FINANCIAL HIGHLIGHTS:
- Full year 2017 GAAP net income was
$20.4 million or $0.54 per diluted common share, compared to GAAP
net income of $17.5 million or $0.46 per diluted common share for
the full year 2016 representing a 17% increase in both GAAP net
income and GAAP net income per diluted common share.
- Full year 2017 core earnings were
$24.6 million or $0.65 per diluted common share, compared to core
earnings of $16.9 million or $0.45 per diluted common share for the
full year 2016 representing a 46% increase in core earnings and a
44% increase in core earnings per diluted common share.
- Fourth quarter 2017 GAAP net income
was $3.7 million, a 24% decrease from $4.8 million for the fourth
quarter of 2016. Diluted earnings per common share for the fourth
quarter of 2017 was $0.10, a 23% decrease from $0.13 for the fourth
quarter of 2016.
- Fourth quarter 2017 core earnings
were $6.6 million, a 36% increase from $4.9 million for the fourth
quarter of 2016. Diluted core earnings per common share for the
fourth quarter of 2017 was $0.17, a 31% increase from $0.13 for the
fourth quarter of 2016.
- The Company’s efficiency ratio
improved to 57% in the fourth quarter of 2017 compared to 63% in
the fourth quarter of 2016. Further, the Company’s core efficiency
ratio improved to 54% in the fourth quarter of 2017 compared to 63%
in the fourth quarter of 2016.
- Book value per common share was
$6.68 at December 31, 2017, an 8% increase from $6.21 at December
31, 2016. Tangible book value per common share was $5.37 at
December 31, 2017, a 10% increase from $4.86 at December 31,
2016.
Bear State Financial, Inc. (the “Company,”) (NASDAQ: BSF), today
reported earnings of $3.7 million and earnings per diluted common
share of $0.10 in the fourth quarter of 2017, compared to earnings
of $4.8 million or $0.13 per diluted common share in the fourth
quarter of 2016. Core earnings for the fourth quarter of 2017 were
$6.6 million or $0.17 per diluted common share compared to core
earnings of $4.9 million or $0.13 per diluted common share in the
fourth quarter of 2016. In the fourth quarter of 2017, the Company
was required to revalue its deferred tax assets and deferred tax
liabilities as a result of the “Tax Cuts and Jobs Act” signed into
law on December 22, 2017. The impact was a one-time, non-cash
charge to income tax provision on the income statement of
approximately $2.5 million.
For the full year of 2017, net income was $20.4 million and
earnings per diluted common share was $0.54 compared to net income
of $17.5 million or $0.46 per diluted common share for the full
year of 2016. Core earnings for the full year of 2017 were $24.6
million or $0.65 per diluted common share compared to core earnings
of $16.9 million or $0.45 per diluted common share for the full
year of 2016.
On August 22, 2017, the Company and Bear State Bank entered into
an Agreement and Plan of Reorganization with Arvest Bank, an
Arkansas banking corporation (“Arvest”), and Arvest Acquisition
Sub, Inc., an Arkansas corporation and a wholly-owned subsidiary of
Arvest (“Acquisition Sub”), pursuant to which Arvest will acquire
the Company and Bear State Bank (the “Merger”).
Pursuant to the Agreement, each share of the Company’s common
stock issued and outstanding as of the effective time of the Merger
will be converted into a right to receive $10.28 per share, payable
in cash. The Merger is expected to close in the first quarter of
2018 and is pending federal regulatory approval. At a Special
Meeting of Shareholders of the Company held November 15, 2017, the
proposal to adopt the Agreement and to approve the Merger was
approved by shareholders of the Company.
FINANCIAL CONDITION
Total assets were $2.16 billion at December 31, 2017, a 5%
increase compared to $2.05 billion at December 31, 2016. The
increase in total assets was primarily due to increases in
investment securities and loans. Total loans were $1.67 billion at
December 31, 2017, an increase of $117.0 million, or 8%, compared
to December 31, 2016 and investment securities were $239.6 million
at December 31, 2017, an increase of $24.1 million, or 11%,
compared to December 31, 2016. Total deposits were $1.50 billion at
December 31, 2017, a 9% decrease compared to $1.64 billion at
December 31, 2016.
Total stockholders’ equity was $252.2 million at December 31,
2017, an 8% increase from $233.4 million at December 31, 2016.
Tangible common stockholders’ equity was $202.7 million at December
31, 2017, an 11% increase from $182.9 million at December 31, 2016.
Book value per common share was $6.68 at December 31, 2017, an 8%
increase from $6.21 at December 31, 2016. Tangible book value per
common share was $5.37 at December 31, 2017, a 10% increase from
$4.86 at December 31, 2016. The Company’s ratio of total
stockholders’ equity to total assets increased to 11.68% at
December 31, 2017, compared to 11.37% at December 31, 2016. The
calculation of the Company’s tangible book value per common share
and tangible common stockholders’ equity and the reconciliation of
such non-GAAP financial measures to the most comparable GAAP
measures are included in the schedules accompanying this
release.
RESULTS OF OPERATIONS
The Company recognized fourth quarter 2017 net income of $3.7
million or $0.10 per diluted common share compared to net income of
$4.8 million or $0.13 per diluted common share in the fourth
quarter of 2016, resulting in a return on average assets of 0.66%
in the fourth quarter of 2017, compared to 0.95% in the fourth
quarter of 2016. Calculation of net income in accordance with GAAP
includes what the Company considers “non-core” items, which are
items that we do not consider indicative of our core operating
performance and which are not necessarily comparable from year to
year. The Company reports core earnings, which is a non-GAAP
financial measure that the Company defines as GAAP net income less
non-core items. The reconciliation of GAAP net income to core
earnings together with related financial measures and ratios is
included in the schedules accompanying this release.
Fourth quarter 2017 core earnings totaled $6.6 million or $0.17
per diluted common share, compared to core earnings of $4.9 million
or $0.13 per diluted common share in the fourth quarter of 2016.
For the fourth quarter of 2017 and 2016, respectively, the core
return on average assets measured 1.18% and 0.95%, core return on
average equity measured 10.40% and 8.23% and core return on average
tangible equity measured 12.95% and 10.50%. Non-core items during
the fourth quarter of 2017 included transaction-related expenses
incurred in connection with the pending transaction with Arvest
totaling $677,000 and a deferred tax asset adjustment of $2.5
million. The effect of non-core items, net of taxes, decreased GAAP
net income by approximately $2.9 million for the fourth quarter of
2017.
Net interest income for the fourth quarter of 2017 was $18.9
million compared to $17.1 million for the same period in 2016. Net
interest income for the year ended December 31, 2017 was $75.5
million, compared to $67.5 million for the same period in 2016.
Interest income for the fourth quarter of 2017 was $22.0 million
compared to $19.2 million for the same period in 2016. Interest
income for the year ended December 31, 2017 was $86.3 million
compared to $75.4 million for the same period in 2016. The
increases in interest income for the three and twelve months ended
December 31, 2017 compared to the same periods in 2016 were
primarily related to increases in the average balances of and the
yields earned on loans receivable and investment securities.
Interest expense for the fourth quarter of 2017 was $3.1 million
compared to $2.1 million for the same period in 2016. Interest
expense for the year ended December 31, 2017 was $10.7 million
compared to $7.9 million for the same period in 2016. The increases
in interest expense for the three and twelve months ended December
31, 2017 compared to the same periods in 2016 were primarily due to
increases in the average balance of borrowings and increases in the
average rate paid on deposits.
Net interest margin measured 3.67% for the fourth quarter of
2017, compared to 3.75% for the same period in 2016. Net interest
margin for the year ended December 31, 2017 was 3.79%, compared to
3.85% for the same period in 2016. The average yield on
interest-earning assets for the fourth quarter of 2017 was 4.27%
compared to 4.21% for the same period in 2016 and was 4.33% for the
year ended December 31, 2017 compared to 4.30% for the same period
in 2016. The average cost of interest-bearing liabilities increased
to 0.70% for the fourth quarter of 2017, compared to 0.54% for the
same period in 2016. The average cost of total interest-bearing
liabilities for the year ended December 31, 2017 was 0.63%,
compared to 0.53% for the same period in 2016.
Noninterest income is generated primarily through deposit
account fee income, profit on sale of mortgage loans, and earnings
on life insurance policies. Total noninterest income for the three
months ended December 31, 2017 decreased to $3.8 million from $4.4
million for the same period in 2016, a 14% decrease. Total
noninterest income of $16.8 million for the year ended December 31,
2017 increased from $16.7 million for the same period in 2016, a 1%
increase. The decrease in the three month comparison period was
primarily due to a decrease in gain on sales of loans due to a
decrease in the number of loans sold during the quarter, slightly
offset by an increase in deposit fee income. The increase in the
twelve month comparison period was primarily due to increases in
deposit fee income and earnings on bank owned life insurance,
partially offset by a decrease in gain on sales of loans.
Total noninterest expense decreased $667,000, or 5%, for the
fourth quarter of 2017 compared to the fourth quarter of 2016.
Total noninterest expense decreased $2.9 million or 5% during the
year ended December 31, 2017 compared to the same period in 2016.
The decrease in total noninterest expense for the three and twelve
month comparative periods was primarily related to the Company’s
efforts to improve its operational efficiency as well as a decrease
in the number of branches.
Income tax provision increased by $3.4 million, or 153%, for the
fourth quarter of 2017 compared to the fourth quarter of 2016,
primarily due to a $2.5 million revaluation of deferred tax assets
and liabilities to account for the future impact of lower corporate
tax rates as a result of the “Tax Cuts and Jobs Act” signed into
law on December 22, 2017. Income tax provision for the year ended
December 31, 2017 increased by $6.1 million or 89% compared to
2016, primarily due to the tax rate revaluation of the deferred tax
asset as well as an increase in taxable income in 2017 partially
offset by the recording of a valuation allowance reversal of
$897,000 on deferred tax assets in the second quarter of 2016. The
Company’s effective tax rate for the quarter ended December 31,
2017 (excluding the tax rate revaluation of the deferred tax asset)
was 32.50% compared to 31.20% for the quarter ended December 31,
2016. The Company’s effective tax rate for the year ended December
31, 2017 (excluding the tax rate revaluation of the deferred tax
asset) was 31.86% compared to 31.90% for the year ended December
31, 2016 (excluding the valuation allowance reversal).
ASSET QUALITY
The ratio of nonperforming assets to total assets decreased to
0.87% at December 31, 2017, compared to 0.94% at December 31, 2016.
The allowance for loan losses represented 1.14% of total loans at
December 31, 2017 compared to 1.00% at December 31, 2016. The ratio
of the allowance for loan losses to nonperforming loans was 111% at
December 31, 2017, compared to 90% at December 31, 2016. Annualized
net charge-offs as a percentage of average loans for the quarter
ended December 31, 2017 was 0.04% compared to 0.10% for the quarter
ended December 31, 2016. Provision for loan losses decreased from
$851,000 for the fourth quarter of 2016 to $464,000 for the fourth
quarter of 2017. Provision for loan losses for the year ended
December 31, 2017 increased to $4.5 million from $2.5 million for
2016. The increase in the provision for the year was primarily
attributable to loan originations and migration of acquired loans
from the purchased loan portfolio to the originated loan
portfolio.
About Bear State Financial, Inc.
Bear State Financial, Inc. is the parent company for Bear State
Bank. Bear State Financial, Inc. common stock is traded on the
NASDAQ Global Market under the symbol BSF. For more information on
Bear State Financial, Inc. please visit www.bearstatefinancial.com.
Its principal subsidiary, Bear State Bank, is a community oriented
financial institution providing a broad line of financial products
to individuals and business customers. Bear State Bank operates 42
branches, three personalized technology centers equipped with
interactive teller machines and three loan production offices
throughout Arkansas, Southwest Missouri and Southeast Oklahoma.
Non-GAAP Financial Measures
This release contains certain non-GAAP financial measures in
addition to results presented in accordance with accounting
principles generally accepted in the United States (“GAAP”). These
non-GAAP measures provide supplemental perspectives on operating
results, performance trends, and financial condition. They are not
a substitute for GAAP measures and they should be read and used in
conjunction with the Company’s GAAP financial information. In all
cases, it should be understood that non-GAAP per share measures do
not depict amounts that accrue directly to the benefit of
shareholders. The Company utilizes the non-GAAP measure of core
earnings, which management believes is useful in evaluating
operating trends from period to period, including components of
core revenue and core expense. Core earnings and its components
exclude amounts that the Company views as unrelated to its
normalized operations. Management and the Board of Directors also
utilize core earnings or components of core earnings and related
ratios in the preparation of the Company’s operating budgets,
monthly financial performance reporting and investor presentations
of Company performance and in the calculation of annual
performance-based incentives for certain members of management. In
2016, the Company modified its definition of core earnings to
clarify that a material amount of net gains, losses or impairments
to the Company’s real estate owned (“REO”) portfolio during an
applicable reporting period will be considered a non-core item and
will thus be excluded from core earnings. Immaterial net gains,
losses and impairments to the REO portfolio, however, will not be
considered a non-core item and will not be excluded from core
earnings. The Company believes that while activity within the REO
portfolio is a recurring aspect of its core business, material
changes to the portfolio are not indicative of the Company’s
normalized banking operations.
The Company also reports certain non-GAAP equity measures
(including tangible stockholders’ equity, tangible book value per
common share and related ratios) that exclude intangible assets
from their calculation. Management believes that these non-GAAP
tangible measures provide additional useful information about the
capital strength of the Company to the investment community, as
these measures are widely used by industry analysts for banks and
bank holding companies with prior merger and acquisition activity.
A reconciliation of non-GAAP financial measures to GAAP measures is
included in the accompanying financial tables.
Forward-Looking Statements
This press release contains statements about future events that
constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical fact are forward-looking
statements. Such forward-looking statements may be identified by
reference to a future period or periods, or by the use of
forward-looking terminology, such as “may,” “will,” “believe,”
“plan,” “intend,” “anticipate,” “expect,” or similar terms or
variations of those terms, or the negative of those terms. These
forward-looking statements include, without limitation, statements
relating to the terms and closing of the proposed transaction
between the Company and Arvest. Forward-looking statements are
subject to numerous risks and uncertainties, including, but not
limited to, those risks previously disclosed in the Company’s
filings with the SEC; the Company’s and Arvest’s ability to
consummate the Merger or satisfy the conditions to the completion
of the Merger, the failure of the proposed Merger to close for any
other reason; occurrence of any event, change or other
circumstances that could give rise to the termination of the
Agreement; the effect of the announcement of the Merger on customer
relationships and operating results (including, without limitation,
difficulties in maintaining relationships with employees or
customers); the diversion of management time on transaction related
issues; general economic conditions, changes in interest rates,
regulatory considerations, competition, technological developments,
retention and recruitment of qualified personnel, and market
acceptance of Bear State Bank’s pricing, products and services, and
with respect to the loans extended by Bear State Bank and real
estate owned, market prices of the property securing loans and the
costs of collection and sales. The Company wishes to caution
readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company does
not undertake and specifically declines any obligation to publicly
release the result of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after
the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
BEAR STATE FINANCIAL, INC. SELECTED CONSOLIDATED
FINANCIAL DATA – UNAUDITED (In thousands)
December September June March
December 2017 2017
2017 2017
2016
Balance sheet
data, at quarter end:
Commercial real estate - mortgage loans $ 646,272 $ 661,155 $
632,149 $ 604,888 $ 587,633 Consumer real estate - mortgage loans
391,225 393,082 396,550 397,898 389,107 Farmland 96,786 99,189
97,881 98,672 94,018 Construction and land development 157,453
147,071 131,046 129,078 125,785 Commercial and industrial loans
345,087 373,464 364,194 370,961 323,096 Consumer and other 36,036
36,859 36,624 36,100 36,265 Total loans 1,672,859 1,710,820
1,658,444 1,637,597 1,555,904 Loans held for sale 3,815 7,258 7,470
4,735 8,954 Allowance for loan losses (18,992 ) (18,682 ) (17,083 )
(16,821 ) (15,584 ) Investment securities and other investments
266,658 273,073 275,805 268,981 229,212 Goodwill 40,196 40,196
40,196 40,196 40,196 Core deposit intangible, net 9,332 9,587 9,842
10,098 10,353 Total assets 2,160,054 2,241,459 2,239,090 2,174,041
2,053,175 Noninterest-bearing deposits 217,582 232,004 255,806
221,891 223,038 Total deposits 1,499,444 1,589,136 1,703,246
1,669,066 1,644,080 Short term borrowings 13,445 21,629 17,856
17,831 19,114 FHLB advances 374,661 359,791 254,928 225,072 129,992
Other borrowings 12,150 12,525 11,600 13,506 22,012 Total
stockholders' equity 252,248 249,209 244,533 237,912 233,427
Balance sheet
data, quarterly averages:
Total loans $ 1,695,811 $ 1,706,952 $ 1,659,830 $ 1,607,892 $
1,536,703 Investment securities 269,441 276,578 271,402 248,355
217,522 Total earning assets 2,039,624 2,049,894 1,990,562
1,886,813 1,810,802 Goodwill 40,196 40,196 40,196 40,196 40,196
Core deposit intangible, net 9,497 9,754 10,008 10,265 10,519 Total
assets 2,233,918 2,246,331 2,190,240 2,092,022 2,019,792
Noninterest-bearing deposits 222,770 225,383 220,511 213,467
229,296 Interest-bearing deposits 1,335,165 1,411,163 1,435,630
1,414,137 1,416,991 Total deposits 1,557,935 1,636,546 1,656,141
1,627,604 1,646,287 Short term borrowings 20,425 20,375 15,463
15,549 17,983 FHLB advances 381,553 321,631 258,658 190,965 94,336
Other borrowings 12,256 12,193 11,898 16,247 22,161 Total
stockholders' equity 252,755 248,559 242,263 236,247 234,339
Statement of
income data for the three months ended:
Interest income $ 21,972 $ 22,094 $ 21,153 $ 21,048 $ 19,212
Interest expense 3,079 2,958
2,496 2,214 2,105 Net interest
income 18,893 19,136 18,657 18,834 17,107 Provision for loan losses
464 1,863 821
1,349 851 Net interest income after provision
for loan losses 18,429 17,273 17,836 17,485 16,256 Noninterest
income 3,769 4,191 4,694 4,176 4,394 Noninterest expense
12,958 14,260 12,795
14,444 13,625 Income before taxes 9,240 7,204
9,735 7,217 7,025 Income tax provision 5,544
2,072 3,078 2,300 2,192
Net income $ 3,696 $ 5,132 $ 6,657 $
4,917 $ 4,833
BEAR STATE FINANCIAL,
INC. SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED
December September
June March December 2017
2017 2017
2017 2016
Common stock
data:
Net income per share, diluted $ 0.10 $ 0.14 $ 0.18 $ 0.13 $ 0.13
Core earnings per share, diluted $ 0.17 $ 0.16 $ 0.17 $ 0.15 $ 0.13
Book value per share $ 6.68 $ 6.61 $ 6.48 $ 6.31 $ 6.21 Tangible
book value per share $ 5.37 $ 5.29 $ 5.16 $ 4.98 $ 4.86 Diluted
weighted average shares outstanding 37,982,761 37,921,016
37,883,264 37,880,022 37,833,124 End of period shares outstanding
37,767,613 37,729,837 37,713,171 37,689,939 37,618,597
Profitability and
performance ratios:
Return on average assets 0.66 % 0.91 % 1.22 % 0.95 % 0.95 % Core
return on average assets 1.18 % 1.04 % 1.15 % 1.14 % 0.95 % Return
on average equity 5.80 % 8.19 % 11.02 % 8.44 % 8.18 % Core return
on average equity 10.40 % 9.38 % 10.36 % 10.06 % 8.23 % Core return
on average tangible equity 12.95 % 11.74 % 13.07 % 12.80 % 10.50 %
Net interest margin 3.67 % 3.70 % 3.76 % 4.05 % 3.75 % Noninterest
income to total revenue 16.63 % 17.97 % 20.10 % 18.15 % 20.44 %
Noninterest income to average assets 0.67 % 0.74 % 0.86 % 0.81 %
0.86 % Noninterest expense to average assets 2.30 % 2.52 % 2.34 %
2.80 % 2.68 % Efficiency ratio 57.18 % 61.13 % 54.79 % 62.77 %
63.37 % Core efficiency ratio(1) 54.36 % 54.56 % 55.70 % 56.00 %
63.18 % Average loans to average deposits 108.85 % 104.30 % 100.22
% 98.79 % 93.34 % Securities to total assets 12.34 % 12.18 % 12.32
% 11.52 % 10.49 %
Asset quality
ratios:
Allowance for loan losses to total loans 1.14 % 1.09 % 1.03 % 1.03
% 1.00 % Allowance for loan losses to non-performing loans 110.67 %
104.56 % 104.00 % 94.20 % 89.69 % Nonperforming loans to total
loans 1.03 % 1.04 % 0.99 % 1.09 % 1.12 % Nonperforming assets to
total assets 0.87 % 0.85 % 0.78 % 0.87 % 0.94 % Annualized net
charge offs to average total loans 0.04 % 0.06 % 0.14 % 0.03 % 0.10
%
Regulatory
capital ratios:
Tier 1 leverage ratio 9.36 % 9.16 % 9.18 % 9.27 % 9.47 % Common
equity tier 1 capital ratio 11.30 % 10.84 % 10.85 % 10.58 % 11.04 %
Tier 1 capital to risk weighted assets 11.30 % 10.84 % 10.85 %
10.58 % 11.04 % Total capital to risk weighted assets 12.35 % 11.84
% 11.80 % 11.52 % 11.96 %
(1) Core efficiency ratio is a
non-GAAP ratio that is calculated by dividing core noninterest
expense by total core revenue (the sum of net interest income and
core noninterest income). Other companies may define and calculate
this data differently.
BEAR STATE FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In
thousands, except share data) (Unaudited)
December 31,
2017
December 31,
2016
ASSETS Cash and cash equivalents $ 53,568 $ 78,789
Interest-bearing time deposits in banks 4,075 4,571 Investment
securities: Available for sale securities, at fair value 196,806
188,476 Held to maturity securities, at amortized cost (fair value
of $42,849 and $25,090, respectively) 42,775 26,977 Other
investment securities, at cost 27,077 13,759 Loans receivable, net
of allowance of $18,992 and $15,584, respectively 1,654,245
1,540,805 Loans held for sale 3,815 8,954 Accrued interest
receivable 7,677 7,006 Real estate owned, net 1,648 1,945 Office
properties and equipment, net 50,546 54,049 Office properties and
equipment held for sale 2,201 5,337 Cash surrender value of life
insurance 58,200 57,267 Goodwill 40,196 40,196 Core deposit
intangibles, net 9,332 10,353 Deferred tax asset, net 4,611 11,619
Prepaid expenses and other assets 3,282 3,072
TOTAL $ 2,160,054 $ 2,053,175
LIABILITIES
AND STOCKHOLDERS’ EQUITY LIABILITIES: Noninterest
bearing deposits $ 217,582 $ 223,038 Interest bearing deposits
1,281,862 1,421,042 Total deposits 1,499,444
1,644,080 Securities sold under agreement to repurchase 13,445
19,114 Other borrowings 386,811 152,004 Other liabilities
8,106 4,550 Total liabilities 1,907,806
1,819,748 STOCKHOLDERS’ EQUITY: Preferred
stock, $0.01 par value—5,000,000 shares authorized; none issued at
December 31, 2017 or 2016 -- -- Common stock, $0.01 par
value—100,000,000 shares authorized; 37,767,613 and 37,618,597
shares issued and outstanding at December 31, 2017 and 2016,
respectively 378 376 Additional paid-in capital 210,599 209,274
Accumulated other comprehensive income (loss) 180 (1,436 ) Retained
earnings 40,091 25,213
Total stockholders’ equity
252,248 233,427 TOTAL $ 2,160,054 $
2,053,175
BEAR STATE FINANCIAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands,
except earnings per share) (Unaudited)
Three Months
Ended Year Ended December
31, December 31, 2017
2016 2017
2016 INTEREST INCOME: Loans receivable $
20,065 $ 17,924 $ 79,120 $ 70,936 Investment securities: Taxable
735 475 2,750 1,952 Nontaxable 927 729 3,700 2,185 Other 245
84 697 313 Total interest income
21,972 19,212 86,267 75,386
INTEREST EXPENSE: Deposits 1,720 1,729 6,992 6,515
Other borrowings 1,359 376 3,755
1,403 Total interest expense 3,079 2,105
10,747 7,918 NET INTEREST INCOME
18,893 17,107 75,520 67,468 PROVISION FOR LOAN LOSSES
464 851 4,498 2,516 NET
INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,429
16,256 71,022 64,952
NONINTEREST INCOME: Net gain on sales of investment securities --
-- 48 19 Deposit fee income 2,461 2,354 9,970 8,994 Earnings on
life insurance policies 406 418 2,031 1,665 Gain on sales of loans
703 1,342 3,773 4,796 Other 199 280 1,008
1,237 Total noninterest income
3,769 4,394 16,830 16,711
NONINTEREST EXPENSES: Salaries and employee benefits 6,752 7,443
28,519 31,168 Net occupancy expense 1,732 1,762 6,987 7,414 Real
estate owned, net 29 2 (2 ) (377 ) FDIC insurance 303 230 1,078
1,099 Amortization of intangible assets 255 255 1,021 1,021 Data
processing 1,463 1,341 5,769 5,520 Professional fees 429 531 1,860
2,212 Advertising and public relations 254 316 1,148 1,600 Postage
and supplies 205 233 836 1,121 Other 1,536 1,512
7,239 6,567 Total noninterest
expenses 12,958 13,625 54,455
57,345 INCOME BEFORE INCOME TAXES 9,240 7,025 33,397
24,318 INCOME TAX PROVISION 5,544 2,192
12,995 6,859 NET INCOME $ 3,696 $ 4,833
$ 20,402 $ 17,459 Basic earnings per common
share $ 0.10 $ 0.13 $ 0.54 $ 0.46 Diluted
earnings per common share $ 0.10 $ 0.13 $ 0.54 $ 0.46
BEAR STATE FINANCIAL, INC.
AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS -
UNAUDITED (Dollars in thousands)
Three Months Ended December 31, 2017
2016 Average
Balance
Interest Average
Yield/
Cost
Average
Balance
Interest Average
Yield/
Cost
(Dollars in Thousands) Interest-earning assets: Loans receivable(1)
$ 1,695,811 $ 20,065 4.69 % $ 1,536,703 $ 17,924 4.63 % Investment
securities(2) 269,441 1,662 2.45 217,522 1,204 2.20 Other
interest-earning assets 74,372 245 1.31 56,577
84 0.59 Total interest-earning assets 2,039,624 21,972 4.27
1,810,802 19,212 4.21 Noninterest-earning assets 194,294
208,990 Total assets $ 2,233,918 $ 2,019,792
Interest-bearing liabilities: Deposits $ 1,335,165 1,720 0.51 $
1,416,991 1,729 0.48 Other borrowings 414,234 1,359
1.30 134,480 376 1.11 Total interest-bearing
liabilities 1,749,399 3,079 0.70 1,551,471 2,105 0.54
Noninterest-bearing deposits 222,770 229,296 Noninterest-bearing
liabilities 8,994 4,686 Total liabilities 1,981,163
1,785,453 Stockholders' equity 252,755 234,339
Total liabilities and stockholders'
equity
$ 2,233,918 $ 2,019,792 Net interest income $ 18,893
$ 17,107 Net earning assets $ 290,225 $ 259,331 Interest rate
spread 3.57 % 3.67 % Net interest margin 3.67 % 3.75 % Ratio of
interest-earning assets to
Interest-bearing liabilities
116.59 % 116.71 %
Year Ended December 31, 2017 2016
Average
Balance
Interest Average
Yield/
Cost
Average
Balance
Interest Average
Yield/
Cost
(Dollars in Thousands) Interest-earning assets: Loans receivable(1)
$ 1,667,971 $ 79,120 4.74 % $ 1,503,245 $ 70,936 4.72 % Investment
securities(2) 266,530 6,450 2.42 203,899 4,137 2.03 Other
interest-earning assets 57,803 697 1.21 44,814
313 0.70 Total interest-earning assets 1,992,304 86,267 4.33
1,751,958 75,386 4.30 Noninterest-earning assets 198,865
213,221 Total assets $ 2,191,169 $ 1,965,179
Interest-bearing liabilities: Deposits $ 1,398,840 6,992 0.50 $
1,394,194 6,515 0.47 Other borrowings 319,924 3,755
1.17 111,484 1,403 1.26 Total interest-bearing
liabilities 1,718,764 10,747 0.63 1,505,678 7,918 0.53
Noninterest-bearing deposits 220,572 226,758 Noninterest-bearing
liabilities 6,822 3,447 Total liabilities 1,946,158
1,735,883 Stockholders' equity 245,011 229,296
Total liabilities and stockholders'
equity
$ 2,191,169 $ 1,965,179 Net interest income $ 75,520 $
67,468 Net earning assets $ 273,540 $ 246,280 Interest rate spread
3.70 % 3.77 % Net interest margin 3.79 % 3.85 % Ratio of
interest-earning assets to
Interest-bearing liabilities
115.91 % 116.36 % (1) Includes nonaccrual loans. (2)
Includes FHLB and FRB stock.
BEAR STATE FINANCIAL, INC.
ASSET QUALITY ANALYSIS - UNAUDITED (Dollars in thousands)
December 31, 2017 December 31, 2016
Net (2)
% Total
Assets
Net (2)
% Total
Assets
Increase
(Decrease)
Nonaccrual Loans: One- to four-family residential $ 7,061 0.32% $
6,709 0.33% $ 352 Nonfarm nonresidential 7,374 0.34% 5,177 0.25%
2,197 Farmland 657 0.03% 783 0.04% (126) Construction and land
development 188 0.01% 463 0.02% (275) Commercial 1,669 0.08% 4,071
0.20% (2,402) Consumer 212 0.01% 173 0.01% 39 Total
nonaccrual loans 17,161 0.79% 17,376 0.85% (215) Accruing
loans 90 days or more past due -- -- -- -- -- Real estate
owned 1,648 0.08% 1,945 0.09% (297) Total nonperforming
assets 18,809 0.87% 19,321 0.94% (512) Performing restructured
loans 882 0.04% 4,804 0.23% (3,922) Total nonperforming
assets and performing restructured loans (1) $ 19,691 0.91% $
24,125 1.17% $ (4,434)
(1) The table does not include substandard
loans which were judged not to be impaired totaling $30.7 million
at December 31, 2017 and 2016 or acquired ASC 310-30 purchased
credit impaired loans which are considered performing.
(2) Loan balances are presented net of
undisbursed loan funds, partial charge-offs and interest payments
recorded as reductions in principal balances for financial
reporting purposes.
BEAR STATE FINANCIAL, INC. CALCULATION OF RETURN
ON AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY – UNAUDITED
(Dollars in thousands)
For the Quarter Ending
12/31/2017
9/30/2017
6/30/2017
3/31/2017
12/31/2016 Net income available to common
stockholders $ 3,696 $ 5,132 $ 6,657 $ 4,917
$ 4,833 Average common stockholders' equity 252,755
248,559 242,263 236,247 234,339 Less average intangible assets:
Goodwill (40,196 ) (40,196 ) (40,196 ) (40,196 ) (40,196 ) Core
deposit intangible, net of accumulated amortization (9,497 )
(9,754 ) (10,008 ) (10,265 ) (10,519 )
Average tangible common stockholders' equity $ 203,062
$ 198,609 $ 192,059 $ 185,786 $ 183,624
Annualized return on average tangible
common stockholders' equity
7.2 % 10.3 % 13.9 % 10.7 % 10.4
%
BEAR STATE FINANCIAL, INC. CALCULATION OF
TANGIBLE BOOK VALUE PER COMMON SHARE - UNAUDITED (In thousands,
except per share data)
For the Quarter Ending
12/31/2017 9/30/2017
6/30/2017
3/31/2017 12/31/2016
Total common stockholder's equity $ 252,248 $ 249,209 $ 244,533 $
237,912 $ 233,427 Less intangible assets: Goodwill (40,196 )
(40,196 ) (40,196 ) (40,196 ) (40,196 ) Core deposit intangible,
net of accumulated amortization (9,332 ) (9,587 )
(9,842 ) (10,098 ) (10,353 ) Total intangible
assets (49,528 ) (49,783 ) (50,038 )
(50,294 ) (50,549 ) Total tangible common stockholder's
equity $ 202,720 $ 199,426 $ 194,495 $ 187,618
$ 182,878 Common shares outstanding
37,768 37,730 37,713
37,690 37,619
Tangible book value per common share
$ 5.37 $ 5.29 $ 5.16 $ 4.98 $ 4.86
BEAR STATE FINANCIAL, INC. RECONCILIATION
OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED
(In thousands, except share data)
For the
Quarter Ending December
September June
March December
2017 2017 2017
2017 2016 Net
income $ 3,696 $ 5,132 $ 6,657 $ 4,917 $ 4,833 Adj: Loss (gain) on
sale of securities, net -- -- (37 ) (11 ) -- Adj: Claim on bank
owned life insurance -- -- (395 ) -- -- Adj: Merger, acquisition
and integration expenses 677 1,253 -- -- -- Adj: Branch restructure
expense (1) (38 ) 279 29 1,565 41 Adj: Deferred tax asset tax rate
adjustment (2) 2,541 (186 ) -- -- -- Tax effect of adjustments (3)
(250 )
(600 ) 3
(608 ) (16 ) Total core
earnings (A) $ 6,626
$ 5,878 $ 6,257
$ 5,863 $ 4,858
Total revenue $ 22,662 $ 23,327 $ 23,351 $ 23,010 $ 21,501
Adj: Gain on sale of securities, net -- -- (37 ) (11 ) -- Adj:
Claim on bank owned life insurance
-- --
(395 ) --
-- Total core revenue
$ 22,662 $ 23,327
$ 22,919 $
22,999 $ 21,501 Total
non-interest expense $ 12,958 $ 14,260 $ 12,795 $ 14,444 $ 13,625
Adj: Merger, acquisition and integration expenses (677 ) (1,253 )
-- -- -- Adj: Branch restructure expense (1)
38 (279 )
(29 ) (1,565 )
(41 ) Total core noninterest expense
$ 12,319 $
12,728 $ 12,766
$ 12,879 $ 13,584
Total average assets (B) $ 2,233,918 $ 2,246,331 $ 2,190,240 $
2,092,022 $ 2,019,792 Total average stockholders' equity (C)
252,755 248,559 242,263 236,247 234,339 Total average tangible
stockholders' equity (D) 203,062 198,609 192,059 185,786 183,624
Total tangible stockholders' equity, period end (E) 202,720 199,426
194,495 187,618 182,878 Total common shares outstanding,
period-end (F) 37,767,613 37,729,837 37,713,171 37,689,939
37,618,597 Diluted weighted average shares outstanding (G)
37,982,761 37,921,016 37,883,264 37,880,022 37,833,124 Core
earnings per share, diluted (A/G) $ 0.17 $ 0.16 $ 0.17 $ 0.15 $
0.13 Tangible book value per share, period-end (E/F) $ 5.37 $ 5.29
$ 5.16 $ 4.98 $ 4.86 Core return on average assets (A/B)
1.18 % 1.04 % 1.15 % 1.14 % 0.95 % Core return on average equity
(A/C) 10.40 % 9.38 % 10.36 % 10.06 % 8.23 % Core return on average
tangible equity (A/D) 12.95 % 11.74 % 13.07 % 12.80 % 10.50 % Core
efficiency ratio (4) 54.36 %
54.56 %
55.70 % 56.00 %
63.18 %
(1) This adjustment primarily consists of
costs associated with properties disposed or held for sale as a
result of branch restructuring, including net (gains) losses on
sales, impairment charges, and other expenses such as accelerated
depreciation. For the quarter ended March 31,2017, this adjustment
also included severance expense totaling $1.1 million resulting
from branch and other organizational restructure, primarily due to
severance of $0.8 million accrued upon the departure of the former
CEO in January 2017.
(2) The Company was required to revalue
its deferred tax assets and deferred tax liabilities as a result of
the “Tax Cuts and Jobs Act” signed into law on December 22, 2017.
The impact was a one-time, non-cash charge to income tax provision
on the income statement.
(3) The tax effect is calculated at the
Company’s blended statutory rate of 39.14% for adjustments that
impact taxable income for periods in 2017 and 38.29% for periods
ending in 2016.
(4) Core efficiency ratio is a non-GAAP
ratio that is calculated by dividing core noninterest expense by
total core revenue (the sum of net interest income and core
noninterest income). Other companies may define and calculate this
data differently.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180118005134/en/
Bear State Financial, Inc.Matt Machen, CEO, 501-975-6033orSherri
Billings, CFO, 501-975-6033
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