ex99-1.htm

EX-99.1 2 ex99-1.htm EXHIBIT 99.1 ex99-1.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

900 S. Shackleford, Suite 401

Little Rock, AR 72211

FOR FURTHER INFORMATION CONTACT:

Mark McFatridge | CEO

Matt Machen | CFO

501.975.6011

Bear State Financial, Inc. Announces Third Quarter 2015 Earnings

QUARTER HIGHLIGHTS:

●

Third quarter 2015 GAAP net income was $3.2 million or $0.10 per diluted common share, compared to GAAP net income of $22.7 million or $0.68 per diluted common share for the third quarter of 2014. Net income for the third quarter of 2014 included a non-recurring income tax benefit of $20.3 million.

●

Third quarter 2015 GAAP pre-tax earnings were $4.7 million compared to pre-tax earnings of $2.4 million in the third quarter of 2014.

●

Book value per common share was $5.36 at September 30, 2015, an 8% increase from $4.96 at September 30, 2014.

●

Tangible book value per common share was $4.38 at September 30, 2015, an 11% increase from $3.96 at September 30, 2014.

●

Bear State Financial, Inc. completed its acquisition of Metropolitan National Bank (Springfield, MO) on October 1, 2015.

Little Rock, AR – November 5, 2015 – Bear State Financial, Inc. (the “Company,” NASDAQ: BSF), today reported earnings of $3.2 million and earnings per diluted common share of $0.10 in the third quarter of 2015, compared to earnings of $22.7 million or $0.68 per diluted common share in the third quarter of 2014. Net income for the third quarter of 2014 included a non-recurring income tax benefit of $20.3 million primarily resulting from the reversal of the Company’s valuation allowance against its deferred tax assets. Pre-tax income for the third quarter of 2015 was $4.7 million compared to pre-tax income of $2.4 million in the third quarter of 2014.

On October 1, 2015, the Company completed its previously-announced acquisition of Metropolitan National Bank (Springfield, MO) (“MNB”). In connection with and effective upon the MNB acquisition, Mark McFatridge, CEO of MNB, was appointed President and CEO of the Company and Bear State Bank, N.A., the Company’s wholly-owned bank subsidiary (“Bear State Bank”). In addition, McFatridge and John Ghirardelli, a member of the Board of Directors of MNB, were also elected to the respective Boards of Directors of the Company and Bear State Bank.

The Company plans to convert MNB systems to its core technology platform, and, subject to regulatory approval, consolidate its two banking charters to a single charter. The Company anticipates the conversion and charter consolidation to be substantially completed by the second quarter of 2016.

As of September 30, 2015, MNB had approximately $455 million of total assets, $370 million of net loans and $370 million of deposits. Following the consummation of the MNB acquisition on October 1, 2015, the Company and its consolidated subsidiaries will have approximately $2 billion in total assets, 55 total branches (41 branches throughout Arkansas, 2 branches in Southeast Oklahoma and 12 branches in Southwest Missouri) and three loan production offices in Arkansas and one in Missouri.

“This is a great time to be with Bear State Financial,” said Mark McFatridge, CEO. “Bear State continues to build on our strong foundation while making solid progress in achieving our goals with respect to improved operational efficiency. Our teams are working diligently toward making the integration of Metropolitan National Bank a non-event for our customers. Additionally, we continue to invest in systems and processes that will allow us to facilitate a simpler and more responsive operational environment in order to realize efficiencies that will benefit our organization long term.”

FINANCIAL CONDITION

Total assets were $1.47 billion at September 30, 2015, a 4% decrease compared to $1.53 billion at September 30, 2014. Total deposits were $1.21 billion at September 30, 2015, a 5% decrease compared to $1.28 billion at September 30, 2014. The decrease in deposits is due, in part, to management’s efforts to reduce unprofitable to marginally profitable accounts and more efficiently manage its deposit base. Total loans were $1.08 billion at September 30, 2015, an increase of $14 million, or 1%, from September 30, 2014. While loan opportunities are abundant in the Company’s markets, management has deliberately chosen not to pursue a majority of these opportunities due to unacceptable levels of rate and/or credit risk.

Total stockholders’ equity was $179 million at September 30, 2015, an 8% increase from $165 million at September 30, 2014. Tangible common stockholders’ equity was $146 million at September 30, 2015, an 11% increase from $132 million at September 30, 2014. Book value per common share was $5.36 at September 30, 2015, an 8% increase from $4.96 at September 30, 2014. Tangible book value per common share was $4.38 at September 30, 2015, an 11% increase from $3.96 at September 30, 2014. The Company’s ratio of total stockholders’ equity to total assets increased to 12.15% at September 30, 2015, compared to 10.82% at September 30, 2014. 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

Third quarter 2015 core earnings totaled $3.3 million or $0.10 per diluted common share, compared to core earnings of $4.1 million or $0.12 per diluted common share in the third quarter of 2014. The core return on average assets measured 0.90% and 1.09%; core return on average equity measured 7.41% and 11.12%; and core return on average tangible equity measured 9.07% and 14.42%, each for the third quarters of 2015 and 2014, respectively.

Pre-tax income on a GAAP basis for the third quarter of 2015 was $4.7 million compared to pre-tax income on a GAAP basis of $2.4 million in the third quarter of 2014. The Company recognized third quarter 2015 GAAP net income of $3.2 million or $0.10 per diluted common share compared to GAAP net income of $22.7 million or $0.68 per diluted common share in the third quarter of 2014. The GAAP net income resulted in a GAAP return on average assets of 0.87% in the third quarter of 2015, compared to 6.02% in the third quarter of 2014. GAAP net income 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 reconciliation of GAAP net income and core earnings, a non-GAAP financial measure, together with related financial measures and ratios is included in the schedules accompanying this release.

Net interest income for the third quarter of 2015 was $12.2 million, compared to $14.7 million for the same period in 2014. Net interest income for the nine months ended September 30, 2015 was $36.8 million, compared to $24 million for the same period in 2014. Interest income for the third quarter of 2015 was $13.7 million compared to $16.2 million for the same period in 2014. Interest income for the nine months ended September 30, 2015 was $41.4 million compared to $27.5 million for the same period in 2014. The increase in interest income for the nine months ended September 30, 2015, compared to the same period in 2014, was primarily related to increases in the average balances of loans receivable and investment securities as a result of the merger with First National Security Company (“First National”) on June 13, 2014. Interest expense for the third quarter of 2015 was $1.5 million compared to $1.6 million for the same period in 2014. Interest expense for the nine months ended September 30, 2015 was $4.6 million compared to $3.5 million for the same period in 2014. The increase in interest expense for the nine months ended September 30, 2015 compared to the same period in 2014 was primarily due to an increase in the average balance of deposit accounts and borrowings as a result of the First National merger.

Net interest margin measured 3.74% for the third quarter 2015, compared to 4.44% for the same period in 2014. Net interest margin for the nine months ended September 30, 2015 was 3.76%, compared to 3.84% for the same period in 2014. Average cost of total interest-bearing liabilities for the nine months ended September 30, 2015 was 0.55%, compared to 0.63% for the same period 2014.

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 $3.3 million for the three months ended September 30, 2015 decreased from $3.6 million for the same period in 2014, a 9% decrease. Total noninterest income of $9.8 million for the nine months ended September 30, 2015 increased from $6.7 million for the same period in 2014, a 48% increase. The increase in the nine month comparison period was primarily due to an increase in deposit fee income and gain on sale of loans. The increase in deposit fee income was primarily due to an increase in deposit accounts resulting from the merger with First National. The increase in gain on sale of loans was due to an increase in the number of and the average profit on mortgage loans sold.

Total noninterest expense decreased $4.9 million or 32% during the third quarter of 2015 compared to the third quarter of 2014. The variance in total noninterest expense for the three month period ended September 30, 2015 compared to the same period in 2014 was primarily the result of a decrease of approximately $4.1 million in non-core expenses incurred during the third quarter of 2014 and a benefit from expense savings following the Company’s consolidation of its three subsidiary banks into a single charter during the first quarter of 2015. Total noninterest expense increased $3.3 million or 11% during the nine months ended September 30, 2015 compared to the same period in 2014. The variance in total noninterest expense for the nine months ended September 30, 2015 compared to the same period in 2014 was primarily related to the increase in personnel and overhead costs resulting from the merger with First National. The Company’s core efficiency ratio was 66% in the third quarter of 2015 compared to 61% in the third quarter of 2014.

Nonperforming assets increased to $19.1 million at September 30, 2015, compared to $15.0 million at September 30, 2014. The increase in nonperforming assets is primarily attributable to a single relationship that management has been actively monitoring. The Company anticipates a resolution of this matter within the next six months and management believes that reserves adequately reflect its estimated loss exposure. The allowance for loan losses represented 1.30% of total loans at September 30, 2015, compared to 1.22% at September 30, 2014. The ratio of allowance for loan losses plus discount on acquired loans to total loans was 1.97% at September 30, 2015, compared to 2.52% at September 30, 2014. The ratio of the allowance for loan losses to nonperforming loans was 83.18% at September 30, 2015, compared to 136.79% at September 30, 2014. Annualized net charge-offs as a percentage of average loans for the quarter ended September 30, 2015 was 0.08% compared to 0.01% for the quarter ended September 30, 2014. Provision for loan losses in the third quarter of 2015 was $331,000, compared to $600,000 for the same period in 2014. Provision for loans losses for the nine months ended September 30, 2015 was $931,000, compared to $830,000 for the same period in 2014.

About Bear State Financial, Inc.

Bear State Financial, Inc. is the parent company for Bear State Bank, and effective October 1, 2015, for Metropolitan National Bank. Bear State Financial 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 subsidiaries are community oriented financial institutions providing a broad line of financial products to individuals and business customers. Bear State Bank operates 43 branches and three loan production offices throughout Arkansas and Southeast Oklahoma. Metropolitan National Bank operates 12 branches and one loan production office in Southwest Missouri.

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; 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, 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. 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 due to the importance of these non-GAAP 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, including, without limitation, statements regarding the integration of MNB and the consolidation of the MNB and Bear State Bank charters. 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,” “anticipate,” “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 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 and MNB’s pricing, products and services, and with respect to the loans extended by Bear State Bank and MNB 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, except share data)

	September			June			March			December			September
	2015			2015			2015			2014			2014

Balance sheet data, at quarter end:
Commercial real estate - mortgage loans	$	401,044		$	378,878		$	388,043		$	415,155		$	423,925
Consumer real estate - mortgage loans		309,951			307,183			315,082			320,254			318,508
Farmland		53,192			48,058			50,244			47,199			48,892
Construction and land development		93,688			103,094			100,918			98,594			89,165
Commercial and industrial loans		186,772			185,266			152,913			139,871			149,073
Consumer and other		32,428			32,455			32,613			33,809			33,268
Total loans		1,077,075			1,054,934			1,039,813			1,054,882			1,062,831
Allowance for loan losses		(13,975	)		(13,854	)		(13,762	)		(13,660	)		(12,964	)
Investment securities		164,564			182,525			176,599			174,218			190,376
Goodwill		25,717			25,717			25,717			25,717			25,801
Core deposit intangible, net		6,869			7,026			7,182			7,338			7,494
Total assets		1,470,725			1,451,281			1,477,597			1,514,595			1,528,387
Noninterest-bearing deposits		173,525			168,225			176,924			180,136			169,962
Total deposits		1,209,176			1,208,800			1,236,258			1,263,797			1,277,306
Short term borrowings		10,366			3,530			5,576			12,083			12,081
FHLB advances		49,457			41,591			38,936			43,095			49,783
Other borrowings		18,843			18,450			18,706			18,163			19,519
Total stockholders' equity		178,670			174,831			173,128			170,454			165,419

Balance sheet data, quarterly averages:
Total loans	$	1,077,500		$	1,059,235		$	1,045,946		$	1,059,636		$	1,045,076
Investment securities		180,831			189,285			183,857			183,735			213,813
Total earning assets		1,294,619			1,294,523			1,325,125			1,350,646			1,309,259
Goodwill		25,717			25,717			25,717			25,773			25,612
Core deposit intangible, net		6,972			7,127			7,284			7,441			7,773
Total assets		1,466,342			1,468,521			1,504,716			1,525,455			1,493,527
Noninterest-bearing deposits		176,219			173,248			175,457			178,286			170,310
Interest-bearing deposits		1,036,330			1,055,200			1,072,255			1,106,867			1,096,212
Total deposits		1,212,549			1,228,448			1,247,712			1,285,153			1,266,522
Short term borrowings		6,166			4,481			11,902			11,992			14,763
FHLB Advances		47,614			38,625			50,206			37,942			47,559
Other borrowings		18,641			18,564			18,482			19,552			14,675
Total stockholders' equity		177,824			175,025			172,811			166,793			145,737

Statement of operation data for the three months ended:
Interest income	$	13,749		$	13,523		$	14,106		$	14,945		$	16,223
Interest expense		1,529			1,563			1,528			1,627			1,567
Net interest income		12,220			11,960			12,578			13,318			14,656
Provision for loan losses		331			300			300			758			600
Net interest income after provision for loan losses		11,889			11,660			12,278			12,560			14,056
Noninterest income		3,318			3,397			3,111			3,382			3,631
Noninterest expense		10,465			11,273			12,237			11,387			15,324
Income before taxes		4,742			3,784			3,152			4,555			2,363
Income tax expense		1,529			1,253			885			(259	)		(20,312	)
Net income	$	3,213		$	2,531		$	2,267		$	4,814		$	22,675

BEAR STATE FINANCIAL, INC.

SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED

(In thousands, except share data)

	September			June			March			December			September
	2015			2015			2015			2014			2014

Common stock data:
Core earnings per share, diluted	$	0.10		$	0.09		$	0.08		$	0.10		$	0.12
Net income per share, diluted	$	0.10		$	0.08		$	0.07		$	0.14		$	0.68
Tangible book value per share	$	4.38		$	4.26		$	4.20		$	4.12		$	3.96
Book value per share	$	5.36		$	5.24		$	5.19		$	5.11		$	4.96
Diluted weighted average shares outstanding		33,497,298			33,521,490			33,551,776			33,508,230			33,432,486
End of period shares outstanding		33,349,512			33,375,753			33,375,753			33,365,845			33,366,345

Profitability and performance ratios:
Core return on average assets		0.90	%		0.79	%		0.76	%		0.89	%		1.09	%
Return on average assets		0.87	%		0.69	%		0.61	%		1.25	%		6.02	%
Core return on average equity		7.41	%		6.65	%		6.58	%		8.16	%		11.12	%
Core return on average tangible equity		9.07	%		8.18	%		8.14	%		10.19	%		14.42	%
Return on average equity		7.17	%		5.80	%		5.32	%		11.45	%		61.73	%
Net interest margin		3.74	%		3.71	%		3.85	%		3.91	%		4.44	%
Noninterest income to total revenue		21.35	%		22.12	%		19.83	%		20.25	%		19.86	%
Noninterest income to average assets		0.90	%		0.93	%		0.84	%		0.88	%		0.96	%
Noninterest expense to average assets		2.83	%		3.08	%		3.30	%		2.96	%		4.07	%
Efficiency ratio(1)		66.24	%		69.51	%		71.88	%		66.54	%		61.02	%
Average loans to average deposits		88.86	%		86.23	%		83.83	%		82.45	%		82.52	%
Securities to total assets		11.19	%		12.58	%		11.95	%		11.50	%		12.46	%

Asset quality ratios:
Allowance for loan losses to total loans		1.30	%		1.31	%		1.32	%		1.29	%		1.22	%
Allowance for loan losses to non-performing loans		83.18	%		134.94	%		138.60	%		139.82	%		136.79	%
Nonperforming loans to total loans		1.56	%		0.97	%		0.95	%		0.93	%		0.89	%
Nonperforming assets to total assets		1.30	%		0.94	%		0.99	%		0.96	%		0.98	%
Annualized net charge offs to average total loans		0.08	%		0.08	%		0.08	%		0.22	%		0.01	%

Regulatory capital ratios:
Tier 1 leverage ratio		9.83	%		9.54	%		8.96	%		8.29	%		8.11	%
Common equity tier 1 capital ratio		11.77	%		11.59	%		11.39	%	N/A			N/A
Tier 1 capital to risk weighted assets		11.77	%		11.59	%		11.39	%		10.89	%		10.31	%
Total capital to risk weighted assets		12.94	%		12.77	%		12.58	%		12.11	%		11.45	%

(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 this data differently.

BEAR STATE FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - UNAUDITED

(In thousands, except share data)

	September 30, 2015		December 31, 2014
ASSETS

Cash and cash equivalents	$	58,746	$	113,086
Interest-bearing time deposits in banks		10,930		12,421
Investment securities available for sale		164,564		174,218
Other investment securities, at cost		8,197		5,864
Loans receivable, net of allowance of $13,975 and $13,660, respectively		1,063,100		1,041,222
Loans held for sale		8,032		6,409
Accrued interest receivable		5,020		4,485
Real estate owned - net		2,290		4,792
Office properties and equipment - net		51,768		50,332
Cash surrender value of life insurance		45,998		44,130
Goodwill		25,717		25,717
Core deposit intangible - net		6,869		7,338
Deferred tax asset, net		17,121		20,697
Prepaid expenses and other assets		2,373		3,884

TOTAL	$	1,470,725	$	1,514,595

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES:
Noninterest bearing deposits	$	173,525	$	180,136
Interest bearing deposits		1,035,651		1,083,661
Total deposits		1,209,176		1,263,797
Short term borrowings		10,366		12,083
Other borrowings		68,300		61,258
Other liabilities		4,213		7,003

Total liabilities		1,292,055		1,344,141

STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value—5,000,000 shares authorized; none issued at September 30, 2015 and December 31, 2014		--		--
Common stock, $0.01 par value—100,000,000 shares authorized; 33,349,512 and 33,365,845 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		333		334
Additional paid-in capital		169,570		169,543
Accumulated other comprehensive income		753		577
Retained earnings		8,014		--

Total stockholders’ equity		178,670		170,454

TOTAL	$	1,470,725	$	1,514,595

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,
	2015			2014			2015			2014
INTEREST INCOME:
Loans receivable	$	12,829		$	15,390		$	38,610		$	25,381
Investment securities:
Taxable		337			272			979			777
Nontaxable		516			456			1,546			1,069
Other		67			105			243			321
Total interest income		13,749			16,223			41,378			27,548

INTEREST EXPENSE:
Deposits		1,265			1,320			3,853			3,174
Other borrowings		264			247			767			334

Total interest expense		1,529			1,567			4,620			3,508

NET INTEREST INCOME		12,220			14,656			36,758			24,040

PROVISION FOR LOAN LOSSES		331			600			931			830

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		11,889			14,056			35,827			23,210

NONINTEREST INCOME:
Net gain on sales of investment securities		--			30			88			30
Deposit fee income		1,926			1,956			5,569			3,445
Earnings on life insurance policies		357			349			1,096			758
Gain on sale of loans		833			968			2,359			1,923
Other		202			328			715			497

Total noninterest income		3,318			3,631			9,827			6,653

NONINTEREST EXPENSES:
Salaries and employee benefits		5,518			6,261			17,521			15,864
Net occupancy expense		1,475			1,569			4,273			2,850
Real estate owned, net		(341	)		650			(431	)		1,458
Amortization of intangible assets		156			157			469			183
Data processing		1,103			4,177			3,814			5,159
Professional fees		133			213			616			644
Advertising and public relations		510			494			1,764			795
Postage and supplies		244			263			809			466
Other		1,667			1,540			5,138			3,264

Total noninterest expenses		10,465			15,324			33,973			30,683

INCOME (LOSS) BEFORE INCOME TAXES		4,742			2,363			11,681			(820	)

INCOME TAX PROVISION (BENEFIT)		1,529			(20,312	)		3,667			(20,312	)

NET INCOME	$	3,213		$	22,675		$	8,014		$	19,492

Basic earnings per common share	$	0.10		$	0.68		$	0.24		$	0.73

Diluted earnings per common share	$	0.10		$	0.68		$	0.24		$	0.71

BEAR STATE FINANCIAL, INC.

AVERAGE CONSOLIDATED BALANCE SHEETS and NET INTEREST ANALYSIS - UNAUDITED

(In thousands)

	Three Months Ended September 30,
	2015							2014
	Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1)	$	1,077,500	$	12,829		4.72	%	$	1,045,076	$	15,390		5.84	%
Investment securities(2)		180,831		853		1.87			213,813		728		1.35
Other interest-earning assets		36,288		67		0.73			50,370		105		0.83
Total interest-earning assets		1,294,619		13,749		4.21			1,309,259		16,223		4.92
Noninterest-earning assets		171,723							184,268
Total assets	$	1,466,342						$	1,493,527
Interest-bearing liabilities:
Deposits	$	1,036,330		1,265		0.48		$	1,096,212		1,320		0.48
Other borrowings		72,421		264		1.45			76,997		247		1.27
Total interest-bearing liabilities		1,108,751		1,529		0.55			1,173,209		1,567		0.53
Noninterest-bearing deposits		176,219							170,310
Noninterest-bearing liabilities		3,548							4,271
Total liabilities		1,288,518							1,347,790
Stockholders' equity		177,824							145,737
Total liabilities and stockholders' equity	$	1,466,342						$	1,493,527

Net interest income			$	12,220						$	14,656
Net earning assets	$	185,868						$	136,050
Interest rate spread						3.66	%						4.39	%
Net interest margin						3.74	%						4.44	%
Ratio of interest-earning assets to Interest-bearing liabilities						116.76	%						111.60	%

	Nine Months Ended September 30,
	2015							2014
	Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1)	$	1,062,552	$	38,610		4.86	%	$	653,780	$	25,381		5.19	%
Investment securities(2)		184,648		2,525		1.83			131,157		1,846		1.88
Other interest-earning assets		58,988		243		0.55			51,728		321		0.83
Total interest-earning assets		1,306,188		41,378		4.24			836,665		27,548		4.40
Noninterest-earning assets		173,547							99,541
Total assets	$	1,479,735						$	936,206
Interest-bearing liabilities:
Deposits	$	1,054,412		3,853		0.49		$	715,593		3,174		0.59
Other borrowings		71,530		767		1.43			32,971		334		1.35
Total interest-bearing liabilities		1,125,942		4,620		0.55			748,564		3,508		0.63
Noninterest-bearing deposits		175,028							83,145
Noninterest-bearing liabilities		3,508							3,326
Total liabilities		1,304,478							835,035
Stockholders' equity		175,257							101,171
Total liabilities and stockholders' equity	$	1,479,735						$	936,206

Net interest income			$	36,758						$	24,040
Net earning assets	$	180,246						$	88,101
Interest rate spread						3.69	%						3.78	%
Net interest margin						3.76	%						3.84	%
Ratio of interest-earning assets to Interest-bearing liabilities						116.01	%						111.77	%

(1) Includes nonaccrual loans.

(2) Includes FHLB and FRB stock.

BEAR STATE FINANCIAL, INC.

ASSET QUALITY ANALYSIS - UNAUDITED

(In thousands)

	September 30, 2015					December 31, 2014
	Net (2)		% Total Assets			Net (2)		% Total Assets			Increase (Decrease)
Nonaccrual Loans:
One- to four-family residential	$	5,698		0.39	%	$	4,959		0.33	%	$	739
Nonfarm nonresidential		6,023		0.41	%		3,113		0.21	%		2,910
Farmland		735		0.05	%		734		0.05	%		1
Construction and land development		682		0.04	%		624		0.04	%		58
Commercial		3,518		0.24	%		306		0.02	%		3,212
Consumer		144		0.01	%		34		--			110

Total nonaccrual loans		16,800		1.14	%		9,770		0.65	%		7,030

Accruing loans 90 days or more past due		--		--			353		0.02	%		(353	)

Real estate owned		2,290		0.16	%		4,792		0.31	%		(2,502	)

Total nonperforming assets		19,090		1.30	%		14,915		0.98	%		4,175
Performing restructured loans		287		0.02	%		566		0.04	%		(279	)

Total nonperforming assets and performing restructured loans (1)	$	19,377		1.32	%	$	15,481		1.02	%	$	3,896

(1)

The table does not include substandard loans which were judged not to be impaired totaling $18.1 million at September 30, 2015 and $24.9 million at December 31, 2014 or acquired ASC 310-30 purchased credit impaired loans which are considered performing at September 30, 2015.

(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
	9/30/2015			6/30/2015			3/31/2015			12/31/2014			9/30/2014
Net income available to common stockholders	$	3,213		$	2,531		$	2,267		$	4,814		$	22,675
Average common stockholders' equity		177,824			175,025			172,811			166,793			145,737
Less Average Intangible Assets:
Goodwill		(25,717	)		(25,717	)		(25,717	)		(25,773	)		(25,612	)
Core Deposit Intangible, net of accumulated amortization		(6,972	)		(7,127	)		(7,284	)		(7,441	)		(7,773	)

Average tangible common stockholders' equity	$	145,135		$	142,181		$	139,810		$	133,579		$	112,352

Annualized return on average tangible common stockholders' equity		8.8	%		7.1	%		6.6	%		14.3	%		80.1	%

BEAR STATE FINANCIAL, INC.

CALCULATION OF RATIO OF TANGIBLE BOOK VALUE PER COMMON SHARE - UNAUDITED

(In thousands, except share data)

	For the Period Ending
	9/30/2015			6/30/2015			3/31/2015			12/31/2014			9/30/2014
Total common stockholder's equity		178,670			174,831			173,128			170,454			165,419
Less intangible assets:
Goodwill		(25,717	)		(25,717	)		(25,717	)		(25,717	)		(25,801	)
Core Deposit Intangible, net of accumulated amortization		(6,869	)		(7,026	)		(7,182	)		(7,338	)		(7,494	)
Total intangibles		(32,586	)		(32,743	)		(32,899	)		(33,055	)		(33,295	)
Total tangible common stockholder's equity	$	146,084		$	142,088		$	140,229		$	137,399		$	132,124

Common Shares Outstanding		33,350			33,376			33,376			33,366			33,366

Tangible book value per common share	$	4.38		$	4.26		$	4.20		$	4.12		$	3.96

BEAR STATE FINANCIAL, INC.

RECONCILIATION OF NON-GAAP SELECTED CONSOLIDATED FINANCIAL DATA - UNAUDITED

(In thousands, except share data)

		As of and for the quarter ended
		September 30,			June 30,			March 31,			December 31,			September 30,
		2015			2015			2015			2014			2014
Net income (loss)		$	3,213		$	2,531		$	2,267		$	4,814		$	22,675
Adj: Gain on sale of securities, net			-			-			(88	)		(1	)		(30	)
Adj: Merger, acquisition and integration expenses			166			441			565			55			477
Adj: Rebranding expenses			6			158			395			219
Adj: Pension plan payment
Adj: Real estate owned provision			-			-			-			-			653
Adj. Data processing termination fees															3,035
Adj: Deferred tax asset valuation allowance reversal												(1,550	)		(21,142	)
Tax Effect of Adjustments			(66	)		(229	)		(334	)		(105	)		(1,583	)
Total core income	(A)	$	3,319		$	2,901		$	2,805		$	3,432		$	4,085

Total revenue		$	15,538		$	15,357		$	15,689		$	16,700		$	18,287
Adj: Gain on sale of securities, net			-			-			(88	)		(1	)		(30	)
Total core revenue		$	15,538		$	15,357		$	15,601		$	16,699		$	18,257

Total non-interest expense		$	10,465		$	11,273		$	12,237		$	11,387		$	15,324
Less: Merger, acquisition and integration expenses			(166	)		(441	)		(565	)		(55	)		(477	)
Less: Rebranding Expenses			(6	)		(158	)		(395	)		(219	)		-
Less: Pension plan payment			-			-			-			-			-
Less: Real estate owned provision			-			-			-			-			(653	)
Less: Data processing termination fees			-			-			-			-			(3,035	)
Core noninterest expense		$	10,293		$	10,674		$	11,277		$	11,113		$	11,159

Total average assets	(B)	$	1,466,342		$	1,468,521		$	1,504,716		$	1,525,455		$	1,493,527
Total average stockholders' equity	(C)		177,824			175,025			172,811			166,793			145,737
Total average tangible stockholders' equity	(D)		145,135			142,181			139,810			133,579			112,352
Total tangible stockholders' equity, period end	(E)		146,084			142,088			140,229			137,399			132,124

Total common shares outstanding, period-end	(F)		33,349,512			33,375,753			33,375,753			33,365,845			33,366,345
Average diluted shares outstanding	(G)		33,497,298			33,521,490			33,551,776			33,508,230			33,432,486

Core earnings per share, diluted	(A/G)		0.10			0.09			0.08			0.10		$	0.12
Tangible book value per share, period-end	(E/F)	$	4.38		$	4.26		$	4.20		$	4.12		$	3.96

Core return on average assets	(A/B)		0.90	%		0.79	%		0.76	%		0.89	%		1.09	%
Core return on average equity	(A/C)		7.41	%		6.65	%		6.58	%		8.16	%		11.12	%
Core return on average tangible equity	(A/D)		9.07	%		8.18	%		8.14	%		10.19	%		14.42	%
Efficiency ratio(1)			66.24	%		69.51	%		71.88	%		66.54	%		61.02	%