BSF Bear State Financial, Inc. (delisted)

FINANCIAL HIGHLIGHTS:

• First quarter 2017 GAAP net income was $4.9 million, a 47% increase from $3.3 million for the first quarter of 2016. Diluted earnings per common share for the first quarter of 2017 was $0.13, a 44% increase from $0.09 for the first quarter of 2016.
• First quarter 2017 core earnings were $5.9 million, a 60% increase from $3.7 million for the first quarter of 2016. Diluted core earnings per common share for the first quarter of 2017 was $0.15, a 50% increase from $0.10 for the first quarter of 2016.
• The Company’s efficiency ratio improved to 63% in the first quarter of 2017 compared to 74% in the first quarter of 2016. Further, the Company’s core efficiency ratio improved to 56% in the first quarter of 2017 compared to 72% in the first quarter of 2016.
• Net interest income increased 11% for the first quarter of 2017 compared to the first quarter of 2016 primarily due to loan portfolio growth of 12% year over year.
• The ratio of nonperforming assets to total assets improved to 0.87% at March 31, 2017 compared to 1.23% at March 31, 2016. Annualized net chargeoffs for the quarter ended March 31, 2017 were 0.03% of average total loans.
• Book value per common share was $6.31 at March 31, 2017, a 6% increase from $5.96 at March 31, 2016. Tangible book value per common share was $4.98 at March 31, 2017, an 8% increase from $4.59 at March 31, 2016.

Bear State Financial, Inc. (the “Company”) (NASDAQ: BSF), today reported earnings of $4.9 million and earnings per diluted common share of $0.13 in the first quarter of 2017, compared to earnings of $3.3 million or $0.09 per diluted common share in the first quarter of 2016. Core earnings for the first quarter of 2017 were $5.9 million or $0.15 per diluted common share compared to core earnings of $3.7 million or $0.10 per diluted common share in the first quarter of 2016.

The company experienced record revenue of $23 million in the first quarter of 2017 which is an increase of 12% compared to the first quarter of 2016. Net interest income increased 11% for the first quarter of 2017 compared to the first quarter of 2016 primarily due to loan portfolio growth. Noninterest income increased 14% for the first quarter of 2017 compared to the first quarter of 2016 primarily due to increases in gain on sale of loans and deposit fee income.

Along with revenue growth, the Company continued to focus on operational efficiency as evidenced by the decrease in noninterest expense of 6% for the first quarter of 2017 compared to the first quarter of 2016, resulting in an improvement in the Company’s efficiency ratio to 63% in the first quarter of 2017 compared to 74% in the first quarter of 2016. Further, the Company’s core efficiency ratio improved to 56% in the first quarter of 2017 compared to 72% in the first quarter of 2016. During the first quarter of 2017, the Company consolidated three of its retail branch locations and transitioned one limited service branch location to operate using personalized technology with Interactive ATMs (“ITMs”) only. Two additional retail branch locations will transition to operate solely with ITMs in the second quarter of 2017.

FINANCIAL CONDITION

Total assets were $2.17 billion at March 31, 2017, a 13% increase compared to $1.92 billion at March 31, 2016. The increase in total assets was primarily due to increases in investment securities and loans. Total loans were $1.64 billion at March 31, 2017, an increase of $180.2 million, or 12% compared to March 31, 2016 and investment securities were $250.5 million at March 31, 2017, an increase of $65.4 million, or 35% compared to March 31, 2016. Total deposits were $1.67 billion at March 31, 2017, a 4% increase compared to $1.61 billion at March 31, 2016.

Total stockholders’ equity was $238 million at March 31, 2017, a 6% increase from $224 million at March 31, 2016. Tangible common stockholders’ equity was $188 million at December 31, 2016, a 9% increase from $172 million at March 31, 2016. Book value per common share was $6.31 at March 31, 2017, a 6% increase from $5.96 at March 31, 2016. Tangible book value per common share was $4.98 at March 31, 2017, an 8% increase from $4.59 at March 31, 2016. The Company’s ratio of total stockholders’ equity to total assets decreased to 10.94% at March 31, 2017, compared to 11.64% at March 31, 2016. The calculation of the Company’s tangible book value per common share, 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 first quarter 2017 net income of $4.9 million or $0.13 per diluted common share compared to net income of $3.3 million or $0.09 per diluted common share in the first quarter of 2016, resulting in a return on average assets of 0.95% in the first quarter of 2017, compared to 0.71% in the first 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.

First quarter 2017 core earnings totaled $5.9 million or $0.15 per diluted common share, compared to core earnings of $3.7 million or $0.10 per diluted common share in the first quarter of 2016. The core return on average assets measured 1.14% and 0.77%, core return on average equity measured 10.06% and 6.61% and core return on average tangible equity measured 12.80% and 8.58%, each for the first quarters of 2017 and 2016, respectively. Non-core items during the first quarter of 2017 included gain on sales of investments of $11,000 and branch restructure expenses of $1.6 million, including $1.1 million of severance expense, primarily due to severance of $0.8 million accrued upon the departure of our former CEO in January 2017. The effect of non-core items, net of taxes, decreased GAAP net income by approximately $946,000 for the first quarter of 2017.

Net interest income for the first quarter of 2017 was $18.8 million compared to $16.9 million for the same period in 2016. Interest income for the first quarter of 2017 was $21.0 million compared to $18.8 million for the same period in 2016. The increase in interest income for the quarter ended March 31, 2017, compared to 2016 was primarily related to an increase in the average balances of loans receivable and investment securities and an increase in the yield earned on investment securities. Interest expense for the first quarter of 2017 was $2.2 million compared to $1.9 million for the same period in 2016. The increase in interest expense for the first quarter of 2017 compared to the same period in 2016 was primarily due to an increase in the average balance of borrowings and an increase in the average rate paid on deposits, partially offset by a decrease in the average rate paid on borrowings.

Net interest margin measured 4.05% for the first quarter of 2017, compared to 4.03% for the same period in 2016. The average yield on interest-earning assets for the first quarter of 2017 was 4.52% compared to 4.47% for the same period in 2016. The average cost of interest-bearing liabilities increased to 0.55% for the first quarter 2017, compared to 0.51% 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 March 31, 2017 increased to $4.2 million from $3.7 million for the same period in 2016, a 14% increase. The increases in the three month comparison period was primarily due to increases in deposit fee income and gain on sales of mortgage loans.

Total noninterest expense decreased $0.9 million or 6% for the first quarter of 2017 compared to the first quarter of 2016. The decrease in total noninterest expense for the three month comparative period was primarily related to the Company’s efforts to improve its operational efficiency as well as transaction costs incurred in connection with the integration of MNB in the first quarter of 2016.

Income tax provision increased by $0.9 million or 60% for the first quarter of 2017 compared to the first quarter of 2016. The increase in income tax provision was primarily due to an increase in taxable income. The Company’s effective tax rate for the quarter ended March 31, 2017 was 31.9% compared to 30.1% for the quarter ended March 31, 2016.

The ratio of nonperforming assets to total assets decreased to 0.87% at March 31, 2017, compared to 1.23% at March 31, 2016. The allowance for loan losses represented 1.03% of total loans at March 31, 2017 compared to 1.02% at March 31, 2016. The ratio of allowance for loan losses plus discount on acquired loans to total loans was 1.58% at March 31, 2017, compared to 1.99% at March 31, 2016. The ratio of the allowance for loan losses to nonperforming loans was 94% at March 31, 2017, compared to 73% at March 31, 2016. Annualized net charge-offs as a percentage of average loans for the quarter ended March 31, 2017 was 0.03% compared to 0.05% for the quarter ended March 31, 2016. Provision for loan losses increased from $489,000 for the first quarter of 2016 to $1.3 million for the first quarter of 2017. The increase in the provision 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, 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 44 branches 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. 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. 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, 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)           March December September June March 2017 2016 2016 2016 2016  

Balance sheet data, at quarter end:

Commercial real estate - mortgage loans $ 604,888 $ 587,633 $ 566,302 $ 557,612 $ 555,264 Consumer real estate - mortgage loans 398,106 389,592 385,642 390,743 395,509 Farmland 98,672 94,018 94,187 92,452 93,380 Construction and land development 129,078 125,785 119,433 124,369 117,283 Commercial and industrial loans 370,961 323,096 312,957 281,874 258,479 Consumer and other 36,100 36,265 36,645 36,339 37,673 Total loans 1,637,805 1,556,389 1,515,166 1,483,389 1,457,588 Loans held for sale 4,735 8,954 13,995 15,168 10,103 Allowance for loan losses (16,821 ) (15,584 ) (15,112 ) (14,751 ) (14,866 ) Investment securities 250,493 215,453 197,670 192,549 185,143 Goodwill 40,196 40,196 40,196 40,196 40,196 Core deposit intangible, net 10,098 10,353 10,608 10,863 11,119 Total assets 2,174,041 2,053,175 2,007,938 1,990,715 1,922,301 Noninterest-bearing deposits 221,891 223,038 239,831 255,648 216,173 Total deposits 1,669,066 1,644,080 1,653,523 1,641,250 1,610,718 Short term borrowings 17,831 19,114 13,511 14,964 8,990 FHLB advances 225,072 129,992 80,138 75,282 50,178 Other borrowings 13,506 22,012 22,518 22,900 22,681 Total stockholders' equity 237,912 233,427 232,403 228,534 223,798  

Balance sheet data, quarterly averages:

Total loans $ 1,607,892 $ 1,536,703 $ 1,522,106 $ 1,492,504 $ 1,461,091 Investment securities 248,355 217,522 202,868 188,808 206,258 Total earning assets 1,886,813 1,810,802 1,768,892 1,724,381 1,702,917 Goodwill 40,196 40,196 40,196 40,196 40,196 Core deposit intangible, net 10,265 10,519 10,775 11,030 11,284 Total assets 2,092,022 2,019,792 1,981,582 1,937,722 1,920,833 Noninterest-bearing deposits 213,467 229,296 239,886 215,766 221,909 Interest-bearing deposits 1,414,137 1,416,991 1,395,501 1,394,262 1,369,759 Total deposits 1,627,604 1,646,287 1,635,387 1,610,028 1,591,668 Short term borrowings 15,549 17,983 13,699 11,991 12,163 FHLB advances 190,965 94,336 73,418 64,494 64,488 Other borrowings 16,247 22,161 22,634 22,982 25,353 Total stockholders' equity 236,247 234,339 231,758 226,587 224,416  

Statement of income data for the three months ended:

Interest income $ 21,048 $ 19,212 $ 18,849 $ 18,535 $ 18,790 Interest expense   2,214     2,105     2,014     1,935     1,864   Net interest income 18,834 17,107 16,835 16,600 16,926 Provision for loan losses   1,349     851     643     533     489   Net interest income after provision for loan losses 17,485 16,256 16,192 16,067 16,437 Noninterest income 4,176 4,394 4,333 4,311 3,673 Noninterest expense   14,444     13,625     13,400     14,989     15,331   Income before taxes 7,217 7,025 7,125 5,389 4,779 Income tax provision   2,300     2,192     2,384     847     1,436   Net income $ 4,917   $ 4,833   $ 4,741   $ 4,542   $ 3,343       BEAR STATE FINANCIAL, INC. SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED             March December September June March 2017 2016 2016 2016 2016  

Common stock data:

Net income per share, diluted $ 0.13 $ 0.13 $ 0.13 $ 0.12 $ 0.09 Core earnings per share, diluted $ 0.15 $ 0.13 $ 0.11 $ 0.11 $ 0.10 Book value per share $ 6.31 $ 6.21 $ 6.18 $ 6.08 $ 5.96 Tangible book value per share $ 4.98 $ 4.86 $ 4.83 $ 4.72 $ 4.59 Diluted weighted average shares outstanding 37,880,022 37,833,124 37,807,419 37,772,959 37,915,503 End of period shares outstanding 37,689,939 37,618,597 37,600,986 37,589,543 37,560,031  

Profitability and performance ratios:

Return on average assets 0.95 % 0.95 % 0.95 % 0.94 % 0.71 % Core return on average assets 1.14 % 0.95 % 0.85 % 0.84 % 0.77 % Return on average equity 8.44 % 8.18 % 8.12 % 8.04 % 6.04 % Core return on average equity 10.06 % 8.23 % 7.28 % 7.23 % 6.61 % Core return on average tangible equity 12.80 % 10.50 % 9.34 % 9.34 % 8.58 % Net interest margin 4.05 % 3.75 % 3.78 % 3.86 % 4.03 % Noninterest income to total revenue 18.15 % 20.44 % 20.47 % 20.62 % 17.83 % Noninterest income to average assets 0.81 % 0.86 % 0.87 % 0.89 % 0.78 % Noninterest expense to average assets 2.80 % 2.68 % 2.68 % 3.10 % 3.24 % Efficiency ratio 62.77 % 63.37 % 63.30 % 71.68 % 74.43 % Core efficiency ratio(1) 56.00 % 63.18 % 66.99 % 68.29 % 71.96 % Average loans to average deposits 98.79 % 93.34 % 93.07 % 92.70 % 91.80 % Securities to total assets 11.52 % 10.49 % 9.84 % 9.67 % 9.63 %  

Asset quality ratios:

Allowance for loan losses to total loans 1.03 % 1.00 % 1.00 % 0.99 % 1.02 % Allowance for loan losses to non-performing loans 94.20 % 89.69 % 86.41 % 76.42 % 72.84 % Nonperforming loans to total loans 1.09 % 1.12 % 1.15 % 1.30 % 1.40 % Nonperforming assets to total assets 0.87 % 0.94 % 0.95 % 1.08 % 1.23 % Annualized net charge offs to average total loans (2) 0.03 % 0.10 % 0.07 % 0.17 % 0.05 %  

Regulatory capital ratios:

Tier 1 leverage ratio 9.27 % 9.47 % 9.37 % 9.30 % 9.16 % Common equity tier 1 capital ratio 10.58 % 11.04 % 11.00 % 10.78 % 10.65 % Tier 1 capital to risk weighted assets 10.58 % 11.04 % 11.00 % 10.78 % 10.65 % Total capital to risk weighted assets 11.51 % 11.96 % 11.92 % 11.69 % 11.58 %                      

(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.

(2) The quarter ending June 30, 2016 includes a charge-off on a purchased credit impaired loan amounting to 0.13% of average total loans.

   

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands, except share data) (Unaudited)     March 31, December 31, 2017 2016 ASSETS Cash and cash equivalents $ 87,815 $ 78,789 Interest-bearing time deposits in banks 4,324 4,571

Investment Securities:

Available for sale, at fair value 208,035 188,476 Held to maturity, at amortized cost (fair value of $40,681 and $25,090, respectively) 42,458 26,977 Other investment securities, at cost 18,488 13,759 Loans receivable, net of allowance of $16,821 and $15,584, respectively 1,620,984 1,540,805 Loans held for sale 4,735 8,954 Accrued interest receivable 7,248 7,006 Real estate owned, net 1,182 1,945 Office properties and equipment, net 52,539 54,049 Office properties and equipment held for sale 5,597 5,337 Cash surrender value of life insurance 57,676 57,267 Goodwill 40,196 40,196 Core deposit intangibles, net 10,098 10,353 Deferred tax asset, net 9,179 11,619 Prepaid expenses and other assets   3,487     3,072     TOTAL $ 2,174,041   $ 2,053,175     LIABILITIES AND STOCKHOLDERS’ EQUITY   LIABILITIES: Noninterest bearing deposits $ 221,891 $ 223,038 Interest bearing deposits   1,447,175     1,421,042   Total deposits 1,669,066 1,644,080 Securities sold under agreement to repurchase 17,831 19,114 Other borrowings 238,578 152,004 Other liabilities   10,654     4,550     Total liabilities   1,936,129     1,819,748     STOCKHOLDERS’ EQUITY: Preferred stock, $0.01 par value—5,000,000 shares authorized; none issued at March 31, 2017 or December 31, 2016 -- -- Common stock, $0.01 par value—100,000,000 shares authorized; 37,689,939 and 37,618,597 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively 377 376 Additional paid-in capital 209,623 209,274 Accumulated other comprehensive loss (1,088 ) (1,436 ) Retained earnings   29,000     25,213     Total stockholders’ equity   237,912     233,427     TOTAL $ 2,174,041   $ 2,053,175      

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except earnings per share) (Unaudited)       Three Months Ended     March 31,   March 31, 2017 2016 INTEREST INCOME: Loans receivable $ 19,479 $ 17,685 Investment securities: Taxable 611 537 Nontaxable 883 485 Other   75     83   Total interest income   21,048     18,790     INTEREST EXPENSE: Deposits 1,680 1,515 Other borrowings   534     349     Total interest expense   2,214     1,864     NET INTEREST INCOME 18,834 16,926   PROVISION FOR LOAN LOSSES   1,349     489     NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   17,485     16,437     NONINTEREST INCOME: Net gain (loss) on sales of investment securities 11 (2 ) Deposit fee income 2,477 2,150 Earnings on life insurance policies 409 412 Gain on sales of loans 995 794 Other   284     319     Total noninterest income   4,176     3,673     NONINTEREST EXPENSES: Salaries and employee benefits 8,083 8,250 Net occupancy expense 1,892 1,928 Real estate owned, net (94 ) 28 FDIC insurance 251 308 Amortization of intangible assets 255 255 Data processing 1,368 1,433 Professional fees 606 609 Advertising and public relations 297 496 Postage and supplies 205 290 Other   1,581     1,734     Total noninterest expenses   14,444     15,331     INCOME BEFORE INCOME TAXES 7,217 4,779

INCOME TAX PROVISION

  2,300     1,436     NET INCOME $ 4,917   $ 3,343     Basic earnings per common share $ 0.13   $ 0.09     Diluted earnings per common share $ 0.13   $ 0.09            

BEAR STATE FINANCIAL, INC.

AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED

(Dollars in thousands)

  Three Months Ended March 31, 2017

 

2016

  Average Average Average Yield/

 

Average

Yield/ Balance Interest Cost

 

Balance

 

Interest

Cost (Dollars in Thousands) Interest-earning assets:   Loans receivable(1) $ 1,607,892

$

19,479

4.91 %

$

1,461,091

$ 17,685 4.91 % Investment securities(2) 248,355 1,494 2.44

206,258

1,022 2.01 Other interest-earning assets   30,566   75   1.00   35,568   83 0.95 Total interest-earning assets 1,886,813 21,048 4.52 1,702,917 18,790 4.47 Noninterest-earning assets   205,209   217,916 Total assets $ 2,092,022

$

1,920,833

Interest-bearing liabilities: Deposits $ 1,414,137 1,680 0.48

$

1,369,759

1,515 0.45 Other borrowings   222,761   534   0.97   102,004   349 1.39 Total interest-bearing liabilities 1,636,898 2,214 0.55 1,471,763 1,864 0.51 Noninterest-bearing deposits 213,467 221,909

Noninterest-bearing liabilities

  5,410   2,745 Total liabilities 1,855,775 1,696,417 Stockholders' equity   236,247   224,416

Total liabilities and stockholders' equity

 

$ 2,092,022

$

1,920,833

      Net interest income

$

18,834

  $ 16,926 Net earning assets $ 249,915

$

231,154

Interest rate spread 3.97 % 3.96 % Net interest margin 4.05 % 4.03 %

Ratio of interest-earning assets to Interest-bearing liabilities

 

115.27 % 115.71 %   (1) Includes nonaccrual loans. (2) Includes FHLB and FRB stock.        

BEAR STATE FINANCIAL, INC.

ASSET QUALITY ANALYSIS - UNAUDITED

(Dollars in thousands)

  March 31, 2017 December 31, 2016   % Total   % Total Increase Net (2) Assets Net (2) Assets (Decrease) Nonaccrual Loans: One- to four-family residential $ 6,759 0.31 % $ 6,709 0.33 % $ 50 Multifamily 119 0.01 % -- -- 119 Nonfarm nonresidential 5,208 0.23 % 5,177 0.25 % 31 Farmland 1,280 0.06 % 783 0.04 % 497 Construction and land development 439 0.02 % 463 0.02 % (24 ) Commercial 3,841 0.18 % 4,071 0.20 % (230 ) Consumer   211 0.01 %   173 0.01 %   38     Total nonaccrual loans 17,857 0.82 % 17,376 0.85 % 481   Accruing loans 90 days or more past due -- -- -- -- --   Real estate owned   1,182 0.05 %   1,945 0.09 %   (763 )   Total nonperforming assets 19,039 0.87 % 19,321 0.94 % (282 ) Performing restructured loans   4,800 0.22 %   4,804 0.23 %   (4 )   Total nonperforming assets and performing restructured loans (1) $ 23,839 1.09 % $ 24,125 1.17 % $ (286 )    

(1) The table does not include substandard loans which were judged not to be impaired totaling $24.7 million at March 31, 2017 and $30.7 million at December 31, 2016 or acquired ASC 310-30 purchased credit impaired loans which are considered performing at March 31, 2017.

(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 3/31/2017   12/31/2016   9/30/2016   6/30/2016   3/31/2016 Net income available to common stockholders $ 4,917   $ 4,833   $ 4,741   $ 4,542   $ 3,343   Average common stockholders' equity 236,247 234,339 231,758 226,587 224,416 Less average intangible assets: Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 ) Core deposit intangible, net of accumulated amortization   (10,265 )   (10,519 )   (10,775 )   (11,030 )   (11,284 )   Average tangible common stockholders' equity $ 185,786   $ 183,624   $ 180,787   $ 175,361   $ 172,936    

Annualized return on average tangible common stockholders' equity

  10.7 %   10.4 %   10.4 %   10.4 %   7.8 %       BEAR STATE FINANCIAL, INC. CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE - UNAUDITED (In thousands, except per share data) For the Quarter Ending 3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016 Total common stockholder's equity $ 237,912 $ 233,427 $ 232,403 $ 228,534 $ 223,798 Less intangible assets: Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 ) Core deposit intangible, net of accumulated amortization   (10,098 )   (10,353 )   (10,608 )   (10,863 )   (11,119 ) Total intangible assets   (50,294 )   (50,549 )   (50,804 )   (51,059 )   (51,315 ) Total tangible common stockholder's equity $ 187,618   $ 182,878   $ 181,599   $ 177,475   $ 172,483     Common Shares Outstanding   37,690     37,619     37,601     37,590     37,560     Tangible book value per common share $ 4.98   $ 4.86   $ 4.83   $ 4.72   $ 4.59       BEAR STATE FINANCIAL, INC. RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED (In thousands, except share data)           For the Quarter Ending March December September June March 2017 2016 2016 2016 2016 Net income $ 4,917 $ 4,833 $ 4,741 $ 4,542 $ 3,343 Adj: Loss (gain) on sale of securities, net (11 ) -- (21 ) -- 2 Adj: Merger, acquisition and integration expenses -- -- -- 137 445 Adj: Branch restructure expense (1) 1,565 41 (323 ) 571 63 Adj: Net provision/loss/(gain) on real estate owned -- -- (444 ) -- -- Adj: Deferred tax asset valuation allowance reversal -- -- -- (897 ) -- Tax effect of adjustments (2)       (608 )     (16 )     302       (271 )     (195 ) Total core earnings (A)   $ 5,863     $ 4,858     $ 4,255     $ 4,082     $ 3,658     Total revenue $ 23,010 $ 21,501 $ 21,168 $ 20,911 $ 20,599 Adj: Loss (gain) on sale of securities, net       (11 )     --       (21 )     --       2   Total core revenue     $ 22,999     $ 21,501     $ 21,147     $ 20,911     $ 20,601     Total non-interest expense $ 14,444 $ 13,625 $ 13,400 $ 14,989 $ 15,331 Adj: Merger, acquisition and integration expenses -- -- -- (137 ) (445 ) Adj: Branch restructure expense (1) (1,565 ) (41 ) 323 (571 ) (63 ) Adj: Net (provision/loss)/gain on real estate owned       --       --       444       --       --   Total core noninterest expense     $ 12,879     $ 13,584     $ 14,167     $ 14,281     $ 14,823     Total average assets (B) $ 2,092,022 $ 2,019,792 $ 1,981,582 $ 1,937,722 $ 1,920,833 Total average stockholders' equity (C) 236,247 234,339 231,758 226,587 224,416 Total average tangible stockholders' equity (D) 185,786 183,624 180,787 175,361 172,936 Total tangible stockholders' equity, period end (E) 187,618 182,878 181,599 177,475 172,483   Total common shares outstanding, period-end (F) 37,689,939 37,618,597 37,600,986 37,589,543 37,560,031 Average diluted shares outstanding (G) 37,880,022 37,833,124 37,807,419 37,772,959 37,915,503   Core earnings per share, diluted (A/G) $ 0.15 $ 0.13 $ 0.11 $ 0.11 $ 0.10 Tangible book value per share, period-end (E/F) $ 4.98 $ 4.86 $ 4.83 $ 4.72 $ 4.59   Core return on average assets (A/B) 1.14 % 0.95 % 0.85 % 0.84 % 0.77 % Core return on average equity (A/C) 10.06 % 8.23 % 7.28 % 7.23 % 6.61 % Core return on average tangible equity (A/D) 12.80 % 10.50 % 9.34 % 9.34 % 8.58 % Core efficiency ratio(3)       56.00 %     63.18 %     66.99 %     68.29 %   71.96 %

(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 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.

(3) 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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Bear State Financial, Inc.Matt Machen, CEO, 501-975-6033orSherri Billings, CFO, 501-975-6033