Bear State Financial, Inc. (the “Company”) (NASDAQ:BSF), today reported earnings of $6.7 million and earnings per diluted common share of $0.18 in the second quarter of 2017, compared to earnings of $4.5 million or $0.12 per diluted common share in the second quarter of 2016. Core earnings for the second quarter of 2017 were $6.3 million or $0.17 per diluted common share compared to core earnings of $4.1 million or $0.11 per diluted common share in the second quarter of 2016.

The Company experienced record revenue of $23.4 million in the second quarter of 2017, which is an increase of 12% compared to the second quarter of 2016. Net interest income increased 12% for the second quarter of 2017 compared to the second quarter of 2016 primarily due to loan portfolio growth. Noninterest income increased 9% for the second quarter of 2017 compared to the second quarter of 2016 primarily due to increases in earnings on life insurance 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 15% for the second quarter of 2017 compared to the second quarter of 2016, resulting in an improvement in the Company’s efficiency ratio to 55% in the second quarter of 2017 compared to 72% in the second quarter of 2016. Further, the Company’s core efficiency ratio improved to 56% in the second quarter of 2017 compared to 68% in the second quarter of 2016. During the second quarter of 2017, the Company transitioned two branch locations to operate using personalized technology with Interactive ATMs (“ITMs”) only.

FINANCIAL CONDITION

Total assets were $2.24 billion at June 30, 2017, a 12% increase compared to $1.99 billion at June 30, 2016. The increase in total assets was primarily due to increases in investment securities and loans. Total loans were $1.66 billion at June 30, 2017, an increase of $175.7 million, or 12% compared to June 30, 2016, and investment securities were $254.0 million at June 30, 2017, an increase of $61.4 million, or 32% compared to June 30, 2016. Total deposits were $1.70 billion at June 30, 2017, a 4% increase compared to $1.64 billion at June 30, 2016.

Total stockholders’ equity was $244.5 million at June 30, 2017, a 7% increase from $228.5 million at June 30, 2016. Tangible common stockholders’ equity was $194.5 million at June 30, 2017, a 10% increase from $177.5 million at June 30, 2016. Book value per common share was $6.48 at June 30, 2017, a 7% increase from $6.08 at June 30, 2016. Tangible book value per common share was $5.16 at June 30, 2017, a 9% increase from $4.72 at June 30, 2016. The Company’s ratio of total stockholders’ equity to total assets decreased to 10.92% at June 30, 2017, compared to 11.48% at June 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 second quarter 2017 net income of $6.7 million or $0.18 per diluted common share compared to net income of $4.5 million or $0.12 per diluted common share in the second quarter of 2016, resulting in a return on average assets of 1.22% in the second quarter of 2017, compared to 0.94% in the second 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.

Second quarter 2017 core earnings totaled $6.3 million or $0.17 per diluted common share, compared to core earnings of $4.1 million or $0.11 per diluted common share in the second quarter of 2016. The core return on average assets measured 1.15% and 0.84%, core return on average equity measured 10.36% and 7.23% and core return on average tangible equity measured 13.07% and 9.34%, each for the second quarters of 2017 and 2016, respectively. Non-core items during the second quarter of 2017 included a claim on bank owned life insurance of $395,000, gain on sales of investments of $37,000 and branch restructure expenses of $29,000. The effect of non-core items, net of taxes, increased GAAP net income by approximately $400,000 for the second quarter of 2017.

Net interest income for the second quarter of 2017 was $18.7 million compared to $16.6 million for the same period in 2016. Interest income for the second quarter of 2017 was $21.2 million compared to $18.5 million for the same period in 2016. The increase in interest income for the quarter ended June 30, 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 second quarter of 2017 was $2.5 million compared to $1.9 million for the same period in 2016. The increase in interest expense for the second 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 3.76% for the second quarter of 2017, compared to 3.86% for the same period in 2016. The average yield on interest-earning assets for the second quarter of 2017 was 4.26% compared to 4.31% for the same period in 2016. The average cost of interest-bearing liabilities increased to 0.58% for the second quarter of 2017, 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 June 30, 2017, increased to $4.7 million from $4.3 million for the same period in 2016, a 9% increase. The increases in the three month comparison period was primarily due to increases in deposit fee income and earnings on bank owned life insurance.

Total noninterest expense decreased $2.2 million, or 15%, for the second quarter of 2017 compared to the second 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 a decrease in the number of branches and transitioning of three branches to operate solely with ITMs.

Income tax provision increased by $2.2 million, or 263%, for the second quarter of 2017 compared to the second quarter of 2016. The increase in income tax provision was primarily due to an increase in taxable income in the second quarter of 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 June 30, 2017, was 31.6% compared to 15.7% for the quarter ended June 30, 2016.

ASSET QUALITY

The ratio of nonperforming assets to total assets decreased to 0.78% at June 30, 2017, compared to 1.08% at June 30, 2016. The allowance for loan losses represented 1.03% of total loans at June 30, 2017, compared to 0.99% at June 30, 2016. The ratio of the allowance for loan losses to nonperforming loans was 104% at June 30, 2017, compared to 76% at June 30, 2016. Annualized net charge-offs as a percentage of average loans for the quarter ended June 30, 2017, was 0.14% compared to 0.17% for the quarter ended June 30, 2016. Provision for loan losses increased from $533,000 for the second quarter of 2016 to $821,000 for the second 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 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. 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)
 
 
June March December September June
2017 2017 2016 2016 2016
 

Balance sheet data, at quarter end:

Commercial real estate - mortgage loans $ 632,149 $ 604,888 $ 587,633 $ 566,302 $ 557,612
Consumer real estate - mortgage loans 396,550 397,898 389,107 385,126 390,066
Farmland 97,881 98,672 94,018 94,187 92,452
Construction and land development 131,046 129,078 125,785 119,433 124,369
Commercial and industrial loans 364,194 370,961 323,096 312,957 281,874
Consumer and other 36,624 36,100 36,265 36,645 36,339
Total loans 1,658,444 1,637,597 1,555,904 1,514,650 1,482,712
Loans held for sale 7,470 4,735 8,954 13,995 15,168
Allowance for loan losses (17,083 ) (16,821 ) (15,584 ) (15,112 ) (14,751 )
Investment securities 275,805 268,981 229,212 209,508 204,236
Goodwill 40,196 40,196 40,196 40,196 40,196
Core deposit intangible, net 9,842 10,098 10,353 10,608 10,863
Total assets 2,239,090 2,174,041 2,053,175 2,007,938 1,990,715
Noninterest-bearing deposits 255,806 221,891 223,038 239,831 255,648
Total deposits 1,703,246 1,669,066 1,644,080 1,653,523 1,641,250
Short term borrowings 17,856 17,831 19,114 13,511 14,964
FHLB advances 254,928 225,072 129,992 80,138 75,282
Other borrowings 11,600 13,506 22,012 22,518 22,900
Total stockholders' equity 244,533 237,912 233,427 232,403 228,534
 

Balance sheet data, quarterly averages:

Total loans $ 1,659,830 $ 1,607,892 $ 1,536,703 $ 1,522,106 $ 1,492,504
Investment securities 271,402 248,355 217,522 202,868 188,808
Total earning assets 1,990,562 1,886,813 1,810,802 1,768,892 1,724,381
Goodwill 40,196 40,196 40,196 40,196 40,196
Core deposit intangible, net 10,008 10,265 10,519 10,775 11,030
Total assets 2,190,240 2,092,022 2,019,792 1,981,582 1,937,722
Noninterest-bearing deposits 220,511 213,467 229,296 239,886 215,766
Interest-bearing deposits 1,435,630 1,414,137 1,416,991 1,395,501 1,394,262
Total deposits 1,656,141 1,627,604 1,646,287 1,635,387 1,610,028
Short term borrowings 15,463 15,549 17,983 13,699 11,991
FHLB advances 258,658 190,965 94,336 73,418 64,494
Other borrowings 11,898 16,247 22,161 22,634 22,982
Total stockholders' equity 242,263 236,247 234,339 231,758 226,587
 

Statement of income data for the three months ended:

Interest income $ 21,153 $ 21,048 $ 19,212 $ 18,849 $ 18,535
Interest expense   2,496     2,214     2,105     2,014     1,935  
Net interest income 18,657 18,834 17,107 16,835 16,600
Provision for loan losses   821     1,349     851     643     533  
Net interest income after provision for loan losses 17,836 17,485 16,256 16,192 16,067
Noninterest income 4,694 4,176 4,394 4,333 4,311
Noninterest expense   12,795     14,444     13,625     13,400     14,989  
Income before taxes 9,735 7,217 7,025 7,125 5,389
Income tax provision   3,078     2,300     2,192     2,384     847  
Net income $ 6,657   $ 4,917   $ 4,833   $ 4,741   $ 4,542  
 
         
BEAR STATE FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED
 
 
June March December September June
2017 2017 2016 2016 2016
 

Common stock data:

Net income per share, diluted $ 0.18 $ 0.13 $ 0.13 $ 0.13 $ 0.12
Core earnings per share, diluted $ 0.17 $ 0.15 $ 0.13 $ 0.11 $ 0.11
Book value per share $ 6.48 $ 6.31 $ 6.21 $ 6.18 $ 6.08
Tangible book value per share $ 5.16 $ 4.98 $ 4.86 $ 4.83 $ 4.72
Diluted weighted average shares outstanding 37,883,264 37,880,022 37,833,124 37,807,419 37,772,959
End of period shares outstanding 37,713,171 37,689,939 37,618,597 37,600,986 37,589,543
 

Profitability and performance ratios:

Return on average assets 1.22 % 0.95 % 0.95 % 0.95 % 0.94 %
Core return on average assets 1.15 % 1.14 % 0.95 % 0.85 % 0.84 %
Return on average equity 11.02 % 8.44 % 8.18 % 8.12 % 8.04 %
Core return on average equity 10.36 % 10.06 % 8.23 % 7.28 % 7.23 %
Core return on average tangible equity 13.07 % 12.80 % 10.50 % 9.34 % 9.34 %
Net interest margin 3.76 % 4.05 % 3.75 % 3.78 % 3.86 %
Noninterest income to total revenue 20.10 % 18.15 % 20.44 % 20.47 % 20.62 %
Noninterest income to average assets 0.86 % 0.81 % 0.86 % 0.87 % 0.89 %
Noninterest expense to average assets 2.34 % 2.80 % 2.68 % 2.68 % 3.10 %
Efficiency ratio 54.79 % 62.77 % 63.37 % 63.30 % 71.68 %
Core efficiency ratio(1) 55.70 % 56.00 % 63.18 % 66.99 % 68.29 %
Average loans to average deposits 100.22 % 98.79 % 93.34 % 93.07 % 92.70 %
Securities to total assets 12.32 % 11.52 % 10.49 % 9.84 % 9.67 %
 

Asset quality ratios:

Allowance for loan losses to total loans 1.03 % 1.03 % 1.00 % 1.00 % 0.99 %
Allowance for loan losses to non-performing loans 104.00 % 94.20 % 89.69 % 86.41 % 76.42 %
Nonperforming loans to total loans 0.99 % 1.09 % 1.12 % 1.15 % 1.30 %
Nonperforming assets to total assets 0.78 % 0.87 % 0.94 % 0.95 % 1.08 %
Annualized net charge offs to average total loans (2) 0.14 % 0.03 % 0.10 % 0.07 % 0.17 %
 

Regulatory capital ratios:

Tier 1 leverage ratio 9.18 % 9.27 % 9.47 % 9.37 % 9.30 %
Common equity tier 1 capital ratio 10.85 % 10.58 % 11.04 % 11.00 % 10.78 %
Tier 1 capital to risk weighted assets 10.85 % 10.58 % 11.04 % 11.00 % 10.78 %
Total capital to risk weighted assets 11.80 % 11.51 % 11.96 % 11.92 % 11.69 %
 

(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, included 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)
 
 
June 30, December 31,
2017 2016
ASSETS
Cash and cash equivalents $ 125,153 $ 78,789
Interest-bearing time deposits in banks 4,324 4,571
Investment securities:
Available for sale securities, at fair value 211,038 188,476
Held to maturity securities, at amortized cost (fair value of $42,332 and $25,090, respectively) 42,953 26,977
Other investment securities, at cost 21,814 13,759
Loans receivable, net of allowance of $17,083 and $15,584, respectively 1,641,636 1,540,805
Loans held for sale 7,470 8,954
Accrued interest receivable 7,469 7,006
Real estate owned, net 1,103 1,945
Office properties and equipment, net 51,943 54,049
Office properties and equipment held for sale 4,948 5,337
Cash surrender value of life insurance 58,091 57,267
Goodwill 40,196 40,196
Core deposit intangibles, net 9,842 10,353
Deferred tax asset, net 6,696 11,619
Prepaid expenses and other assets   4,414     3,072  
 
TOTAL $ 2,239,090   $ 2,053,175  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
LIABILITIES:
Noninterest bearing deposits $ 255,806 $ 223,038
Interest bearing deposits   1,447,440     1,421,042  
Total deposits 1,703,246 1,644,080
Securities sold under agreement to repurchase 17,856 19,114
Other borrowings 266,528 152,004
Other liabilities   6,927     4,550  
 
Total liabilities   1,994,557     1,819,748  
 
STOCKHOLDERS’ EQUITY:

Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued at June 30, 2017, or December 31, 2016

-- --

Common stock, $0.01 par value - 100,000,000 shares authorized; 37,713,171 and 37,618,597 shares issued and outstanding at June 30, 2017, and December 31, 2016, respectively

377 376
Additional paid-in capital 209,736 209,274
Accumulated other comprehensive loss (106 ) (1,436 )
Retained earnings   34,526     25,213  
 
Total stockholders’ equity   244,533     233,427  
 
TOTAL $ 2,239,090   $ 2,053,175  
 
       

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except earnings per share)
(Unaudited)
 
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2017 2016 2017 2016
INTEREST INCOME:
Loans receivable $ 19,392 $ 17,519 $ 38,871 35,205
Investment securities:
Taxable 678 474 1,290 1,010
Nontaxable 940 462 1,823 947
Other   143   80     218   164  
Total interest income   21,153   18,535     42,202   37,326  
 
INTEREST EXPENSE:
Deposits 1,737 1,608 3,417 3,123
Other borrowings   759   327     1,293   675  
Total interest expense   2,496   1,935     4,710   3,798  
 
NET INTEREST INCOME 18,657 16,600 37,492 33,528
 
PROVISION FOR LOAN LOSSES   821   533     2,171   1,022  
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   17,836   16,067     35,321   32,506  
 
NONINTEREST INCOME:
Net gain (loss) on sales of investment securities 37 -- 48 (2 )
Deposit fee income 2,513 2,236 4,990 4,387
Earnings on life insurance policies 810 421 1,219 833
Gain on sales of loans 1,073 1,291 2,068 2,086
Other   261   363     545   682  
 
Total noninterest income   4,694   4,311     8,870   7,986  
 
NONINTEREST EXPENSES:
Salaries and employee benefits 6,771 7,857 14,854 16,107
Net occupancy expense 1,684 1,898 3,575 3,825
Real estate owned, net 101 (27 ) 7 2
FDIC insurance 276 338 526 646
Amortization of intangible assets 255 255 511 511
Data processing 1,525 1,405 2,892 2,839
Professional fees 418 525 1,024 1,133
Advertising and public relations 256 369 552 865
Postage and supplies 218 325 424 616
Other   1,291   2,044     2,874   3,779  
 
Total noninterest expenses   12,795   14,989     27,239   30,323  
 
INCOME BEFORE INCOME TAXES 9,735 5,389 16,952 10,169
 
INCOME TAX PROVISION   3,078   847     5,378   2,284  
 
NET INCOME $ 6,657 $ 4,542   $ 11,574 $ 7,885  
 
Basic earnings per common share $ 0.18 $ 0.12   $ 0.31 $ 0.21  
 
Diluted earnings per common share $ 0.18 $ 0.12   $ 0.31 $ 0.21  
 
           

BEAR STATE FINANCIAL, INC.

AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED

(Dollars in thousands)

 
 

 

Three Months Ended June 30,
2017 2016
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 1,659,830 $ 19,392 4.69 % $ 1,492,504 $ 17,519 4.71 %
Investment securities(2) 271,402 1,618 2.39 188,808 936 1.99
Other interest-earning assets   59,330   143 0.97   43,069   80 0.75
Total interest-earning assets 1,990,562 21,153 4.26 1,724,381 18,535 4.31
Noninterest-earning assets   199,678   213,341
Total assets $ 2,190,240 $ 1,937,722
Interest-bearing liabilities:
Deposits $ 1,435,630 1,737 0.49 $ 1,394,262 1,608 0.46
Other borrowings   286,019   759 1.06   99,467   327 1.32
Total interest-bearing liabilities 1,721,649 2,496 0.58 1,493,729 1,935 0.52
Noninterest-bearing deposits 220,511 215,766
Noninterest-bearing liabilities   5,817   1,640
Total liabilities 1,947,977 1,711,135
Stockholders' equity   242,263   226,587

Total liabilities and stockholders' equity

$ 2,190,240 $ 1,937,722
       
Net interest income $ 18,657 $ 16,600
Net earning assets $ 268,913 $ 230,652
Interest rate spread 3.68 % 3.79 %
Net interest margin 3.76 % 3.86 %

Ratio of interest-earning assets to Interest-bearing liabilities

 

115.62 % 115.44 %
 
 

 

Six Months Ended June 30,
2017 2016
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 1,634,005 $ 38,871 4.80 % $ 1,476,798 $ 35,205 4.81 %
Investment securities(2) 259,942 3,113 2.41 197,533 1,957 2.00
Other interest-earning assets   45,029   218 0.98   39,319   164 0.84
Total interest-earning assets 1,938,976 42,202 4.39 1,713,650 37,326 4.39
Noninterest-earning assets   202,427   215,630
Total assets $ 2,141,403 $ 1,929,280
Interest-bearing liabilities:
Deposits $ 1,424,943 3,417 0.48 $ 1,382,011 3,123 0.46
Other borrowings   254,565   1,293 1.02   100,736   675 1.35
Total interest-bearing liabilities 1,679,508 4,710 0.57 1,482,747 3,798 0.52
Noninterest-bearing deposits 217,009 218,837
Noninterest-bearing liabilities   5,615   2,214
Total liabilities 1,902,132 1,703,798
Stockholders' equity   239,271   225,482

Total liabilities and stockholders' equity

$ 2,141,403 $ 1,929,280
       
Net interest income $ 37,492 $ 33,528
Net earning assets $ 259,468 $ 230,903
Interest rate spread 3.82 % 3.87 %
Net interest margin 3.90 % 3.95 %

Ratio of interest-earning assets to Interest-bearing liabilities

115.45 % 115.57 %
 
(1) Includes nonaccrual loans.
 
(2) Includes FHLB and FRB stock.
 
         

BEAR STATE FINANCIAL, INC.

ASSET QUALITY ANALYSIS - UNAUDITED

(Dollars in thousands)
 
 
June 30, 2017 December 31, 2016
% Total % Total Increase
Net (2) Assets Net (2) Assets (Decrease)
Nonaccrual Loans:
One- to four-family residential $ 6,866 0.30 % $ 6,709 0.33 % $ 157
Multifamily 119 0.01 % -- -- 119
Nonfarm nonresidential 7,172 0.31 % 5,177 0.25 % 1,995
Farmland 1,023 0.05 % 783 0.04 % 240
Construction and land development 212 0.01 % 463 0.02 % (251 )
Commercial 844 0.04 % 4,071 0.20 % (3,227 )
Consumer   190 0.01 %   173 0.01 %   17  
 
Total nonaccrual loans 16,426 0.73 % 17,376 0.85 % (950 )
 
Accruing loans 90 days or more past due -- -- -- -- --
 
Real estate owned   1,103 0.05 %   1,945 0.09 %   (842 )
 
Total nonperforming assets 17,529 0.78 % 19,321 0.94 % (1,792 )
Performing restructured loans   1,194 0.05 %   4,804 0.23 %   (3,610 )
 
Total nonperforming assets and performing restructured loans (1) $ 18,723 0.83 % $ 24,125 1.17 % $ (5,402 )
 

(1) The table does not include substandard loans which were judged not to be impaired totaling $22.8 million at June 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
6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Net income available to common stockholders $ 6,657   $ 4,917   $ 4,833   $ 4,741   $ 4,542  
Average common stockholders' equity 242,263 236,247 234,339 231,758 226,587
Less average intangible assets:
Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 )
Core deposit intangible, net of accumulated amortization   (10,008 )   (10,265 )   (10,519 )   (10,775 )   (11,030 )
 
Average tangible common stockholders' equity $ 192,059   $ 185,786   $ 183,624   $ 180,787   $ 175,361  
 

Annualized return on average tangible common stockholders' equity

  13.9 %   10.7 %   10.4 %   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
6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Total common stockholder's equity $ 244,533 $ 237,912 $ 233,427 $ 232,403 $ 228,534
Less intangible assets:
Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 )
Core deposit intangible, net of accumulated amortization   (9,842 )   (10,098 )   (10,353 )   (10,608 )   (10,863 )
Total intangible assets   (50,038 )   (50,294 )   (50,549 )   (50,804 )   (51,059 )
Total tangible common stockholder's equity $ 194,495   $ 187,618   $ 182,878   $ 181,599   $ 177,475  
 
Common Shares Outstanding   37,713     37,690     37,619     37,601     37,590  
 
Tangible book value per common share $ 5.16   $ 4.98   $ 4.86   $ 4.83   $ 4.72  
 
           

BEAR STATE FINANCIAL, INC.

RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED

(In thousands, except share data)
 
 
For the Quarter Ending
June March December September June
2017 2017 2016 2016 2016
Net income $ 6,657 $ 4,917 $ 4,833 $ 4,741 $ 4,542
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 -- -- -- -- 137
Adj: Branch restructure expense (1) 29 1,565 41 (323 ) 571
Adj: Net provision/loss/(gain) on real estate owned -- -- -- (444 ) --
Adj: Deferred tax asset valuation allowance reversal -- -- -- -- (897 )
Tax effect of adjustments (2)         3       (608 )     (16 )     302       (271 )
Total core earnings   (A)   $ 6,257     $ 5,863     $ 4,858     $ 4,255     $ 4,082  
 
Total revenue $ 23,351 $ 23,010 $ 21,501 $ 21,168 $ 20,911
Adj: Loss (gain) on sale of securities, net (37 ) (11 ) -- (21 ) --
Adj: Claim on bank owned life insurance         (395 )     --       --       --       --  
Total core revenue       $ 22,919     $ 22,999     $ 21,501     $ 21,147     $ 20,911  
 
Total non-interest expense $ 12,795 $ 14,444 $ 13,625 $ 13,400 $ 14,989
Adj: Merger, acquisition and integration expenses -- -- -- -- (137 )
Adj: Branch restructure expense (1) (29 ) (1,565 ) (41 ) 323 (571 )
Adj: Net (provision/loss)/gain on real estate owned         --       --       --       444       --  
Total core noninterest expense       $ 12,766     $ 12,879     $ 13,584     $ 14,167     $ 14,281  
 
Total average assets (B) $ 2,190,240 $ 2,092,022 $ 2,019,792 $ 1,981,582 $ 1,937,722
Total average stockholders' equity (C) 242,263 236,247 234,339 231,758 226,587
Total average tangible stockholders' equity (D) 192,059 185,786 183,624 180,787 175,361
Total tangible stockholders' equity, period end (E) 194,495 187,618 182,878 181,599 177,475
 
Total common shares outstanding, period-end (F) 37,713,171 37,689,939 37,618,597 37,600,986 37,589,543
Diluted weighted average shares outstanding (G) 37,883,264 37,880,022 37,833,124 37,807,419 37,772,959
 
Core earnings per share, diluted (A/G) $ 0.17 $ 0.15 $ 0.13 $ 0.11 $ 0.11
Tangible book value per share, period-end (E/F) $ 5.16 $ 4.98 $ 4.86 $ 4.83 $ 4.72
 
Core return on average assets (A/B) 1.15 % 1.14 % 0.95 % 0.85 % 0.84 %
Core return on average equity (A/C) 10.36 % 10.06 % 8.23 % 7.28 % 7.23 %
Core return on average tangible equity (A/D) 13.07 % 12.80 % 10.50 % 9.34 % 9.34 %
Core efficiency ratio(3) 55.70 % 56.00 % 63.18 % 66.99 % 68.29 %
 

(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.