the borrower’s overall financial condition to determine the need, if any, for possible write downs or appropriate additions to the allowance for loan losses based on the unlikelihood of full repayment of principal and interest in accordance with the contractual terms or the net realizable value of the pledged collateral.

Please see “Critical Accounting Policies – Allowance for Loan Losses” for additional discussion of our allowance policy.

In connection with our review of the loan portfolio, risk elements attributable to particular loan types or categories are considered when assessing the quality of individual loans. Some of the risk elements include:

Purchased credit impaired loans: As part of previous acquisitions, we acquired certain loans for which there was, at acquisition, evidence of deterioration of credit quality since origination. These purchased credit impaired loans were recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. Purchased credit impaired loans are accounted for individually. We estimate the amount and timing of expected cash flows for each loan, and the expected cash flows in excess of the amount paid are recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (non-accretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of the expected cash flows is less than the carrying amount, a loss is recorded. If the present value of the expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

The table below shows the contractually required principal loan payments and the associated purchase discount on our purchased credit impaired portfolio.

	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
	(Dollars in thousands)						(Dollars in thousands)
Contractually required payments	$	6,759		$	7,550		$	5,734		$	7,550
Discount		(1,583	)		(1,794	)		(1,443	)		(1,794	)
Recorded investment	$	5,176		$	5,756		$	4,291		$	5,756

Analysis of allowance for loan losses: At ~~June~~September 30, 2016, the allowance for loan losses totaled ~~$6.0~~$6.1 million, or ~~0.62%~~0.64% of total loans. At December 31, 2015, the allowance for loan losses aggregated $5.5 million, or 0.57% of total loans.

The allowance for loan losses on loans collectively evaluated for impairment totaled ~~$5.7~~$5.6 million, or 0.59%, of the ~~$969.2~~$945.9 million in loans collectively evaluated for impairment at ~~June~~September 30, 2016, compared to an allowance for loan losses of $5.2 million, or 0.55% of the $948.9 million in loans collectively evaluated for impairment at December 31, 2015. The increases in the allowance for loan losses as a percentage of total loans and of loans collectively evaluated for impairment principally reflect management’s evaluation of current environmental conditions and changes in the composition and quality of our loan portfolio. The changes in composition included decreases in mortgage finance loans since December 31, 2015. The unique credit qualities of mortgage finance loans require lower reserves than other loan categories. Also considered by management in evaluating the allowance for loan losses are applied loss factors which are based in part on historical loss experience.

Annualized net losses as a percentage of average loans decreased to ~~0.20%~~0.02% for the three months ended ~~June~~September 30, 2016, as compared to ~~0.79%~~0.38% for the three months ended ~~June~~September 30, 2015. Annualized net losses as a percentage of average loans decreased to ~~0.16%~~0.11% for the ~~six~~nine months ended ~~June~~September 30, 2016, as compared to ~~0.44%~~0.48% for the ~~six~~nine months ended ~~June~~September 30, 2015.

The following table presents, as of and for the periods indicated, an analysis of the allowance for loan losses and other related data:

	As of and for the Three Months Ended June 30,						As of and for the Six Months Ended June 30,						As of and for the Three Months Ended September 30,						As of and for the Nine Months Ended September 30,
	2016			2015			2016			2015			2016			2015			2016			2015
	(Dollars in thousands)												(Dollars in thousands)
Average loans outstanding	$	950,243		$	772,215		$	947,305		$	755,426		$	968,402		$	831,553		$	954,388		$	781,080
Gross loans outstanding at end of period⁽¹⁾	$	980,110		$	834,740		$	980,110		$	834,740		$	956,070		$	855,676		$	956,070		$	855,676
Allowance for loan losses at beginning of the period	$	5,980		$	6,565		$	5,506		$	5,963		$	6,030		$	5,643		$	5,506		$	5,963
Provision for loan losses		532			605			1,255			1,330			104			537			1,359			1,867
Charge-offs:
Commercial and industrial		(7	)		(2	)		(62	)		(8	)		(11	)		(1,181	)		(73	)		(1,190	)
Real estate:
Commercial real estate		(190	)		(1,428	)		(224	)		(1,456	)		(52	)		(8	)		(276	)		(1,464	)
Real estate construction	―			―			―			―				—			—			—			—
Residential real estate		(200	)		(72	)		(248	)		(156	)		(30	)		(2	)		(278	)		(158	)
Agricultural real estate		―		―				(23	)	―				—			—			(23	)	―
Consumer		(153	)		(59	)		(281	)		(119	)		(96	)		(64	)		(377	)		(182	)
Agricultural				―				(3	)	―						―				(3	)		—
Total charge-offs		(550	)		(1,561	)		(841	)		(1,739	)		(189	)		(1,255	)		(1,030	)		(2,994	)
Recoveries:
Commercial and industrial		2			4			9			7			26			—			35			7
Real estate:
Commercial real estate		27			4			32			40			32			79			64			118
Real estate construction	―				2		―				2			—			—			—			2
Residential real estate		20			7			26			8			51			18			77			28
Agricultural real estate	―				—		―			―				1			—			1			—
Consumer		19			17			42			32			25			15			67			46
Agricultural		―		―				1		―				—			1			1			1
Total recoveries		68			34			110			89			135			113			245			202
Net recoveries (charge-offs)		(482	)		(1,527	)		(731	)		(1,650	)		(54	)		(1,142	)		(785	)		(2,792	)
Allowance for loan losses at end of the period	$	6,030		$	5,643		$	6,030		$	5,643		$	6,080		$	5,038		$	6,080		$	5,038
Ratio of allowance to period-ended loans		0.62	%		0.68	%		0.62	%		0.68	%		0.64	%		0.59	%		0.64	%		0.59	%
Annualized ratio of net charge-offs (recoveries) to average loans		0.20	%		0.79	%		0.16	%		0.44	%		0.02	%		0.55	%		0.11	%		0.48	%

The following table shows the allocation of the allowance for loan losses among our loan categories and certain other information as of the dates indicated. The total allowance is available to absorb losses from any loan category.

	June 30, 2016					December 31, 2015					September 30, 2016					December 31, 2015
	Amount		% of Total Allowance			Amount		% of Total Allowance			Amount		% of Total Allowance			Amount		% of Total Allowance
	(Dollars in thousands)										(Dollars in thousands)
Balance of allowance for loan losses applicable to:
Commercial and industrial	$	1,574		26.1	%	$	1,366		24.8	%	$	1,463		24.1	%	$	1,366		24.8	%
Real estate:
Commercial real estate		1,839		30.5	%		1,728		31.4	%		1,965		32.3	%		1,728		31.4	%
Real estate construction		469		7.8	%		323		5.9	%		630		10.4	%		323		5.9	%
Residential real estate		1,917		31.8	%		1,824		33.1	%		1,653		27.2	%		1,824		33.1	%
Agricultural real estate		41		0.7	%		29		0.5	%		40		0.7	%		29		0.5	%
Consumer		127		2.1	%		187		3.4	%		263		4.3	%		187		3.4	%
Agricultural		63		1.0	%		49		0.9	%		66		1.1	%		49		0.9	%
Total allowance for loan losses	$	6,030		100.0	%	$	5,506		100.0	%	$	6,080		100.0	%	$	5,506		100.0	%

Management believes that the allowance for loan losses at ~~June~~September 30, 2016 was adequate to cover probable incurred losses in the loan portfolio as of such date. There can be no assurance, however, that we will not sustain losses in future periods, which could be substantial in relation to the size of the allowance at ~~June~~September 30, 2016.

We use our securities portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk, to meet pledging requirements and to meet regulatory capital requirements. At ~~June~~September 30, 2016, the carrying amount of investment securities totaled ~~$392.5~~$452.3 million, a decrease of ~~$48.9~~$11.0 million, or ~~11.1%~~2.5%, compared with December 31, 2015. At ~~June~~September 30, 2016, securities represented ~~25.4%~~29.0% of total assets compared with 27.8% at December 31, 2015.

At the date of purchase, debt and equity securities are classified into one of two categories, held-to-maturity or available-for-sale. We do not purchase securities for trading purposes. At each reporting date, the appropriateness of the classification is reassessed. Investments in debt securities are classified as held-to-maturity and carried at cost, adjusted for the amortization of premiums and the accretion of discounts, in the financial statements only if management has the positive intent and ability to hold those securities to maturity. Debt securities not classified as held-to-maturity are classified as available-for-sale and measured at fair value in the financial statements with unrealized gains and losses reported, net of tax, as accumulated comprehensive income or loss until realized. Interest earned on securities is included in total interest and dividend income. Also included in total interest and dividend income are dividends received on stock investments in the Federal Reserve Bank of Kansas City and the FHLB of Topeka. These stock investments are stated at cost.

The following table summarizes the amortized cost and fair value by classification of available-for-sale securities as of the dates shown:

	June 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)								(Dollars in thousands)
U.S. government-sponsored entities	$	4,745	$	4,719	$	17,090	$	17,036	$	4,756	$	4,783	$	17,090	$	17,036
Residential mortgage-backed securities (issued by government-sponsored entities)		65,584		65,993		109,784		109,521		92,672		93,361		109,784		109,521
Corporate		3,000		2,981		3,000		2,954		3,000		3,010		3,000		2,954
Small Business Administration loan pools		249		271		275		297		211		229		275		297
State and political subdivisions		501		508		504		508		500		507		504		508
Equity securities		500		504		500		494		500		501		500		494
Total available-for-sale securities	$	74,579	$	74,976	$	131,153	$	130,810	$	101,639	$	102,391	$	131,153	$	130,810

The following table summarizes the amortized cost and fair value by classification of held-to-maturity securities as of the dates shown:

	June 30, 2016				December 31, 2015				September 30, 2016				December 31, 2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)								(Dollars in thousands)
U.S. government-sponsored entities	$	2,188	$	2,188	$	2,669	$	2,643	$	—	$	—	$	2,669	$	2,643
Residential mortgage-backed securities (issued by government-sponsored entities)		233,302		237,356		230,554		230,993		257,008		262,298		230,554		230,993
Corporate		12,985		12,718		12,983		12,758		12,987		13,055		12,983		12,758
Small Business Administration loan pools		2,636		2,697		2,863		2,875		2,399		2,465		2,863		2,875
State and political subdivisions		66,398		69,466		61,470		63,533		77,521		80,407		61,470		63,533
Total held-to-maturity securities	$	317,509	$	324,425	$	310,539	$	312,802	$	349,915	$	358,225	$	310,539	$	312,802

At ~~June~~September 30, 2016 and December 31, 2015, we did not own securities of any one issuer (other than the U.S. government and its agencies or sponsored entities) for which aggregate adjusted cost exceeded 10% of the consolidated stockholders’ equity at the reporting dates noted.

The following tables summarize the contractual maturity of debt securities and their weighted average yields as of ~~June~~September 30, 2016 and December 31, 2015. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Available-for-sale securities are shown at fair value and held-to-maturity securities are shown at cost, adjusted for the amortization of premiums and the accretion of discounts.

	June 30, 2016																									September 30, 2016
	Due in one year or less					Due after one year through five years					Due after five years through 10 years					Due after 10 years					Total					Due in one year or less					Due after one year through five years					Due after five years through 10 years					Due after 10 years					Total
	Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield
	(Dollars in thousands)																									(Dollars in thousands)
Available-for-sale securities:
U.S. government-sponsored entities	$	—		—	%	$	—		—	%	$	4,719		2.17	%	$	—		—	%	$	4,719		2.17	%	$	—	—%			$	—	—%			$	4,783		2.37	%	$	—	—%			$	4,783		2.37	%
Residential mortgage-backed securities (issued by government-sponsored entities)		—		—	%		3,718		1.90	%		340		2.38	%		61,935		2.74	%		65,993		2.69	%		—	—%				3,669		1.88	%		303		2.38	%		89,389		2.63	%		93,361		2.60	%
Corporate		—		—	%		—		—	%		2,981		1.65	%		—		—	%		2,981		1.65	%		—	—%				—	—%				3,010		1.85	%		—	—%				3,010		1.85	%
Small Business Administration loan pools		—		—	%		—		—	%		—		—	%		271		5.21	%		271		5.21	%		—	—%				—	—%				—	—%				229		5.21	%		229		5.21	%
State and political subdivisions⁽¹⁾		—		—	%		508		1.50	%		—		—	%		—		—	%		508		1.50	%		—	—%				507		1.50	%		—	—%				—	—%				507		1.50	%
Total available-for-sale securities	$	—		—		$	4,226		1.85	%	$	8,040		1.99	%	$	62,206		2.75		$	74,472		2.62	%	$	—		—		$	4,176		1.84	%	$	8,096		2.18	%	$	89,618		2.63		$	101,890		2.56	%
Held-to-maturity securities:
U.S. government-sponsored entities	$	—		—	%	$	2,188		2.46	%	$	—		—	%	$	—		—	%	$	2,188		2.46	%
Residential mortgage-backed securities (issued by government-sponsored entities)		—		—	%		4,224		2.50	%		5,659		2.70	%		223,419		2.87	%		233,302		2.86	%	$	—	—%			$	4,208	2.50			$	5,554	2.71			$	247,246	2.82			$	257,008	2.82
Corporate		—		—	%		5,337		2.74	%		—		—	%		7,648		2.37	%		12,985		2.52	%		—	—%				5,321		2.74	%		—	—%				7,666		2.48	%		12,987		2.59	%
Small Business Administration loan pools		—		—	%		—		—	%		—		—	%		2,636		2.61	%		2,636		2.61	%		—	—%				—	—%				—	—%				2,399		2.61	%		2,399		2.61	%
State and political subdivisions⁽¹⁾		2,259		2.56	%		12,197		2.62	%		22,366		2.94	%		29,576		3.07	%		66,398		2.93	%		3,103		2.60	%		11,620		2.62	%		22,105		2.98	%		40,693		2.97	%		77,521		2.90	%
Total held-to-maturity securities	$	2,259		2.56	%	$	23,946		2.61	%	$	28,025		2.89	%	$	263,279		2.88	%	$	317,509		2.86	%	$	3,103		2.60	%	$	21,149		2.62	%	$	27,659		2.92	%	$	298,004		2.83	%	$	349,915		2.83	%
Total debt securities	$	2,259		2.56	%	$	28,172		2.49	%	$	36,065		2.69	%	$	325,485		2.85	%	$	391,981		2.81	%	$	3,103		2.60	%	$	25,325		2.49	%	$	35,755		2.75	%	$	387,622		2.79	%	$	451,805		2.77	%

December 31, 2015

Due in one year
or less

Due after one
year through
five years

Due after five
years through
10 years

Due after 10
years

Total

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

Carrying
Value

Yield

(Dollars in thousands)

Available-for-sale securities:

U.S. government-
   sponsored entities

$
100

1.26
%

$
12,204

1.47
%

$
4,732

2.02
%

$
—

—
%

$
17,036

1.63
%
Residential mortgage-
   backed securities
   (issued by government-
   sponsored entities)

—

—
%

3,719

1.91
%

456

2.47
%

105,346

2.89
%

109,521

2.86
%
Corporate

—

—
%

—

—
%

2,954

1.51
%

—

—
%

2,954

1.51
%
Small Business
   Administration loan pools

—

—
%

—

—
%

—

—
%

297

5.21
%

297

5.21
%
State and political subdivisions⁽¹⁾

—

—
%

508

1.50
%

—

—
%

—

—
%

508

1.50
%
Total available-for-sale securities

$
100

1.26
%

$
16,431

1.57
%

$
8,142

1.86
%

$
105,643

2.90
%

$
130,316

2.67
%
Held-to-maturity securities:

U.S. government-
   sponsored entities

$
—

—
%

$
2,669

2.46
%

$
—

—
%

$
—

—
%

$
2,669

2.46
%
Residential mortgage-
   backed securities
   (issued by government-
   sponsored entities)

—

—
%

4,257

2.50
%

5,869

2.68
%

220,428

2.89
%

230,554

2.87
%
Corporate

—

—
%

—

—
%

5,370

2.74
%

7,613

2.06
%

12,983

2.34
%
Small Business
   Administration loan pools

—

—
%

—

—
%

—

—
%

2,863

2.61
%

2,863

2.61
%
State and political subdivisions⁽¹⁾

3,741

2.41
%

12,084

2.60
%

22,731

2.90
%

22,914

3.16
%

61,470

2.91
%
Total held-to-maturity securities

$
3,741

2.41
%

$
19,010

2.55
%

$
33,970

2.84
%

$
253,818

2.88
%

$
310,539

2.85
%
Total debt securities

$
3,841

2.38
%

$
35,441

2.10
%

$
42,112

2.65
%

$
359,461

2.89
%

$
440,855

2.80
%

	December 31, 2015
	Due in one year or less					Due after one year through five years					Due after five years through 10 years					Due after 10 years					Total
	Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield			Carrying Value		Yield
	(Dollars in thousands)
Available-for-sale securities:
U.S. government- sponsored entities	$	100		1.26	%	$	12,204		1.47	%	$	4,732		2.02	%	$	—	—%			$	17,036		1.63	%
Residential mortgage- backed securities (issued by government- sponsored entities)		—	—%				3,719		1.91	%		456		2.47	%		105,346		2.89	%		109,521		2.86	%
Corporate		—	—%				—	—%				2,954		1.51	%		—	—%				2,954		1.51	%
Small Business Administration loan pools		—	—%				—	—%				—	—%				297		5.21	%		297		5.21	%
State and political subdivisions⁽¹⁾		—	—%				508		1.50	%		—	—%				—	—%				508		1.50	%
Total available-for-sale securities	$	100		1.26	%	$	16,431		1.57	%	$	8,142		1.86	%	$	105,643		2.90	%	$	130,316		2.67	%
Held-to-maturity securities:
U.S. government- sponsored entities	$	—	—%			$	2,669		2.46	%	$	—	—%			$	—	—%			$	2,669		2.46	%
Residential mortgage- backed securities (issued by government- sponsored entities)		—	—%				4,257		2.50	%		5,869		2.68	%		220,428		2.89	%		230,554		2.87	%
Corporate		—	—%				—	—%				5,370		2.74	%		7,613		2.06	%		12,983		2.34	%
Small Business Administration loan pools		—	—%				—	—%				—	—%				2,863		2.61	%		2,863		2.61	%
State and political subdivisions⁽¹⁾		3,741		2.41	%		12,084		2.60	%		22,731		2.90	%		22,914		3.16	%		61,470		2.91	%
Total held-to-maturity securities	$	3,741		2.41	%	$	19,010		2.55	%	$	33,970		2.84	%	$	253,818		2.88	%	$	310,539		2.85	%
Total debt securities	$	3,841		2.38	%	$	35,441		2.10	%	$	42,112		2.65	%	$	359,461		2.89	%	$	440,855		2.80	%

Mortgage-backed securities are securities that have been developed by pooling a number of real estate mortgages and which are principally issued by federal agencies such as Ginnie Mae, Fannie Mae and Freddie Mac. Unlike U.S. Treasury and U.S. government agency securities, which have a lump sum payment at maturity, mortgage-backed securities provide cash flows from regular principal and interest payments and principal prepayments throughout the lives of the securities. Premiums and discounts on mortgage-backed securities are amortized and accreted over the expected life of the security and may be impacted by prepayments. As such, mortgage-backed securities which are purchased at a premium will generally produce decreasing net yields as interest rates drop because home owners tend to refinance their mortgages resulting in prepayments and an acceleration of premium amortization. Securities purchased at a discount will reflect higher net yields in a decreasing interest rate environment as prepayments result in an acceleration of discount accretion.

The contractual maturity of mortgage-backed securities is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time. Monthly pay downs on mortgage-backed securities cause the average lives of these securities to be much different than their stated lives. At ~~June~~September 30, 2016 and December 31, 2015, ~~95.3%~~96.1% and 95.8% of the mortgage-backed securities held by us had contractual final maturities of more than ten years with a weighted average life of ~~3.7~~4.3 years and 5.2 years and a modified duration of ~~3.5~~3.9 years and 4.6 years.

Our lending and investing activities are primarily funded by deposits. A variety of deposit accounts are offered with a wide range of interest rates and terms including demand, savings, money market and time deposits. We rely primarily on competitive pricing policies, convenient locations, comprehensive marketing strategy and personalized service to attract and retain these deposits.

The following table shows our composition of deposits at ~~June~~September 30, 2016 and December 31, 2015:

	June 30,					December 31,
	2016					2015					September 30, 2016					December 31, 2015
	Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total			Amount		Percent of Total
	(Dollars in thousands)										(Dollars in thousands)
Non-interest-bearing demand	$	157,896		13.2	%	$	157,834		13.0	%	$	169,368		14.4	%	$	157,834		13.0	%
Interest-bearing demand		291,818		24.4	%		316,965		26.0	%		264,249		22.4	%		316,965		26.0	%
Savings and money market		303,454		25.3	%		302,503		24.9	%		307,006		26.1	%		302,503		24.9	%
Time		443,599		37.1	%		438,612		36.1	%		437,109		37.1	%		438,612		36.1	%
Total deposits	$	1,196,767		100.0	%	$	1,215,914		100.0	%	$	1,177,732		100.0	%	$	1,215,914		100.0	%

Total deposits at ~~June~~September 30, 2016 were ~~$1.20~~$1.18 billion, a decrease of ~~$19.1~~$38.2 million, or ~~1.6%~~3.1%, compared to total deposits of $1.22 billion at December 31, 2015. The decrease in total deposits is primarily due to decreases in interest-bearing demand deposits of ~~$25.1~~$52.7 million, or ~~7.9%~~16.6%, partially offset by increases in ~~time~~non-interest-bearing deposits of ~~$5.0~~$11.5 million, or ~~1.1%~~7.3%, and savings and money market deposits of ~~$951 thousand,~~$4.5 million, or ~~0.3%~~1.5%. The increase in non-interest-bearing demand deposits is primarily from consumer checking, escrow accounts and small business checking accounts. The decrease in interest-bearing demand accounts is due to the use of tax monies by public funds customers. The increase in time deposits is primarily due to customers migrating to term deposits and the attractiveness of our rates in our market partially offset by reductions in public funds customer balances as the tax monies are expended.

Included in the savings and money market deposits are brokered deposit balances of ~~$3.1~~$3.0 million as of ~~June~~September 30, 2016 and $3.9 million as of December 31, 2015. These balances represent customer funds placed in the Insured Cash Sweep (“ICS”) service that allows Equity Bank to break large money market deposits into smaller amounts and place them in a network of other ICS banks to ensure FDIC insurance coverage on the entire deposit. Although classified as brokered deposits for regulatory purposes, funds placed through the ICS service are Equity Bank’s customer relationships that management views as core funding. Brokered certificates of deposit as of ~~June~~September 30, 2016 were $4.0 million and $4.2 million at December 31, 2015. These balances were customer funds placed in the Certificate of Deposit Account Registry Service (“CDARS”) program. CDARS allows Equity Bank to break large time deposits into smaller amounts and place them in a network of other CDARS banks to ensure FDIC insurance coverage on the entire deposit. Although classified as brokered deposits for regulatory purposes, funds placed through the CDARS program are Equity Bank’s customer relationships that management views as core funding.

The following table provides information on the maturity distribution of time deposits of $100 or more as of ~~June~~September 30, 2016 and December 31, 2015:

	June 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
	(Dollars in thousands)				(Dollars in thousands)
3 months or less	$	68,598	$	39,837	$	39,606	$	39,837
Over 3 through 6 months		36,328		42,803		44,223		42,803
Over 6 through 12 months		77,868		96,888		72,306		96,888
Over 12 months		95,484		99,086		116,604		99,086
Total Time Deposits	$	278,278	$	278,614	$	272,739	$	278,614

We utilize borrowings to supplement deposits to fund our lending and investing activities. Short-term borrowings and long-term borrowings include federal funds purchased and retail repurchase agreements, FHLB advances, a bank stock loan, and subordinated debentures.

Federal funds purchased and retail repurchase agreements: We have available federal funds lines of credit with our correspondent banks. As of ~~June~~September 30, 2016 and December 31, 2015, there were no federal funds purchased outstanding. Retail

repurchase agreements outstanding represent the purchase of interests in securities by banking customers. Retail repurchase agreements are stated at the amount of cash received in connection with the transaction. We do not account for any of our repurchase agreements as sales for accounting purposes in our financial statements. Repurchase agreements with banking customers are settled on the following business day. Retail repurchase agreements are secured by investment securities held by us totaling ~~$24.0~~$25.0 million at ~~June~~September 30, 2016 and $25.8 million at December 31, 2015. The agreements are on a day-to-day basis and can be terminated on demand. At ~~June~~September 30, 2016 and December 31, 2015, we had retail repurchase agreements with banking customers of ~~$22.8~~$25.4 million and $20.8 million.

FHLB advances: FHLB advances include both draws against our line of credit and fixed rate term advances. Each term advance is payable in full at its maturity date and contains provision for prepayment penalties. At ~~June~~September 30, 2016 and December 31, 2015 we had no term advances with the FHLB. Our FHLB borrowings are used for operational liquidity needs for originating and purchasing loans, purchasing investments and general operating cash requirements. Our FHLB borrowings were collateralized by certain qualifying loans totaling ~~$303.3~~$336.7 million at ~~June~~September 30, 2016. Based on this collateral and our holdings of FHLB stock, we were eligible to borrow an additional ~~$149.8~~$167.1 million at ~~June~~September 30, 2016.

Bank stock loan: In July 2014, we borrowed $15.5 million from an unaffiliated financial institution, secured by our stock in Equity Bank. In September 2015, we amended and restated the loan agreement and borrowed an additional $5.0 million. At December 31, 2015, $18.6 million was outstanding on the bank stock loan at a fixed rate of 4.00% (computed on the basis of a 360-day year and the actual number of days elapsed) until July 2019. This borrowing was repaid on January 4, 2016 using proceeds from our IPO.

On January 28, 2016, we entered into a new agreement with the same lender that provides for a maximum borrowing facility of $20.0 million, secured by our stock in Equity Bank. The borrowing facility will mature on January 26, 2017. Each draw of funds on the facility will create a separate note that is repayable over a term of five years. Each note will bear interest at a variable interest rate equal to the prime rate published in the “Money Rates” section of The Wall Street Journal (or any generally recognized successor), floating daily. Accrued interest and principal payments will be due quarterly with one final payment of unpaid principal and interest due at the end of the five year term of each separate note. We are also required to pay an unused commitment fee in an amount equal to twenty basis points per annum on the unused portion of the maximum borrowing facility. We can use the proceeds from the borrowing facility to fund future acquisitions and for general corporate purposes approved by the lender. At ~~June~~September 30, 2016, no borrowings were outstanding on the bank stock loan.

The terms of the borrowing facility require the Company and Equity Bank to maintain minimum capital ratios and other covenants. We believe we are in compliance with the terms of the borrowing facility and have not been otherwise notified of noncompliance.

Subordinated debentures: In conjunction with the 2012 acquisition of First Community Bancshares, Inc., we assumed certain subordinated debentures owed to special purpose unconsolidated subsidiaries that are controlled by us, FCB Capital Trust II (“CTII”) and FCB Capital Trust III (“CTIII”). The trust preferred securities issued by CTII accrue and pay distributions quarterly at three-month LIBOR plus 2.00% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on April 15, 2035 or upon earlier redemption. The trust preferred securities issued by CTIII accrue and pay distributions quarterly at three-month LIBOR plus 1.89% on the stated liquidation amount of the trust preferred securities. These trust preferred securities are mandatorily redeemable upon maturity on June 15, 2037 or upon earlier redemption. The subordinated debentures balance was $9.4 million at ~~June~~September 30, 2016 and $9.3 million at December 31, 2015.

Market and public confidence in our financial strength and financial institutions in general will largely determine access to appropriate levels of liquidity. This confidence is significantly dependent on our ability to maintain sound asset quality and appropriate levels of capital reserves.

Liquidity is defined as the ability to meet anticipated customer demands for future funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis. We measure our liquidity position by giving consideration to both on- and off-balance sheet sources of and demands for funds on a daily, weekly, and monthly basis.

Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations in a cost-effective manner and to meet current and future potential obligations such as loan commitments, lease obligations, and unexpected deposit outflows. In this process, we focus on both assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs.

During the ~~six-month~~nine-month periods ended ~~June~~September 30, 2016 and ~~June~~September 30, 2015 our liquidity needs have primarily been met by core deposits, security and loan maturities and amortizing investment and loan portfolios. Other funding sources include federal funds purchased, brokered certificates of deposit, and borrowings from the FHLB.

Our largest sources of funds are deposits and FHLB borrowings and largest uses of funds are loans and securities. Average loans were ~~$947.3~~$954.4 million for the ~~six~~nine months ended ~~June~~September 30, 2016, an increase of ~~16.1%~~22.2% over December 31, 2015 average balance. Excess deposits are primarily invested in our interest-bearing deposit account with the Federal Reserve Bank of Kansas City, investment securities, federal funds sold or other short-term liquid investments until the funds are needed to fund loan growth. Our securities portfolio has a weighted average life of ~~3.7~~4.5 years and a modified duration of ~~3.5~~4.1 years at ~~June~~September 30, 2016.

Cash and cash equivalents were ~~$46.2~~$21.8 million at ~~June~~September 30, 2016, a decrease of ~~$10.6~~$35.0 million from the $56.8 million cash and cash equivalents at December 31, 2015. The net cash provided by operating activities of ~~$7.3 million and the net cash provided by investing activities of $32.2~~$13.3 million were offset by ~~the $50.1~~net cash used in investing activities of $2.9 million ~~use~~and net cash used in financing activities of ~~cash and cash equivalents for financing activities,~~$45.4 million, resulting in a net use of cash and cash equivalents of ~~$10.6~~$35.0 million. Cash and cash equivalents at January 1, 2016 plus liquidity provided by operating activities, pay downs, sales and maturities of investment securities and FHLB borrowings during the first ~~six~~nine months of 2016 were used to originate or purchase loans, to redeem deposits, pay off the bank stock loan in the amount of $18.6 million and redeem the Series C preferred stock in the amount of $16.4 million. We believe that our daily funding needs can be met through cash provided by operating activities, payments and maturities on loans and investment securities, our core deposit base and FHLB advances and other borrowing relationships.

In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby and commercial letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. Our exposure to credit loss is represented by the contractual amounts of these commitments. The same credit policies and procedures are used in making these commitments as for on-balance sheet instruments.

Our commitments associated with outstanding standby and performance letters of credit and commitments to extend credit expiring by period as of ~~June~~September 30, 2016 are summarized below. Since commitments associated with letters of credit and commitments to extend credit may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements:

	1 Year or Less		More Than 1 Year but Less Than 3 Years		3 Years or More but Less Than 5 Years		5 Years or More		Total		1 Year or Less		More Than 1 Year but Less Than 3 Years		3 Years or More but Less Than 5 Years		5 Years or More		Total
	(Dollars in thousands)										(Dollars in thousands)
Standby and performance letters of credit	$	3,464	$	1,368	$	5	$	—	$	4,837	$	3,553	$	1,313	$	26	$	—	$	4,892
Commitments to extend credit		92,183		35,573		35,369		46,537		209,662		92,454		15,622		33,268		21,761		163,105
Total	$	95,647	$	36,941	$	35,374	$	46,537	$	214,499	$	96,007	$	16,935	$	33,294	$	21,761	$	167,997

Standby and Performance Letters of Credit: Standby letters of credit are irrevocable commitments issued by us to guarantee the performance of a customer to a third party once specified pre-conditions are met. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.

Commitments to Extend Credit: Commitments to originate loans and available lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments and lines of credit may expire without being drawn upon, the total commitment and lines of credit amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate, and residential real estate. Mortgage loans in the process of origination represent amounts that we plan to fund within a normal period of 60 to 90 days, and which are intended for sale to investors in the secondary market.

Capital management consists of providing equity to support our current and future operations. The federal bank regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital relative to the amount and types of assets they hold. As a bank holding company and a state-chartered-Fed-member bank, the Company and Equity Bank are subject to regulatory capital requirements.

Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes as of ~~June~~September 30, 2016 and December 31, 2015, the Company and Equity Bank meet all capital adequacy requirements to which they are subject.

Failure to meet capital guidelines could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including termination of deposit insurance by the FDIC, restrictions on certain business activities and appointment of the FDIC as conservator or receiver. As of ~~June~~September 30, 2016, the most recent notifications from the federal regulatory agencies categorized Equity Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Equity Bank must maintain minimum total capital, Tier 1 capital, Common Equity Tier 1 capital, and Tier 1 leverage ratios as set forth in the ~~table.~~table below. There are no conditions or events since that notification that management believes have changed Equity Bank’s category.

Total stockholders’ equity was ~~$158.2~~$161.2 million at ~~June~~September 30, 2016, a decrease of ~~$9.0~~$6.0 million, or ~~5.4%~~3.6%, compared with December 31, 2015. The decrease was principally attributable to the redemption of Series C preferred stock of $16.4 million, partially offset by an increase in retained earnings of ~~$6.3~~$9.0 million, an increase in the value of the securities portfolio recognized in other accumulated comprehensive earnings of ~~$639~~$962 thousand, stock based compensation of ~~$282~~$348 thousand and common stock issued upon exercise of stock options of ~~$121.~~$121 thousand.

In July 2013, the federal banking agencies published final rules establishing a new comprehensive capital framework for U.S. banking organizations. These rules became effective as applied to the Company and Equity Bank on January 1, 2015, with a phase in period from January 1, 2015 through January 1, 2019. Beginning in January 2016, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reaches 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers. The following table provides a comparison of the Company’s and Equity Bank’s leverage and risk-weighted capital ratios as of ~~June~~September 30, 2016 to the minimum and well-capitalized regulatory standards.

	Actual					Minimum Required for Capital Adequacy Purposes						To be Categorized as Well Capitalized Under Prompt Corrective Action Provisions					Actual					Minimum Required for Capital Adequacy Purposes					To be Categorized as Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio				Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)																(Dollars in thousands)
The Company⁽¹⁾
Total capital (to risk weighted assets)	$	158,238		14.45	%	$	87,598		8.00	%	$	N/A		N/A			$	161,156		15.02	%	$	85,863		8.00	%	$	N/A	N/A
Tier 1 capital (to risk weighted assets)		152,208		13.90	%		65,698		6.00	%		N/A		N/A				155,076		14.45	%		64,397		6.00	%	N/A		N/A
Common equity tier 1 capital (to risk weighted assets)		142,837		13.04	%		49,274		4.50	%		N/A		N/A				145,645		13.57	%		48,298		4.50	%	N/A		N/A
Tier 1 leverage capital (to average assets)		152,208		9.32	%		65,352		4.00	%		N/A		N/A				155,076		9.42	%		65,882		4.00	%	N/A		N/A

The Bank⁽²⁾
Total capital (to risk weighted assets)	$	144,892		13.22	%	$	87,707		8.00	%	$		109,634		10.00	%	$	145,121		13.50	%	$	85,968		8.00	%	$	107,460		10.00	%
Tier 1 capital (to risk weighted assets)		138,862		12.67	%		65,780		6.00	%			87,707		8.00	%		139,041		12.94	%		64,476		6.00	%		85,968		8.00	%
Common equity tier 1 capital (to risk weighted assets)		138,862		12.67	%		49,335		4.50	%			71,262		6.50	%		139,041		12.94	%		48,357		4.50	%		69,849		6.50	%
Tier 1 leverage capital (to average assets)		138,862		8.49	%		65,407		4.00	%			81,759		5.00	%		139,041		8.44	%		65,935		4.00	%		82,419		5.00	%

We identify certain financial measures discussed in this Quarterly Report as being “non-GAAP financial measures.” In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheet or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures or both.

The non-GAAP financial measures that we discuss in this Quarterly Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this Quarterly Report may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures we have discussed in this Quarterly Report when comparing such non-GAAP financial measures.

Tangible Book Value Per Common Share and Tangible Book Value Per Diluted Common Share: Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less preferred stock, goodwill, core deposit intangibles, net of accumulated amortization and mortgage servicing asset; (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by shares of common stock outstanding; and tangible book value per diluted common share as tangible common equity (as described in clause (a)) divided by diluted shares of common stock outstanding. For tangible book value, the most directly comparable financial measure calculated in accordance with GAAP is book value.

Management believes that these measures are important to many investors who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity, tangible book value per common share, and ~~diluted~~ tangible book value per diluted common share and compares these values with book value per common share:

	June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30, 2015		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
	(Dollars in thousands, except per share data)										(Dollars in thousands, except per share data)
Total stockholders’ equity	$	158,188	$	155,092	$	167,233	$	126,054	$	121,748	$	161,248	$	158,188	$	155,092	$	167,233	$	126,054
Less: preferred stock		—		—		16,372		16,365		16,363		—		—		—		16,372		16,365
Less: goodwill		18,130		18,130		18,130		18,130		18,130		18,130		18,130		18,130		18,130		18,130
Less: core deposit intangibles, net		1,376		1,462		1,549		926		986		1,289		1,376		1,462		1,549		926
Less: mortgage servicing asset		26		28		29		—		—		25		26		28		29		—
Tangible common equity	$	138,656	$	135,472	$	131,153	$	90,633	$	86,269	$	141,804	$	138,656	$	135,472	$	131,153	$	90,633
Common shares outstanding at period end		8,219,415		8,211,727		8,211,727		6,270,727		6,270,727		8,219,415		8,219,415		8,211,727		8,211,727		6,270,727
Diluted common shares outstanding at period end		8,334,445		8,317,882		8,332,762		6,296,227		6,289,407		8,365,283		8,334,445		8,317,882		8,332,762		6,296,227
Book value per common share	$	19.25	$	18.89	$	18.37	$	17.49	$	16.81	$	19.62	$	19.25	$	18.89	$	18.37	$	17.49
Tangible book value per common share	$	16.87	$	16.50	$	15.97	$	14.45	$	13.76	$	17.25	$	16.87	$	16.50	$	15.97	$	14.45
Tangible book value per diluted common share	$	16.64	$	16.29	$	15.74	$	14.39	$	13.72	$	16.95	$	16.64	$	16.29	$	15.74	$	14.39

Tangible Common Equity to Tangible Assets: Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less ~~goodwill;~~preferred stock, goodwill, core deposit intangibles, net of accumulated amortization and mortgage servicing asset; (b) tangible assets as total assets less ~~goodwill;~~goodwill, core deposit intangibles, net of accumulated amortization and mortgage servicing asset; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

Management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and total assets while not increasing tangible common equity or tangible assets.

The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets:

	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Dollars in thousands)															(Dollars in thousands)
Total stockholders’ equity	$	158,188		$	155,092		$	167,233		$	126,054		$	121,748		$	161,248		$	158,188		$	155,092		$	167,233		$	126,054
Less: preferred stock		—			—			16,372			16,365			16,363			—			—			—			16,372			16,365
Less: goodwill		18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130
Less: core deposit intangibles, net		1,376			1,462			1,549			926			986			1,289			1,376			1,462			1,549			926
Less: mortgage servicing asset		26			28			29			—			—			25			26			28			29			—
Tangible common equity	$	138,656		$	135,472		$	131,153		$	90,633		$	86,269		$	141,804		$	138,656		$	135,472		$	131,153		$	90,633
Total assets	$	1,544,857		$	1,528,729		$	1,585,727		$	1,413,355		$	1,350,719		$	1,557,082		$	1,544,857		$	1,528,729		$	1,585,727		$	1,413,355
Less: goodwill		18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130			18,130
Less: core deposit intangibles, net		1,376			1,462			1,549			926			986			1,289			1,376			1,462			1,549			926
Less: mortgage servicing asset		26			28			29			—			—			25			26			28			29			—
Tangible assets	$	1,525,325		$	1,509,109		$	1,566,019		$	1,394,299		$	1,331,603		$	1,537,638		$	1,525,325		$	1,509,109		$	1,566,019		$	1,394,299
Equity to assets		10.24	%		10.15	%		10.55	%		8.92	%		9.01	%		10.36	%		10.24	%		10.15	%		10.55	%		8.92	%
Tangible common equity to tangible assets		9.09	%		8.98	%		8.37	%		6.50	%		6.48	%		9.22	%		9.09	%		8.98	%		8.37	%		6.50	%

Return on Average Tangible Common Equity: Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) average tangible common equity as total average stockholders’ equity less average ~~goodwill;~~goodwill, core deposit intangibles, net of accumulated ~~amortization;~~amortization, mortgage servicing asset and preferred stock; (b) adjusted net income allocable to common stockholders as net income allocable to common stockholders plus intangible asset amortization less tax effect on intangible assets amortization; and (c) return on average tangible common equity as annualized adjusted net income allocable to common stockholders (as described in clause (b)) divided by average tangible common equity (as described in clause (a)). For return on average tangible common equity, ~~to tangible assets,~~ the most directly comparable financial measure calculated in accordance with GAAP is ~~total stockholders’ equity to total assets.~~return on average equity.

Management believes that this measure is important to many investors in the marketplace who are interested in earnings quality on tangible common equity. Goodwill and other intangible assets have the effect of increasing ~~both~~ total stockholders’ equity ~~and total assets~~ while not increasing tangible common ~~equity or tangible assets.~~equity.

The following table reconciles, as of the dates set forth below, return on average stockholders equity and return on average tangible common equity:

	As of and for the three months ended															As of and for the three months ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Dollars in thousands)															(Dollars in thousands)
Total average stockholders’ equity	$	156,403		$	153,929		$	140,207		$	123,595		$	120,066		$	159,887		$	156,403		$	153,929		$	140,207		$	123,595
Less: average intangible assets and preferred stock		21,309			20,616			29,314			35,144			34,463			23,116			21,309			20,616			29,314			35,144
Average tangible common equity	$	135,094		$	133,313		$	110,893		$	88,451		$	85,603		$	136,771		$	135,094		$	133,313		$	110,893		$	88,451
Net income allocable to common stockholders	$	2,846		$	3,439		$	2,506		$	2,693		$	2,526		$	2,671		$	2,846		$	3,439		$	2,506		$	2,693
Amortization of intangible assets		88			88			93			61			61			88			88			88			93			61
Less: tax effect of intangible assets amortization		31			31			33			21			21			31			31			31			33			21
Adjusted net income allocable to common stockholders	$	2,903		$	3,496		$	2,566		$	2,733		$	2,566		$	2,728		$	2,903		$	3,496		$	2,566		$	2,733
Return on total average stockholders’ equity (ROAE) annualized		7.32	%		8.99	%		7.23	%		8.78	%		8.58	%		6.65	%		7.32	%		8.99	%		7.23	%		8.78	%
Return on average tangible common equity (ROATCE) annualized		8.64	%		10.55	%		9.18	%		12.26	%		12.02	%		7.94	%		8.64	%		10.55	%		9.18	%		12.26	%

Efficiency Ratio: The efficiency ratio is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate the efficiency ratio by dividing non-interest expense, excluding merger expenses and loss on debt extinguishment, by the sum of net interest income and non-interest income, excluding net gain from securities ~~transactions.~~transactions and net gain on acquisition. The GAAP-based efficiency ratio is non-interest expenses divided by net interest income plus non-interest income.

In management’s judgment, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess operating expenses in relation to operating revenue by removing merger expenses, loss on debt extinguishment, net gain from securities transactions and net gain on acquisition.

The following table reconciles, as of the dates set forth below, the efficiency ratio to the GAAP-based efficiency ratio:

	Three months ended															Three months ended
	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Dollars in thousands)															(Dollars in thousands)
Non-interest expense	$	9,941		$	9,689		$	11,664		$	8,866		$	9,027		$	10,734		$	9,941		$	9,689		$	11,664		$	8,866
Less: Merger expenses		—			—			1,614			77			—			237			—			—			1,614			77
Less: Loss on debt extinguishment		—			58			—			—			—			—			—			58			—			—
Non-interest expense, excluding merger expenses and loss on debt extinguishment	$	9,941		$	9,631		$	10,050		$	8,789		$	9,027		$	10,497		$	9,941		$	9,631		$	10,050		$	8,789
Net interest income	$	12,194		$	12,758		$	12,313		$	11,450		$	11,466		$	11,982		$	12,194		$	12,758		$	12,313		$	11,450
Non-interest income	$	2,452		$	2,698		$	3,325		$	2,032		$	2,048		$	2,527		$	2,452		$	2,698		$	3,325		$	2,032
Less: net gain from securities transactions		59			420			386			—			2		—				59			420			386			—
Less: net gain on acquisition		—			—			682			—			—			—			—			—			682			—
Non-interest income, excluding net gain from securities transactions and net gain on acquisition	$	2,393		$	2,278		$	2,257		$	2,032		$	2,046		$	2,527		$	2,393		$	2,278		$	2,257		$	2,032
Net interest income plus non-interest income, excluding net gain from securities transactions and net gains on acquisition	$	14,587		$	15,036		$	14,570		$	13,482		$	13,512		$	14,509		$	14,587		$	15,036		$	14,570		$	13,482
Non-interest expense to net interest income plus non-interest income		67.88	%		62.69	%		74.59	%		65.76	%		66.80	%		73.98	%		67.88	%		62.69	%		74.59	%		65.76	%
Efficiency Ratio		68.15	%		64.05	%		68.98	%		65.19	%		66.81	%		72.35	%		68.15	%		64.05	%		68.98	%		65.19	%

Our asset-liability policy provides guidelines to management for effective funds management, and management has established a measurement system for monitoring net interest rate sensitivity position within established guidelines.

As a financial institution, the primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which have a short-term held-to-maturity. Interest rate risk is the potential of economic gains or losses due to future interest rate changes. These changes can be reflected in future net interest income and/or fair market values. The objective is to measure the effect on net interest income (“NII”) and economic value of equity (“EVE”) and to adjust the balance sheet to minimize the inherent risk, while at the same time maximizing income.

We manage exposure to interest rates by structuring the balance sheet in the ordinary course of business. We have the ability to enter into instruments such as leveraged derivatives, interest rate swaps, financial options, financial future contracts or forward delivery contracts for the purpose of reducing interest rate risk; however, currently we do not have a material exposure to these instruments. We also have the ability to enter into interest rate swaps as an accommodation to our customers in connection with an interest rate swap program. Based upon the nature of ~~its~~our operations, we are not subject to foreign exchange or commodity price risk. We do not own any trading assets.

Our exposure to interest rate risk is managed by the Asset Liability Committee (“ALCO”), which is composed of certain members of senior management, in accordance with policies approved by the Board of Directors. The ALCO formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the ALCO considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The ALCO meets monthly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, securities purchase and sale activities, commitments to originate loans and the maturities of investment securities and borrowings. Additionally, the ALCO reviews liquidity, projected cash flows, maturities of deposits and consumer and commercial deposit activity.

ALCO uses a simulation analysis to monitor and manage the pricing and maturity of assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The simulation tests the sensitivity of NII and EVE. Contractual maturities and repricing opportunities of loans are incorporated in the simulation model as are prepayment assumptions, maturity data and call options within the investment securities portfolio. Assumptions based on past experience are

incorporated into the model for non-maturity deposit accounts. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the future NII and EVE. Actual results will differ from the model’s simulated results due to timing,

magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

The change in the impact of net interest income from the base case for ~~June~~September 30, 2016 and December 31, 2015, was primarily driven by the rate and mix of variable and fixed rate financial instruments, the underlying duration of the financial instruments, and the level of response to changes in the interest rate environment. The increase in the level of negative impact to net interest income in the up interest rate shock scenarios are due to the assumed migration of non-term deposit liabilities to higher rate term deposits; the level of fixed rate investments and loans receivable that will not reprice to higher rates; the variable rate Federal Home Loan Bank advances; the variable rate subordinated debentures, and the non-term deposits that are assumed not to migrate to term deposits that are variable rate and will reprice to the higher rates; and a portion of our portfolio of variable rate loans contain restrictions on the amount of repricing and frequency of repricing that limit the amount of repricing to the current higher rates. These factors result in the negative impacts to net interest income in the up interest rate shock scenarios that are detailed in the table below. In the down interest rate shock scenario the main drivers of the negative impact on net interest income are the decrease in investment income due to the negative convexity features of the fixed rate mortgage backed securities; assumed prepayment of existing fixed rate loans receivable; the downward pricing of variable rate loans receivable; the constraint of the shock on non-term deposits; and the level of term deposit repricing. Our mortgage ~~back~~backed security portfolio is comprised of fixed rate investments and as rates decrease the level of prepayments are assumed to increase and cause the current higher rate investments to prepay and the assumed reinvestment will be at lower interest rates. Similar to our mortgage backed securities, the model assumes that our fixed rate loans receivable will prepay at a faster rate and reinvestment will occur at lower rates. The level of downward shock on the non-term deposits is constrained to limit the downward shock to a non-zero rate which results in a minimal reduction in the average rate paid. Term deposits repricing will only decrease the average cost paid by a minimal amount due to the assumed repricing occurring at maturity. These factors result in the negative impact to net interest income in the down interest rate shock scenario.

The change in the EVE from the base case for ~~June~~September 30, 2016 and December 31, 2015 is due to us being in a liability sensitive position and the level of convexity in our pre-payable assets. Generally, with a liability sensitive position, as interest rates increase the value of your assets decrease faster than the value of liabilities and as interest rates decrease the value of your assets increase at a faster rate than liabilities. However, due to the level of convexity in our fixed rate pre-payable assets we do not experience a similar change in the value of assets in a down interest rate shock scenario. Substantially all investments and approximately ~~46.2%~~45.5% of loans are pre-payable and fixed rate and as rates decrease the level of modeled prepayments increase. The prepaid principal is assumed to reprice at the assumed current rates, resulting in a smaller positive impact to the EVE.

Management utilizes static balance sheet rate shocks to estimate the potential impact on various rate scenarios. This analysis estimates a percentage of change in the metric from the stable rate base scenario versus alternative scenarios of rising and falling market interest rates by instantaneously shocking a static balance sheet. The following table summarizes the simulated immediate change in net interest income for twelve months as of the dates indicated:

	Impact on Net Interest Income						Impact on Net Interest Income
Change in prevailing interest rates	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
+300 basis points		(6.1	)%		(9.8	)%		(6.1	)%		(9.8	)%
+200 basis points		(3.1	)%		(6.1	)%		(3.1	)%		(6.1	)%
+100 basis points		(0.8	)%		(2.9	)%		(0.8	)%		(2.9	)%
0 basis points		—			—			—			—
-100 basis points		(3.5	)%		(4.0	)%		(3.5	)%		(4.0	)%

	Impact on Economic Value of Equity						Impact on Economic Value of Equity
Change in prevailing interest rates	June 30, 2016			December 31, 2015			September 30, 2016			December 31, 2015
+300 basis points		(10.6	)%		(22.0	)%		(10.6	)%		(22.0	)%
+200 basis points		(2.7	)%		(12.3	)%		(2.7	)%		(12.3	)%
+100 basis points		5.1	%		(4.9	)%		5.1	%		(4.9	)%
0 basis points		—			—			—			—
-100 basis points		(2.2	)%		(3.4	)%		(2.2	)%		(3.4	)%

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange ~~Act~~Act) as of the end of the period covered by this Quarterly Report on Form 10-Q was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgement in evaluating its controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported ~~with~~within the time periods specified by the SEC’s rules and forms.

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

From time to time we are a party to various litigation matters incidental to the conduct of our business. See “NOTE 11 – LEGAL MATTERS” of the Condensed Notes to Interim Consolidated Financial Statements under Item 1 to this Quarterly report for a complete discussion of litigation matters.

There ~~has~~have been no material changes in the Company’s risk factors previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 17, 2016.

The information required by this Item 6 is set forth in the Index to Exhibits following our signature page and is incorporated by reference or attached hereto.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Kansas		72-1532188
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7701 East Kellogg Drive, Suite ~~200~~300 Wichita, KS		67207
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	o☐		Accelerated filer	o☐
Non-accelerated filer	x☒		Smaller reporting company	o☐

PART I	Financial Information	5
Item 1.	Financial Statements	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Stockholders’ Equity	8
	Consolidated Statements of Cash Flows	9
	Condensed Notes to Interim Consolidated Financial Statements	1011
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3435
	Overview	3435
	Critical Accounting Policies	3637
	Results of Operations	3739
	Financial Condition	4951
	Liquidity and Capital Resources	6264
	Non-GAAP Financial Measures	6567
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6870
Item 4.	Controls and Procedures	7072
Part II	OTHER INFORMATION	7173
Item 1.	Legal Proceedings	7173
Item 1A.	Risk Factors	7173
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7173
Item 3.	Defaults Upon Senior Securities	7173
Item 4.	Mine Safety Disclosures	7173
Item 5.	Other Information	7173
Item 6.	Exhibits	7173

	As of and for the nine months ended
	September 30, 2016				September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,385	$	6	$	945	$	8
Commercial and industrial		799	―			599		11
Residential real estate		776		15		608		—
Agricultural real estate		449		—		66		—
Consumer		26		—		3		—
Agricultural		121		1	―			—
Subtotal		3,556		22		2,221		19
With an allowance recorded:
Commercial real estate		1,998		14		3,921		42
Commercial and industrial		93		—		1,655		26
Residential real estate		903		13		714		12
Agricultural real estate	―			—		78		—
Consumer		202		6		29		—
Agricultural		24		5		—		—
Subtotal		3,220		38		6,397		80
Total	$	6,776	$	60	$	8,618	$	99

	As of and for the six months ended
	June 30, 2016				June 30, 2015
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate	$	1,233	$	4	$	1,091	$	8
Commercial and industrial		845	―			536	7
Residential real estate		662		3		627		—
Agricultural real estate		399		—		95		—
Consumer		16		—		4		—
Agricultural		100		1	―			—
Subtotal		3,255	8			2,353		15
With an allowance recorded:
Commercial real estate		2,516	4			4,441	5
Commercial and industrial		109	―			1,514		26
Residential real estate		877	3			719	2
Agricultural real estate	―			—		111		—
Consumer		177		5		30		—
Agricultural		35		—		—		—
Subtotal		3,714	12			6,815		33
Total	$	6,969	$	20	$	9,168	$	48

	As of December 31, 2015
	One year or less		After one year through five years		After five years		Total
	(Dollars in thousands)
Commercial and industrial	$	125,800	$	93,842	$	42,390	$	262,032
Real Estate:
Commercial real estate		66,576		184,759		91,761		343,096
Real estate construction		23,455		22,537		7,929		53,921
Residential real estate		5,080		11,497		233,639		250,216
Agricultural real estate		4,984		6,452		6,744		18,180
Total real estate		100,095		225,245		340,073		665,413
Consumer		2,097		10,013		4,993		17,103
Agricultural		9,871		3,785		2,151		15,807
Total	$	237,863	$	332,885	$	389,607	$	960,355
Loans with a predetermined fixed interest rate		110,401		231,026		125,579		467,006
Loans with an adjustable/floating interest rate		127,462		101,859		264,028		493,349
Total	$	237,863	$	332,885	$	389,607	$	960,355

	Equity Bancshares, Inc.

~~August 15,~~November 14, 2016	By:	/s/ Brad S. Elliott
Date		Brad S. Elliott
		Chairman and Chief Executive Officer

~~August 15,~~November 14, 2016	By:	/s/ Gregory H. Kossover
Date		Gregory H. Kossover
		Executive Vice President and Chief Financial Officer

Exhibit No.		Description
2.1		Agreement and Plan of ~~Reorganization,~~Merger by and among Equity Bancshares, Inc., Prairie Merger Sub, Inc. and Prairie State Bancshares, Inc., dated as of ~~July 14,~~October 20, 2016 ~~by and between Equity Bancshares, Inc.~~ (incorporated by reference to Exhibit 2.1 to Equity Bancshares, Inc.’s Current Report on Form 8-K filed with the SEC on ~~July 14, 2016).~~
~~10.1~~		Form of Voting Agreement, dated as of July 14, 2016, by and among Equity Bancshares, Inc., Brad S. Elliott, Community First Bancshares, Inc. and the stockholders party thereto (incorporated by reference to Exhibit A to Exhibit 2.1 to Equity Bancshares, Inc.’s Current Report on Form 8-K filed with SEC on July 14, 2016).
~~10.2~~		Form of Director Support Agreement, dated as of July 14, 2016, by and between Equity Bancshares, Inc. and each of the directors of Community First Bancshares, Inc. (incorporated by reference to Exhibit B to Exhibit 2.1 to Equity Bancshares, Inc.’s Current Report on Form 8-K filed with SEC on July 14,October 20, 2016).
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document.
101.SCH*		XBRL Taxonomy Extension Schema Document.
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.