Bear State’s 4Q, yearly profits off from a year ago due to big one-time tax break

Bear State Financial Inc.’s fourth quarter and yearly profits fell well short of last year’s results due to a one-tax benefit that added more than $21 million to the company’s balance sheet in 2014, bank officials said on Friday.

For the period ended Dec. 31, 2015, the Little Rock-based banking group reported earnings of $2.6 million, seven cents per share, down 46% from $4.8 million, 14 cents, in the same period a year ago. Revenues were up 28% to $21.4 million, compared to $16.7 million a year ago. Net income for the quarter included a one-time income tax benefit of $1.6 million primarily resulting from the reversal of the company’s remaining valuation allowance against its deferred tax assets, bank officials said.

For the full year of 2015, Bear State reported net income of $10.6 million, or 30 cents per share, down 56.4% from net income of $24.3 million, 84 cents per share, for the full year of 2014. Last year’s four quarter earnings included an income tax benefit of huge $21.1 million primarily resulting from the reversal of the company’s valuation allowance against its deferred tax assets.

Despite the drab earnings report, Bear State completed its previously-announced acquisition of Metropolitan National Bank of Springfield, Mo., on Oct. 1. The former First Federal Bank of Harrison said it plans to convert MNB’s systems to Bear’s core technology platform, and, subject to regulatory approval, merge MNB’s charter into Bear State Bank. In addition to the MNB integration project, the Arkansas rural banking group said it has evaluated its branch network and intends to reduce its total retail branches by up to six. Bank officials hope to complete the integration and branch consolidation project by the second quarter of 2016.

“The results for 2015 reflect Bear State Financial’s continued focus on disciplined growth and operational efficiency while further solidifying our reputation as a proven acquirer and operator. Completing the integration of three banks onto one core operating system, merging three bank charters and completing a rebrand to create Bear State Bank all while negotiating, receiving regulatory approval, and completing the acquisition of Metropolitan National Bank was an incredible achievement in one year,” said Mark McFatridge, president and CEO of Bear State Financial.

McFatridge, the former MNB CEO who took over as Bear State’s top executive following the Oct. 1 acquisition, said the community bank will continue to improve its response to customer preferences by investing in more digital and mobile banking solutions with it eye on keeping capital spending and expense in line.

“With the strength of Bear State’s unique brand and commitment to innovation, I look forward to capitalizing on the momentum we’ve built as we head into 2016,” he said.

Following are key Bear State fourth quarter highlights.
• Total assets were $1.92 billion at Dec. 31, 2015, a 27% increase from $1.51 billion in the fourth quarter of 2014. Total deposits were $1.61 billion at Dec. 31, 2015, a 27% increase from $1.26 a year ago. The increase in both assets and deposits was primarily due to the MNB acquisition, bank officials said.

• Total loans for the quarter were $1.46 billion, a 38% or $404 million gain from the period ended Dec. 31, 2014.

• Total stockholders’ equity was $223 million at Dec. 31, 2015, a 31% increase from $170 million from the same period of 2014.

• Net interest income for the fourth quarter of 2015 was $17.7 million, compared to $13.3 million for the same period in 2014. Interest expense for the fourth quarter of 2015 was $1.7 million compared to $1.6 million for the same period in 2014.

Bear State’s stock was trending upward more than 12% in Friday’s midday session as the bank shares were trading at $9.02, up 99 cents on the Nasdaq stock exchange. The Arkansas bank’s shares have traded in the range of $7.71 and $11.39 over the past 52 weeks.