<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File # 0-23969
POCAHONTAS BANCORP, INC.
Delaware IRS Employer Identification
No. 71-0806097
Address Telephone Number
-------- ----------------
203 West Broadway (870)-892-4595
Pocahontas, Arkansas 72455
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve 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
------- -------
The registrant's Common Stock was issued on March 31, 1998, and commenced
trading on April 1, 1998. There were 6,685,283 shares of Common Stock ($.01 par
value) issued and outstanding as of June 30, 1998.
<PAGE>
POCAHONTAS BANCORP, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Consolidated Statements of Financial Condition at June 30, 1998 and
September 30, 1997 1
Consolidated Statements of Income for the Three and Nine Months Ended
June 30, 1998 and 1997 2
Consolidated Statements of Cash Flows for the Nine Months Ended
June 30, 1998 and 1997 3
Notes to Consolidated Financial Statements 4
Independent Accountants' Report 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 10
PART II. OTHER INFORMATION 11
<PAGE>
POCAHONTAS BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
June 30, 1998 September 30, 1997
ASSETS
<S> <C> <C>
Cash $ 3,948,248 $ 2,805,273
Cash surrender value of life insurance 5,791,801 5,639,161
Trading securities 1,955,067 0
Investment securities held to maturity 187,516,961 200,552,569
Loans receivable, net 187,268,964 159,690,201
Accrued interest receivable 2,401,869 2,229,531
Premises and equipment, net 2,652,466 1,804,832
Federal Home Loan Bank Stock, at cost 9,910,100 10,052,700
Core deposit premium 1,863,236 0
Other assets 1,297,333 642,947
------------- -------------
TOTAL ASSETS $ 404,606,045 $ 383,417,214
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 171,386,362 $ 143,354,096
Federal Home Loan Bank Advances 169,595,000 190,601,038
Securities sold under agreements to repurchase 1,250,000 20,685,000
Deferred compensation 714,657 947,186
Accrued expenses and other liabilties 3,205,891 3,583,625
------------- -------------
Total liabilities 346,151,910 359,170,945
STOCKHOLDERS' EQUITY:
Common stock 66,853 66,693
Additional paid-in capital 50,094,461 15,010,040
Reduction for ESOP debt guaranty (2,856,600) (103,644)
Retained earnings 11,149,421 9,273,180
------------- -------------
Total stockholders' equity 58,454,135 24,246,269
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 404,606,045 $ 383,417,214
============= =============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
POCAHONTAS BANCORP, INC
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans receivable $ 3,643,303 3,076,444 10,430,673 8,855,434
Investment securities 3,417,091 3,516,348 10,445,547 10,574,281
------------ ------------ ------------ ------------
Total interest income 7,060,394 6,592,792 20,876,220 19,429,715
INTEREST EXPENSE:
Deposits 1,977,883 1,600,484 5,842,348 4,231,896
Borrowed funds 2,289,319 3,111,007 8,141,525 9,635,952
------------ ------------ ------------ ------------
Total interest expense 4,267,202 4,711,491 13,983,873 13,867,848
NET INTEREST INCOME 2,793,192 1,881,301 6,892,347 5,561,867
PROVISION FOR LOAN LOSSES 0 0 0 60,000
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,793,192 1,881,301 6,892,347 5,501,867
OTHER INCOME:
Dividends 146,560 146,301 464,029 476,131
Fees and service charges 127,908 108,654 347,080 297,626
Loss on trading activity (44,933) -- (44,933) --
Other 40,766 36,497 177,175 185,759
------------ ------------ ------------ ------------
Total other income 270,301 291,452 943,351 959,516
------------ ------------ ------------ ------------
OPERATING EXPENSE:
Compensation and benefits 998,750 702,913 2,798,108 2,094,246
Occupancy and equipment 164,258 128,436 433,787 424,784
Deposit insurance premium 23,094 18,732 68,462 88,440
Professional fees 46,995 51,478 171,780 189,127
Data processing 76,611 54,708 213,701 179,036
Advertising 62,017 46,426 173,768 137,347
OTS assessment 23,326 23,239 69,519 69,168
Other 224,308 152,852 508,356 395,762
------------ ------------ ------------ ------------
Total operating expense 1,619,359 1,178,784 4,437,481 3,577,910
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,444,134 993,969 3,398,217 2,883,473
INCOME TAXES 512,891 371,480 1,220,620 1,034,777
------------ ------------ ------------ ------------
NET INCOME $ 931,243 $ 622,489 $ 2,177,597 $ 1,848,696
============ ============ ============ ============
BASIC EARNINGS PER SHARE $ 0.15 $ 0.09 $ 0.35 $ 0.28
============ ============ ============ ============
DILUTED EARNINGS PER SHARE $ 0.14 $ 0.09 $ 0.33 $ 0.27
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
POCAHONTAS BANCORP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 2,177,597 $ 1,848,696
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of premises and equipment 256,544 147,965
Amortization of deferred loan fees 83,041 49,693
Amortization of premiums and discounts, net (193,433) (85,556)
Provision for loan losses -- 60,000
Net (gain)loss on sale of assets (60,597) (21,457)
Change in:
Cash surrender value of life insurance policies (152,640) (138,231)
Net change in trading account (1,955,067) --
Accrued interest receivable (172,338) 85,886
Other assets (654,386) 588,359
Special SAIF premium payable -- (937,000)
Deferred compensation (232,529) 24,018
Other liabilities (274,090) (355,558)
--------------- ---------------
Net cash provided (used) by operating activities (1,177,898) 1,266,815
--------------- ---------------
INVESTING ACTIVITIES:
Loan repayments and originations, net (27,601,207) (16,109,250)
Core deposit premium paid (1,863,236) --
Purchase of investment securities held to maturity (4,418,337) (8,460,626)
Proceeds from maturities and principal repayments
of investment securities held to maturity 17,789,978 27,211,603
Proceeds from sale of real estate owned -- 136,161
Purchase of premises and equipment (1,104,178) (66,239)
--------------- ---------------
Net cash provided (used) by investing activities (17,196,980) 2,711,649
--------------- ---------------
FINANCING ACTIVITIES:
Net increase in deposits 28,032,266 24,779,574
Net increase (decrease) in repurchase agreements (19,435,000) 10,625,000
Proceeds of FHLB advances 1,272,809,000 1,391,060,900
Repayment of FHLB advances (1,293,815,038) (1,429,480,568)
Proceeds from stock offering, net of offering costs 32,639,004 --
Proceeds from exercise of stock options 40,000 78,300
Dividends paid (752,379) (505,491)
--------------- ---------------
Net cash provided (used) by financing activities 19,517,853 (3,442,285)
--------------- ---------------
NET INCREASE IN CASH 1,142,975 536,179
CASH AT BEGINNING OF PERIOD 2,805,273 2,046,135
--------------- ---------------
CASH AT END OF PERIOD $ 3,948,248 $ 2,582,314
=============== ===============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
POCAHONTAS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements were prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10
of Regulation S-X. Certain information required for a complete presentation
in accordance with generally accepted accounting principles has been omitted.
All adjustments that are, in the opinion of management, necessary for a fair
presentation of the interim financial statements have been included. The
results of operations for the three and nine months ended June 30, 1998, are
not necessarily indicative of the results that may be expected for the entire
fiscal year or any interim period.
On March 31, 1998, in accordance with its plan of conversion and
reorganization Pocahontas Bancorp, Inc. (the "Company") sold 3,570,750 shares
of common stock at a price per share of $10.00. In addition, each of the
769,924 shares of common stock of Pocahontas Federal Savings & Loan
Association (the "Bank"), held by public stockholders were exchanged for
4.0245 shares of common stock of the Company in accordance with the Plan of
Conversion and Agreement and Plan or Reorganization. At March 31, 1998 the
Company had 6,669,309 outstanding shares of common stock. Financial
information presented is for the Company, except for periods prior to
conversion and reorganization, which are for the Bank, and for
classifications within stockholders' equity in the condensed consolidated
statement of financial condition and earnings per common share.
The interim financial information should be read in conjunction with the
consolidated financial statements and notes of the Bank, including a summary
of significant accounting policies followed by the Company, included in the
Annual Report for the fiscal year ended September 30, 1997. The accompanying
unaudited consolidated financial statements include the accounts of the
Company and the Bank. The intercompany accounts of the Company and the Bank
have been eliminated in consolidation.
2. EARNINGS PER COMMON SHARE
The earnings per share amounts were computed using the weighted average
number of shares outstanding during the periods presented. In accordance with
Statement of Position No. 93-6, Employers' Accounting for Employee Stock
Ownership Plans, issued by the American Institute of Certified Public
Accountants, shares owned by the Bank's Employee Stock Ownership Plan that
have not been committed to be released are not considered to be outstanding
for the purpose of computing earnings per share.
4
<PAGE>
The weighted average number of shares used in the basic and diluted earnings
per share calculation are set out in the table below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------------------------------------
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total basic shares outstanding 6,388,891 6,627,193 6,385,294 6,608,829
Add dilutive effect of unexercised options 146,162 200,376 146,162 200,376
----------- ----------- ----------- -----------
Total weighted average shares outstanding
for dilutive earnings per share calculation 6,535,053 6,827,569 6,531,456 6,809,205
=========== =========== =========== ===========
</TABLE>
3. DECLARATION OF DIVIDENDS
On May 13, 1998, the Board of Directors declared a $0.06 per share quarterly
dividend for holders of record June 15, 1998.
4. CORE DEPOSIT PREMIUM
On January 22, 1998, the Bank paid a $1.9 million premium for $27.9 million
of deposits. This premium is being amortized over ten years which
approximates the estimated life of the purchased deposits.
5. TRADING SECURITIES
The Company allocated $2,000,000 to purchase marketable equity securities.
Such securities were classified as trading and are carried at fair market
value. The securities included in the trading account are primarily
financial institution stocks.
6. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
On July 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS 133"). This Statement establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value.
If certain conditions are met, a derivative may be specifically designated as
(a) a hedge of the exposure to changes in the fair value of a recognized
asset or liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction, or (c) a hedge
of the foreign currency exposure of a net investment in a foreign operation,
an unrecognized firm commitment, an available-for-sale security, or a
foreign-currency-denominated forecasted transaction.
The accounting for changes in the fair value of a derivative (that is, gains
and losses) depends on the intended use of the derivative and the resulting
designation.
5
<PAGE>
For a derivative designated as hedging the exposure to changes in the fair
value of a recognized asset or liability or a firm commitment (referred to as
a fair value hedge), the gain or loss is recognized in earnings in the period
of change together with the offsetting loss or gain on the hedged item
attributable to the risk being hedged. The effect of that accounting is to
reflect in earnings the extent to which the hedge is not effective in
achieving offsetting changes in fair value.
For a derivative designated as hedging the exposure to variable cash flows of
a forecasted transaction (referred to as a cash flow hedge), the effective
portion of the derivative's gain or loss is initially reported as a component
of other comprehensive income (outside earnings) and subsequently
reclassified into earnings when the forecasted transaction affects earnings.
The ineffective portion of the gain or loss is reported in earnings
immediately.
For a derivative designated as hedging the foreign currency exposure of a net
investment in a foreign operation, the gain or loss is reported in other
comprehensive income (outside earnings) as part of the cumulative translation
adjustment. The accounting for a fair value hedge described above applies to
a derivative designated as a hedge of the foreign currency exposure of an
unrecognized firm commitment or an available-for-sale security. Similarly,
the accounting for a cash flow hedge described above applies to a derivative
designated as a hedge of the foreign currency exposure of a foreign-currency-
denominated forecasted transaction.
For a derivative not designated as a hedging instrument, the gain or loss is
recognized in earnings in the period of change.
Under this Statement, an entity that elects to apply hedge accounting is
required to establish at the inception of the hedge the method it will use
for assessing the effectiveness of the hedging derivative and the measurement
approach for determining the ineffective aspect of the hedge. Those methods
must be consistent with the entity's approach to managing risk.
This Statement precludes designating a nonderivative financial instrument as
a hedge of an asset, liability, unrecognized firm commitment, or forecasted
transaction except that a nonderivative instrument denominated in a foreign
currency may be designated as a hedge of the foreign currency exposure of an
unrecognized firm commitment denominated in a foreign currency or a net
investment in a foreign operation.
In connection with the adoption of SFAS 133, on July1, 1998 the Company
reclassified approximately $177.8 million of investment securities from the
held to maturity portfolio to the available for sale portfolio. This
resulted in an increase to investment securities of $4.6 million, an increase
to deferred income tax liability of $1.7 million and an increase to
stockholders' equity of $2.9 million. The other provisions of SFAS 133 did
not have a material impact on the Company's financial statements.
* * * * * *
6
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Pocahontas Bancorp, Inc.
Pocahontas, Arkansas
We have reviewed the accompanying condensed consolidated statement of financial
condition of Pocahontas Bancorp, Inc. (the "Company") as of June 30, 1998, and
the related condensed consolidated statements of income and cash flows for the
three-month and nine-month periods ended June 30, 1998 and 1997. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition of Pocahontas
Federal Savings and Loan Association and subsidiaries as of September 30, 1997
(see Note 1 to the accompanying condensed consolidated financial statements),
and the related consolidated statements of income, stockholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated October 30, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated statement of financial condition as of
September 30, 1997, is fairly stated, in all material respects, in relation to
the consolidated statement of financial condition from which it has been
derived.
/s/ Deloitte & Touche LLP
Little Rock, Arkansas
July 27, 1998
7
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Financial Condition at June 30, 1998, as compared to September 30, 1997
General. The Company's total assets increased $21.2 million or 5.5% to $404.6
million at June 30, 1998, as compared to $383.4 million at September 30, 1997.
Loans receivable, net. Net loans receivable increased by $27.6 million or 17.6%
to $187.3 million at June 30, 1998 from $159.7 million as of September 30, 1997.
Growth in the loan portfolio was due to continued strong loan demand in the
Company's local market.
Investment securities held to maturity. Investment securities held to maturity
decreased $13.0 million, or 6.5%, to $187.5 million at June 30, 1998 from $200.6
million at September 30, 1997. The decrease in the Company's investment
portfolio was due to principal prepayments and calls. Cash flow from
investments was used to partially fund growth in net loans receivable.
Trading securities. Trading securities increased $2.0 million to $2.0 million
at June 30, 1998. This increase is the result of investments in marketable
equity securities. Such securities are classified as trading and are carried at
fair value. As of June 30, 1998, the Company had recognized net losses of
approximately $29,000 net of income tax.
Core deposit premium. Core deposit premium increased $1.9 million to $1.9
million at June 30, 1998 due to the purchase of the deposits of three branches
located within the Company's market area. The Company is amortizing the premium
over 10 years.
Deposits. Deposits increased $28.0 million or 19.6% to $171.4 million at June
30, 1998 from $143.4 million at September 30, 1997, primarily due to the
acquisition of deposits and premises and equipment of three branches located
within the Company's market area. As a result of this transaction, deposits
increased $27.9 million. The cash obtained from the increase in deposits was
used to repay Federal Home Loan Bank Advances.
Federal Home Loan Bank Advances and securities sold under agreements to
repurchase. FHLB advances decreased $40.4 million or 19.1% to $170.9 million at
June 30, 1998 from $211.3 million at September 30, 1997. This decrease was due
to the increase in deposits discussed above and the sale of stock discussed
below.
Stockholders' equity. Stockholders' equity increased $34.2 million or 141.1%
to $58.5 million at June 30, 1998 from $24.3 million at September 30, 1997,
primarily due to proceeds from a public stock offering which was completed March
31, 1998, and net income, net of dividends paid.
8
<PAGE>
Comparison of Results of Operations for the Three and Nine Months Ended June 30,
1998 and 1997
Overview. For the three-month periods ended June 30, 1998 and 1997, net income
was $931,243 and $622,489, respectively. For the nine-month periods ended June
30, 1998 and 1997, net income was $2.2 million and $1.9 million, respectively.
Net interest income. For the three-month periods ended June 30, 1998 and 1997,
net interest income increased approximately $900,000, or 48.5% to $2.8 million.
For the nine-month periods ended June 30, 1998 and 1997, net interest income
increased $1.3 million, or 23.2%, to $6.9 million. The increase in net interest
income was due to the increase in net loans receivable, decrease in investment
securities, increase in deposits and decrease in Federal Home Loan Bank advances
and securities sold under agreements to repurchase (see discussion of changes in
financial condition). The changes in the Company's asset/liability mix resulted
in an increase in the Company's interest rate spread to 2.19% for the three
months ended June 30, 1998 compared to 1.92% for the same period last year. The
Company's strategy has been to utilize the run-off and principal pay-downs from
investment securities to fund loan growth within the Company's local market.
Such loans generally have higher yields than investment securities.
Non-performing Loans and Loan Loss Provisions
The allowance for loan losses is established through a provision for loan losses
based on management's quarterly asset classification review and evaluation of
the risk inherent in its loan portfolio and changes in the nature and volume of
its loan activity. Such evaluation, which includes a review of all loans of
which full collection may not be reasonably assured, considers among other
matters, the estimated value of collateral, cash flow analysis, historical loan
loss experience, and other factors that warrant recognition in providing
adequate allowances. No provision was made in the three month periods ended
June 30, 1998 and 1997. No provision for loan losses was made during the nine-
month period ended June 30, 1998, compared to $60,000 for the same period in
1997. Management believes that the current allowance for loan loss is adequate
to absorb possible loan losses in the existing portfolio. However, future
reviews may require additional provisions.
The following table sets forth information regarding loans delinquent for 90
days or more and real estate owned by the Bank on the dates indicated.
<TABLE>
<CAPTION>
June 30, 1998 September 30, 1997
------------- ------------------
(Dollar in Thousands)
<S> <C> <C>
Delinquent loans:
Single family mortgage $ 955 $ 422
Other mortgage loans 0 0
Other loans 69 31
------ -----
Total delinquent loans 1,024 453
Total real estate owned (1) 18 17
------ -----
Total non-performing assets 1,042 470
Total loans delinquent 90 days or more to net
loans receivable 0.54% 0.28%
Total loans delinquent 90 days or more to total assets 0.25% 0.12%
Total nonperforming loans and REO to total assets 0.26% 0.12%
</TABLE>
(1) Net of valuation allowances
9
<PAGE>
It is the policy of the Bank to place loans 90 days or more past due on a non-
accrual status by establishing a specific interest reserve that provides for a
corresponding reduction in interest income. Delinquent loans 90 days or more
past due increased $571,000 or 126% during the nine-month period ended June 30,
1998.
Operating expense. For the three-month periods ended June 30, 1998 and 1997,
operating expenses increased approximately $441,000, or 37.4%, to $1.6 million.
For the nine-month periods ended June 30, 1998 and 1997, operating expenses
increased approximately $860,000, or 24.0% to $4.4 million. The increase in
operating expense was primarily attributable to an increase in compensation
expense. Compensation expense increased due to an increase in number of
personnel due to branches increasing 50% and due to increases in compensation
resulting from responsibility changes for certain employees.
Year 2000. The Company has contacted its major service vendors and has received
assurances that those computer services will properly function on January 1,
2000, the date that computer problems are expected to develop worldwide.
Internally, the Company had determined that certain computer programs must be
revised in advance of the year 2000. The Company does not believe that the
costs associated with its actions will be material to the Company. The Company
is working to develop a contingency plan, however, if a major vendor should be
unable to fulfill it contractual obligation, the Company could experience
material cost.
Liquidity and Capital Resources
Regulatory liquidity is defined as a percentage of the institution's average
daily balance of net withdrawable deposits and current borrowings, invested with
final maturities no longer than five years. The Office of Thrift Supervision
requires 1.0% total liquidity. The Bank's average liquidity ratio during June
1998 was 11.23% compared to 5.17% during the month of September 1997. At June
30, 1998, the Bank was in compliance with all liquidity requirements.
At June 30, 1998, the Bank had outstanding loan commitments of $7.0 million.
Funding of these commitments will be accomplished by utilizing cash resources
from deposits, Federal Home Loan Bank advances and/or repurchase agreements,
principal and interest payments from loans and investments.
The Bank utilizes Federal Home Loan Bank advances and/or repurchase agreements
to leverage its capital to maximize earnings and to maintain a stable capital to
asset ratio. At June 30, 1998, the Bank's capital to asset ratio exceeded all
regulatory requirements.
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See discussion of qualitative and quantitative risks in the September 30, 1997
annual report. The risks identified in the annual report have been mitigated by
the increase in core deposits and capital, see management's discussion and
analysis of financial condition and results of operations.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Pocahontas Bancorp, Inc. or
the Bank is a party or to which any of their property is subject. From time-to-
time, the Bank is a party to various legal proceedings incident to its business.
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 Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
POCAHONTAS FEDERAL BANCORP, INC.
Date:
------------- ----------------------------------------
Skip Martin
President and Chief Executive Officer
Date:
------------- ----------------------------------------
James Edington
Executive Vice President
Date:
------------- ----------------------------------------
Dwayne Powell
Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 699,441
<INT-BEARING-DEPOSITS> 3,248,807
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,955,067
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 187,516,961
<INVESTMENTS-MARKET> 0
<LOANS> 188,936,408
<ALLOWANCE> 1,667,444
<TOTAL-ASSETS> 404,606,045
<DEPOSITS> 171,386,362
<SHORT-TERM> 126,595,000
<LIABILITIES-OTHER> 5,170,548
<LONG-TERM> 43,000,000
0
0
<COMMON> 66,853
<OTHER-SE> 58,454,135
<TOTAL-LIABILITIES-AND-EQUITY> 404,606,045
<INTEREST-LOAN> 10,430,673
<INTEREST-INVEST> 10,445,547
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 20,876,220
<INTEREST-DEPOSIT> 5,842,348
<INTEREST-EXPENSE> 13,983,873
<INTEREST-INCOME-NET> 6,892,347
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (44,933)
<EXPENSE-OTHER> 4,437,481
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</TABLE>
