<PAGE>
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Exchange Act
For the transition period from ______ to ______
Commission file number: 0-23525
NORTH ARKANSAS BANCSHARES, INC.
-------------------------------
(Exact Name of Small Business Issuer
as Specified in its Charter)
Tennessee 71-0800742
--------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
200 Olivia Drive, Newport, Arkansas 72112
-----------------------------------------
(Address of Principal Executive Offices)
(870) 523-3611
--------------
Registrant's Telephone Number, Including Area Code
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the pre-
ceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
As of May 14, 1999, the issuer had 333,300 shares of Common
Stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
<PAGE>
<PAGE>
CONTENTS
PART I. FINANCIAL INFORMATION
- - -----------------------------
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as
of March 31, 1999 (unaudited) and
June 30, 1998. . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three
and Nine Months Ended March 31, 1999 and 1998
(unaudited). . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
Nine Months Ended March 31, 1999 and 1998
(unaudited). . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . .12
Item 2. Changes in Securities and Use of Proceeds. . . . . . .12
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . .12
Item 4. Submissions of Matters to a Vote of Security Holders .12
Item 5. Other Information. . . . . . . . . . . . . . . . . . .12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . .12
SIGNATURES
This Form 10-QSB contains forward-looking statements consisting
of estimates or predictions concerning future operations with
respect to the financial condition, results of operations and
other business of North Arkansas Bancshares, Inc. that are
subject to various factors which could cause actual results to
differ materially from those estimates. Such statements are
based on management's beliefs or interpretations of information
currently available. Factors which could influence the
estimates include changes in the national, regional and local
market conditions, legislative and regulatory conditions and an
adverse interest rate environment. In addition, the Year 2000
issue is extremely complex and compliance failures on the part
of third parties that are outside the control of the Company,
could have a material adverse impact on future operating
results.
2<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Financial Condition
March 31, 1999 and June 30, 1998
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
------------- ----------
(Audited)
Assets
------
<S> <C> <C>
Cash and amounts due from banks, includes interest
bearing deposits of $378,601 and $1,167,778 at
March 31, 1999 and June 30, 1998, respectively $ 613,502 $ 2,094,104
Certificates of deposit with other financial
institutions 2,298,000 1,990,000
Investment securities held-to-maturity, at cost 13,673,261 11,243,627
Loans receivable, net 27,366,666 25,592,938
Real estate owned, net 387,078 535,700
Office properties and equipment, net 1,458,957 1,623,226
Accrued interest receivable 282,015 313,422
Other assets 146,994 295,608
----------- ------------
Total assets $46,226,473 $ 43,688,625
=========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
Deposits $34,663,078 $ 34,270,664
Federal Home Loan Bank advances 6,437,779 3,969,525
Other liabilities 184,029 122,202
----------- ------------
Total liabilities 41,284,886 38,362,391
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $0.01 par value per share,
3,000,000 shares authorized, no shares issued
or outstanding $ -- $ --
Common stock, $0.01 par value per share 9,000,000
shares authorized, 333,300 and 370,300 shares
issued and outstanding at March 31, 1999 and
June 30, 1998, respectively 3,333 3,703
Additional paid-in capital 2,885,018 3,298,267
Retained earnings - substantially restricted 2,319,852 2,290,880
Loan to employee stock ownership plan (266,616) (266,616)
----------- ------------
Total stockholders' equity 4,941,587 5,326,234
----------- ------------
Total liabilities and stockholders'
equity $46,226,473 $ 43,688,625
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
3<PAGE>
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Operations
For the Three and Nine Months Ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- -------------------
1999 1998 1999 1998
----- ------ ------ ------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $498,818 $544,771 $1,538,213 $1,549,456
Deposits in other financial
institutions 68,305 70,379 181,709 115,067
Mortgage-backed securities 166,957 102,642 520,623 259,869
Investment securities 28,980 20,927 87,076 39,826
-------- -------- ---------- ----------
Total interest income 763,060 738,719 2,327,621 1,964,218
-------- -------- ---------- ----------
Interest expense:
Deposits 418,631 413,990 1,273,246 1,197,503
Federal Home Loan advances 91,173 17,116 256,605 40,415
-------- -------- ---------- ----------
Total interest expense 509,804 431,106 1,529,851 1,237,918
-------- -------- ---------- ----------
Net interest income 253,256 307,613 797,770 726,300
Provision for loan losses 2,000 132,923 7,887 133,856
-------- -------- ---------- ----------
Net interest income after provision 251,256 174,690 789,883 592,444
Non-interest income - other 24,544 30,234 142,730 117,661
Non-interest expenses:
Salaries and employee benefits 126,102 102,132 349,580 296,791
Contribution Expense-ESOP 7,404 0 22,212 0
Legal and professional fees 70,247 35,582 100,134 58,072
Data processing fees 31,606 20,046 94,199 71,367
Federal insurance expense 11,374 7,956 27,081 23,219
Furniture and equipment expense 8,151 18,597 24,851 36,989
Occupancy expense 20,443 20,205 61,909 62,459
Other 108,045 43,459 208,175 132,939
-------- -------- ---------- ----------
383,372 247,977 888,141 681,836
-------- -------- ---------- ----------
Net income (loss) before income
taxes (107,572) (43,053) 44,472 28,269
Income tax expense (36,200) 0 15,500 0
-------- -------- ---------- ----------
Net income (loss) $(71,372) $(43,053) $ 28,972 $ 28,269
========= ======== ========== ==========
Earnings per share (Note 3):
Basic and diluted $ (.21) $ (.13) $ .09 $ .22
Weighted average shares outstanding 339,081 340,676 339,081 128,064
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
---------------------
1999 1998
------ ------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 28,972 $ 28,267
Adjustment to reconcile net income to
net cash provided by operating activities:
MRP Expense 11,060 0
Depreciation and Amortization 48,995 46,392
Provision for loan loss 7,887 133,856
Writedown of real estate owned 50,000 0
Gain on sale of building (25,221) 0
Writedown of land 54,988 0
FHLB stock dividends (14,815) (12,800)
Net premium amortization on investments 24,496 9,552
Decrease in interest receivable 31,407 (26,659)
Decrease in other assets 144,888 25,022
Increase (decrease) in other liabilities 61,827 (284,663)
----------- ----------
Net cash provided (used) by operating
activities 424,484 (81,033)
----------- ----------
Cash flow from investing activities:
Purchase of held to maturity ("HTM") securities (8,362,078) (6,109,095)
Proceeds from maturities/principal repayments
of HTM securities 5,922,763 1,407,362
Net (increase) in loans receivable (1,657,772) (1,010,750)
Net (increase) in certificates of
deposit with other financial institutions (308,000) (401,000)
Sale (Purchase) of office properties and equipment 69,779 (157,471)
Purchase of office products and equipment (5,767) 0
Proceeds from sale of real estate owned 0 16,739
----------- -----------
Net cash (used) in investing activities (4,341,075) (6,254,215)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock 0 3,005,730
Repurchase of common stock (424,679) 0
Net increase in deposits 392,414 3,491,184
Net increase in Federal Home Loan Bank
advances 2,468,254 3,387,760
----------- ----------
Net cash provided by financing
activities 2,435,989 9,884,674
----------- -----------
Net increase in cash and amounts due from banks (1,480,602) 3,549,426
Cash and amounts due from banks at beginning of period 2,094,104 884,002
----------- -----------
Cash and amounts due from banks at end of period $ 613,502 $ 4,433,428
=========== ===========
Supplemental disclosures of cash flow information:
Noncash investing and financing activities:
Transfers from real estate acquired
through foreclosure $ 8,518 $ 563,440
Cash paid during the period:
Interest on deposits 1,369,716 1,206,010
Income taxes 25,925 0
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5<PAGE>
<PAGE>
NORTH ARKANSAS BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1999 AND 1998
NOTE 1 - NORTH ARKANSAS BANCSHARES, INC.
North Arkansas Bancshares, Inc. (the "Company") was incorporated
under the laws of the State of Tennessee for the purpose of
becoming the holding company of Newport Federal Savings Bank
(the "Bank") in connection with the Bank's conversion from a
federally chartered mutual savings bank to a federally chartered
capital stock savings bank. On November 12, 1997, the Company
commenced a subscription offering of its shares in connection
with the Bank's conversion. The Company's offering and the
Bank's conversion closed on December 18, 1997. A total of
370,300 shares were sold at $10.00 per share.
NOTE 2 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited financial statements (except for the
statement of financial condition at June 30, 1998, which is
audited) have been prepared in accordance with generally
accepted accounting principles for interim financial statements
and with the instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position, results of operations, and cash
flows for the interim periods presented have been included. The
financial statements of the Company are presented on a
consolidated basis with those of the Bank. The account balances
include only the accounts and operations of the Bank prior to
December 18, 1997. The results of operations for the three and
nine months ended March 31, 1999 are not necessarily
indicative of the results expected for the full year.
NOTE 3 - EARNINGS PER SHARE
Earnings per share have been calculated in accordance with
Financial Accounting Standards Board Statement No.128, "Earnings
Per Share," and Statement of Position 93-6, "Employers'
Accounting for Employee Stock Ownership Plans." For purposes of
this computation, the number of shares of common stock purchased
by the employee stock ownership plan (the "ESOP") which have not
been allocated to participant's accounts are not assumed to be
outstanding. As of March 31, 1999, 2,962 of the 29,624 shares
of common stock held by the ESOP had been allocated to
participants' accounts. The weighted average number of shares
used for basic and diluted earnings per share for the three and
nine months ended March 31, 1999 were 339,081.
NOTE 4 - PLAN OF CONVERSION
On May 29, 1997, the Bank's Board of Directors formally approved
a plan ("Plan") to convert from a federally chartered mutual
savings bank to a federally chartered stock savings bank subject
to approval by the Bank's members and the Office of Thrift
Supervision. The Plan called for the common stock of the Bank
to be purchased by the Company and the common stock of the
Company to be offered to various parties in a subscription
offering at a price based upon an independent appraisal of the
6<PAGE>
<PAGE>
Bank. All requisite approvals were obtained and the conversion
and the Company's offering were consummated effective December
18, 1997.
Upon consummation of the conversion, the Bank established a
liquidation account in an amount equal to its retained earnings
as reflected in the latest statement of financial condition used
in the final conversion prospectus. The liquidation account
will be maintained for the benefit of certain depositors of the
Bank who continue to maintain their deposit accounts in the Bank
after conversion. In the event of a complete liquidation of the
Bank, such depositors will be entitled to receive a distribution
from the liquidation account before any liquidation may be made
with respect to the common stock.
7<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND JUNE
30, 1998
The Company's total assets at March 31, 1999 were $46.2
million, an increase of $2.5 million, or 5.81%, from June 30,
1998's level of $43.7 million. The increase in assets was due
to the combined effects of a $2.4 million increase in the
Company's investment securities classified as held to maturity
and the $1.8 million increase in net loans receivable. The
growth in assets was primarily funded by an increase in FHLB
advances and by a decrease in cash and cash equivalents. Total
FHLB advances rose from $4.0 million at June 30, 1998 to $6.4
million at March 31, 1999 for a net increase of $2.5 million.
In addition, cash and cash equivalents declined by $1.5 million
from $2.1 million at June 30, 1998 to $614,000 at March 31,
1999.
Net loans at March 31, 1999 amounted to $27.4 million, an
increase of $1.8 million, or 6.93%, from $25.6 million at June
30, 1998. During the nine months ended March 31, 1999, the Bank
originated $4.9 million in new loans consisting of $4.1 million
in one-to four-family mortgage loans and $756,000 in consumer
loans. In addition, during late March of 1999, the Bank
purchased $2.0 million in one-to four-family mortgage loans.
These originations and loan purchases were partially offset by
loan repayments during the period. Subsequent to March 31,
1999, the Bank purchased an additional $1 million in one-to
four-family mortgage loans. All of these purchased loans are
secured by properties primarily located in Arkansas, Texas and
Louisiana and are guaranteed by the seller.
Total deposits at March 31, 1999 were $34.7 million, an
increase of $392,000 from June 30, 1998's level of $34.3
million. Total stockholders' equity at March 31, 1999 amounted
to $4.9 million, a decrease of $385,000 from $5.3 million at
June 30, 1998. The decline was attributable to the repurchase
of stock during the period. During the third quarter of fiscal
1999, the Company announced that it had received approval from
the Office of Thrift Supervision to repurchase up to 10% of the
outstanding shares of its common stock. At March 31, 1999,
37,030 shares of stock had been repurchased for a total cost of
$390,000. In addition, 3,300 shares of stock were purchased by
a grantor trust established by the Company as a mechanism to
fund the Company's management recognition plan which was
approved by stockholders in December 1998.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH
31, 1999 AND 1998
For the three months ended March 31, 1999, the Company
incurred a net loss of $71,000 as compared to net loss of
$43,000 for the three month period ended March 31, 1998. The
decrease was primarily attributable to additional writedowns in
the value of the Bank's two pieces of real estate owned.
Together, these writedowns totaled $105,000. Also contributing
to the decrease was a $135,000 increase in non-interest expense.
For the nine months ended March 31, 1999, net income amounted to
$29,000 which was comparable to the same period in fiscal year
1998. The 1998 period had reflected a $134,000 provision for
loan losses.
Net interest income during the three months ended March 31,
1999 decreased by $77,000 as compared to the same period in 1998
due mainly to a $79,000 increase in interest expense due to the
increased balance of FHLB advances outstanding during the
period. Total interest income was comparable for both periods
increasing by $1,000 to $740,000 for the three months ended
March 31, 1999. On average, interest-earning assets were
greater during the three months ended March 31, 1999 as compared
8<PAGE>
<PAGE>
to the three months ended March 31, 1998 although the average
yield has declined. The 1998 period, however, included a
$33,000 interest settlement received from a guarantor in
connection with a loan participation workout. Interest expense
increased by $79,000 to $510,000 for the three months ended
March 31, 1999 as compared to $431,000 for the three months
ended March 31, 1998 due to increased balances of both deposits
and FHLB advances. In January 1998, the Bank completed the
purchase of the former NationsBank branch located in Newport,
Arkansas. As part of the transaction, the Bank assumed
approximately $4.0 million in deposit liabilities. The former
NationsBank branch location was closed effective upon
consummation of the acquisition. For the nine months ended
March 31, 1999, net interest income amounted to $798,000 as
compared to $726,000 for the nine months ended March 31, 1998
due to the same factors present in the three months ended March
31, 1999 as discussed above.
A provision for loan losses is charged to earnings to bring
the total allowance for loan losses to a level considered
appropriate by management based on historical experience, the
volume and type of lending conducted by the Bank, the status of
past due principal and interest payments, general economic
conditions, particularly as such conditions relate to the Bank's
market area and other factors related to the collectibility of
the Bank's loan portfolio. As a result of such analysis, in
particular, the level of charge-offs during the quarter,
management recorded a $2,000 provision for loan losses during
the three months ended March 31, 1999 as compared to a $133,000
provision having been recorded during the same period in 1998.
During the three months ended March 31, 1999.
Non-interest income which consists mainly of deposit and
loan fees amounted to $25,000 for the three months ended March
31, 1999 as compared to $30,000 for the three months ended March
31, 1998. Non-interest income for the nine months ended March
31, 1999, amounted to $143,000, an increase of $25,000 from the
same period in 1998. Included within non-interest income during
the nine months ended March 31, 1999 was a gain of $25,000
resulting from the sale of a piece of property that had formerly
been the Bank's main office.
For the three months ended March 31, 1999, the Bank made a
$2,000 provision for loan losses to bring the total allowance
for loan losses at March 31, 1999 to $49,000. During the same
period in 1998, the Bank made a $133,000 provision for loan
losses. The higher provision during the 1998 period was due to
problems associated with a non-performing real estate loan
participation which is discussed more fully below. Such loan
was subsequently transferred to real estate owned. For the nine
months ended March 31, 1999, the Bank's provision for loan
losses totaled $8,000 as compared to $134,000 for the nine
months ended March 31, 1998 with the higher level in 1998 due to
the nonperforming real estate loan participation. While
management believes that the current level of the allowance for
loan losses is sufficient to cover potential losses in the
Bank's loan portfolio, there can be no assurance that the
allowance for loan losses will be adequate to cover losses on
nonperforming assets in the future.
Total non-interest expense increased by $138,000 for the
three months ended March 31, 1999 to $383,000 from $245,000 for
the three months ended March 31, 1998 due primarily to further
writedowns of the value of the Bank's interest in two pieces of
commercial real estate. The Bank had a $625,000 participation
interest in a loan secured by a hotel located in Oklahoma. In
early 1998, the lead lender accepted a deed in lieu of
foreclosure. At such time, based on an updated appraisal of the
property, the Bank wrote down its interest to $536,000 and a
reserve of $107,000 was established. During the second quarter
9<PAGE>
<PAGE>
of fiscal 1999, the carrying value of the property was reduced
by the amount of that reserve. During the third quarter of
fiscal 1999, an offer to purchase the property was accepted at a
price below the then-carrying value of the property. Such offer
subsequently fell through. However, the Bank believed it
appropriate to reduce its carrying value to the offer price
which resulted in a further writedown of $50,000. In addition,
during the second quarter of fiscal 1999, the Bank sold the
property that had formerly housed its main office but retained
an adjacent lot. During the third quarter of fiscal 1999, the
Bank accepted an offer to purchase the lot at a price below its
then-carrying value. Although such purchase was ultimately not
consummated, the Bank reduced its carrying value to the offer
price to reflect the market value. Such reduction in value
amounted to $55,000. Other non-interest expense items
contributing to the overall increase in the expense level year
to year were legal and professional fees and salaries and
employee benefits. Legal and professional fees increased by
$38,000 to $70,000 for the three months ended March 31, 1999
from $33,000 for the three months ended March 31, 1998. The
increased level of expenses reflects additional professional
fees incurred as a result of the termination of the Company's
former accountant and the appointment of a successor,
professional fees associated with the implementation of various
stock benefit plans and in connection with obtaining OTS
approval to repurchase 10% of the outstanding shares of Common
Stock. Salaries and employee benefits rose by $24,000 year to
year due in part to the additional expenses associated with the
implementation of the management recognition plan and the
accrual of expenses associated with the director retirement
plan, as well as normal salary increases.
For the nine months ended March 31, 1999, non-interest
expenses totaled $888,000, up from $682,000 for the nine months
ended March 31, 1998, an increase of $206,000. The increase in
the first three quarters of fiscal 1999 as compared to the same
period in fiscal 1998 was due primarily to the factors discussed
above with respect to the quarterly period. In addition, data
processing fees rose by $23,000 for the nine months ended March
31, 1999 as compared to the nine months ended March 31, 1998 due
to the increased deposit level.
The Company's income tax expense for the three months ended
March 31, 1999 amounted to a net benefit of $36,000. During the
same period in 1998, no provision for income tax expense was
required with the difference attributable to the net loss for
the period. For the nine months ended March 31, 1999, a
provision for income taxes of $16,000 was made as compared to no
provision for the same period in 1998. The increase in the
provision was due to the higher level of pre-tax income during
the period.
10<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
varies from time to time depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and
short-term borrowings. The required ratio at March 31, 1999
was 4%. For the month ended March 31, 1999 the Bank was in
compliance. As a result of the conversion, the Bank's liquidity
has increased due to the additional funds it received.
The Bank's primary sources of funds are deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, funds provided from
operations and advances from the FHLB of Dallas. While
scheduled repayments of loans and mortgage-backed securities and
maturities of investment securities are predictable sources of
funds, deposit flows and loan prepayments are greatly influenced
by the general level of interest rates, economic conditions and
competition. The Bank uses its liquidity resources principally
to fund existing and future loan commitments, to fund maturing
certificates of deposit and demand deposit withdrawals, to
invest in other interest-earning assets, to maintain liquidity,
and to meet operating expenses.
At March 31, 1999, the Bank was in compliance with
all applicable regulatory capital requirements with total core
and tangible capital of $4.2 million (8.97% of adjusted total
assets) and total risk-based capital of $4.2 million (20.49% of
risk-weighted assets).
YEAR 2000 PLANNING
Like most financial institutions, the Company's principal
subsidiary relies extensively on computers in conducting its
business. It has been widely reported that many computer
programs currently in use were designed without adequately
considering the impact of the upcoming change in century on
their date codes. If these design flaws are not corrected,
these computer applications may malfunction in the year 2000.
The Company's mission-critical processing systems are provided
by a third party. The third party provider has converted its
hardware and software to a new year 2000 compliant system. The
service provider tested its new system at selected sites (not
including the Bank) in September 1998. The Bank has been
provided with the results of such testing and has evaluated the
results. Based on extensive review and analysis of the results,
the Bank has determined that the on-site testing originally
scheduled for February 1999, is not considered necessary.
System connectivity testing has been successfully completed.
The Bank has developed a contingency plan to address the
possibility that its efforts to become year 2000 compliant are
not successful. The contingency plan provides that the Bank
would process information manually. The Bank's third party
provider has also adopted a contingency plan which calls for the
recovery of processing and information at a back-up site, using
back-up hardware. The Bank has also made arrangements to use an
alternative third-party if its provider is not successful.
The Bank has also evaluated its non-critical applications
and has made necessary changes and/or the third party provider
has made necessary changes. Testing for non-mission critical
systems is substantially complete. The Bank has also evaluated
its nontechnological systems to determine if any such systems
may have embedded technology that could be affected by the year
2000 issue. As of the date hereof, the Bank does not anticipate
that any such systems will be materially affected by the year
2000.
The Bank anticipates that its expenses associated with
year 2000 will not exceed $10,000.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 Financial Data Schedule (EDGAR only)
(b) Reports on Form 8-K. During the quarter ended
March 31, 1999, the registrant filed a Current
Report on Form 8-K on January 15, 1999 to
announce its stock repurchase program and a
Current Report on Form 8-K and a Current
Report on Form 8-K/A on February 4, 1999 and
February 19, 1999 to report a change in
accountants.
12<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
NORTH ARKANSAS BANCSHARES, INC.
Date: May 14, 1999 By: /s/ Brad Snider
--------------------------------
Brad Snider
President, Chief Executive
Officer and Treasurer
(Duly Authorized and Principal
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 234,901
<INT-BEARING-DEPOSITS> 378,601
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 13,673,261
<INVESTMENTS-MARKET> 13,800,000
<LOANS> 27,415,401
<ALLOWANCE> 48,735
<TOTAL-ASSETS> 46,226,473
<DEPOSITS> 34,663,078
<SHORT-TERM> 500,000
<LIABILITIES-OTHER> 184,029
<LONG-TERM> 5,937,779
<COMMON> 3,333
0
0
<OTHER-SE> 4,938,254
<TOTAL-LIABILITIES-AND-EQUITY> 46,226,473
<INTEREST-LOAN> 1,538,213
<INTEREST-INVEST> 87,076
<INTEREST-OTHER> 702,332
<INTEREST-TOTAL> 2,327,621
<INTEREST-DEPOSIT> 1,273,246
<INTEREST-EXPENSE> 1,529,851
<INTEREST-INCOME-NET> 797,770
<LOAN-LOSSES> 7,887
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 888,141
<INCOME-PRETAX> 44,472
<INCOME-PRE-EXTRAORDINARY> 28,972
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,972
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 2.28
<LOANS-NON> 44,165
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 46,735
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 48,735
<ALLOWANCE-DOMESTIC> 48,735
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
