Market Overview

Bear State Financial, Inc. Announces Full Year 2017 Earnings

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FINANCIAL HIGHLIGHTS:

  • Full year 2017 GAAP net income was $20.4 million or $0.54 per
    diluted common share, compared to GAAP net income of $17.5 million or
    $0.46 per diluted common share for the full year 2016 representing a
    17% increase in both GAAP net income and GAAP net income per diluted
    common share.
  • Full year 2017 core earnings were $24.6 million or $0.65 per
    diluted common share, compared to core earnings of $16.9 million or
    $0.45 per diluted common share for the full year 2016 representing a
    46% increase in core earnings and a 44% increase in core earnings per
    diluted common share.
  • Fourth quarter 2017 GAAP net income was $3.7 million, a 24%
    decrease from $4.8 million for the fourth quarter of 2016. Diluted
    earnings per common share for the fourth quarter of 2017 was $0.10, a
    23% decrease from $0.13 for the fourth quarter of 2016.
  • Fourth quarter 2017 core earnings were $6.6 million, a 36% increase
    from $4.9 million for the fourth quarter of 2016. Diluted core
    earnings per common share for the fourth quarter of 2017 was $0.17, a
    31% increase from $0.13 for the fourth quarter of 2016.
  • The Company's efficiency ratio improved to 57% in the fourth
    quarter of 2017 compared to 63% in the fourth quarter of 2016.
    Further, the Company's core efficiency ratio improved to 54% in the
    fourth quarter of 2017 compared to 63% in the fourth quarter of 2016.
  • Book value per common share was $6.68 at December 31, 2017, an 8%
    increase from $6.21 at December 31, 2016. Tangible book value per
    common share was $5.37 at December 31, 2017, a 10% increase from $4.86
    at December 31, 2016.

Bear State Financial, Inc. (the "Company,") (NASDAQ:BSF), today
reported earnings of $3.7 million and earnings per diluted common share
of $0.10 in the fourth quarter of 2017, compared to earnings of $4.8
million or $0.13 per diluted common share in the fourth quarter of 2016.
Core earnings for the fourth quarter of 2017 were $6.6 million or $0.17
per diluted common share compared to core earnings of $4.9 million or
$0.13 per diluted common share in the fourth quarter of 2016. In the
fourth quarter of 2017, the Company was required to revalue its deferred
tax assets and deferred tax liabilities as a result of the "Tax Cuts and
Jobs Act" signed into law on December 22, 2017. The impact was a
one-time, non-cash charge to income tax provision on the income
statement of approximately $2.5 million.

For the full year of 2017, net income was $20.4 million and earnings per
diluted common share was $0.54 compared to net income of $17.5 million
or $0.46 per diluted common share for the full year of 2016. Core
earnings for the full year of 2017 were $24.6 million or $0.65 per
diluted common share compared to core earnings of $16.9 million or $0.45
per diluted common share for the full year of 2016.

On August 22, 2017, the Company and Bear State Bank entered into an
Agreement and Plan of Reorganization with Arvest Bank, an Arkansas
banking corporation ("Arvest"), and Arvest Acquisition Sub, Inc., an
Arkansas corporation and a wholly-owned subsidiary of Arvest
("Acquisition Sub"), pursuant to which Arvest will acquire the Company
and Bear State Bank (the "Merger").

Pursuant to the Agreement, each share of the Company's common stock
issued and outstanding as of the effective time of the Merger will be
converted into a right to receive $10.28 per share, payable in cash. The
Merger is expected to close in the first quarter of 2018 and is pending
federal regulatory approval. At a Special Meeting of Shareholders of the
Company held November 15, 2017, the proposal to adopt the Agreement and
to approve the Merger was approved by shareholders of the Company.

FINANCIAL CONDITION

Total assets were $2.16 billion at December 31, 2017, a 5% increase
compared to $2.05 billion at December 31, 2016. The increase in total
assets was primarily due to increases in investment securities and
loans. Total loans were $1.67 billion at December 31, 2017, an increase
of $117.0 million, or 8%, compared to December 31, 2016 and investment
securities were $239.6 million at December 31, 2017, an increase of
$24.1 million, or 11%, compared to December 31, 2016. Total deposits
were $1.50 billion at December 31, 2017, a 9% decrease compared to $1.64
billion at December 31, 2016.

Total stockholders' equity was $252.2 million at December 31, 2017, an
8% increase from $233.4 million at December 31, 2016. Tangible common
stockholders' equity was $202.7 million at December 31, 2017, an 11%
increase from $182.9 million at December 31, 2016. Book value per common
share was $6.68 at December 31, 2017, an 8% increase from $6.21 at
December 31, 2016. Tangible book value per common share was $5.37 at
December 31, 2017, a 10% increase from $4.86 at December 31, 2016. The
Company's ratio of total stockholders' equity to total assets increased
to 11.68% at December 31, 2017, compared to 11.37% at December 31, 2016.
The calculation of the Company's tangible book value per common share
and tangible common stockholders' equity and the reconciliation of such
non-GAAP financial measures to the most comparable GAAP measures are
included in the schedules accompanying this release.

RESULTS OF OPERATIONS

The Company recognized fourth quarter 2017 net income of $3.7 million or
$0.10 per diluted common share compared to net income of $4.8 million or
$0.13 per diluted common share in the fourth quarter of 2016, resulting
in a return on average assets of 0.66% in the fourth quarter of 2017,
compared to 0.95% in the fourth quarter of 2016. Calculation of net
income in accordance with GAAP includes what the Company considers
"non-core" items, which are items that we do not consider indicative of
our core operating performance and which are not necessarily comparable
from year to year. The Company reports core earnings, which is a
non-GAAP financial measure that the Company defines as GAAP net income
less non-core items. The reconciliation of GAAP net income to core
earnings together with related financial measures and ratios is included
in the schedules accompanying this release.

Fourth quarter 2017 core earnings totaled $6.6 million or $0.17 per
diluted common share, compared to core earnings of $4.9 million or $0.13
per diluted common share in the fourth quarter of 2016. For the fourth
quarter of 2017 and 2016, respectively, the core return on average
assets measured 1.18% and 0.95%, core return on average equity measured
10.40% and 8.23% and core return on average tangible equity measured
12.95% and 10.50%. Non-core items during the fourth quarter of 2017
included transaction-related expenses incurred in connection with the
pending transaction with Arvest totaling $677,000 and a deferred tax
asset adjustment of $2.5 million. The effect of non-core items, net of
taxes, decreased GAAP net income by approximately $2.9 million for the
fourth quarter of 2017.

Net interest income for the fourth quarter of 2017 was $18.9 million
compared to $17.1 million for the same period in 2016. Net interest
income for the year ended December 31, 2017 was $75.5 million, compared
to $67.5 million for the same period in 2016. Interest income for the
fourth quarter of 2017 was $22.0 million compared to $19.2 million for
the same period in 2016. Interest income for the year ended December 31,
2017 was $86.3 million compared to $75.4 million for the same period in
2016. The increases in interest income for the three and twelve months
ended December 31, 2017 compared to the same periods in 2016 were
primarily related to increases in the average balances of and the yields
earned on loans receivable and investment securities. Interest expense
for the fourth quarter of 2017 was $3.1 million compared to $2.1 million
for the same period in 2016. Interest expense for the year ended
December 31, 2017 was $10.7 million compared to $7.9 million for the
same period in 2016. The increases in interest expense for the three and
twelve months ended December 31, 2017 compared to the same periods in
2016 were primarily due to increases in the average balance of
borrowings and increases in the average rate paid on deposits.

Net interest margin measured 3.67% for the fourth quarter of 2017,
compared to 3.75% for the same period in 2016. Net interest margin for
the year ended December 31, 2017 was 3.79%, compared to 3.85% for the
same period in 2016. The average yield on interest-earning assets for
the fourth quarter of 2017 was 4.27% compared to 4.21% for the same
period in 2016 and was 4.33% for the year ended December 31, 2017
compared to 4.30% for the same period in 2016. The average cost of
interest-bearing liabilities increased to 0.70% for the fourth quarter
of 2017, compared to 0.54% for the same period in 2016. The average cost
of total interest-bearing liabilities for the year ended December 31,
2017 was 0.63%, compared to 0.53% for the same period in 2016.

Noninterest income is generated primarily through deposit account fee
income, profit on sale of mortgage loans, and earnings on life insurance
policies. Total noninterest income for the three months ended December
31, 2017 decreased to $3.8 million from $4.4 million for the same period
in 2016, a 14% decrease. Total noninterest income of $16.8 million for
the year ended December 31, 2017 increased from $16.7 million for the
same period in 2016, a 1% increase. The decrease in the three month
comparison period was primarily due to a decrease in gain on sales of
loans due to a decrease in the number of loans sold during the quarter,
slightly offset by an increase in deposit fee income. The increase in
the twelve month comparison period was primarily due to increases in
deposit fee income and earnings on bank owned life insurance, partially
offset by a decrease in gain on sales of loans.

Total noninterest expense decreased $667,000, or 5%, for the fourth
quarter of 2017 compared to the fourth quarter of 2016. Total
noninterest expense decreased $2.9 million or 5% during the year ended
December 31, 2017 compared to the same period in 2016. The decrease in
total noninterest expense for the three and twelve month comparative
periods was primarily related to the Company's efforts to improve its
operational efficiency as well as a decrease in the number of branches.

Income tax provision increased by $3.4 million, or 153%, for the fourth
quarter of 2017 compared to the fourth quarter of 2016, primarily due to
a $2.5 million revaluation of deferred tax assets and liabilities to
account for the future impact of lower corporate tax rates as a result
of the "Tax Cuts and Jobs Act" signed into law on December 22, 2017.
Income tax provision for the year ended December 31, 2017 increased by
$6.1 million or 89% compared to 2016, primarily due to the tax rate
revaluation of the deferred tax asset as well as an increase in taxable
income in 2017 partially offset by the recording of a valuation
allowance reversal of $897,000 on deferred tax assets in the second
quarter of 2016. The Company's effective tax rate for the quarter ended
December 31, 2017 (excluding the tax rate revaluation of the deferred
tax asset) was 32.50% compared to 31.20% for the quarter ended December
31, 2016. The Company's effective tax rate for the year ended December
31, 2017 (excluding the tax rate revaluation of the deferred tax asset)
was 31.86% compared to 31.90% for the year ended December 31, 2016
(excluding the valuation allowance reversal).

ASSET QUALITY

The ratio of nonperforming assets to total assets decreased to 0.87% at
December 31, 2017, compared to 0.94% at December 31, 2016. The allowance
for loan losses represented 1.14% of total loans at December 31, 2017
compared to 1.00% at December 31, 2016. The ratio of the allowance for
loan losses to nonperforming loans was 111% at December 31, 2017,
compared to 90% at December 31, 2016. Annualized net charge-offs as a
percentage of average loans for the quarter ended December 31, 2017 was
0.04% compared to 0.10% for the quarter ended December 31, 2016.
Provision for loan losses decreased from $851,000 for the fourth quarter
of 2016 to $464,000 for the fourth quarter of 2017. Provision for loan
losses for the year ended December 31, 2017 increased to $4.5 million
from $2.5 million for 2016. The increase in the provision for the year
was primarily attributable to loan originations and migration of
acquired loans from the purchased loan portfolio to the originated loan
portfolio.

About Bear State Financial, Inc.

Bear State Financial, Inc. is the parent company for Bear State Bank.
Bear State Financial, Inc. common stock is traded on the NASDAQ Global
Market under the symbol BSF. For more information on Bear State
Financial, Inc. please visit www.bearstatefinancial.com.
Its principal subsidiary, Bear State Bank, is a community oriented
financial institution providing a broad line of financial products to
individuals and business customers. Bear State Bank operates 42
branches, three personalized technology centers equipped with
interactive teller machines and three loan production offices throughout
Arkansas, Southwest Missouri and Southeast Oklahoma.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures in addition to
results presented in accordance with accounting principles generally
accepted in the United States ("GAAP"). These non-GAAP measures provide
supplemental perspectives on operating results, performance trends, and
financial condition. They are not a substitute for GAAP measures and
they should be read and used in conjunction with the Company's GAAP
financial information. In all cases, it should be understood that
non-GAAP per share measures do not depict amounts that accrue directly
to the benefit of shareholders. The Company utilizes the non-GAAP
measure of core earnings, which management believes is useful in
evaluating operating trends from period to period, including components
of core revenue and core expense. Core earnings and its components
exclude amounts that the Company views as unrelated to its normalized
operations. Management and the Board of Directors also utilize core
earnings or components of core earnings and related ratios in the
preparation of the Company's operating budgets, monthly financial
performance reporting and investor presentations of Company performance
and in the calculation of annual performance-based incentives for
certain members of management. In 2016, the Company modified its
definition of core earnings to clarify that a material amount of net
gains, losses or impairments to the Company's real estate owned ("REO")
portfolio during an applicable reporting period will be considered a
non-core item and will thus be excluded from core earnings. Immaterial
net gains, losses and impairments to the REO portfolio, however, will
not be considered a non-core item and will not be excluded from core
earnings. The Company believes that while activity within the REO
portfolio is a recurring aspect of its core business, material changes
to the portfolio are not indicative of the Company's normalized banking
operations.

The Company also reports certain non-GAAP equity measures (including
tangible stockholders' equity, tangible book value per common share and
related ratios) that exclude intangible assets from their calculation.
Management believes that these non-GAAP tangible measures provide
additional useful information about the capital strength of the Company
to the investment community, as these measures are widely used by
industry analysts for banks and bank holding companies with prior merger
and acquisition activity. A reconciliation of non-GAAP financial
measures to GAAP measures is included in the accompanying financial
tables.

Forward-Looking Statements

This press release contains statements about future events that
constitute forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are forward-looking statements. Such
forward-looking statements may be identified by reference to a future
period or periods, or by the use of forward-looking terminology, such as
"may," "will," "believe," "plan," "intend," "anticipate," "expect," or
similar terms or variations of those terms, or the negative of those
terms. These forward-looking statements include, without limitation,
statements relating to the terms and closing of the proposed transaction
between the Company and Arvest.
Forward-looking statements are
subject to numerous risks and uncertainties, including, but not limited
to, those risks previously disclosed in the Company's filings with the
SEC; the Company's and Arvest's ability to consummate the Merger or
satisfy the conditions to the completion of the Merger, the failure of
the proposed Merger to close for any other reason; occurrence of any
event, change or other circumstances that could give rise to the
termination of the Agreement; the effect of the announcement of the
Merger on customer relationships and operating results (including,
without limitation, difficulties in maintaining relationships with
employees or customers); the diversion of management time on transaction
related issues;
general economic conditions, changes in interest
rates, regulatory considerations, competition, technological
developments, retention and recruitment of qualified personnel, and
market acceptance of Bear State Bank's pricing, products and services,
and with respect to the loans extended by Bear State Bank and real
estate owned, market prices of the property securing loans and the costs
of collection and sales. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak
only as of the date made. The Company does not undertake and
specifically declines any obligation to publicly release the result of
any revisions that may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.

 
BEAR STATE FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED
(In thousands)
                       
December September June March December
  2017     2017     2017     2017     2016  
 

Balance sheet data, at quarter end:

Commercial real estate - mortgage loans $ 646,272 $ 661,155 $ 632,149 $ 604,888 $ 587,633
Consumer real estate - mortgage loans 391,225 393,082 396,550 397,898 389,107
Farmland 96,786 99,189 97,881 98,672 94,018
Construction and land development 157,453 147,071 131,046 129,078 125,785
Commercial and industrial loans 345,087 373,464 364,194 370,961 323,096
Consumer and other 36,036 36,859 36,624 36,100 36,265
Total loans 1,672,859 1,710,820 1,658,444 1,637,597 1,555,904
Loans held for sale 3,815 7,258 7,470 4,735 8,954
Allowance for loan losses (18,992 ) (18,682 ) (17,083 ) (16,821 ) (15,584 )
Investment securities and other investments 266,658 273,073 275,805 268,981 229,212
Goodwill 40,196 40,196 40,196 40,196 40,196
Core deposit intangible, net 9,332 9,587 9,842 10,098 10,353
Total assets 2,160,054 2,241,459 2,239,090 2,174,041 2,053,175
Noninterest-bearing deposits 217,582 232,004 255,806 221,891 223,038
Total deposits 1,499,444 1,589,136 1,703,246 1,669,066 1,644,080
Short term borrowings 13,445 21,629 17,856 17,831 19,114
FHLB advances 374,661 359,791 254,928 225,072 129,992
Other borrowings 12,150 12,525 11,600 13,506 22,012
Total stockholders' equity 252,248 249,209 244,533 237,912 233,427
 

Balance sheet data, quarterly averages:

Total loans $ 1,695,811 $ 1,706,952 $ 1,659,830 $ 1,607,892 $ 1,536,703
Investment securities 269,441 276,578 271,402 248,355 217,522
Total earning assets 2,039,624 2,049,894 1,990,562 1,886,813 1,810,802
Goodwill 40,196 40,196 40,196 40,196 40,196
Core deposit intangible, net 9,497 9,754 10,008 10,265 10,519
Total assets 2,233,918 2,246,331 2,190,240 2,092,022 2,019,792
Noninterest-bearing deposits 222,770 225,383 220,511 213,467 229,296
Interest-bearing deposits 1,335,165 1,411,163 1,435,630 1,414,137 1,416,991
Total deposits 1,557,935 1,636,546 1,656,141 1,627,604 1,646,287
Short term borrowings 20,425 20,375 15,463 15,549 17,983
FHLB advances 381,553 321,631 258,658 190,965 94,336
Other borrowings 12,256 12,193 11,898 16,247 22,161
Total stockholders' equity 252,755 248,559 242,263 236,247 234,339
 

Statement of income data for the three
months ended:

Interest income $ 21,972 $ 22,094 $ 21,153 $ 21,048 $ 19,212
Interest expense   3,079     2,958     2,496     2,214     2,105  
Net interest income 18,893 19,136 18,657 18,834 17,107
Provision for loan losses   464     1,863     821     1,349     851  
Net interest income after provision for loan losses 18,429 17,273 17,836 17,485 16,256
Noninterest income 3,769 4,191 4,694 4,176 4,394
Noninterest expense   12,958     14,260     12,795     14,444     13,625  
Income before taxes 9,240 7,204 9,735 7,217 7,025
Income tax provision   5,544     2,072     3,078     2,300     2,192  
Net income $ 3,696   $ 5,132   $ 6,657   $ 4,917   $ 4,833  
 
BEAR STATE FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED
 
                         
December September June March December
  2017     2017     2017     2017     2016  
 

Common stock data:

Net income per share, diluted $ 0.10 $ 0.14 $ 0.18 $ 0.13 $ 0.13
Core earnings per share, diluted $ 0.17 $ 0.16 $ 0.17 $ 0.15 $ 0.13
Book value per share $ 6.68 $ 6.61 $ 6.48 $ 6.31 $ 6.21
Tangible book value per share $ 5.37 $ 5.29 $ 5.16 $ 4.98 $ 4.86
Diluted weighted average shares outstanding 37,982,761 37,921,016 37,883,264 37,880,022 37,833,124
End of period shares outstanding 37,767,613 37,729,837 37,713,171 37,689,939 37,618,597
 

Profitability and performance ratios:

Return on average assets 0.66 % 0.91 % 1.22 % 0.95 % 0.95 %
Core return on average assets 1.18 % 1.04 % 1.15 % 1.14 % 0.95 %
Return on average equity 5.80 % 8.19 % 11.02 % 8.44 % 8.18 %
Core return on average equity 10.40 % 9.38 % 10.36 % 10.06 % 8.23 %
Core return on average tangible equity 12.95 % 11.74 % 13.07 % 12.80 % 10.50 %
Net interest margin 3.67 % 3.70 % 3.76 % 4.05 % 3.75 %
Noninterest income to total revenue 16.63 % 17.97 % 20.10 % 18.15 % 20.44 %
Noninterest income to average assets 0.67 % 0.74 % 0.86 % 0.81 % 0.86 %
Noninterest expense to average assets 2.30 % 2.52 % 2.34 % 2.80 % 2.68 %
Efficiency ratio 57.18 % 61.13 % 54.79 % 62.77 % 63.37 %
Core efficiency ratio(1) 54.36 % 54.56 % 55.70 % 56.00 % 63.18 %
Average loans to average deposits 108.85 % 104.30 % 100.22 % 98.79 % 93.34 %
Securities to total assets 12.34 % 12.18 % 12.32 % 11.52 % 10.49 %
 

Asset quality ratios:

Allowance for loan losses to total loans 1.14 % 1.09 % 1.03 % 1.03 % 1.00 %
Allowance for loan losses to non-performing loans 110.67 % 104.56 % 104.00 % 94.20 % 89.69 %
Nonperforming loans to total loans 1.03 % 1.04 % 0.99 % 1.09 % 1.12 %
Nonperforming assets to total assets 0.87 % 0.85 % 0.78 % 0.87 % 0.94 %
Annualized net charge offs to average total loans 0.04 % 0.06 % 0.14 % 0.03 % 0.10 %
 

Regulatory capital ratios:

Tier 1 leverage ratio 9.36 % 9.16 % 9.18 % 9.27 % 9.47 %
Common equity tier 1 capital ratio 11.30 % 10.84 % 10.85 % 10.58 % 11.04 %
Tier 1 capital to risk weighted assets 11.30 % 10.84 % 10.85 % 10.58 % 11.04 %
Total capital to risk weighted assets 12.35 % 11.84 % 11.80 % 11.52 % 11.96 %
                                       
(1) Core efficiency ratio is a non-GAAP ratio that is calculated by
dividing core noninterest expense by total core revenue (the sum of
net interest income and core noninterest income). Other companies
may define and calculate this data differently.
 
 

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
(Unaudited)
       
December 31,

2017

December 31,

2016

ASSETS
Cash and cash equivalents $ 53,568 $ 78,789
Interest-bearing time deposits in banks 4,075 4,571
Investment securities:
Available for sale securities, at fair value 196,806 188,476
Held to maturity securities, at amortized cost (fair value of
$42,849 and $25,090, respectively)
42,775 26,977
Other investment securities, at cost 27,077 13,759
Loans receivable, net of allowance of $18,992 and $15,584,
respectively
1,654,245 1,540,805
Loans held for sale 3,815 8,954
Accrued interest receivable 7,677 7,006
Real estate owned, net 1,648 1,945
Office properties and equipment, net 50,546 54,049
Office properties and equipment held for sale 2,201 5,337
Cash surrender value of life insurance 58,200 57,267
Goodwill 40,196 40,196
Core deposit intangibles, net 9,332 10,353
Deferred tax asset, net 4,611 11,619
Prepaid expenses and other assets   3,282   3,072  
 
TOTAL $ 2,160,054 $ 2,053,175  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
LIABILITIES:
Noninterest bearing deposits $ 217,582 $ 223,038
Interest bearing deposits   1,281,862   1,421,042  
Total deposits 1,499,444 1,644,080
Securities sold under agreement to repurchase 13,445 19,114
Other borrowings 386,811 152,004
Other liabilities   8,106   4,550  
 
Total liabilities   1,907,806   1,819,748  
 
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value—5,000,000 shares authorized; none
issued at December 31, 2017 or 2016
-- --
Common stock, $0.01 par value—100,000,000 shares authorized;
37,767,613 and 37,618,597 shares issued and outstanding at December
31, 2017 and 2016, respectively
378 376
Additional paid-in capital 210,599 209,274
Accumulated other comprehensive income (loss) 180 (1,436 )
Retained earnings   40,091   25,213  
 

Total stockholders' equity

  252,248   233,427  
 
TOTAL $ 2,160,054 $ 2,053,175  
 

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share)
(Unaudited)
  Three Months Ended       Year Ended
December 31, December 31,
  2017         2016   2017           2016  
INTEREST INCOME:
Loans receivable $ 20,065 $ 17,924 $ 79,120 $ 70,936
Investment securities:
Taxable 735 475 2,750 1,952
Nontaxable 927 729 3,700 2,185
Other   245   84   697     313  
Total interest income   21,972   19,212   86,267     75,386  
 
INTEREST EXPENSE:
Deposits 1,720 1,729 6,992 6,515
Other borrowings   1,359   376   3,755     1,403  
Total interest expense   3,079   2,105   10,747     7,918  
 
NET INTEREST INCOME 18,893 17,107 75,520 67,468
 
PROVISION FOR LOAN LOSSES   464   851   4,498     2,516  
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   18,429   16,256   71,022     64,952  
 
NONINTEREST INCOME:
Net gain on sales of investment securities -- -- 48 19
Deposit fee income 2,461 2,354 9,970 8,994
Earnings on life insurance policies 406 418 2,031 1,665
Gain on sales of loans 703 1,342 3,773 4,796
Other   199   280   1,008     1,237  
 
Total noninterest income   3,769   4,394   16,830     16,711  
 
NONINTEREST EXPENSES:
Salaries and employee benefits 6,752 7,443 28,519 31,168
Net occupancy expense 1,732 1,762 6,987 7,414
Real estate owned, net 29 2 (2 ) (377 )
FDIC insurance 303 230 1,078 1,099
Amortization of intangible assets 255 255 1,021 1,021
Data processing 1,463 1,341 5,769 5,520
Professional fees 429 531 1,860 2,212
Advertising and public relations 254 316 1,148 1,600
Postage and supplies 205 233 836 1,121
Other   1,536   1,512   7,239     6,567  
 
Total noninterest expenses   12,958   13,625   54,455     57,345  
 
INCOME BEFORE INCOME TAXES 9,240 7,025 33,397 24,318
 
INCOME TAX PROVISION   5,544   2,192   12,995     6,859  
 
NET INCOME $ 3,696 $ 4,833 $ 20,402   $ 17,459  
 
Basic earnings per common share $ 0.10 $ 0.13 $ 0.54   $ 0.46  
 
Diluted earnings per common share $ 0.10 $ 0.13 $ 0.54   $ 0.46  
 

BEAR STATE FINANCIAL, INC.

AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS -
UNAUDITED
(Dollars in thousands)
 

 

    Three Months Ended December 31,
2017     2016  
Average

Balance

  Interest   Average

Yield/

Cost

Average

Balance

  Interest   Average

Yield/

Cost

(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 1,695,811 $ 20,065 4.69 % $ 1,536,703 $ 17,924 4.63 %
Investment securities(2) 269,441 1,662 2.45 217,522 1,204 2.20
Other interest-earning assets   74,372   245 1.31   56,577   84 0.59
Total interest-earning assets 2,039,624 21,972 4.27 1,810,802 19,212 4.21
Noninterest-earning assets   194,294   208,990
Total assets $ 2,233,918 $ 2,019,792
Interest-bearing liabilities:
Deposits $ 1,335,165 1,720 0.51 $ 1,416,991 1,729 0.48
Other borrowings   414,234   1,359 1.30   134,480   376 1.11
Total interest-bearing liabilities 1,749,399 3,079 0.70 1,551,471 2,105 0.54
Noninterest-bearing deposits 222,770 229,296
Noninterest-bearing liabilities   8,994   4,686
Total liabilities 1,981,163 1,785,453
Stockholders' equity   252,755   234,339

Total liabilities and stockholders' equity

$ 2,233,918 $ 2,019,792
   
Net interest income $ 18,893 $ 17,107
Net earning assets $ 290,225 $ 259,331
Interest rate spread 3.57 % 3.67 %
Net interest margin 3.67 % 3.75 %
Ratio of interest-earning assets to

Interest-bearing liabilities

116.59 % 116.71 %
 

 

Year Ended December 31,
2017   2016  
Average

Balance

Interest Average

Yield/

Cost

Average

Balance

Interest Average

Yield/

Cost

(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 1,667,971 $ 79,120 4.74 % $ 1,503,245 $ 70,936 4.72 %
Investment securities(2) 266,530 6,450 2.42 203,899 4,137 2.03
Other interest-earning assets   57,803   697 1.21   44,814   313 0.70
Total interest-earning assets 1,992,304 86,267 4.33 1,751,958 75,386 4.30
Noninterest-earning assets   198,865   213,221
Total assets $ 2,191,169 $ 1,965,179
Interest-bearing liabilities:
Deposits $ 1,398,840 6,992 0.50 $ 1,394,194 6,515 0.47
Other borrowings   319,924   3,755 1.17   111,484   1,403 1.26
Total interest-bearing liabilities 1,718,764 10,747 0.63 1,505,678 7,918 0.53
Noninterest-bearing deposits 220,572 226,758
Noninterest-bearing liabilities   6,822   3,447
Total liabilities 1,946,158 1,735,883
Stockholders' equity   245,011   229,296

Total liabilities and stockholders' equity

$ 2,191,169 $ 1,965,179
 
Net interest income $ 75,520 $ 67,468
Net earning assets $ 273,540 $ 246,280
Interest rate spread 3.70 % 3.77 %
Net interest margin 3.79 % 3.85 %
Ratio of interest-earning assets to

Interest-bearing liabilities

115.91 % 116.36 %
 
 
(1) Includes nonaccrual loans.
(2) Includes FHLB and FRB stock.

BEAR STATE FINANCIAL, INC.

ASSET QUALITY ANALYSIS - UNAUDITED
(Dollars in thousands)
  December 31, 2017   December 31, 2016  

Net (2)

 

% Total

Assets

Net (2)

 

% Total

Assets

Increase

(Decrease)

Nonaccrual Loans:
One- to four-family residential $ 7,061 0.32% $ 6,709 0.33% $ 352
Nonfarm nonresidential 7,374 0.34% 5,177 0.25% 2,197
Farmland 657 0.03% 783 0.04% (126)
Construction and land development 188 0.01% 463 0.02% (275)
Commercial 1,669 0.08% 4,071 0.20% (2,402)
Consumer 212 0.01% 173 0.01% 39
 
Total nonaccrual loans 17,161 0.79% 17,376 0.85% (215)
 
Accruing loans 90 days or more past due -- -- -- -- --
 
Real estate owned 1,648 0.08% 1,945 0.09% (297)
 
Total nonperforming assets 18,809 0.87% 19,321 0.94% (512)
Performing restructured loans 882 0.04% 4,804 0.23% (3,922)
 
Total nonperforming assets and performing restructured loans (1) $ 19,691 0.91% $ 24,125 1.17% $ (4,434)
 

(1) The table does not include substandard loans which were judged
not to be impaired totaling $30.7 million at December 31, 2017 and
2016 or acquired ASC 310-30 purchased credit impaired loans which
are considered performing.

(2) Loan balances are presented net of undisbursed loan funds,
partial charge-offs and interest payments recorded as reductions
in principal balances for financial reporting purposes.

 
BEAR STATE FINANCIAL, INC.
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS'
EQUITY – UNAUDITED
(Dollars in thousands)
    For the Quarter Ending
  12/31/2017           9/30/2017           6/30/2017           3/31/2017           12/31/2016  
Net income available to common stockholders $ 3,696   $ 5,132   $ 6,657   $ 4,917   $ 4,833  
Average common stockholders' equity 252,755 248,559 242,263 236,247 234,339
Less average intangible assets:
Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 )
Core deposit intangible, net of accumulated amortization   (9,497 )   (9,754 )   (10,008 )   (10,265 )   (10,519 )
 
Average tangible common stockholders' equity $ 203,062   $ 198,609   $ 192,059   $ 185,786   $ 183,624  
 

Annualized return on average tangible common stockholders' equity

  7.2 %   10.3 %   13.9 %   10.7 %   10.4 %
 
BEAR STATE FINANCIAL, INC.
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE - UNAUDITED
(In thousands, except per share data)
    For the Quarter Ending
  12/31/2017       9/30/2017       6/30/2017       3/31/2017       12/31/2016  
Total common stockholder's equity $ 252,248 $ 249,209 $ 244,533 $ 237,912 $ 233,427
Less intangible assets:
Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 )
Core deposit intangible, net of accumulated amortization   (9,332 )   (9,587 )   (9,842 )   (10,098 )   (10,353 )
Total intangible assets   (49,528 )   (49,783 )   (50,038 )   (50,294 )   (50,549 )
Total tangible common stockholder's equity $ 202,720   $ 199,426   $ 194,495   $ 187,618   $ 182,878  
 
Common shares outstanding   37,768     37,730     37,713     37,690     37,619  
 

Tangible book value per common share

$ 5.37   $ 5.29   $ 5.16   $ 4.98   $ 4.86  
 
BEAR STATE FINANCIAL, INC.
RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA -
UNAUDITED
(In thousands, except share data)
      For the Quarter Ending
December       September       June       March       December
  2017     2017     2017     2017     2016  
Net income $ 3,696 $ 5,132 $ 6,657 $ 4,917 $ 4,833
Adj: Loss (gain) on sale of securities, net -- -- (37 ) (11 ) --
Adj: Claim on bank owned life insurance -- -- (395 ) -- --
Adj: Merger, acquisition and integration expenses 677 1,253 -- -- --
Adj: Branch restructure expense (1) (38 ) 279 29 1,565 41
Adj: Deferred tax asset tax rate adjustment (2) 2,541 (186 ) -- -- --
Tax effect of adjustments (3)           (250 )         (600 )         3           (608 )         (16 )
Total core earnings     (A)   $ 6,626         $ 5,878         $ 6,257         $ 5,863         $ 4,858  
 
Total revenue $ 22,662 $ 23,327 $ 23,351 $ 23,010 $ 21,501
Adj: Gain on sale of securities, net -- -- (37 ) (11 ) --
Adj: Claim on bank owned life insurance           --           --           (395 )         --           --  
Total core revenue         $ 22,662         $ 23,327         $ 22,919         $ 22,999         $ 21,501  
 
Total non-interest expense $ 12,958 $ 14,260 $ 12,795 $ 14,444 $ 13,625
Adj: Merger, acquisition and integration expenses (677 ) (1,253 ) -- -- --
Adj: Branch restructure expense (1)           38           (279 )         (29 )         (1,565 )         (41 )
Total core noninterest expense         $ 12,319         $ 12,728         $ 12,766         $ 12,879         $ 13,584  
 
Total average assets (B) $ 2,233,918 $ 2,246,331 $ 2,190,240 $ 2,092,022 $ 2,019,792
Total average stockholders' equity (C) 252,755 248,559 242,263 236,247 234,339
Total average tangible stockholders' equity (D) 203,062 198,609 192,059 185,786 183,624
Total tangible stockholders' equity, period end (E) 202,720 199,426 194,495 187,618 182,878
 
Total common shares outstanding, period-end (F) 37,767,613 37,729,837 37,713,171 37,689,939 37,618,597
Diluted weighted average shares outstanding (G) 37,982,761 37,921,016 37,883,264 37,880,022 37,833,124
 
Core earnings per share, diluted (A/G) $ 0.17 $ 0.16 $ 0.17 $ 0.15 $ 0.13
Tangible book value per share, period-end (E/F) $ 5.37 $ 5.29 $ 5.16 $ 4.98 $ 4.86
 
Core return on average assets (A/B) 1.18 % 1.04 % 1.15 % 1.14 % 0.95 %
Core return on average equity (A/C) 10.40 % 9.38 % 10.36 % 10.06 % 8.23 %
Core return on average tangible equity (A/D) 12.95 % 11.74 % 13.07 % 12.80 % 10.50 %
Core efficiency ratio (4)           54.36 %         54.56 %         55.70 %         56.00 %         63.18 %  

(1) This adjustment primarily consists of costs associated with
properties disposed or held for sale as a result of branch
restructuring, including net (gains) losses on sales, impairment
charges, and other expenses such as accelerated depreciation. For
the quarter ended March 31,2017, this adjustment also included
severance expense totaling $1.1 million resulting from branch and
other organizational restructure, primarily due to severance of
$0.8 million accrued upon the departure of the former CEO in
January 2017.

(2) The Company was required to revalue its deferred tax assets
and deferred tax liabilities as a result of the "Tax Cuts and Jobs
Act" signed into law on December 22, 2017. The impact was a
one-time, non-cash charge to income tax provision on the income
statement.

(3) The tax effect is calculated at the Company's blended
statutory rate of 39.14% for adjustments that impact taxable
income for periods in 2017 and 38.29% for periods ending in 2016.

(4) Core efficiency ratio is a non-GAAP ratio that is calculated
by dividing core noninterest expense by total core revenue (the
sum of net interest income and core noninterest income). Other
companies may define and calculate this data differently.

 

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