LITTLE ROCK, Ark.--(BUSINESS WIRE)--Bear State Financial, Inc. (the “Company”) (NASDAQ: BSF), today reported earnings of $4.7 million and earnings per diluted common share of $0.13 in the third quarter of 2016, compared to earnings of $3.2 million or $0.10 per diluted common share in the third quarter of 2015. Core earnings for the third quarter of 2016 were $4.3 million or $0.11 per diluted common share compared to core earnings of $3.1 million or $0.09 per diluted common share in the third quarter of 2015.
“Bear State crossed the $2 billion mark in total assets and delivered solid financial results in the third quarter,” said Mark McFatridge, President and CEO of Bear State Financial. “The Bank’s third quarter performance was highlighted by growth of over $30 million in total loans and $12 million in deposits along with record results in the mortgage banking business. We remain focused on carrying out our core initiatives which includes diversifying the make-up of our commercial loan portfolio. Thanks to this effort, commercial and industrial (C&I) loans now represent over 20% of our total loans outstanding. C&I relationships help lead the broadening of our revenue streams with increased non-interest income and core deposits. Our other core initiatives include the continued improvement in the efficiency of our operations and maintaining the discipline of our credit culture. These initiatives remain ahead of schedule and are responsible, in part, for our impressive year-to-date results. Our teammates have done an excellent job remaining focused on delivering the value of the Bear to our customer base.”
FINANCIAL CONDITION
Total assets were $2.01 billion at September 30, 2016, a 37% increase compared to $1.47 billion at September 30, 2015. Total loans were $1.52 billion at September 30, 2016, an increase of $438 million, or 41% compared to September 30, 2015. Total deposits were $1.65 billion at September 30, 2016, a 37% increase compared to $1.21 billion at September 30, 2015. The increases in total assets, loans and deposits were primarily due to the acquisition of Metropolitan National Bank (“MNB”) on October 1, 2015.
Total stockholders’ equity was $232 million at September 30, 2016, a 30% increase from $179 million at September 30, 2015. Tangible common stockholders’ equity was $182 million at September 30, 2016, a 24% increase from $146 million at September 30, 2015. Book value per common share was $6.18 at September 30, 2016, a 15% increase from $5.36 at September 30, 2015. Tangible book value per common share was $4.83 at September 30, 2016, a 10% increase from $4.38 at September 30, 2015. The Company’s ratio of total stockholders’ equity to total assets decreased to 11.57% at September 30, 2016, compared to 12.15% at September 30, 2015. The calculation of the Company’s tangible book value per common share, 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 2016 net income of $4.7 million or $0.13 per diluted common share compared to net income of $3.2 million or $0.10 per diluted common share in the third quarter of 2015, resulting in a return on average assets of 0.95% in the third quarter of 2016, compared to 0.87% in the third quarter of 2015. 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 2016 core earnings totaled $4.3 million or $0.11 per diluted common share, compared to core earnings of $3.1 million or $0.09 per diluted common share in the third quarter of 2015. The core return on average assets measured 0.85% and 0.83%, core return on average equity measured 7.28% and 6.88% and core return on average tangible equity measured 9.34% and 8.42% each for the third quarters of 2016 and 2015, respectively. Non-core items during the third quarter of 2016 included net branch restructuring income of $323,000; gains (net of losses and provisions) on real estate owned totaling $444,000 and gains on sales of investment securities of $21,000. Collectively, the effect of all non-core items, net of taxes, increased GAAP net income by approximately $486,000, or approximately $0.02 of diluted earnings per share.
Net interest income for the third quarter of 2016 was $16.8 million compared to $12.2 million for the same period in 2015. Net interest income for the nine months ended September 30, 2016 was $50.4 million, compared to $36.8 million for the same period in 2015. Interest income for the third quarter of 2016 was $18.8 million compared to $13.7 million for the same period in 2015. Interest income for the nine months ended September 30, 2016 was $56.2 million compared to $41.4 million for the same period in 2015 .The increases in interest income for the three and nine months ended September 30, 2016, compared to the same periods in 2015, were primarily related to increases in the average balance of loans receivable as a result of the MNB acquisition. Interest expense for the third quarter of 2016 was $2.0 million compared to $1.5 million for the same period in 2015. Interest expense for the nine months ended September 30, 2016 was $5.8 million compared to $4.6 million for the same period in 2015. The increases in interest expense for the three and nine months ended September 30, 2016 compared to the same periods in 2015 were primarily due to increases in the average balance of interest bearing deposits as a result of the MNB acquisition.
Net interest margin measured 3.78% for the third quarter of 2016, compared to 3.74% for the same period in 2015. Net interest margin for the nine months ended September 30, 2016 was 3.89%, compared to 3.76% for the same period in 2015. The Company’s net interest margin increased primarily as a result of an increase in average yield on interest earning assets resulting from a higher percentage of loans in the mix of interest earning assets. The average cost of total interest-bearing liabilities decreased to 0.53% for the third quarter 2016, compared to 0.55% for the same period in 2015. The average cost of total interest-bearing liabilities for the nine months ended September 30, 2016 was 0.52%, compared to 0.55% for the same period in 2015.
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, 2016 increased to $4.3 million from $3.3 million for the same period in 2015, a 31% increase. Total noninterest income of $12.3 million for the nine months ended September 30, 2016 increased from $9.8 million for the same period in 2015, a 25% increase. The increases in the three and nine month comparison periods were primarily due to increases in deposit fee income and gain on sales of mortgage loans. The increase in deposit fee income was primarily due to an increase in deposit accounts resulting from the acquisition of MNB. The increase in gain on sales of loans was due to an increase in the volume of mortgage loans sold.
Total noninterest expense increased $2.9 million or 28% for the third quarter of 2016 compared to the third quarter of 2015. Total noninterest expense increased $9.8 million or 29% during the nine months ended September 30, 2016 compared to the same period in 2015. The increases in total noninterest expense were primarily related to the increase in personnel and overhead costs incurred in connection with the MNB acquisition. The Company’s core efficiency ratio was 67% in the third quarter of 2016 compared to 69% in the third quarter of 2015.
Income tax provision increased by $855,000 or 56% for the third quarter of 2016 compared to the third quarter of 2015. Income tax provision for the nine months ended September 30, 2016 increased by $1.0 million or 27% compared to the same period in 2015. The increases in income tax provision were a result of an increase in taxable income. For the nine months ended September 30, 2016, the income tax provision was reduced by $0.9 million for the valuation allowance reversal in the second quarter of 2016.
The ratio of nonperforming assets to total assets decreased to 0.95% at September 30, 2016, compared to 1.30% at September 30, 2015. The allowance for loan losses represented 1.00% of total loans at September 30, 2016, compared to 1.30% at September 30, 2015. The ratio of allowance for loan losses plus discount on acquired loans to total loans was 1.77% at September 30, 2016, compared to 2.00% at September 30, 2015. The ratio of the allowance for loan losses to nonperforming loans was 86% at September 30, 2016, compared to 83% at September 30, 2015. Annualized net charge-offs as a percentage of average loans for the quarter ended September 30, 2016 was 0.07% compared to 0.08% for the quarter ended September 30, 2015. Provision for loan losses increased from $331,000 for the third quarter of 2015 to $643,000 for the third quarter of 2016. Provision for loan losses for the nine months ended September 30, 2016 was $1.7 million, compared to $931,000 for the same period in 2015. The increase in the provision is attributable to loan originations and a 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 48 branches and four 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. The Company recently 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. This change in definition requires the Company to recast its previously-reported calculation of core earnings for the quarter ended September 30, 2015 to give effect to a $385,000 net REO gain during that period.
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) | ||||||||||||||||||||||||||
| September | June | March | December | September | ||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||||||||
|
Balance sheet data, at quarter end: |
||||||||||||||||||||||||||
| Commercial real estate - mortgage loans | $ | 566,302 | $ | 557,612 | $ | 555,264 | $ | 561,910 | $ | 401,044 | ||||||||||||||||
| Consumer real estate - mortgage loans | 385,642 | 390,743 | 395,509 | 401,594 | 309,951 | |||||||||||||||||||||
| Farmland | 94,187 | 92,452 | 93,380 | 94,235 | 53,192 | |||||||||||||||||||||
| Construction and land development | 119,433 | 124,369 | 117,283 | 116,015 | 93,688 | |||||||||||||||||||||
| Commercial and industrial loans | 312,957 | 281,874 | 258,479 | 246,304 | 186,772 | |||||||||||||||||||||
| Consumer and other | 36,645 | 36,339 | 37,673 | 38,594 | 32,428 | |||||||||||||||||||||
| Total loans | 1,515,166 | 1,483,389 | 1,457,588 | 1,458,652 | 1,077,075 | |||||||||||||||||||||
| Loans held for sale | 13,995 | 15,168 | 10,103 | 7,326 | 8,032 | |||||||||||||||||||||
| Allowance for loan losses | (15,112 | ) | (14,751 | ) | (14,866 | ) | (14,550 | ) | (13,975 | ) | ||||||||||||||||
| Investment securities | 197,670 | 192,549 | 185,143 | 198,585 | 164,564 | |||||||||||||||||||||
| Goodwill | 40,196 | 40,196 | 40,196 | 40,196 | 25,717 | |||||||||||||||||||||
| Core deposit intangible, net | 10,608 | 10,863 | 11,119 | 11,374 | 6,869 | |||||||||||||||||||||
| Total assets | 2,007,938 | 1,990,715 | 1,922,301 | 1,920,216 | 1,470,725 | |||||||||||||||||||||
| Noninterest-bearing deposits | 239,831 | 255,648 | 216,173 | 234,879 | 173,525 | |||||||||||||||||||||
| Total deposits | 1,653,523 | 1,641,250 | 1,610,718 | 1,607,683 | 1,209,176 | |||||||||||||||||||||
| Short term borrowings | 13,511 | 14,964 | 8,990 | 12,075 | 10,366 | |||||||||||||||||||||
| FHLB advances | 80,138 | 75,282 | 50,178 | 53,518 | 49,457 | |||||||||||||||||||||
| Other borrowings | 22,518 | 22,900 | 22,681 | 18,862 | 18,843 | |||||||||||||||||||||
| Total stockholders' equity | 232,403 | 228,534 | 223,798 | 223,157 | 178,670 | |||||||||||||||||||||
|
Balance sheet data, quarterly averages: |
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| Total loans | $ | 1,522,106 | $ | 1,492,504 | $ | 1,461,091 | $ | 1,445,357 | $ | 1,077,500 | ||||||||||||||||
| Investment securities | 202,868 | 188,808 | 206,258 | 209,629 | 180,831 | |||||||||||||||||||||
| Total earning assets | 1,768,892 | 1,724,381 | 1,702,917 | 1,699,227 | 1,294,619 | |||||||||||||||||||||
| Goodwill | 40,196 | 40,196 | 40,196 | 40,216 | 25,717 | |||||||||||||||||||||
| Core deposit intangible, net | 10,775 | 11,030 | 11,284 | 11,549 | 6,972 | |||||||||||||||||||||
| Total assets | 1,981,582 | 1,937,722 | 1,920,833 | 1,920,617 | 1,466,342 | |||||||||||||||||||||
| Noninterest-bearing deposits | 239,886 | 215,766 | 221,909 | 234,206 | 176,219 | |||||||||||||||||||||
| Interest-bearing deposits | 1,395,501 | 1,394,262 | 1,369,759 | 1,364,403 | 1,036,330 | |||||||||||||||||||||
| Total deposits | 1,635,387 | 1,610,028 | 1,591,668 | 1,598,609 | 1,212,549 | |||||||||||||||||||||
| Short term borrowings | 13,699 | 11,991 | 12,163 | 26,872 | 6,166 | |||||||||||||||||||||
| FHLB advances | 73,418 | 64,494 | 64,488 | 47,127 | 47,614 | |||||||||||||||||||||
| Other borrowings | 22,634 | 22,982 | 25,353 | 18,983 | 18,641 | |||||||||||||||||||||
| Total stockholders' equity | 231,758 | 226,587 | 224,416 | 223,083 | 177,824 | |||||||||||||||||||||
|
Statement of income data for the three months ended: |
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| Interest income | $ | 18,849 | $ | 18,535 | $ | 18,790 | $ | 19,468 | $ | 13,749 | ||||||||||||||||
| Interest expense | 2,014 | 1,935 | 1,864 | 1,744 | 1,529 | |||||||||||||||||||||
| Net interest income | 16,835 | 16,600 | 16,926 | 17,724 | 12,220 | |||||||||||||||||||||
| Provision for loan losses | 643 | 533 | 489 | 866 | 331 | |||||||||||||||||||||
| Net interest income after provision for loan losses | 16,192 | 16,067 | 16,437 | 16,858 | 11,889 | |||||||||||||||||||||
| Noninterest income | 4,333 | 4,311 | 3,673 | 3,721 | 3,318 | |||||||||||||||||||||
| Noninterest expense | 13,400 | 14,989 | 15,331 | 17,044 | 10,465 | |||||||||||||||||||||
| Income before taxes | 7,125 | 5,389 | 4,779 | 3,535 | 4,742 | |||||||||||||||||||||
| Income tax provision | 2,384 | 847 | 1,436 | 972 | 1,529 | |||||||||||||||||||||
| Net income | $ | 4,741 | $ | 4,542 | $ | 3,343 | $ | 2,563 | $ | 3,213 | ||||||||||||||||
| BEAR STATE FINANCIAL, INC. | ||||||||||||||||||||||||||
| SELECTED CONSOLIDATED FINANCIAL DATA – UNAUDITED | ||||||||||||||||||||||||||
| September | June | March | December | September | ||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||||||||
|
Common stock data: |
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| Net income per share, diluted | $ | 0.13 | $ | 0.12 | $ | 0.09 | $ | 0.07 | $ | 0.10 | ||||||||||||||||
| Core earnings per share, diluted | $ | 0.11 | $ | 0.11 | $ | 0.10 | $ | 0.11 | $ | 0.09 | ||||||||||||||||
| Book value per share | $ | 6.18 | $ | 6.08 | $ | 5.96 | $ | 5.87 | $ | 5.36 | ||||||||||||||||
| Tangible book value per share | $ | 4.83 | $ | 4.72 | $ | 4.59 | $ | 4.52 | $ | 4.38 | ||||||||||||||||
| Diluted weighted average shares outstanding | 37,807,419 | 37,772,959 | 37,918,188 | 38,173,234 | 33,497,298 | |||||||||||||||||||||
| End of period shares outstanding | 37,600,986 | 37,589,543 | 37,560,031 | 37,987,722 | 33,349,512 | |||||||||||||||||||||
|
Profitability and performance ratios: |
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| Return on average assets | 0.95 | % | 0.94 | % | 0.71 | % | 0.53 | % | 0.87 | % | ||||||||||||||||
| Core return on average assets | 0.85 | % | 0.84 | % | 0.77 | % | 0.86 | % | 0.83 | % | ||||||||||||||||
| Return on average equity | 8.12 | % | 8.04 | % | 6.04 | % | 4.56 | % | 7.17 | % | ||||||||||||||||
| Core return on average equity | 7.28 | % | 7.23 | % | 6.61 | % | 7.41 | % | 6.88 | % | ||||||||||||||||
| Core return on average tangible equity | 9.34 | % | 9.34 | % | 8.58 | % | 9.65 | % | 8.42 | % | ||||||||||||||||
| Net interest margin | 3.78 | % | 3.86 | % | 4.03 | % | 4.14 | % | 3.74 | % | ||||||||||||||||
| Noninterest income to total revenue | 20.47 | % | 20.62 | % | 17.83 | % | 17.35 | % | 21.35 | % | ||||||||||||||||
| Noninterest income to average assets | 0.87 | % | 0.89 | % | 0.78 | % | 0.77 | % | 0.90 | % | ||||||||||||||||
| Noninterest expense to average assets | 2.68 | % | 3.10 | % | 3.24 | % | 3.52 | % | 2.83 | % | ||||||||||||||||
| Efficiency ratio | 63.30 | % | 71.68 | % | 74.43 | % | 79.48 | % | 67.35 | % | ||||||||||||||||
| Core efficiency ratio(1) | 66.99 | % | 68.29 | % | 71.96 | % | 67.66 | % | 68.72 | % | ||||||||||||||||
| Average loans to average deposits | 93.07 | % | 92.70 | % | 91.80 | % | 90.41 | % | 88.86 | % | ||||||||||||||||
| Securities to total assets | 9.84 | % | 9.67 | % | 9.63 | % | 10.34 | % | 11.19 | % | ||||||||||||||||
|
Asset quality ratios: |
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| Allowance for loan losses to total loans | 1.00 | % | 0.99 | % | 1.02 | % | 1.00 | % | 1.30 | % | ||||||||||||||||
| Allowance for loan losses to non-performing loans | 86.41 | % | 76.42 | % | 72.84 | % | 75.23 | % | 83.18 | % | ||||||||||||||||
| Nonperforming loans to total loans | 1.15 | % | 1.30 | % | 1.40 | % | 1.36 | % | 1.56 | % | ||||||||||||||||
| Nonperforming assets to total assets | 0.95 | % | 1.08 | % | 1.23 | % | 1.22 | % | 1.30 | % | ||||||||||||||||
| Annualized net charge offs to average total loans (2) | 0.07 | % | 0.17 | % | 0.05 | % | 0.08 | % | 0.08 | % | ||||||||||||||||
|
Regulatory capital ratios: |
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| Tier 1 leverage ratio | 9.37 | % | 9.30 | % | 9.16 | % | 9.15 | % | 9.83 | % | ||||||||||||||||
| Common equity tier 1 capital ratio | 11.04 | % | 10.78 | % | 10.65 | % | 10.62 | % | 11.77 | % | ||||||||||||||||
| Tier 1 capital to risk weighted assets | 11.04 | % | 10.78 | % | 10.65 | % | 10.62 | % | 11.77 | % | ||||||||||||||||
| Total capital to risk weighted assets | 11.96 | % | 11.69 | % | 11.58 | % | 11.52 | % | 12.94 | % | ||||||||||||||||
|
(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. |
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(2) The quarter ending June 30, 2016 includes a charge-off on a purchased credit impaired loan amounting to 0.13% of average total loans. |
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| BEAR STATE FINANCIAL, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||
| (In thousands, except share data) | |||||||||
| (Unaudited) | |||||||||
| September 30, | December 31, | ||||||||
| 2016 | 2015 | ||||||||
| ASSETS | |||||||||
| Cash and cash equivalents | $ | 86,887 | $ | 52,131 | |||||
| Interest-bearing time deposits in banks | 4,820 | 10,930 | |||||||
| Federal funds sold | -- | 18 | |||||||
| Investment securities— | |||||||||
| Available for sale, at fair value | 186,319 | 198,585 | |||||||
| Held to maturity, at amortized cost | 11,351 | -- | |||||||
| Other investment securities, at cost | 11,838 | 9,563 | |||||||
| Loans receivable, net of allowance of $15,112 and $14,550, respectively | 1,500,054 | 1,444,102 | |||||||
| Loans held for sale | 13,995 | 7,326 | |||||||
| Accrued interest receivable | 6,694 | 6,157 | |||||||
| Real estate owned - net | 1,576 | 3,642 | |||||||
| Office properties and equipment – net | 55,052 | 63,641 | |||||||
| Office properties and equipment held for sale | 5,554 | -- | |||||||
| Cash surrender value of life insurance | 56,849 | 52,602 | |||||||
| Goodwill | 40,196 | 40,196 | |||||||
| Core deposit intangible – net | 10,608 | 11,374 | |||||||
| Deferred tax asset, net | 11,752 | 16,713 | |||||||
| Prepaid expenses and other assets | 4,393 | 3,236 | |||||||
| TOTAL | $ | 2,007,938 | $ | 1,920,216 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| LIABILITIES: | |||||||||
| Noninterest bearing deposits | $ | 239,831 | $ | 234,879 | |||||
| Interest bearing deposits | 1,413,692 | 1,372,804 | |||||||
| Total deposits | 1,653,523 | 1,607,683 | |||||||
| Short term borrowings | 13,511 | 12,075 | |||||||
| Other borrowings | 102,656 | 72,380 | |||||||
| Other liabilities | 5,845 | 4,921 | |||||||
| Total liabilities | 1,775,535 | 1,697,059 | |||||||
| STOCKHOLDERS’ EQUITY: | |||||||||
| Preferred stock, $0.01 par value—5,000,000 shares authorized; none issued at September 30, 2016 or December 31, 2015 | -- | -- | |||||||
| Common stock, $0.01 par value—100,000,000 shares authorized; 37,600,986 and 37,987,722 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 376 | 380 | |||||||
| Additional paid-in capital | 209,131 | 211,817 | |||||||
| Accumulated other comprehensive income | 1,575 | 386 | |||||||
| Retained earnings | 21,321 | 10,574 | |||||||
| Total stockholders’ equity | 232,403 | 223,157 | |||||||
| TOTAL | $ | 2,007,938 | $ | 1,920,216 | |||||
| BEAR STATE FINANCIAL, INC. | |||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||
| (Dollars in thousands, except earnings per share) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||||
| Loans receivable | $ | 17,808 | $ | 12,829 | $ | 53,012 | $ | 38,610 | |||||||||||||
| Investment securities: | |||||||||||||||||||||
| Taxable | 467 | 337 | 1,477 | 979 | |||||||||||||||||
| Nontaxable | 508 | 516 | 1,456 | 1,546 | |||||||||||||||||
| Other | 66 | 67 | 230 | 243 | |||||||||||||||||
| Total interest income | 18,849 | 13,749 | 56,175 | 41,378 | |||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||
| Deposits | 1,662 | 1,265 | 4,785 | 3,853 | |||||||||||||||||
| Other borrowings | 352 | 264 | 1,027 | 767 | |||||||||||||||||
| Total interest expense | 2,014 | 1,529 | 5,812 | 4,620 | |||||||||||||||||
| NET INTEREST INCOME | 16,835 | 12,220 | 50,363 | 36,758 | |||||||||||||||||
| PROVISION FOR LOAN LOSSES | 643 | 331 | 1,665 | 931 | |||||||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 16,192 | 11,889 | 48,698 | 35,827 | |||||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||||
| Net gain on sales of investment securities | 21 | -- | 19 | 88 | |||||||||||||||||
| Deposit fee income | 2,253 | 1,926 | 6,639 | 5,569 | |||||||||||||||||
| Earnings on life insurance policies | 414 | 357 | 1,247 | 1,096 | |||||||||||||||||
| Gain on sales of loans | 1,368 | 833 | 3,454 | 2,359 | |||||||||||||||||
| Other | 277 | 202 | 960 | 715 | |||||||||||||||||
| Total noninterest income | 4,333 | 3,318 | 12,319 | 9,827 | |||||||||||||||||
| NONINTEREST EXPENSES: | |||||||||||||||||||||
| Salaries and employee benefits | 7,618 | 5,518 | 23,725 | 17,521 | |||||||||||||||||
|
Net occupancy expense |
1,826 | 1,475 | 5,652 | 4,273 | |||||||||||||||||
| Real estate owned, net | (381 | ) | (341 | ) | (379 | ) | (431 | ) | |||||||||||||
| FDIC insurance | 224 | 199 | 870 | 637 | |||||||||||||||||
| Amortization of intangible assets | 255 | 156 | 766 | 469 | |||||||||||||||||
| Data processing | 1,341 | 1,103 | 4,180 | 3,814 | |||||||||||||||||
| Professional fees | 545 | 261 | 1,700 | 1,391 | |||||||||||||||||
| Advertising and public relations | 419 | 510 | 1,284 | 1,764 | |||||||||||||||||
| Postage and supplies | 273 | 244 | 889 | 809 | |||||||||||||||||
| Other | 1,280 | 1,340 | 5,036 | 3,726 | |||||||||||||||||
| Total noninterest expenses | 13,400 | 10,465 | 43,723 | 33,973 | |||||||||||||||||
| INCOME BEFORE INCOME TAXES | 7,125 | 4,742 | 17,294 | 11,681 | |||||||||||||||||
|
INCOME TAX PROVISION |
2,384 | 1,529 | 4,668 | 3,667 | |||||||||||||||||
| NET INCOME | $ | 4,741 | $ | 3,213 | $ | 12,626 | $ | 8,014 | |||||||||||||
| Basic earnings per common share | $ | 0.13 | $ | 0.10 | $ | 0.34 | $ | 0.24 | |||||||||||||
| Diluted earnings per common share | $ | 0.13 | $ | 0.10 | $ | 0.33 | $ | 0.24 | |||||||||||||
|
BEAR STATE FINANCIAL, INC. |
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|
AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED |
|||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||
|
Average |
Interest |
Average |
Average |
Interest |
Average |
||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||
| Loans receivable(1) | $ | 1,522,106 | $ | 17,808 | 4.64 | % | $ | 1,077,500 | $ | 12,829 | 4.72 | % | |||||||||||||
| Investment securities(2) | 202,868 | 975 | 1.91 | 180,831 | 853 | 1.87 | |||||||||||||||||||
| Other interest-earning assets | 43,918 | 66 | 0.60 | 36,288 | 67 | 0.73 | |||||||||||||||||||
| Total interest-earning assets | 1,768,892 | 18,849 | 4.23 | 1,294,619 | 13,749 | 4.21 | |||||||||||||||||||
| Noninterest-earning assets | 212,690 | 171,723 | |||||||||||||||||||||||
| Total assets | $ | 1,981,582 | $ | 1,466,342 | |||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||
| Deposits | $ | 1,395,501 | 1,662 | 0.47 | $ | 1,036,330 | 1,265 | 0.48 | |||||||||||||||||
| Other borrowings | 109,751 | 352 | 1.27 | 72,421 | 264 | 1.45 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,505,252 | 2,014 | 0.53 | 1,108,751 | 1,529 | 0.55 | |||||||||||||||||||
| Noninterest-bearing deposits | 239,886 | 176,219 | |||||||||||||||||||||||
| Noninterest-bearing liabilities | 4,686 | 3,548 | |||||||||||||||||||||||
| Total liabilities | 1,749,824 | 1,288,518 | |||||||||||||||||||||||
| Stockholders' equity | 231,758 | 177,824 | |||||||||||||||||||||||
|
Total liabilities and stockholders' equity |
$ | 1,981,582 | $ | 1,466,342 | |||||||||||||||||||||
| Net interest income | $ | 16,835 | $ | 12,220 | |||||||||||||||||||||
| Net earning assets | $ | 263,640 | $ | 185,868 | |||||||||||||||||||||
| Interest rate spread | 3.70 | % | 3.66 | % | |||||||||||||||||||||
| Net interest margin | 3.78 | % | 3.74 | % | |||||||||||||||||||||
|
Ratio of interest-earning assets to Interest-bearing liabilities |
117.51 | % | 116.76 | % | |||||||||||||||||||||
|
|
Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||||
|
Average |
Interest |
Average |
Average |
Interest |
Average |
||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||
| Loans receivable(1) | $ | 1,492,010 | $ | 53,012 | 4.75 | % | $ | 1,062,552 | $ | 38,610 | 4.86 | % | |||||||||||||
| Investment securities(2) | 199,324 | 2,933 | 1.97 | 184,648 | 2,525 | 1.83 | |||||||||||||||||||
| Other interest-earning assets | 40,863 | 230 | 0.75 | 58,988 | 243 | 0.55 | |||||||||||||||||||
| Total interest-earning assets | 1,732,197 | 56,175 | 4.34 | 1,306,188 | 41,378 | 4.24 | |||||||||||||||||||
| Noninterest-earning assets | 214,644 | 173,547 | |||||||||||||||||||||||
| Total assets | $ | 1,946,841 | $ | 1,479,735 | |||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||
| Deposits | $ | 1,386,540 | 4,785 | 0.46 | $ | 1,054,412 | 3,853 | 0.49 | |||||||||||||||||
| Other borrowings | 103,764 | 1,027 | 1.32 | 71,530 | 767 | 1.43 | |||||||||||||||||||
| Total interest-bearing liabilities | 1,490,304 | 5,812 | 0.52 | 1,125,942 | 4,620 | 0.55 | |||||||||||||||||||
| Noninterest-bearing deposits | 225,905 | 175,028 | |||||||||||||||||||||||
| Noninterest-bearing liabilities | 3,043 | 3,508 | |||||||||||||||||||||||
| Total liabilities | 1,719,252 | 1,304,478 | |||||||||||||||||||||||
| Stockholders' equity | 227,589 | 175,257 | |||||||||||||||||||||||
|
Total liabilities and stockholders' equity |
$ | 1,946,841 | $ | 1,479,735 | |||||||||||||||||||||
| Net interest income | $ | 50,363 | $ | 36,758 | |||||||||||||||||||||
| Net earning assets | $ | 241,893 | $ | 180,246 | |||||||||||||||||||||
| Interest rate spread | 3.82 | % | 3.69 | % | |||||||||||||||||||||
| Net interest margin | 3.89 | % | 3.76 | % | |||||||||||||||||||||
|
Ratio of interest-earning assets to Interest-bearing liabilities |
116.23 | % | 116.01 | % | |||||||||||||||||||||
|
(1) Includes nonaccrual loans. |
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|
(2) Includes FHLB and FRB stock. |
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|
BEAR STATE FINANCIAL, INC. |
||||||||||||||||||||||
| ASSET QUALITY ANALYSIS - UNAUDITED | ||||||||||||||||||||||
|
(Dollars in thousands) |
||||||||||||||||||||||
| September 30, 2016 | December 31, 2015 | |||||||||||||||||||||
|
Net (2) |
% Total |
Net (2) |
% Total |
Increase |
||||||||||||||||||
| Nonaccrual Loans: | ||||||||||||||||||||||
| One- to four-family residential | $ | 6,637 | 0.33 | % | $ | 6,455 | 0.34 | % | $ | 182 | ||||||||||||
| Multifamily | -- | 0.00 | % | 230 | 0.01 | % | (230 | ) | ||||||||||||||
| Nonfarm nonresidential | 5,461 | 0.27 | % | 6,638 | 0.35 | % | (1,177 | ) | ||||||||||||||
| Farmland | 787 | 0.04 | % | 973 | 0.05 | % | (186 | ) | ||||||||||||||
| Construction and land development | 497 | 0.02 | % | 622 | 0.03 | % | (125 | ) | ||||||||||||||
| Commercial | 3,940 | 0.20 | % | 4,235 | 0.22 | % | (295 | ) | ||||||||||||||
| Consumer | 166 | 0.01 | % | 187 | 0.01 | % | (21 | ) | ||||||||||||||
| Total nonaccrual loans | 17,488 | 0.87 | % | 19,340 | 1.01 | % | (1,852 | ) | ||||||||||||||
| Accruing loans 90 days or more past due | -- | -- | 451 | 0.02 | % | (451 | ) | |||||||||||||||
| Real estate owned | 1,576 | 0.08 | % | 3,642 | 0.19 | % | (2,066 | ) | ||||||||||||||
| Total nonperforming assets | 19,064 | 0.95 | % | 23,433 | 1.22 | % | (4,369 | ) | ||||||||||||||
| Performing restructured loans | 276 | 0.01 | % | 284 | 0.01 | % | (8 | ) | ||||||||||||||
|
Total nonperforming assets and performing restructured loans (1) |
$ | 19,340 | 0.96 | % | $ | 23,717 | 1.23 | % | $ | (4,377 | ) | |||||||||||
(1) The table does not include substandard loans which were judged not to be impaired totaling $28.4 million at September 30, 2016 and $30.2 million at December 31, 2015 or acquired ASC 310-30 purchased credit impaired loans which are considered performing at September 30, 2016.
(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 | ||||||||||||||||||||||||||
| 9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||||||||
| Net income available to common stockholders | $ | 4,741 | $ | 4,542 | $ | 3,343 | $ | 2,563 | $ | 3,213 | ||||||||||||||||
| Average common stockholders' equity | 231,758 | 226,587 | 224,416 | 223,083 | 177,824 | |||||||||||||||||||||
| Less Average Intangible Assets: | ||||||||||||||||||||||||||
| Goodwill | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,216 | ) | (25,717 | ) | ||||||||||||||||
|
Core deposit intangible, net of accumulated amortization |
(10,775 | ) | (11,030 | ) | (11,284 | ) | (11,549 | ) | (6,972 | ) | ||||||||||||||||
| Average tangible common stockholders' equity | $ | 180,787 | $ | 175,361 | $ | 172,936 | $ | 171,318 | $ | 145,135 | ||||||||||||||||
|
Annualized return on average tangible common stockholders' equity |
10.4 | % | 10.4 | % | 7.8 | % | 5.9 | % | 8.8 | % | ||||||||||||||||
| BEAR STATE FINANCIAL, INC. | ||||||||||||||||||||||||||
| CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE - UNAUDITED | ||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| For the Quarter Ending | ||||||||||||||||||||||||||
| 9/30/2016 | 6/30/2016 | 3/31/2016 | 12/31/2015 | 9/30/2015 | ||||||||||||||||||||||
| Total common stockholder's equity | $ | 232,403 | $ | 228,534 | $ | 223,798 | $ | 223,157 | $ | 178,670 | ||||||||||||||||
| Less intangible assets: | ||||||||||||||||||||||||||
| Goodwill | (40,196 | ) | (40,196 | ) | (40,196 | ) | (40,196 | ) | (25,717 | ) | ||||||||||||||||
|
Core deposit intangible, net of accumulated amortization |
(10,608 | ) | (10,863 | ) | (11,119 | ) | (11,374 | ) | (6,869 | ) | ||||||||||||||||
| Total intangible assets | (50,804 | ) | (51,059 | ) | (51,315 | ) | (51,570 | ) | (32,586 | ) | ||||||||||||||||
| Total tangible common stockholder's equity | $ | 181,599 | $ | 177,475 | $ | 172,483 | $ | 171,587 | $ | 146,084 | ||||||||||||||||
| Common Shares Outstanding | 37,601 | 37,590 | 37,560 | 37,988 | 33,350 | |||||||||||||||||||||
| Tangible book value per common share | $ | 4.83 | $ | 4.72 | $ | 4.59 | $ | 4.52 | $ | 4.38 | ||||||||||||||||
| 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 | |||||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | |||||||||||||||||||||||||
| Net income | $ | 4,741 | $ | 4,542 | $ | 3,343 | $ | 2,563 | $ | 3,213 | |||||||||||||||||||
| Adj: Loss (gain) on sale of securities, net | (21 | ) | -- | 2 | 68 | -- | |||||||||||||||||||||||
| Adj: Merger, acquisition and integration expenses | -- | 137 | 445 | 1,348 | 172 | ||||||||||||||||||||||||
|
Adj: Branch restructure and related property valuation expense, net of (gain) on sale of properties |
(323 | ) | 571 | 63 | -- | -- | |||||||||||||||||||||||
| Adj: Data processing termination fees | -- | -- | -- | 1,186 | -- | ||||||||||||||||||||||||
|
Adj: Net provision/loss/(gain) on real estate owned (1) |
(444 | ) | -- | -- | -- | (385 | ) | ||||||||||||||||||||||
| Adj: Deferred tax asset valuation allowance reversal | -- | (897 | ) | -- | -- | -- | |||||||||||||||||||||||
|
Tax effect of adjustments (2) |
302 | (271 | ) | (195 | ) | (996 | ) | (82 | ) | ||||||||||||||||||||
| Total core income | (A) | $ | 4,255 | $ | 4,082 | $ | 3,658 | $ | 4,169 | $ | 3,082 | ||||||||||||||||||
| Total revenue | $ | 21,168 | $ | 20,911 | $ | 20,599 | $ | 21,445 | $ | 15,538 | |||||||||||||||||||
| Adj: Loss (gain) on sale of securities, net | (21 | ) | -- | 2 | 68 | -- | |||||||||||||||||||||||
| Total core revenue | $ | 21,147 | $ | 20,911 | $ | 20,601 | $ | 21,513 | $ | 15,538 | |||||||||||||||||||
| Total non-interest expense | $ | 13,400 | $ | 14,989 | $ | 15,331 | $ | 17,044 | $ | 10,465 | |||||||||||||||||||
| Adj: Merger, acquisition and integration expenses | -- | (137 | ) | (445 | ) | (1,348 | ) | (172 | ) | ||||||||||||||||||||
| Adj: Branch restructure and related property valuation (expense), net of gain on sale of properties | 323 | (571 | ) | (63 | ) | -- | -- | ||||||||||||||||||||||
| Adj: Data processing termination fees | -- | -- | -- | (1,186 | ) | -- | |||||||||||||||||||||||
| Adj: Net (provision/loss)/gain on real estate owned | 444 | -- | -- | -- | 385 | ||||||||||||||||||||||||
| Total core noninterest expense | $ | 14,167 | $ | 14,281 | $ | 14,823 | $ | 14,510 | $ | 10,678 | |||||||||||||||||||
| Total average assets | (B) | $ | 1,981,582 | $ | 1,937,722 | $ | 1,920,833 | $ | 1,920,617 | $ | 1,466,342 | ||||||||||||||||||
| Total average stockholders' equity | (C) | 231,758 | 226,587 | 224,416 | 223,083 | 177,824 | |||||||||||||||||||||||
| Total average tangible stockholders' equity | (D) | 180,787 | 175,361 | 172,936 | 171,318 | 145,135 | |||||||||||||||||||||||
| Total tangible stockholders' equity, period end | (E) | 181,599 | 177,475 | 172,483 | 171,587 | 146,084 | |||||||||||||||||||||||
| Total common shares outstanding, period-end | (F) | 37,600,986 | 37,589,543 | 37,560,031 | 37,987,722 | 33,349,512 | |||||||||||||||||||||||
| Average diluted shares outstanding | (G) | 37,807,419 | 37,772,959 | 37,918,188 | 38,173,234 | 33,497,298 | |||||||||||||||||||||||
| Core earnings per share, diluted | (A/G) | $ | 0.11 | $ | 0.11 | $ | 0.10 | $ | 0.11 | $ | 0.09 | ||||||||||||||||||
| Tangible book value per share, period-end | (E/F) | $ | 4.83 | $ | 4.72 | $ | 4.59 | $ | 4.52 | $ | 4.38 | ||||||||||||||||||
| Core return on average assets | (A/B) | 0.85 | % | 0.84 | % | 0.77 | % | 0.86 | % | 0.83 | % | ||||||||||||||||||
| Core return on average equity | (A/C) | 7.28 | % | 7.23 | % | 6.61 | % | 7.41 | % | 6.88 | % | ||||||||||||||||||
| Core return on average tangible equity | (A/D) | 9.34 | % | 9.34 | % | 8.58 | % | 9.65 | % | 8.42 | % | ||||||||||||||||||
|
Core efficiency ratio (3) |
66.99 | % | 68.29 | % | 71.96 | % | 67.66 | % | 68.72 | % | |||||||||||||||||||
|
(1) The Company recently amended its definition of core earnings to add a pre-tax materiality threshold for adjustments for net real estate owned provision/loss/gain during any fiscal quarter. As a result the adjustment for the quarter ending September 30, 2015 was recast to include the net gain as disclosed. |
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|
(2) The tax effect is calculated at the Company’s blended statutory rate of 38.29% for adjustments that impact taxable income. |
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|
(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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