1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

—

Bear State Financial, Inc. (the “Company”) is a bank holding company headquartered in Little Rock, Arkansas. Its subsidiary bank, Bear State Bank (the “Bank”), is a community oriented bank providing a broad line of financial products to individuals and business customers. As of

September 30, 2017,

the Bank operates

branches,

three

personalized technology centers equipped with interactive teller machines (“ITMs”) and

three

loan production offices throughout Arkansas, Missouri and Southeast Oklahoma. On

June 28, 2016,

the Bank converted from a national bank to an Arkansas state-chartered bank.

August 22, 2017,

the Company and

the Bank entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with Arvest Bank, an Arkansas banking corporation (“Arvest”), and Arvest Acquisition Sub, Inc., an Arkansas corporation and a wholly-owned subsidiary of Arvest (“Acquisition Sub”), pursuant to which Arvest will acquire the Company by merging Acquisition Sub with and into the Company with the Company surviving as a wholly-owned subsidiary of Arvest (the “Merger”).

Pursuant to the

Merger Agreement, each share of the Company’s common stock issued and outstanding as of the effective time of the Merger will be converted into a right to receive

$10.28

per share, payable in cash. The Merger is expected to close in the

fourth

quarter of

2017

first

quarter of

2018

and is subject to customary closing conditions, including both regulatory approval and approval by the Company’s shareholders.

Principles of Consolidation

—

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary described above. Intercompany transactions and balances have been eliminated in consolidation.

Operating Segments

—

The Company’s operations are organized on a regional basis. While the chief decision-makers monitor revenue streams of various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Each region provides a group of similar community banking products and services, including loans, time deposits, and checking and savings accounts. The individual regions have similar operating and economic characteristics and are reported as

one

aggregated operating segment.

Basis

Presentation

—

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form

-Q. Accordingly, they do

not

include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. However, such information reflects all adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Those adjusting entries consist only of normal recurring adjustments.

Certain reclassifications of prior period amounts have been made to conform with the current period presentation. These reclassifications had

impact on previously reported net income.

The results of operations for the

nine

months ended

September 30, 2017

are

not

necessarily indicative of the results to be expected for the year ending

December 31, 2017.

The unaudited condensed consolidated financial statements of the Company and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended

December

31,

2016,

contained in the Company’s

2016

Annual Report on Form

-K as filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet of the Company as of

December 31, 2016,

included herein has been derived from the audited consolidated balance sheet of the Company as of that date.