1 6.	CONTINGENCIES

The Company

is a defendant in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is

not

expected to have a material adverse effect on the consolidated financial statements of the Company.

However,

three

shareholder lawsuits have been filed against the Company in connection with the proposed Merger with Arvest. The

first

action,

Owens and Hurliman v. Massey, et al

, Case

No.

60CV

5022,

is a putative class action that was

first

filed on

September 11, 2017

in the Circuit Court of Pulaski County, Arkansas. An amended complaint was filed on

October 13, 2017,

and the action was removed to the United States District Court for the Eastern District of Arkansas on

November 1, 2017.

The complaint names the individual members of the Company board, as well as BSF Holdings, as defendants. The complaint generally alleges, among other things, that members of the Company board breached their fiduciary duties to the Company’s shareholders by (i) agreeing to sell the Company for an inadequate price, (ii) agreeing to inappropriate deal protection provisions in the merger agreement that

may

preclude the Company from soliciting any potential acquirers and limit the ability of the Company board to engage in discussions or negotiations for superior acquisition proposals, and (iii) disseminating a proxy statement that is materially incomplete and misleading. The complaint also alleges that Richard Massey and BSF Holdings, in their capacities as shareholders of the Company, breached fiduciary duties owed by them to the minority shareholders of the Company. The complaint seeks certification by the court as a shareholders’ class action, approval of the plaintiffs as proper plaintiff class representatives, injunctive relief enjoining the defendants from consummating the merger unless and until the Company (a) adopts and implements a procedure or process to obtain a merger agreement providing the best possible terms for shareholders and (b) supplements its proxy disclosure (or, in the event the merger is consummated, rescinding the merger or awarding rescissory damages). The complaint also seeks to recover costs and disbursement from the defendants, including attorneys’ fees and experts’ fees.

The

second

action,

Reichert v. Bear State Financial, Inc., et al

, Case

No.

4:17

-cv-

654,

was filed on

October 11, 2017

in the United States District Court for the Eastern District of Arkansas. The

third

action,

Parshall v. Bear State Financial, Inc., et al

, Case

No.

4:17

-cv-

669,

is a putative class action filed on

October 13, 2017

in the United States District Court for the Eastern District of Arkansas. The

Reichert

complaint names the Company and the individual members of the Company’s board as defendants. The

Parshall

complaint names the Company, the Bank, the individual members of the Company board and Arvest and Acquisition Sub as defendants. The

Reichert

and

Parshall

complaints generally allege, among other things, that defendants violated Sections

(a) and

(a) of the Securities Exchange Act of

1934

(the “Exchange Act”) by disseminating materially deficient and misleading disclosures in the proxy statement dated

October 5, 2017

relating to the proposed Merger. The

Reichert

and

Parshall

complaints seek injunctive relief enjoining the defendants from consummating the Merger unless and until the Company discloses the material information identified in the complaints. The complaints also seek to recover rescissory damages against the defendants and costs associated with bringing the actions, including attorneys’ fees and experts’ fees.

The Company believes these allegations are without merit and intends to defend vigorously against these allegations. At this time, the Company is unable to state whether the likelihood of an unfavorable outcome of the lawsuits is probable or remote. The Company is also unable to provide an estimate of the range or amount of potential loss if the outcome should be unfavorable