FINANCIAL HIGHLIGHTS:
- Third quarter 2017 GAAP net income
was $5.1 million, an 8% increase from $4.7 million for the third
quarter of 2016. Diluted earnings per common share for the third
quarter of 2017 was $0.14, an 8% increase from $0.13 for the third
quarter of 2016.
- Third quarter 2017 core earnings
were $5.9 million, a 38% increase from $4.3 million for the third
quarter of 2016. Diluted core earnings per common share for the
third quarter of 2017 was $0.16, a 45% increase from $0.11 for the
third quarter of 2016.
- The Company’s efficiency ratio
improved to 61% in the third quarter of 2017 compared to 63% in the
third quarter of 2016. Further, the Company’s core efficiency ratio
improved to 55% in the third quarter of 2017 compared to 67% in the
third quarter of 2016.
- Net interest income increased 14%
for the third quarter of 2017 compared to the third quarter of 2016
primarily due to loan portfolio growth of 13% year over
year.
- The ratio of nonperforming assets to
total assets improved to 0.85% at September 30, 2017 compared to
0.95% 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.
- On August 22, 2017, Bear State Bank
entered into an agreement with Arvest Bank for Arvest to acquire
the Company in an all-cash transaction.
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 30,2017
December 31,2016
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)
% TotalAssets
Net (2)
% TotalAssets
Increase(Decrease)
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.
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Bear State Financial, Inc.Matt Machen, CEO, 501-975-6033orSherri
Billings, CFO, 501-975-6033
Bear State Financial, Inc. (NASDAQ:BSF)
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