Bear State Financial, Inc.: Record Third Quarter 2014 Results Show Substantial Earnings and Book Value Accretion From Recent Merger

FINANCIAL HIGHLIGHTS:

  • Bear State Financial, Inc. reports third quarter 2014 GAAP earnings of $22.7 million and earnings per common share of $0.75, compared to earnings of $143,000 and earnings per common share of $0.01 in the third quarter 2013.
  • Third quarter 2014 core earnings were $4.1 million or $0.14 per common share, compared to core earnings of $165,000 or $0.01 per common share in the third quarter of 2013.
  • Book value per common share increased 54% from $3.57 as of September 30, 2013 to $5.51 as of September 30, 2014.

LITTLE ROCK, Ark.--()--Bear State Financial, Inc. (“Bear State”) (NASDAQ: BSF), today reported earnings of $22.7 million and earnings per diluted common share of $0.75 in the third quarter of 2014, compared to earnings of $143,000 or $0.01 per diluted common share in the third quarter of 2013, a 15,757% increase. Net income for the third quarter of 2014 includes an income tax benefit of $20.3 million primarily resulting from the reversal of the Company’s valuation allowance against its deferred tax assets.

On June 13, 2014, Bear State completed its previously announced merger of First National Security Company (“First National”), the parent company for First National Bank headquartered in Hot Springs, Arkansas and Heritage Bank headquartered in Jonesboro, Arkansas. The Company’s results of operations for the nine months ended September 30, 2014 includes results of operations for First National for the period from June 14, 2014 through September 30, 2014.

Bear State’s three banks continue to progress towards more highly efficient and integrated operations. The Company’s operational integration project includes conversion of all bank operations to a single technology platform, and, subject to regulatory approval, the consolidation of its three banking charters to a single charter. The Company expects the bulk of this integration project to be completed by the second quarter of 2015. It also expects further public announcements regarding its management and key operations as the integration project nears completion.

The Company incurred substantial operating losses in prior periods. Those losses may, to a certain extent, be used to offset taxes on future income. The ability to use past losses to offset future taxes is referred to as a deferred tax asset (“DTA”). In 2009 the Company established a valuation allowance against its DTA due to insufficient and uncertain income at the time. Because of the Company’s increased earnings power along with the significant improvement in asset quality, the Company determined as of September 30, 2014, that it will likely use its DTA in the future. As a result, the DTA valuation allowance was reversed in the amount of $19.5 million. In addition, a valuation allowance of $1.25 million remains that is expected to be reversed during the fourth quarter of 2014.

Core earnings for the Company continued to improve in the third quarter of 2014. The Company reported core earnings of $4.1 million in the third quarter of 2014, compared to $1 million in the second quarter 2014 and $165,000 in the third quarter of 2013, a 2,376% increase. The third quarter of 2014 included two significant non-core items besides the reversal of its DTA valuation allowance described above. First, the Company incurred merger related expenses of approximately $3.5 million including termination fees of approximately $3.0 million associated with the conversion of core technology systems. Second, the Company incurred charges in the third quarter of $653,000 as a result of its decision to more aggressively market certain real estate owned, including reductions in the asking price on certain properties. Collectively, the net effect of all non-core items was an increase in earnings of approximately $18.6 million, or approximately $0.62 of diluted earnings per share.

Book value per common share was $5.51 at September 30, 2014, a 54% increase from $3.57 at September 30, 2013. Tangible book value per common share was $4.40 at September 30, 2014, a 23% increase from $3.57 at September 30, 2013.

Total loan growth for the twelve months ended September 30, 2014 for each of Bear State’s three banks was as follows: First Federal Bank 18%; First National Bank 3%; Heritage Bank 20%; or 12% on a consolidated basis.

FINANCIAL CONDITION

Total assets were $1.53 billion at September 30, 2014, a 189% increase compared to $530 million at September 30, 2013. Total deposits were $1.28 billion at September 30, 2014, a 181% increase compared to $455 million at September 30, 2013. The increase in both assets and deposits was primarily due to the First National merger. Total loans, including those acquired, were $1.06 billion at September 30, 2014, an increase of $701 million, or 194%, compared to the same period in 2013.

Common stockholders’ equity was $165 million at September 30, 2014, a 131% increase from $71 million at September 30, 2013. Tangible common stockholders’ equity was $132 million at September 30, 2014, an 85% increase from $71 million at September 30, 2013. Book value per common share was $5.51 at September 30, 2014, a 54% increase from $3.57 at September 30, 2013. Tangible book value per common share was $4.40 at September 30, 2014, a 23% increase from $3.57 at September 30, 2013. The Company’s ratio of common stockholders’ equity to total assets decreased to 10.82% at September 30, 2014, compared to 13.49% at September 30, 2013. The calculation of the Company’s tangible book value per common share, tangible common stockholders’ equity and the reconciliation to GAAP are included in the schedules accompanying this release.

RESULTS OF OPERATIONS

Third quarter 2014 core earnings totaled $4.1 million or $0.14 per diluted common share, compared to core earnings of $1 million or $0.05 per diluted common share in the second quarter of 2014 and to $165,000 or $0.01 per diluted common share in the third quarter of 2013. The core return on average assets measured 1.09%, 0.54%, and 0.12%; core return on average equity measured 11.12%, 4.65%, and 0.92%; and core return on tangible equity measured 14.42%, 5.00%, and 0.92% for these periods, respectively.

GAAP earnings include non-core items. The reconciliation of net income and core income, together with related financial measures is included in the schedules accompanying this release. Non-core items totaled $18.6 million or $0.62 per diluted common share in the most recent quarter. Including these net non-core items, third quarter 2014 GAAP results were earnings of $22.7 million or $0.75 per diluted common share. GAAP net loss was -$2.9 million or -$0.13 per diluted common share in the second quarter of 2014 and $143,000 or $0.01 per diluted common share in the third quarter of 2013. The GAAP net income resulted in a GAAP return on average assets of 6.02% in the most recent quarter, compared to -1.56% and 0.11% in the prior periods respectively.

Net interest income for the third quarter 2014 was $14.7 million, compared to $3.8 million for the same period in 2013. Net interest income for the nine months ended September 30, 2014 was $24.0 million, compared to $11.1 million for the same period in 2013. Interest income for the third quarter of 2014 was $16.2 million compared to $4.6 million for the same period in 2013. Interest income for the nine months ended September 30, 2014 was $27.6 million compared to $13.6 million for the same period in 2013. The increase in interest income for the three and nine months ended September 30, 2014, compared to the comparable periods in 2013, was primarily related to increases in the average balances of loans receivable and investment securities as a result of the merger with First National, which contributed approximately $12.6 million of net interest income for the nine month period ending September 30, 2014. Interest expense for the third quarter of 2014 was $1.6 million compared to $825,000 for the same period in 2013. Interest expense for the nine months ended September 30, 2014 was $3.5 million compared to $2.5 million for the same period in 2013. The increase in interest expense for the three and nine months ended September 30, 2014 compared to the comparable period in 2013 was primarily due to an increase in the average balance of deposit accounts as a result of the First National merger.

The net interest margin measured 4.44% for the third quarter 2014, compared to 3.15% for the same period in 2013. Net interest margin for the nine months ended September 30, 2014 was 3.84%, compared to 3.08% for the same period in 2013. The Company’s net interest margin increased primarily as a result of an increase in yields on loans receivable resulting from loans acquired in the First National merger. The average cost of total interest-bearing liabilities decreased to 0.53% for the third quarter 2014, compared to 0.76% for the same period in 2013. Average cost of total interest-bearing liabilities for the nine months ended September 30, 2014 was 0.63%, compared to 0.77% for the same period 2013.

Noninterest income is generated primarily through deposit account fee income, profit on sale of loans, and earnings on life insurance policies. Total noninterest income of $3.6 million for the three months ended September 30, 2014 increased from $1.4 million for the same period in 2013, a 157% increase. Total noninterest income of $6.7 million for the nine months ended September 30, 2014 increased from $4 million for the same period in 2013, a 68% increase. The increase in the three and nine month comparison periods was primarily due to an increase in deposit fee income and gain on sale of loans. The increase in gain on sale of loans was due to an increase in the number of mortgage loans sold and the average profit on loans held for sale.

Total noninterest expense increased $10.3 million or 205% during the third quarter of 2014 compared to the third quarter of 2013. Total noninterest expense increased $16.1 million or 111% during the nine months ended September 30, 2014 compared to the same period in 2013. The variances in total noninterest expense were primarily related to First National. Noninterest expense attributable to First National for the three and six months ended September 30, 2014 amounted to $6.4 million and $7.2 million respectively. In addition, noninterest expenses also increased due to the election to retire certain pension liabilities, an increase in loss provision on REO, and expenses related to the First National merger. The Company’s efficiency ratio improved to 61.02% from 83.19% in the second quarter of 2014 and from 96.11% in the third quarter of 2013.

Nonperforming assets declined from $15.4 million at June 30, 2014 to $15.0 million at September 30, 2014, compared to $20.6 million at December 31, 2013. Nonperforming assets were 0.98% of total assets at September 30, 2014, compared to 1.07% at June 30, 2014 and 4.32% at September 30, 2013. The allowance for loan losses represented 1.22% of total loans at September 30, 2014, compared to 1.23% at June 30, 2014 and 3.61% at September 30, 2013. The ratio of the allowance for loan losses to nonperforming loans was 136.79% at September 30, 2014, compared to 134.68% at June 30, 2014 and 100.08% at September 30, 2013. Annualized net charge-offs as a percentage of average loans for the quarter ended September 30, 2014 were 0.01% compared to 0.16% for the quarter ended September 30, 2013. Provision for loan losses increased from $0 for the third quarter of 2013 to $600,000 for the third quarter of 2014. The provision was $230,000 for the second quarter of 2014. The increase in provision is attributable to loan growth at Bear State’s three banks which was a 5% increase on a consolidated basis over the past three months.

About Bear State Financial, Inc.

Bear State Financial is the parent company for First Federal Bank, First National Bank in Hot Springs and Heritage Bank in Jonesboro. Bear State Financial, Inc. 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 subsidiaries, First Federal Bank, First National Bank and Heritage Bank, N.A. (collectively, the “Banks”), are community oriented financial institutions providing a broad line of financial products to individuals and business customers. Collectively, the Banks operate 45 branch offices throughout Arkansas and Southeast Oklahoma.

Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; 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 in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community. 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 the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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,” “expect,” or similar terms or variations on 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 Bear State’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 the Bank’s pricing, products and services, and with respect to the loans extended by the Bank and real estate owned, market prices of the property securing loans and the costs of collection and sales. Bear State wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Bear State 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, except share data)
               
September June December September
2014 2014 2013 2013
 

Balance sheet data, at quarter end:

Commercial real estate - mortgage loans $ 423,925 $ 390,848 $ 194,675 $ 187,075
Consumer real estate - mortgage loans 318,508 303,413 129,230 134,209
Farmland 48,892 48,710 2,663 2,469
Construction and land development 89,165 94,084 23,891 15,903
Commercial and industrial loans 149,073 142,058 29,033 17,414
Consumer and other 33,268 32,171 4,368 4,827
Total loans 1,062,831 1,011,284 383,860 361,897
Allowance for loan losses (12,964 ) (12,392 ) (12,711 ) (13,078 )
Investment securities 190,376 213,557 70,828 73,335
Goodwill 25,801 25,610 - -
Core deposit intangible, net 7,494 7,651 - -
Total assets 1,528,387 1,448,205 548,872 529,741
Noninterest-bearing deposits 169,962 167,600 19,427 20,998
Total deposits 1,277,306 1,231,414 469,725 455,456
Short term borrowings 12,081 20,270 - -
FHLB advances 49,783 34,127 5,941 968
Other borrowings 19,519 13,750 - -

Total stockholders’ equity

165,419 142,995 71,187 71,486
 

Balance sheet data, quarterly averages:

Total loans $ 1,045,076 $ 505,754 $ 376,932 $ 359,071
Investment securities 213,813 101,562 72,440 61,880
Total earning assets 1,309,259 665,536 492,769 473,531
Goodwill 25,612 4,497 - -
Core deposit intangible, net 7,773 1,512 - -
Total assets 1,493,527 748,967 539,926 523,763
Noninterest-bearing deposits 170,310 56,988 19,052 21,747
Interest-bearing deposits 1,096,212 587,429 443,469 427,945
Total deposits 1,266,522 644,417 462,521 449,692
Short term borrowings 14,763 2,918 - -
FHLB Advances 47,559 10,953 3,559 978
Other borrowings 14,675 1,338 - -

Total stockholders’ equity

145,737 86,613 71,764 70,971
 

Statement of operation data for the three months ended:

Interest income $ 16,223 $ 6,568 $ 4,748 $ 4,579
Interest expense   1,567     1,050         878         825  
Net interest income 14,656 5,518 3,870 3,754
Provision for loan losses   600     230         -         -  
Net interest income after provision for loan losses 14,056 5,288 3,870 3,754
Noninterest income 3,631 1,825 1,413 1,419
Noninterest expense   15,324     10,019         5,084         5,019  
Income before taxes 2,363 (2,906 ) 199 154
Income tax expense   (20,312 )   -         -         11  
Net income $ 22,675   $ (2,906 )     $ 199       $ 143  
 
 
BEAR STATE FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED
(In thousands, except share data)
               
September June December September
2014 2014 2013 2013
 

Common stock data:

Core earnings per share, diluted $ 0.14 $ 0.05 $ 0.01 $ 0.01
Net income per share, diluted $ 0.75 $ (0.13 ) $ 0.01 $ 0.01
Tangible book value per share $ 4.40 $ 3.65 $ 3.55 $ 3.57
Book value per share $ 5.51 $ 4.76 $ 3.55 $ 3.57
Diluted shares outstanding 30,097,619 22,020,238 20,894,963 20,910,962
End of period shares outstanding 30,030,344 30,026,744 20,041,497 20,041,497
 

Profitability and performance ratios:

Core return on average assets 1.09 % 0.54 % 0.18 % 0.12 %
Return on average assets 6.02 % -1.56 % 0.15 % 0.11 %
Core return on average equity 11.12 % 4.65 % 1.37 % 0.92 %
Core return on tangible equity 14.42 % 5.00 % 1.37 % 0.92 %
Return on average equity 61.73 % -13.46 % 1.10 % 0.80 %
Net interest margin 4.44 % 3.33 % 3.12 % 3.15 %
Noninterest income to total revenue 19.86 % 24.85 % 26.75 % 27.43 %
Noninterest income to average assets 0.96 % 0.98 % 1.04 % 1.07 %
Noninterest expense to average assets 4.07 % 5.37 % 3.74 % 3.80 %
Efficiency ratio(1) 61.02 % 83.19 % 95.31 % 96.11 %
Average loans to average deposits 82.52 % 78.48 % 81.50 % 79.85 %
Securities to total assets 12.46 % 14.75 % 12.90 % 13.84 %
 

Asset quality ratios:

Allowance for loan losses to total loans 1.22 % 1.23 % 3.31 % 3.61 %
Allowance for loan losses to non-performing loans 136.79 % 134.68 % 106.48 % 100.08 %
Nonperforming loans to total loans 0.89 % 0.91 % 3.11 % 3.61 %
Nonperforming assets to total assets 0.98 % 1.07 % 3.75 % 4.32 %
Annualized net charge offs to average total loans 0.01 % 0.25 % 0.36 % 0.16 %
 

Capital ratios:

Core Capital to Adjusted Tangible Assets

8.10

% 7.54 % 12.90 % 13.29 %
Total Capital to Risk-Weighted Assets

11.43

% 10.85 % 18.68 % 20.10 %
Tier I Capital to Risk-Weighted Assets

10.29

% 10.31 % 17.40 % 18.82 %
 
(1) Efficiency ratio is a non-GAAP ratio that is calculated by dividing core noninterest expense by the sum of net interest income and noninterest income. Other companies may define and calculate these data differently.
 

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED
(In thousands, except share data)
       
 
ASSETS

September 30,
2014

December 31,
2013

 
Cash and cash equivalents $ 87,586 $ 23,970
Federal funds sold 10,250 --
Interest-bearing time deposits in banks 14,660 24,118
Investment securities available for sale 190,376 70,828
Other investment securities, at cost 7,104 457
Loans receivable, net of allowance of $12,964 and $12,711, respectively 1,049,867 371,149
Loans held for sale 7,539 4,205
Accrued interest receivable 5,045 1,473
Real estate owned - net 5,542 8,627
Office properties and equipment - net 48,982 18,769
Cash surrender value of life insurance 43,132 23,811
Goodwill 25,801 --
Core deposit intangible - net 7,494 --
Deferred tax asset, net 20,426 --
Prepaid expenses and other assets   4,583     1,465  
 
TOTAL $ 1,528,387   $ 548,872  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
LIABILITIES:
Noninterest bearing deposits $ 169,962 $ 19,427
Interest bearing deposits   1,107,344     450,298  
Total deposits 1,277,306 469,725
Short term borrowings 12,081 --
Other borrowings 69,302 5,941
Other liabilities   4,279     2,019  
 
Total liabilities   1,362,968     477,685  
 
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value—5,000,000 shares authorized; none issued at September 30, 2014 and December 31, 2013 -- --
Common stock, $0.01 par value—100,000,000 and 30,000,000 shares authorized at September 30, 2014 and December 31, 2013, respectively; 30,030,344 and 20,041,497 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively 300 200
Additional paid-in capital 166,434 92,740
Accumulated other comprehensive income (loss) 479 (467 )
Accumulated deficit   (1,794 )   (21,286 )
 
Total stockholders’ equity   165,419     71,187  
 
TOTAL $ 1,528,387   $ 548,872  
 
 

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(In thousands, except earnings per share)
 
    Three Months Ended     Nine Months Ended
September 30,     September 30, September 30,     September 30,
2014 2013 2014 2013
INTEREST INCOME:
Loans receivable $ 15,390 $ 4,033 $ 25,381 $ 12,084
Investment securities:
Taxable 415 146 952 256
Nontaxable 313 290 894 896
Other   105     110   321     381
Total interest income   16,223     4,579   27,548     13,617
 
INTEREST EXPENSE:
Deposits 1,320 814 3,174 2,477
Other borrowings   247     11   334     37
 
Total interest expense   1,567     825   3,508     2,514
 
NET INTEREST INCOME 14,656 3,754 24,040 11,103
 
PROVISION FOR LOAN LOSSES   600     --   830     --
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   14,056     3,754   23,210     11,103
 
NONINTEREST INCOME:
Net gain on sales of investment securities 30 25 30 25
Deposit fee income 1,956 780 3,445 2,352
Earnings on life insurance policies 349 205 758 603
Gain on sale of loans 968 267 1,923 726
Other   328     142   497     307
 
Total noninterest income   3,631     1,419   6,653     4,013
 
NONINTEREST EXPENSES:
Salaries and employee benefits 6,261 2,836 15,795 8,232
Net occupancy expense 1,569 583 2,850 1,809
Real estate owned, net 650 133 1,458 82
FDIC insurance 249 139 494 480
Amortization of intangible assets 157 -- 183 --
Data processing 4,177 376 5,159 1,108
Professional fees 213 108 644 518
Advertising and public relations 494 71 795 215
Postage and supplies 263 91 466 308
Other   1,291     682   2,839     1,823
 
Total noninterest expenses   15,324     5,019   30,683     14,575
 
INCOME (LOSS) BEFORE INCOME TAXES 2,363 154 (820 ) 541
 
INCOME TAX PROVISION (BENEFIT)   (20,312 )   11   (20,312 )   11
 
NET INCOME $ 22,675   $ 143 $ 19,492   $ 530
 
Basic earnings per common share $ 0.76   $ 0.01 $ 0.81   $ 0.03
 
Diluted earnings per common share $ 0.75   $ 0.01 $ 0.79   $ 0.03
 
 

BEAR STATE FINANCIAL, INC.

AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED

(In thousands)

                       
Three Months Ended September 30,
2014 2013

Average
Balance

Interest

Average
Yield/
Cost

Average
Balance

Interest

Average
Yield/
Cost

(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 1,045,076 $ 15,390 5.84 % $ 359,071 $ 4,033 4.46 %
Investment securities(2) 213,813 728 1.35 61,880 436 2.80
Other interest-earning assets   50,370   105 0.83   52,580   110 0.83
Total interest-earning assets 1,309,259 16,223 4.92 473,531 4,579 3.84
Noninterest-earning assets   184,268   50,232
Total assets $ 1,493,527 $ 523,763
Interest-bearing liabilities:
Deposits $ 1,096,212 1,320 0.48 $ 427,945 814 0.76
Other borrowings   76,997   247 1.27   978   11 4.29
Total interest-bearing liabilities 1,173,209 1,567 0.53 428,923 825 0.76
Noninterest-bearing deposits 170,310 21,747
Noninterest-bearing liabilities   4,271   2,122

Total liabilities

1,347,790 452,792

Stockholders’ equity

  145,737   70,971

Total liabilities and stockholders’ equity

$ 1,493,527 $ 523,763
   
Net interest income $ 14,656 $ 3,754
Net earning assets $ 136,050 $ 44,608
Interest rate spread 4.39 % 3.08 %
Net interest margin 4.44 % 3.15 %

Ratio of interest-earning assets to Interest-bearing liabilities

111.60 % 110.40 %

(1) Includes nonaccrual loans.

(2) Includes FHLB of Dallas and Federal Reserve Bank stock.
 
                       
Nine Months Ended September 30,
2014 2013

Average
Balance

Interest

Average
Yield/
Cost

Average
Balance

Interest

Average
Yield/
Cost

(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1) $ 653,780 $ 25,381 5.19 % $ 355,757 $ 12,084 4.54 %
Investment securities(2) 131,157 1,846 1.88 54,873 1,152 2.81
Other interest-earning assets   51,728   321 0.83   70,690   381 0.72
Total interest-earning assets 836,665 27,548 4.40 481,320 13,617 3.78
Noninterest-earning assets   99,541   51,393
Total assets $ 936,206 $ 532,713
Interest-bearing liabilities:
Deposits $ 715,593 3,174 0.59 $ 434,772 2,477 0.76
Other borrowings   32,971   334 1.35   2,296   37 2.12
Total interest-bearing liabilities 748,564 3,508 0.63 437,068 2,514 0.77
Noninterest-bearing deposits 83,145 22,300
Noninterest-bearing liabilities   3,326   2,351
Total liabilities 835,035 461,719

Stockholders’ equity

  101,171   70,994

Total liabilities and stockholders’ equity

$ 936,206 $ 532,713
   
Net interest income $ 24,040 $ 11,103
Net earning assets $ 88,101 $ 44,252
Interest rate spread 3.78 % 3.01 %
Net interest margin 3.84 % 3.08 %

Ratio of interest-earning assets to Interest-bearing liabilities

 

111.77 % 110.12 %

(1) Includes nonaccrual loans.

(2) Includes FHLB of Dallas and Federal Reserve Bank stock.

 
 

BEAR STATE FINANCIAL, INC.

ASSET QUALITY ANALYSIS - UNAUDITED

(In thousands)

 
    September 30, 2014     December 31, 2013    

Net (2)

   

% Total
Assets

Net (2)

   

% Total
Assets

Increase
(Decrease)

Nonaccrual Loans:
One- to four-family residential $ 4,569 0.30 % $ 4,258 0.77 % $ 311
Nonfarm nonresidential 3,214 0.21 % 4,057 0.75 % (843 )
Farmland 737 0.05 % 782 0.15 % (45 )
Construction and land development 615 0.04 % 2,467 0.44 % (1,852 )
Commercial 316 0.02 % 350 0.06 % (34 )
Consumer   26 --     24 0.01 %   2  
 
Total nonaccrual loans 9,477 0.62 % 11,938 2.18 % (2,461 )
 
Accruing loans 90 days or more past due -- -- -- -- --
 
Real estate owned   5,542 0.36 %   8,627 1.57 %   (3,085 )
 
Total nonperforming assets 15,019 0.98 % 20,565 3.75 % (5,546 )
Performing restructured loans   571 0.04 %   494 0.09 %   77  
 
Total nonperforming assets and performing restructured loans (1) $ 15,590 1.02 % $ 21,059 3.84 % $ (5,469 )
 
(1)   The table does not include substandard loans which were judged not to be impaired totaling $15.3 million at September 30, 2014 and $2.9 million at December 31, 2013 or acquired ASC 310-30 purchased credit impaired loans which are considered performing at September 30, 2014.
(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
(in thousands)
   
For the Quarter ending
9/30/2014     6/30/2014     12/31/2013     9/30/2013
Net income available to common stockholders $ 22,675   $ (2,906 ) $ 199   $ 143  

Average common stockholders’ equity

145,737 86,613 71,764 70,971
Less Average Intangible Assets:
Goodwill (25,612 ) (4,497 ) - -
Core Deposit Intangible, net of accumulated amortization   (7,773 )   (1,512 )   -     -  
 

Average tangible common stockholders’ equity

$ 112,352   $ 80,604   $ 71,764   $ 70,971  
 

Annualized return on average tangible common stockholders’ equity

  80.1 %   -14.5 %   1.1 %   0.8 %
 
 
BEAR STATE FINANCIAL, INC.
CALCULATION OF TANGIBLE BOOK VALUE per COMMON SHARE - UNAUDITED
(in thousands, except per share data)
 
For the period ending
9/30/2014 6/30/2014 12/31/2013 9/30/2013

Total common stockholder’s equity

165,419 142,995 71,187 71,486
Less intangible assets:
Goodwill (25,801 ) (25,610 ) - -
Core Deposit Intangible, net of accumulated amortization   (7,494 )   (7,651 )   -     -  
Total intangibles   (33,295 )   (33,261 )   -     -  

Total tangible common stockholder’s equity

$ 132,124   $ 109,734   $ 71,187   $ 71,486  
 
Common Shares Outstanding   30,030     30,027     20,041     20,041  
 
Tangible book value per common share $ 4.40   $ 3.65   $ 3.55   $ 3.57  
 
 
BEAR STATE FINANCIAL, INC.
RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED
(In thousands, except share data)
                 
September June December September
2014 2014 2013 2013
Net income (loss) $ 22,675 $ (2,906 ) $ 199 $ 143
Adj: Gain on sale of securities, net (30 ) (25 )
Adj: Merger, acquisition and integration expenses 477 392 49 47
Adj: Pension plan payment 2,900
Adj: Real estate owned provision 653 618 - -
Adj. Data processing termination fees 3,035 -
Adj: Deferred tax asset valuation allowance reversal (21,142 )
Tax Effect of Adjustments           (1,583 )                  
Total core income   (A)     $ 4,085       $ 1,004       $ 248       $ 165  
 
Total revenue $ 18,287 $ 7,343 $ 5,283 $ 5,173
Adj: Gain on sale of securities, net           (30 )       -         -         (25 )
Total core revenue         $ 18,257       $ 7,343       $ 5,283       $ 5,148  
 
Total non-interest expense $ 15,324 $ 10,019 $ 5,084 $ 5,019
Less: Merger and acquisition expenses (477 ) (392 ) (49 ) (47 )
Less: Pension plan payment - (2,900 ) - -
Less: Real estate owned provision (653 ) (618 ) - -
Less: Data processing termination fees           (3,035 )                  
Core noninterest expense         $ 11,159       $ 6,109       $ 5,035       $ 4,972  
 
Total average assets (B) $ 1,493,527 $ 748,967 $ 539,926 $ 523,763

Total average stockholders’ equity

(C) 145,737 86,613 71,764 70,971

Total average tangible stockholders’ equity

(D) 112,352 80,604 71,764 70,971

Total tangible stockholders’ equity, period end

(E) 132,124 109,734 71,187 71,486
 
Total common shares outstanding, period-end (F) 30,030,344 30,026,744 20,041,497 20,041,497
Average diluted shares outstanding (G) 30,097,619 22,020,238 20,894,963 20,910,962
 
Core earnings per share, diluted (A/G) 0.14 $ 0.05 $ 0.01 $ 0.01
Tangible book value per share, period-end (E/F) $ 4.40 $ 3.65 $ 3.55 $ 3.57
 
Core return on average assets (A/B) 1.09 % 0.54 % 0.18 % 0.12 %
Core return on average equity (A/C) 11.12 % 4.65 % 1.37 % 0.92 %
Core return on tangible equity (A/D) 14.42 % 5.00 % 1.37 % 0.92 %
Efficiency ratio(1) 61.02 % 83.19 % 95.31 % 96.11 %
 
(1)   Efficiency ratio is a non-GAAP ratio that is calculated by dividing core noninterest expense by the sum of net interest income and noninterest income. Other companies may define and calculate these data differently.

Contacts

Bear State Financial, Inc.
Richard N. Massey, 501-975-6011
Chairman
or
Matt Machen, 501-975-6011
CFO

Release Summary

Bear State Financial, Inc.: Record third quarter 2014 results show substantial earnings and book value accretion from recent merger.

Contacts

Bear State Financial, Inc.
Richard N. Massey, 501-975-6011
Chairman
or
Matt Machen, 501-975-6011
CFO