Bear State Financial, Inc. (the “Company,”)(NASDAQ: BSF), today reported earnings of $5.1 million and earnings per diluted common share of $0.14 in the third quarter of 2017, compared to earnings of $4.7 million or $0.13 per diluted common share in the third quarter of 2016. Core earnings for the third quarter of 2017 were $5.9 million or $0.16 per diluted common share compared to core earnings of $4.3 million or $0.11 per diluted common share in the third quarter 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 by merging Acquisition Sub with and into the Company with the Company surviving as a wholly-owned subsidiary of Arvest (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 fourth quarter of 2017 or first quarter of 2018 and is subject to customary closing conditions, including both regulatory approval and approval by the Company’s shareholders.
FINANCIAL CONDITION
Total assets were $2.24 billion at September 30, 2017, a 12% increase compared to $2.01 billion at September 30, 2016. The increase in total assets was primarily due to increases in investment securities and loans. Total loans were $1.71 billion at September 30, 2017, an increase of $196.2 million, or 13%, compared to September 30, 2016 and investment securities were $248.3 million at September 30, 2017, an increase of $50.6 million, or 26%, compared to September 30, 2016. Total deposits were $1.59 billion at September 30, 2017, a 4% decrease compared to $1.65 billion at September 30, 2016.
Total stockholders’ equity was $249.2 million at September 30, 2017, a 7% increase from $232.4 million at September 30, 2016. Tangible common stockholders’ equity was $199.4 million at September 30, 2017, a 10% increase from $181.6 million at September 30, 2016. Book value per common share was $6.61 at September 30, 2017, a 7% increase from $6.18 at September 30, 2016. Tangible book value per common share was $5.29 at September 30, 2017, a 10% increase from $4.83 at September 30, 2016. The Company’s ratio of total stockholders’ equity to total assets decreased to 11.12% at September 30, 2017, compared to 11.57% at September 30, 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 third quarter 2017 net income of $5.1 million or $0.14 per diluted common share compared to net income of $4.7 million or $0.13 per diluted common share in the third quarter of 2016, resulting in a return on average assets of 0.91% in the third quarter of 2017, compared to 0.95% in the third 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.
Third quarter 2017 core earnings totaled $5.9 million or $0.16 per diluted common share, compared to core earnings of $4.3 million or $0.11 per diluted common share in the third quarter of 2016. The core return on average assets measured 1.04% and 0.85%, core return on average equity measured 9.38% and 7.28% and core return on average tangible equity measured 11.74% and 9.34%, each for the third quarters of 2017 and 2016, respectively. Non-core items during the third quarter of 2017 included transaction-related expenses incurred in connection with the pending transaction with Arvest totaling $1.3 million, branch restructure expenses of $279,000 and a deferred tax asset adjustment of $186,000. The effect of non-core items, net of taxes, decreased GAAP net income by approximately $746,000 for the third quarter of 2017.
Net interest income for the third quarter of 2017 was $19.1 million compared to $16.8 million for the same period in 2016. Net interest income for the nine months ended September 30, 2017 was $56.6 million, compared to $50.4 million for the same period in 2016. Interest income for the third quarter of 2017 was $22.1 million compared to $18.8 million for the same period in 2016. Interest income for the nine months ended September 30, 2017 was $64.3 million compared to $56.2 million for the same period in 2016. The increases in interest income for the three and nine months ended September 30, 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 third quarter of 2017 was $3.0 million compared to $2.0 million for the same period in 2016. Interest expense for the nine months ended September 30, 2017 was $7.7 million compared to $5.8 million for the same period in 2016. The increases in interest expense for the three and nine months ended September 30, 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 3.70% for the third quarter of 2017, compared to 3.78% for the same period in 2016. Net interest margin for the nine months ended September 30, 2017 was 3.83%, compared to 3.89% for the same period in 2016. The average yield on interest-earning assets for the third quarter of 2017 was 4.28% compared to 4.23% for the same period in 2016 and was 4.35% for the nine months ended September 30, 2017 compared to 4.34% for the same period in 2016. The average cost of interest-bearing liabilities increased to 0.66% for the third quarter of 2017, compared to 0.53% for the same period in 2016. The average cost of total interest-bearing liabilities for the nine months ended September 30, 2017 was 0.60%, compared to 0.52% 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 September 30, 2017 decreased to $4.2 million from $4.3 million for the same period in 2016, a 3% decrease. Total noninterest income of $13.1 million for the nine months ended September 30, 2017 increased from $12.3 million for the same period in 2016, a 6% 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 nine month comparison period was primarily due to increases in deposit fee income and earnings on bank owned life insurance, offset by a decrease in gain on sales of loans.
Total noninterest expense increased $860,000, or 6%, for the third quarter of 2017 compared to the second quarter of 2016. Total noninterest expense decreased $2.2 million or 5% during the nine months ended September 30, 2017 compared to the same period in 2016. The increase in total noninterest expense for the three month comparative period was primarily related to expenses of $1.3 million associated with the Company’s pending transaction with Arvest. The decrease in total noninterest expense for the nine month comparative period 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 decreased by $312,000, or 13%, for the third quarter of 2017 compared to the third quarter of 2016, primarily due to a tax rate adjustment of the federal deferred tax asset. Income tax provision for the nine months ended September 30, 2017 increased by $2.8 million or 60% compared to the same period in 2016, primarily due to 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 September 30, 2017 was 28.8% compared to 33.5% for the quarter ended September 30, 2016. The Company’s effective tax rate for the nine months ended September 30, 2017 was 30.8% compared to 27.0% for the nine months ended September 30, 2016.
ASSET QUALITY
The ratio of nonperforming assets to total assets decreased to 0.85% at September 30, 2017, compared to 0.95% at September 30, 2016. The allowance for loan losses represented 1.09% of total loans at September 30, 2017 compared to 1.00% at September 30, 2016. The ratio of the allowance for loan losses to nonperforming loans was 105% at September 30, 2017, compared to 86% at September 30, 2016. Annualized net charge-offs as a percentage of average loans for the quarter ended September 30, 2017 was 0.06% compared to 0.07% for the quarter ended September 30, 2016. Provision for loan losses increased from $643,000 for the third quarter of 2016 to $1.9 million for the third quarter of 2017. Provision for loan losses for the nine months ended September 30, 2017 increased to $4.0 million from $1.7 million for the same period in 2016. 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, 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 and Arvest ability to consummate the Merger or satisfy the conditions to the completion of the Merger, including the receipt of shareholder approval, the receipt of regulatory approvals required for the Merger on the terms expected or on the anticipated schedule; 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) | |||||||||||||||||||||||||
| September | June | March | December | September | |||||||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||||||
Balance sheet data, at quarter end: | |||||||||||||||||||||||||
| Commercial real estate - mortgage loans | $ | 661,155 | $ | 632,149 | $ | 604,888 | $ | 587,633 | $ | 566,302 | |||||||||||||||
| Consumer real estate - mortgage loans | 393,082 | 396,550 | 397,898 | 389,107 | 385,126 | ||||||||||||||||||||
| Farmland | 99,189 | 97,881 | 98,672 | 94,018 | 94,187 | ||||||||||||||||||||
| Construction and land development | 147,071 | 131,046 | 129,078 | 125,785 | 119,433 | ||||||||||||||||||||
| Commercial and industrial loans | 373,464 | 364,194 | 370,961 | 323,096 | 312,957 | ||||||||||||||||||||
| Consumer and other | 36,859 | 36,624 | 36,100 | 36,265 | 36,645 | ||||||||||||||||||||
| Total loans | 1,710,820 | 1,658,444 | 1,637,597 | 1,555,904 | 1,514,650 | ||||||||||||||||||||
| Loans held for sale | 7,258 | 7,470 | 4,735 | 8,954 | 13,995 | ||||||||||||||||||||
| Allowance for loan losses | (18,682 | ) | (17,083 | ) | (16,821 | ) | (15,584 | ) | (15,112 | ) | |||||||||||||||
| Investment securities | 273,073 | 275,805 | 268,981 | 229,212 | 209,508 | ||||||||||||||||||||
| Goodwill | 40,196 | 40,196 | 40,196 | 40,196 | 40,196 | ||||||||||||||||||||
| Core deposit intangible, net | 9,587 | 9,842 | 10,098 | 10,353 | 10,608 | ||||||||||||||||||||
| Total assets | 2,241,459 | 2,239,090 | 2,174,041 | 2,053,175 | 2,007,938 | ||||||||||||||||||||
| Noninterest-bearing deposits | 232,004 | 255,806 | 221,891 | 223,038 | 239,831 | ||||||||||||||||||||
| Total deposits | 1,589,136 | 1,703,246 | 1,669,066 | 1,644,080 | 1,653,523 | ||||||||||||||||||||
| Short term borrowings | 21,629 | 17,856 | 17,831 | 19,114 | 13,511 | ||||||||||||||||||||
| FHLB advances | 359,791 | 254,928 | 225,072 | 129,992 | 80,138 | ||||||||||||||||||||
| Other borrowings | 12,525 | 11,600 | 13,506 | 22,012 | 22,518 | ||||||||||||||||||||
| Total stockholders' equity | 249,209 | 244,533 | 237,912 | 233,427 | 232,403 | ||||||||||||||||||||
Balance sheet data, quarterly averages: | |||||||||||||||||||||||||
| Total loans | $ | 1,706,952 | $ | 1,659,830 | $ | 1,607,892 | $ | 1,536,703 | $ | 1,522,106 | |||||||||||||||
| Investment securities | 276,578 | 271,402 | 248,355 | 217,522 | 202,868 | ||||||||||||||||||||
| Total earning assets | 2,049,894 | 1,990,562 | 1,886,813 | 1,810,802 | 1,768,892 | ||||||||||||||||||||
| Goodwill | 40,196 | 40,196 | 40,196 | 40,196 | 40,196 | ||||||||||||||||||||
| Core deposit intangible, net | 9,754 | 10,008 | 10,265 | 10,519 | 10,775 | ||||||||||||||||||||
| Total assets | 2,246,331 | 2,190,240 | 2,092,022 | 2,019,792 | 1,981,582 | ||||||||||||||||||||
| Noninterest-bearing deposits | 225,383 | 220,511 | 213,467 | 229,296 | 239,886 | ||||||||||||||||||||
| Interest-bearing deposits | 1,411,163 | 1,435,630 | 1,414,137 | 1,416,991 | 1,395,501 | ||||||||||||||||||||
| Total deposits | 1,636,546 | 1,656,141 | 1,627,604 | 1,646,287 | 1,635,387 | ||||||||||||||||||||
| Short term borrowings | 20,375 | 15,463 | 15,549 | 17,983 | 13,699 | ||||||||||||||||||||
| FHLB advances | 321,631 | 258,658 | 190,965 | 94,336 | 73,418 | ||||||||||||||||||||
| Other borrowings | 12,193 | 11,898 | 16,247 | 22,161 | 22,634 | ||||||||||||||||||||
| Total stockholders' equity | 248,559 | 242,263 | 236,247 | 234,339 | 231,758 | ||||||||||||||||||||
Statement of income data for the three months ended: | |||||||||||||||||||||||||
| Interest income | $ | 22,094 | $ | 21,153 | $ | 21,048 | $ | 19,212 | $ | 18,849 | |||||||||||||||
| Interest expense | 2,958 | 2,496 | 2,214 | 2,105 | 2,014 | ||||||||||||||||||||
| Net interest income | 19,136 | 18,657 | 18,834 | 17,107 | 16,835 | ||||||||||||||||||||
| Provision for loan losses | 1,863 | 821 | 1,349 | 851 | 643 | ||||||||||||||||||||
| Net interest income after provision for loan losses | 17,273 | 17,836 | 17,485 | 16,256 | 16,192 | ||||||||||||||||||||
| Noninterest income | 4,191 | 4,694 | 4,176 | 4,394 | 4,333 | ||||||||||||||||||||
| Noninterest expense | 14,260 | 12,795 | 14,444 | 13,625 | 13,400 | ||||||||||||||||||||
| Income before taxes | 7,204 | 9,735 | 7,217 | 7,025 | 7,125 | ||||||||||||||||||||
| Income tax provision | 2,072 | 3,078 | 2,300 | 2,192 | 2,384 | ||||||||||||||||||||
| Net income | $ | 5,132 | $ | 6,657 | $ | 4,917 | $ | 4,833 | $ | 4,741 | |||||||||||||||
| BEAR STATE FINANCIAL, INC. | |||||||||||||||||||||||||
| SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED | |||||||||||||||||||||||||
| September | June | March | December | September | |||||||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||||||
Common stock data: | |||||||||||||||||||||||||
| Net income per share, diluted | $ | 0.14 | $ | 0.18 | $ | 0.13 | $ | 0.13 | $ | 0.13 | |||||||||||||||
| Core earnings per share, diluted | $ | 0.16 | $ | 0.17 | $ | 0.15 | $ | 0.13 | $ | 0.11 | |||||||||||||||
| Book value per share | $ | 6.61 | $ | 6.48 | $ | 6.31 | $ | 6.21 | $ | 6.18 | |||||||||||||||
| Tangible book value per share | $ | 5.29 | $ | 5.16 | $ | 4.98 | $ | 4.86 | $ | 4.83 | |||||||||||||||
| Diluted weighted average shares outstanding | 37,921,016 | 37,883,264 | 37,880,022 | 37,833,124 | 37,807,419 | ||||||||||||||||||||
| End of period shares outstanding | 37,729,837 | 37,713,171 | 37,689,939 | 37,618,597 | 37,600,986 | ||||||||||||||||||||
Profitability and performance ratios: | |||||||||||||||||||||||||
| Return on average assets | 0.91 | % | 1.22 | % | 0.95 | % | 0.95 | % | 0.95 | % | |||||||||||||||
| Core return on average assets | 1.04 | % | 1.15 | % | 1.14 | % | 0.95 | % | 0.85 | % | |||||||||||||||
| Return on average equity | 8.19 | % | 11.02 | % | 8.44 | % | 8.18 | % | 8.12 | % | |||||||||||||||
| Core return on average equity | 9.38 | % | 10.36 | % | 10.06 | % | 8.23 | % | 7.28 | % | |||||||||||||||
| Core return on average tangible equity | 11.74 | % | 13.07 | % | 12.80 | % | 10.50 | % | 9.34 | % | |||||||||||||||
| Net interest margin | 3.70 | % | 3.76 | % | 4.05 | % | 3.75 | % | 3.78 | % | |||||||||||||||
| Noninterest income to total revenue | 17.97 | % | 20.10 | % | 18.15 | % | 20.44 | % | 20.47 | % | |||||||||||||||
| Noninterest income to average assets | 0.74 | % | 0.86 | % | 0.81 | % | 0.86 | % | 0.87 | % | |||||||||||||||
| Noninterest expense to average assets | 2.52 | % | 2.34 | % | 2.80 | % | 2.68 | % | 2.68 | % | |||||||||||||||
| Efficiency ratio | 61.13 | % | 54.79 | % | 62.77 | % | 63.37 | % | 63.30 | % | |||||||||||||||
| Core efficiency ratio(1) | 54.56 | % | 55.70 | % | 56.00 | % | 63.18 | % | 66.99 | % | |||||||||||||||
| Average loans to average deposits | 104.30 | % | 100.22 | % | 98.79 | % | 93.34 | % | 93.07 | % | |||||||||||||||
| Securities to total assets | 12.18 | % | 12.32 | % | 11.52 | % | 10.49 | % | 9.84 | % | |||||||||||||||
Asset quality ratios: | |||||||||||||||||||||||||
| Allowance for loan losses to total loans | 1.09 | % | 1.03 | % | 1.03 | % | 1.00 | % | 1.00 | % | |||||||||||||||
| Allowance for loan losses to non-performing loans | 104.56 | % | 104.00 | % | 94.20 | % | 89.69 | % | 86.41 | % | |||||||||||||||
| Nonperforming loans to total loans | 1.04 | % | 0.99 | % | 1.09 | % | 1.12 | % | 1.15 | % | |||||||||||||||
| Nonperforming assets to total assets | 0.85 | % | 0.78 | % | 0.87 | % | 0.94 | % | 0.95 | % | |||||||||||||||
| Annualized net charge offs to average total loans | 0.06 | % | 0.14 | % | 0.03 | % | 0.10 | % | 0.07 | % | |||||||||||||||
Regulatory capital ratios: | |||||||||||||||||||||||||
| Tier 1 leverage ratio | 9.16 | % | 9.18 | % | 9.27 | % | 9.47 | % | 9.37 | % | |||||||||||||||
| Common equity tier 1 capital ratio | 10.83 | % | 10.85 | % | 10.58 | % | 11.04 | % | 11.00 | % | |||||||||||||||
| Tier 1 capital to risk weighted assets | 10.83 | % | 10.85 | % | 10.58 | % | 11.04 | % | 11.00 | % | |||||||||||||||
| Total capital to risk weighted assets | 11.84 | % | 11.80 | % | 11.51 | % | 11.96 | % | 11.92 | % | |||||||||||||||
| (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) | |||||||||
September 30, | December 31, | ||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 80,571 | $ | 78,789 | |||||
| Interest-bearing time deposits in banks | 4,075 | 4,571 | |||||||
| Investment securities: | |||||||||
| Available for sale securities, at fair value | 205,392 | 188,476 | |||||||
| Held to maturity securities, at amortized cost (fair value of $42,446 and $25,090, respectively) | 42,879 | 26,977 | |||||||
| Other investment securities, at cost | 24,802 | 13,759 | |||||||
| Loans receivable, net of allowance of $18,682 and $15,584, respectively | 1,692,463 | 1,540,805 | |||||||
| Loans held for sale | 7,258 | 8,954 | |||||||
| Accrued interest receivable | 8,027 | 7,006 | |||||||
| Real estate owned, net | 1,461 | 1,945 | |||||||
| Office properties and equipment, net | 51,353 | 54,049 | |||||||
| Office properties and equipment held for sale | 4,669 | 5,337 | |||||||
| Cash surrender value of life insurance | 57,794 | 57,267 | |||||||
| Goodwill | 40,196 | 40,196 | |||||||
| Core deposit intangibles, net | 9,587 | 10,353 | |||||||
| Deferred tax asset, net | 7,277 | 11,619 | |||||||
| Prepaid expenses and other assets | 3,655 | 3,072 | |||||||
| TOTAL | $ | 2,241,459 | $ | 2,053,175 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Noninterest bearing deposits | $ | 232,004 | $ | 223,038 | |||||
| Interest bearing deposits | 1,357,132 | 1,421,042 | |||||||
| Total deposits | 1,589,136 | 1,644,080 | |||||||
| Securities sold under agreement to repurchase | 21,629 | 19,114 | |||||||
| Other borrowings | 372,316 | 152,004 | |||||||
| Other liabilities | 9,169 | 4,550 | |||||||
| Total liabilities | 1,992,250 | 1,819,748 | |||||||
| STOCKHOLDERS’ EQUITY: | |||||||||
| Preferred stock, $0.01 par value—5,000,000 shares authorized; none issued at September 30, 2017 or December 31, 2016 | -- | -- | |||||||
| Common stock, $0.01 par value—100,000,000 shares authorized; 37,729,837 and 37,618,597 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 377 | 376 | |||||||
| Additional paid-in capital | 210,049 | 209,274 | |||||||
| Accumulated other comprehensive loss | 256 | (1,436 | ) | ||||||
| Retained earnings | 38,527 | 25,213 | |||||||
| Total stockholders’ equity | 249,209 | 233,427 | |||||||
| TOTAL | $ | 2,241,459 | $ | 2,053,175 | |||||
BEAR STATE FINANCIAL, INC. | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (In thousands, except earnings per share) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| INTEREST INCOME: | ||||||||||||||||||||
| Loans receivable | $ | 20,184 | $ | 17,808 | $ | 59,055 | $ | 53,012 | ||||||||||||
| Investment securities: | ||||||||||||||||||||
| Taxable | 726 | 467 | 2,015 | 1,477 | ||||||||||||||||
| Nontaxable | 950 | 508 | 2,773 | 1,456 | ||||||||||||||||
| Other | 234 | 66 | 452 | 230 | ||||||||||||||||
| Total interest income | 22,094 | 18,849 | 64,295 | 56,175 | ||||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 1,855 | 1,662 | 5,272 | 4,785 | ||||||||||||||||
| Other borrowings | 1,103 | 352 | 2,396 | 1,027 | ||||||||||||||||
| Total interest expense | 2,958 | 2,014 | 7,668 | 5,812 | ||||||||||||||||
| NET INTEREST INCOME | 19,136 | 16,835 | 56,627 | 50,363 | ||||||||||||||||
| PROVISION FOR LOAN LOSSES | 1,863 | 643 | 4,034 | 1,665 | ||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 17,273 | 16,192 | 52,593 | 48,698 | ||||||||||||||||
| NONINTEREST INCOME: | ||||||||||||||||||||
| Net gain on sales of investment securities | -- | 21 | 48 | 19 | ||||||||||||||||
| Deposit fee income | 2,519 | 2,253 | 7,509 | 6,639 | ||||||||||||||||
| Earnings on life insurance policies | 406 | 414 | 1,625 | 1,247 | ||||||||||||||||
| Gain on sales of loans | 1,003 | 1,368 | 3,071 | 3,454 | ||||||||||||||||
| Other | 263 | 277 | 808 | 960 | ||||||||||||||||
| Total noninterest income | 4,191 | 4,333 | 13,061 | 12,319 | ||||||||||||||||
| NONINTEREST EXPENSES: | ||||||||||||||||||||
| Salaries and employee benefits | 6,913 | 7,618 | 21,767 | 23,725 | ||||||||||||||||
| Net occupancy expense | 1,681 | 1,826 | 5,255 | 5,652 | ||||||||||||||||
| Real estate owned, net | (38 | ) | (381 | ) | (31 | ) | (379 | ) | ||||||||||||
| FDIC insurance | 248 | 224 | 774 | 870 | ||||||||||||||||
| Amortization of intangible assets | 255 | 255 | 766 | 766 | ||||||||||||||||
| Data processing | 1,415 | 1,341 | 4,307 | 4,180 | ||||||||||||||||
| Professional fees | 408 | 545 | 1,431 | 1,700 | ||||||||||||||||
| Advertising and public relations | 342 | 419 | 893 | 1,284 | ||||||||||||||||
| Postage and supplies | 207 | 273 | 631 | 889 | ||||||||||||||||
| Other | 2,829 | 1,280 | 5,705 | 5,036 | ||||||||||||||||
| Total noninterest expenses | 14,260 | 13,400 | 41,498 | 43,723 | ||||||||||||||||
| INCOME BEFORE INCOME TAXES | 7,204 | 7,125 | 24,156 | 17,294 | ||||||||||||||||
| INCOME TAX PROVISION | 2,072 | 2,384 | 7,450 | 4,668 | ||||||||||||||||
| NET INCOME | $ | 5,132 | $ | 4,741 | $ | 16,706 | $ | 12,626 | ||||||||||||
| Basic earnings per common share | $ | 0.14 | $ | 0.13 | $ | 0.44 | $ | 0.34 | ||||||||||||
| Diluted earnings per common share | $ | 0.14 | $ | 0.13 | $ | 0.44 | $ | 0.33 | ||||||||||||
BEAR STATE FINANCIAL, INC. | ||||||||||||||||||||||||
| AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED | ||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans receivable(1) | $ | 1,706,952 | $ | 20,184 | 4.69 | % | $ | 1,522,106 | $ | 17,808 | 4.64 | % | ||||||||||||
| Investment securities(2) | 276,578 | 1,676 | 2.40 | 202,868 | 975 | 1.91 | ||||||||||||||||||
| Other interest-earning assets | 66,364 | 234 | 1.40 | 43,918 | 66 | 0.60 | ||||||||||||||||||
| Total interest-earning assets | 2,049,894 | 22,094 | 4.28 | 1,768,892 | 18,849 | 4.23 | ||||||||||||||||||
| Noninterest-earning assets | 196,437 | 212,690 | ||||||||||||||||||||||
| Total assets | $ | 2,246,331 | $ | 1,981,582 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Deposits | $ | 1,411,163 | 1,855 | 0.52 | $ | 1,395,501 | 1,662 | 0.47 | ||||||||||||||||
| Other borrowings | 354,199 | 1,103 | 1.24 | 109,751 | 352 | 1.27 | ||||||||||||||||||
| Total interest-bearing liabilities | 1,765,362 | 2,958 | 0.66 | 1,505,252 | 2,014 | 0.53 | ||||||||||||||||||
| Noninterest-bearing deposits | 225,383 | 239,886 | ||||||||||||||||||||||
| Noninterest-bearing liabilities | 7,027 | 4,686 | ||||||||||||||||||||||
| Total liabilities | 1,997,772 | 1,749,824 | ||||||||||||||||||||||
| Stockholders' equity | 248,559 | 231,758 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,246,331 | $ | 1,981,582 | ||||||||||||||||||||
| Net interest income | $ | 19,136 | $ | 16,835 | ||||||||||||||||||||
| Net earning assets | $ | 284,532 | $ | 263,640 | ||||||||||||||||||||
| Interest rate spread | 3.62 | % | 3.70 | % | ||||||||||||||||||||
| Net interest margin | 3.70 | % | 3.78 | % | ||||||||||||||||||||
Ratio of interest-earning assets to Interest-bearing liabilities | 116.12 | % | 117.51 | % | ||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Loans receivable(1) | $ | 1,658,587 | $ | 59,055 | 4.76 | % | $ | 1,492,010 | $ | 53,012 | 4.75 | % | ||||||||||||
| Investment securities(2) | 265,549 | 4,788 | 2.41 | 199,324 | 2,933 | 1.97 | ||||||||||||||||||
| Other interest-earning assets | 52,218 | 452 | 1.16 | 40,863 | 230 | 0.75 | ||||||||||||||||||
| Total interest-earning assets | 1,976,354 | 64,295 | 4.35 | 1,732,197 | 56,175 | 4.34 | ||||||||||||||||||
| Noninterest-earning assets | 200,409 | 214,644 | ||||||||||||||||||||||
| Total assets | $ | 2,176,763 | $ | 1,946,841 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Deposits | $ | 1,420,299 | 5,272 | 0.50 | $ | 1,386,540 | 4,785 | 0.46 | ||||||||||||||||
| Other borrowings | 288,140 | 2,396 | 1.11 | 103,764 | 1,027 | 1.32 | ||||||||||||||||||
| Total interest-bearing liabilities | 1,708,439 | 7,668 | 0.60 | 1,490,304 | 5,812 | 0.52 | ||||||||||||||||||
| Noninterest-bearing deposits | 219,831 | 225,905 | ||||||||||||||||||||||
| Noninterest-bearing liabilities | 6,092 | 3,043 | ||||||||||||||||||||||
| Total liabilities | 1,934,362 | 1,719,252 | ||||||||||||||||||||||
| Stockholders' equity | 242,401 | 227,589 | ||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 2,176,763 | $ | 1,946,841 | ||||||||||||||||||||
| Net interest income | $ | 56,627 | $ | 50,363 | ||||||||||||||||||||
| Net earning assets | $ | 267,915 | $ | 241,893 | ||||||||||||||||||||
| Interest rate spread | 3.75 | % | 3.82 | % | ||||||||||||||||||||
| Net interest margin | 3.83 | % | 3.89 | % | ||||||||||||||||||||
Ratio of interest-earning assets to Interest-bearing liabilities | 115.68 | % | 116.23 | % | ||||||||||||||||||||
(1) Includes nonaccrual loans. | ||||||||||||||||||||||||
(2) Includes FHLB and FRB stock. | ||||||||||||||||||||||||
BEAR STATE FINANCIAL, INC. | |||||||||||||||||||||
| ASSET QUALITY ANALYSIS - UNAUDITED | |||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| September 30, 2017 | December 31, 2016 | ||||||||||||||||||||
Net (2) | % Total | Net (2) | % Total | Increase | |||||||||||||||||
| Nonaccrual Loans: | |||||||||||||||||||||
| One- to four-family residential | $ | 6,891 | 0.30 | % | $ | 6,709 | 0.33 | % | $ | 182 | |||||||||||
| Nonfarm nonresidential | 8,128 | 0.35 | % | 5,177 | 0.25 | % | 2,951 | ||||||||||||||
| Farmland | 1,174 | 0.05 | % | 783 | 0.04 | % | 391 | ||||||||||||||
| Construction and land development | 207 | 0.01 | % | 463 | 0.02 | % | (256 | ) | |||||||||||||
| Commercial | 1,300 | 0.06 | % | 4,071 | 0.20 | % | (2,771 | ) | |||||||||||||
| Consumer | 167 | 0.01 | % | 173 | 0.01 | % | (6 | ) | |||||||||||||
| Total nonaccrual loans | 17,867 | 0.78 | % | 17,376 | 0.85 | % | 491 | ||||||||||||||
| Accruing loans 90 days or more past due | -- | -- | -- | -- | -- | ||||||||||||||||
| Real estate owned | 1,461 | 0.07 | % | 1,945 | 0.09 | % | (484 | ) | |||||||||||||
| Total nonperforming assets | 19,328 | 0.85 | % | 19,321 | 0.94 | % | 7 | ||||||||||||||
| Performing restructured loans | 1,180 | 0.05 | % | 4,804 | 0.23 | % | (3,624 | ) | |||||||||||||
| Total nonperforming assets and performing restructured loans (1) | $ | 20,508 | 0.90 | % | $ | 24,125 | 1.17 | % | $ | (3,617 | ) | ||||||||||
___________________ | |||||||||||||||||||||
(1) The table does not include substandard loans which were judged not to be impaired totaling $21.6 million at September 30, 2017 and $30.7 million at December 31, 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 | |||||||||||||||||||||||||
| 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | |||||||||||||||||||||
| Net income available to common stockholders | $ | 5,132 | $ | 6,657 | $ | 4,917 | $ | 4,833 | $ | 4,741 | |||||||||||||||
| Average common stockholders' equity | 248,559 | 242,263 | 236,247 | 234,339 | 231,758 | ||||||||||||||||||||
| Less average intangible assets: | |||||||||||||||||||||||||
| Goodwill | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,196 | ) | |||||||||||||||
| Core deposit intangible, net of accumulated amortization | (9,754 | ) | (10,008 | ) | (10,265 | ) | (10,519 | ) | (10,775 | ) | |||||||||||||||
| Average tangible common stockholders' equity | $ | 198,609 | $ | 192,059 | $ | 185,786 | $ | 183,624 | $ | 180,787 | |||||||||||||||
Annualized return on average tangible common stockholders' equity | 10.3 | % | 13.9 | % | 10.7 | % | 10.4 | % | 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 | |||||||||||||||||||||||||
| 9/30/2017 | 6/30/2017 | 3/31/2017 | 12/31/2016 | 9/30/2016 | |||||||||||||||||||||
| Total common stockholder's equity | $ | 249,209 | $ | 244,533 | $ | 237,912 | $ | 233,427 | $ | 232,403 | |||||||||||||||
| Less intangible assets: | |||||||||||||||||||||||||
| Goodwill | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,196 | ) | |||||||||||||||
| Core deposit intangible, net of accumulated amortization | (9,587 | ) | (9,842 | ) | (10,098 | ) | (10,353 | ) | (10,608 | ) | |||||||||||||||
| Total intangible assets | (49,783 | ) | (50,038 | ) | (50,294 | ) | (50,549 | ) | (50,804 | ) | |||||||||||||||
| Total tangible common stockholder's equity | $ | 199,426 | $ | 194,495 | $ | 187,618 | $ | 182,878 | $ | 181,599 | |||||||||||||||
| Common shares outstanding | 37,730 | 37,713 | 37,690 | 37,619 | 37,601 | ||||||||||||||||||||
| Tangible book value per common share | $ | 5.29 | $ | 5.16 | $ | 4.98 | $ | 4.86 | $ | 4.83 | |||||||||||||||
| BEAR STATE FINANCIAL, INC. | |||||||||||||||||||||||||||
| RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED | |||||||||||||||||||||||||||
| (In thousands, except share data) | |||||||||||||||||||||||||||
| For the Quarter Ending | |||||||||||||||||||||||||||
| September | June | March | December | September | |||||||||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||||||||
| Net income | $ | 5,132 | $ | 6,657 | $ | 4,917 | $ | 4,833 | $ | 4,741 | |||||||||||||||||
| Adj: Loss (gain) on sale of securities, net | -- | (37 | ) | (11 | ) | -- | (21 | ) | |||||||||||||||||||
| Adj: Claim on bank owned life insurance | -- | (395 | ) | -- | -- | -- | |||||||||||||||||||||
| Adj: Merger, acquisition and integration expenses | 1,253 | -- | -- | -- | -- | ||||||||||||||||||||||
| Adj: Branch restructure expense (1) | 279 | 29 | 1,565 | 41 | (323 | ) | |||||||||||||||||||||
| Adj: Net provision/loss/(gain) on real estate owned | -- | -- | -- | -- | (444 | ) | |||||||||||||||||||||
| Adj: Deferred tax asset tax rate adjustment | (186 | ) | -- | -- | -- | -- | |||||||||||||||||||||
| Tax effect of adjustments (2) | (600 | ) | 3 | (608 | ) | (16 | ) | 302 | |||||||||||||||||||
| Total core earnings | (A) | $ | 5,878 | $ | 6,257 | $ | 5,863 | $ | 4,858 | $ | 4,255 | ||||||||||||||||
| Total revenue | $ | 23,327 | $ | 23,351 | $ | 23,010 | $ | 21,501 | $ | 21,168 | |||||||||||||||||
| Adj: Loss (gain) on sale of securities, net | -- | (37 | ) | (11 | ) | -- | (21 | ) | |||||||||||||||||||
| Adj: Claim on bank owned life insurance | -- | (395 | ) | -- | -- | -- | |||||||||||||||||||||
| Total core revenue | $ | 23,327 | $ | 22,919 | $ | 22,999 | $ | 21,501 | $ | 21,147 | |||||||||||||||||
| Total non-interest expense | $ | 14,260 | $ | 12,795 | $ | 14,444 | $ | 13,625 | $ | 13,400 | |||||||||||||||||
| Adj: Merger, acquisition and integration expenses | (1,253 | ) | -- | -- | -- | -- | |||||||||||||||||||||
| Adj: Branch restructure expense (1) | (279 | ) | (29 | ) | (1,565 | ) | (41 | ) | 323 | ||||||||||||||||||
| Adj: Net provision/loss/(gain) on real estate owned | -- | -- | -- | -- | 444 | ||||||||||||||||||||||
| Total core noninterest expense | $ | 12,728 | $ | 12,766 | $ | 12,879 | $ | 13,584 | $ | 14,167 | |||||||||||||||||
| Total average assets | (B) | $ | 2,246,331 | $ | 2,190,240 | $ | 2,092,022 | $ | 2,019,792 | $ | 1,981,582 | ||||||||||||||||
| Total average stockholders' equity | (C) | 248,559 | 242,263 | 236,247 | 234,339 | 231,758 | |||||||||||||||||||||
| Total average tangible stockholders' equity | (D) | 198,609 | 192,059 | 185,786 | 183,624 | 180,787 | |||||||||||||||||||||
| Total tangible stockholders' equity, period end | (E) | 199,426 | 194,495 | 187,618 | 182,878 | 181,599 | |||||||||||||||||||||
| Total common shares outstanding, period-end | (F) | 37,729,837 | 37,713,171 | 37,689,939 | 37,618,597 | 37,600,986 | |||||||||||||||||||||
| Diluted weighted average shares outstanding | (G) | 37,921,016 | 37,883,264 | 37,880,022 | 37,833,124 | 37,807,419 | |||||||||||||||||||||
| Core earnings per share, diluted | (A/G) | $ | 0.16 | $ | 0.17 | $ | 0.15 | $ | 0.13 | $ | 0.11 | ||||||||||||||||
| Tangible book value per share, period-end | (E/F) | $ | 5.29 | $ | 5.16 | $ | 4.98 | $ | 4.86 | $ | 4.83 | ||||||||||||||||
| Core return on average assets | (A/B) | 1.04 | % | 1.15 | % | 1.14 | % | 0.95 | % | 0.85 | % | ||||||||||||||||
| Core return on average equity | (A/C) | 9.38 | % | 10.36 | % | 10.06 | % | 8.23 | % | 7.28 | % | ||||||||||||||||
| Core return on average tangible equity | (A/D) | 11.74 | % | 13.07 | % | 12.80 | % | 10.50 | % | 9.34 | % | ||||||||||||||||
| Core efficiency ratio(3) | 54.56 | % | 55.70 | % | 56.00 | % | 63.18 | % | 66.99 | % | |||||||||||||||||
(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. | |||||||||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171019005236/en/
Contacts:
Matt Machen, CEO, 501-975-6033
or
Sherri
Billings, CFO, 501-975-6033
