BSF Bear State Financial, Inc. (delisted)

Supplemental Disclosures to the Proxy Statement

Important information concerning the m erger is set forth in the Proxy Statement , which is amended and supplemented by the information set forth in these Supplemental Disclosures. The Supplemental Disclosures should be read in conjunction with the Proxy Statement, which should be read in its entirety. To the extent that information herein differs from or updates information contained in the Proxy Statement , the information contained herein supersedes the information contained in the Proxy Statement . All page references in the information below are to pages in the Proxy Statement, and all terms used below shall have the meanings set forth in the Proxy Statement.

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On June 29, 2017, Messrs. Massey and Cavin met with representatives of DD&F and Kutak Rock to develop a market check process and a list of potential acquirers whose interest in a potential transaction would be solicited. Messrs. Massey and Cavin reviewed the list of banks with whom they have had prior informal discussions about potential transactions, and Mr. Dennis provided a list of candidates that he determined, based on his professional judgment and knowledge of the marketplace, were most likely to yield a competing offer. These discussions resulted in a list of six financial institutions that were determined the most likely to have the interest and ability to consummate a transaction with Bear State. The parties decided not to include any financial buyers in the market check because of the regulated nature of Bear State ’s business and their belief that financial buyers would not have the strategic interest or be able to generate the expected financial returns to make a proposal competitive with strategic acquirers. Beginning on July 5, 2017, representatives of DD&F engaged in discussions with each of the six financial institutions about a potential transaction with Bear State, informing them that expressions of interest in a potential business combination transaction with Bear State should be submitted by July 21, 2017. Bear State did not enter into a confidentiality agreement with any of the six financial institutions, as any proposals were to be based on Bear State’s comprehensive publicly-available information . The market check yielded one acquisition proposal from a third party, publicly-traded financial institution we refer to as Company A, which was submitted on July 20, 2017.

On August 21, 2017, the board of directors of each of Bear State and Bear State Bank reconvened in a special meeting to evaluate the revised Arvest proposal. At the invitation of the board, representatives of Kutak Rock, DD&F and Raymond James were in attendance. Prior to the meeting, among other things, copies of the revised financial analysis and fairness opinion prepared by Raymond James (revised from the initial August 11, 2017 draft analysis to reflect the modified purchase price of $10.28 per share) were made available to the directors. Mr. Massey informed the board of the decrease in purchase price of the Arvest proposal, as well as his further discussions and negotiations with Arvest representatives. Mr. McDaniel of Kutak Rock noted the changes to the merger agreement since the draft reviewed with the board at its August 11, 2017 meeting. The board noted that even with the decreased price, the Arvest proposal remained superior to the Company A proposal, which then reflected a $9.75 per share value based on the then current trading price of Company A common stock. Mr. Massey requested that John Roddy and Matt Paramore with Raymond James summarize Raymond James’ revised financial analysis. Mr. Paramore summarized the changes to the preliminary financial analysis that was delivered to the board at its August 11, 2017 meeting, reflecting the decreased purchase price in the Arvest proposal. After a discussion of the financial analysis, including a discussion of the valuations of comparable transactions reflected in the analysis, Raymond James rendered an oral opinion, confirmed by delivery of a written opinion dated August 21, 2017, to the Bear State board to the effect that, as of such date and based on and subject to the matters set forth in its opinion, the merger consideration provided for in the merger agreement was fair, from a financial point of view, to the holders of Bear State common stock. For a more detailed discussion of Raymond James’s opinion, please see below under the caption “—Opinion of Raymond James & Associates, Inc.” Such opinion is attached to this proxy statement as Appendix C .

Raymond James analyzed the discounted present value of Bear State ’s projected free cash flows for the years ending December 31, 2017 through December 31, 2022 on a stand-alone basis , which represents the difference between (1) the projected tangible common equity included in the Bear State Projections and (2) the amount of tangible common equity equal to 8% of projected tangible assets , as calculated from the Bear State Projections . as provided by Bear State’s management. Raymond James used tangible common equity in excess of a target ratio of 8.0% at the end of each projection period for free cash flow. Raymond James selected a target ratio of 8.0% for tangible common equity because that is an accepted industry standard for a normal level of capital for a depository institution .

Raymond James ’ s discounted cash flow analysis was based on the Bear State Projections. Consistent with the periods included in the Bear State Projections, Raymond James used calendar year 2022 as the final year for the analysis and applied multiples, ranging from 12.0x to 18.0x, to calendar year 2022 adjusted net income in order to derive a range of terminal values for Bear State in 2022.   Raymond James selected a range of terminal price-to-earnings multiples based upon the long-term average of the price-to-earnings multiple of selected banking indexes and current multiples for similar public companies. A terminal value multiple of 15.0x represents the approximate median SNL Bank index price/LTM EPS multiple for the last fifteen years.

Raymond James used a projected 2022 adjusted net income of $ 28.5 million , which Raymond James calculated using the p rojected 2022 net income of $29.4 million provided in the Bear State Projections as adjust ed downward for the opportunity cost of cash used for cumulative projected dividend s of approximately $875 , 0 00 . The range of terminal values utilized by Raymond James was between $341.8 million and $512.7 million .

The projected free cash flows and terminal values were discounted using rates ranging from 11.5% to 13.5% , which were selected in Raymond James’s judgment using inputs and assumptions it deemed reasonable. The resulting range of equity values was adjusted for outstanding options to acquire shares of Bear State common stock and divided by the number of diluted shares outstanding in order to arrive at a range of present values per share of Bear State common stock. Raymond James reviewed the range of values derived in the discounted cash flow analysis and compared them to the actual per share merger consideration. The results of the discounted cash flow analysis are summarized below:

In connection with its analyses, Raymond James considered and discussed with Bear State ’s management how the discounted cash flow analyses would be affected by potential changes in the underlying assumptions , but did not provide any separate or additional analysis using assumptions different than those described herein . Raymond James noted that the discounted cash flow analysis is a widely used valuation methodology, but the results of such methodology are highly dependent upon the numerous assumptions that must be made, and the results are not necessarily indicative of actual values or future results.

Raymond James is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations and similar transactions. In the ordinary course of business, Raymond James may trade in the securities of Bear State and Arvest for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. Between October 1, 2015 and the date of its fairness opinion, Raymond James received (1) approximately $170,000 from Arvest in commissions from fixed income securities transactions executed for Arvest and (2) approximately $480,000 in net profits for securities trade execution, clearing, and client asset custodial services rendered for Arvest Wealth Management, a registered broker/dealer affiliated with Arvest. In the two years preceding the date of Raymond James’s opinion, Raymond James has not been engaged by or otherwise performed services for Arvest for which compensation received was deemed material. Raymond James may provide investment banking, financial advisory and other financial services to Bear State and/or Arvest or other participants in the merger in the future, for which Raymond James may receive compensation, although as of the date of Raymond James’s opinion, there was no agreement to do so.

Consistent with prior disclosure in its quarterly and annual earnings reports, Bear State calculates (i) tangible common equity as total stockholders ’ equity (calculated in accordance with GAAP) less intangible assets and (ii) tangible book value per share as tangible common equity divided by common shares outstanding. Pursuant to Rule 100(d) of SEC Regulation G, Item 10(e)(6) of SEC Regulation S-K, and SEC Non-GAAP Financial Measures Compliance & Disclosure Interpretation No. 101.01, Bear State is not required to provide a reconciliation of the non-GAAP measures disclosed in the Bear State Forecasts to their most comparable GAAP measures. Further, Bear State does not believe that providing such a reconciliation would provide any meaningful disclosure to its shareholders because (a) the forecasted non-GAAP measures were prepared at the request of Raymond James solely for use in its valuation analysis and fairness opinion and not with a view to public disclosure, (b) the forecasted non-GAAP measures were not calculated using a forecasted comparable GAAP measure, and (c) no forecasted comparable GAAP measure was provided to Raymond James.

Jeri Pritchett, Executive Vice President and Chief Accounting Officer of Bear State, is not a party to a change-in-control agreement with Bear State. In connection with the merger, the Bear State board authorized a retention cash incentive award of $86,000 to Ms. Pritchett that will become payable upon the closing of the merger, subject to her continued service through the closing of the merger. The Bear State board proposed and adopted the retention bonus for Ms. Pritchett at a special meeting of the board held on August 11, 2017 to induce her to continue her employment with Bear State during the pendency of the merger.

Following the consummation of the merger, it is expected that some or all of the members of Bear State’s senior management team may continue as employees of Arvest or its affiliates. As of the date of this proxy statement, none of our executive officers has entered into any new agreement or arrangement with Arvest regarding employment. Prior to and following the closing of the merger, however, certain of our executive officers have had, and may continue to have, discussions, or may enter into agreements, with Arvest regarding future employment opportunities. Prior to and after entering into the merger agreement, certain members of Bear State senior management, including Matt Machen, Sherri Billings and Donna Merriweather engaged in general discussions with Arvest management regarding Bear State’s employees, employment practices and policies, compensation structure and the integration of employees following completion of the merger. No executive officers of Bear State have discussed specific terms of post-closing employment with Arvest and no directors of Bear State have discussed any post-closing director role or other similar arrangement with Arvest.

Pursuant to its engagement letter with Bear State, in consideration for the performance of specified consulting services, DD&F will be entitled to payment of standard hourly rates for its professionals and employees for services rendered. Additionally, upon successful completion of a change in control transaction during the term of the engagement, DD&F will be entitled to a payment of $1,600,000. During the two year period prior to entering into the merger agreement, DD&F provided consulting services, consisting of bank regulatory application and bank regulatory advisory services, to Bear State, Arvest, Company A and certain other financial institutions that were solicited during the market check. During such two year period, DD&F received aggregate fees of approximately $43,000 and $463,000 from Bear State and Arvest, respectively.