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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 December 31, 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.
State of Incorporation
----------------------
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
--- ---
There were 6,245,041 shares of Common Stock ($.10 par value) issued and
outstanding as of December 31, 1998.
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POCAHONTAS BANCORP, INC.
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Financial Condition at December 31, 1998
(unaudited) and September 30, 1998 1
Condensed Consolidated Statements of Income and Comprehensive Income
for the Three Months Ended December 31, 1998 and 1997 (unaudited) 2
Condensed Consolidated Statements of Cash Flows for the Three Months Ended
December 31, 1998 and 1997 (unaudited) 3
Notes to Condensed Consolidated Financial Statements (unaudited) 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
</TABLE>
<PAGE>
ITEM 1
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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<TABLE>
<CAPTION>
(Unaudited)
December 31, 1998 September 30, 1998
<S> <C> <C>
ASSETS
Cash $ 8,472,094 $ 3,781,077
Cash surrender value of life insurance 5,866,801 5,821,800
Equity investments, at fair value 1,668,044 1,588,535
Investment securities - held to maturity 9,505,199 9,425,080
Investment securities - available for sale 159,395,451 173,626,023
Loans receivable, net 195,406,689 193,727,664
Accrued interest receivable 2,335,590 2,407,273
Premises and equipment, net 3,783,683 3,327,076
Federal Home Loan Bank Stock, at cost 10,205,600 10,059,900
Core deposit premium 2,640,255 2,576,908
Other assets 909,370 639,762
------------- -------------
TOTAL ASSETS $ 400,188,776 $ 406,981,098
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 195,813,676 $ 195,536,708
Federal Home Loan Bank advances 141,900,000 143,670,000
Securities sold under agreements to repurchase 2,656,800 2,107,645
Deferred compensation 720,795 717,726
Accrued expenses and other liabilities 3,687,203 4,382,221
------------- -------------
Total liabilities 344,778,474 346,414,300
STOCKHOLDERS' EQUITY:
Common stock 68,281 66,853
Additional paid-in capital 50,239,577 50,094,461
Reduction for ESOP debt guaranty (2,377,673) (2,856,600)
Treasury stock (5,443,883) 0
Retained earnings 11,887,403 11,456,439
Accumulated other comprehensive income:
Unrealized gain on available for sale securities, net of tax 1,036,597 1,805,645
------------- -------------
Total stockholders' equity 55,410,302 60,566,798
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 400,188,776 $ 406,981,098
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
1
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POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
THREE MONTHS ENDED DECEMBER 31 (UNAUDITED)
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<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
INTEREST INCOME:
Loans receivable $ 3,939,958 $ 3,349,562
Investment securities 2,924,831 3,464,024
----------- -----------
Total interest income 6,864,789 6,813,586
INTEREST EXPENSE:
Deposits 2,282,603 1,786,418
Borrowed funds 1,935,361 3,139,759
----------- -----------
Total interest expense 4,217,964 4,926,177
NET INTEREST INCOME 2,646,825 1,887,409
PROVISION FOR LOAN LOSSES -- --
----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,646,825 1,887,409
OTHER INCOME:
Dividends 149,295 143,908
Fees and service charges 177,569 107,620
Trading gain 75,197 --
Other 173,120 59,945
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Total other income 575,181 311,473
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OTHER EXPENSE:
Compensation and benefits 1,271,295 825,857
Occupancy and equipment 224,236 125,771
SAIF deposit insurance premium 26,740 22,247
Professional fees 60,723 41,967
Data processing 128,306 62,605
Advertising 71,587 55,078
OTS assessment 24,108 22,866
Other 245,529 139,182
----------- -----------
Total operating expense 2,052,524 1,295,573
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NET INCOME BEFORE INCOME TAXES 1,169,482 903,309
INCOME TAXES 359,068 324,764
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NET INCOME 810,414 578,545
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized holding loss on available for sale securities arising
during period (769,048) --
----------- -----------
COMPREHENSIVE INCOME $ 41,366 $ 578,545
=========== ===========
EARNINGS PER SHARE:
Basic $ 0.13 $ 0.09
=========== ===========
Diluted $ 0.13 $ 0.09
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
2
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POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31 (UNAUDITED)
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<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 810,414 $ 578,545
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of premises and equipment 110,623 53,610
Amortization of deferred loan fees 42,636 (21,956)
Amortization of premiums and discounts, net (62,596) (25,613)
Net gain on sales of assets (16,958) (27,036)
Cash surrender value of life insurance policies (45,001) (50,880)
Trading securities (79,509) --
Accrued interest receivable 71,683 (160,372)
Core deposit premium (63,347) --
Other assets (269,608) (8,209)
Deferred compensation 3,069 (107,950)
Expensed RRP shares 146,544 --
Other liabilities (216,091) (393,248)
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Net cash provided by operating activities 431,859 (163,109)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Loan repayments and originations, net (1,704,703) (8,884,820)
Net increase in FHLB stock (145,700) (693,500)
Proceeds from maturities and principal
repayments of investment securities 13,444,001 2,481,887
Proceeds from sale of loans -- 1,619,961
Purchases of premises and equipment (567,230) (62,505)
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Net cash provided (used) by investing activities 11,026,368 (5,538,977)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 276,968 4,989,527
Net increase (decrease) in repurchase agreements 549,155 (18,630,529)
Proceeds of FHLB advances 399,565,000 507,752,000
Repayment of FHLB advances (401,335,000) (488,027,719)
Repurchase of stock (5,443,883) --
Dividends paid (379,450) (173,234)
------------- -------------
Net cash provided (used) by financing activities (6,767,210) 5,910,045
------------- -------------
NET INCREASE IN CASH 4,691,017 207,959
CASH AT BEGINNING OF PERIOD 3,781,077 2,805,273
------------- -------------
CASH AT END OF PERIOD $ 8,472,094 $ 3,013,232
============= =============
</TABLE>
See notes to condensed consolidated financial statements
3
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POCAHONTAS BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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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 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
months ended December 31, 1998, are not necessarily indicative of the
results that may be expected for the entire fiscal year or any interim
period.
The interim financial information should be read in conjunction with the
consolidated financial statements and notes of the Company, including a
summary of significant accounting policies followed by the Company,
included in the Annual Report for the fiscal year ended September 30,
1998. The accompanying unaudited consolidated financial statements include
the accounts of the Company and Pocahontas Federal Savings and Loan
Association (the "Bank"), its wholly owned subsidiary. 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.
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
-----------------------------------------
December 31, 1998 December 31, 1997
----------------- -----------------
<S> <C> <C>
Total basic shares outstanding 6,007,273 6,669,185
Add dilutive effect of unexercised options 134,080 146,162
--------- ---------
Total weighted average shares outstanding
for dilutive earnings per share calculation 6,141,353 6,815,347
========= =========
</TABLE>
3. DECLARATION OF DIVIDENDS
On November 18, 1998, the Board of Directors declared a $.06 per share
quarterly dividend for holders of record December 15, 1998.
4
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4. BENEFIT PLANS
STOCK OPTION PLAN - The Company's stockholders adopted the 1998 Stock
Option Plan ("SOP") on October 23, 1998. The SOP provides for a committee
of the Company's Board of Directors to award incentive stock options,
non-qualified or compensatory stock options representing up to 357,075
shares of Company Stock. The options will vest in equal amounts over five
years with the first vesting date on October 23, 1999. Options granted
vest immediately in the event of retirement, disability, or death.
Outstanding stock options can be exercised over a ten-year period. Under
the SOP, options have been granted to directors and key employees of the
Company. The exercise price in each case equals the fair market value of
the Company's stock at the date of grant. The Company granted 352,500
options on October 23, 1998, which have an exercise price of $9.00 per
share. No options from the 1998 SOP are exercisable as of December 31,
1998, and no options have been forfeited.
The Company applies the provisions of APB 25 in accounting for its stock
options plans, as allowed under SFAS 123, Accounting for Stock-Based
Compensation. Accordingly, no compensation cost has been recognized for
the options granted to employees or directors. Had compensation cost for
these been determined on the fair value at the grant dates for awards
under those plans consistent with the methods of SFAS No. 123, the
Company's pro forma net income and pro forma earnings per share would have
been as follows:
As Reported Pro forma
Net income in thousands $ 810 $ 752
Earnings per share:
Basic $ 0.13 $ 0.12
Diluted $ 0.13 $ 0.12
In determining the above pro forma disclosure, the fair value of options
granted during the year was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: expected volatility - 37%, expected life of grant - 6.5
years, risk free interest rate 5.25%, and expected dividend rate of 2.5%.
The weighted average fair value of options granted during the quarter
ended December 31, 1998, was $4.25.
MANAGEMENT RECOGNITION AND RETENTION PLAN - The 1998 Management
Recognition and Retention Plan ("MRP") provides for a committee of the
Company's Board of Directors to award restricted stock to key officers as
well as non-employee directors. The MRP authorizes the Company to grant up
to 142,830 shares of the Company's common stock. The Committee granted
142,830 shares to key officers and non-employee directors on October 23,
1998. Compensation expense is being recognized based on the fair market
value of the shares on the grant date of $9.00 over the vesting period.
The Shares will vest immediately in the event of disability or death. At
December 31, 1998, 142,830 of these shares have been purchased on the open
market at a weighted average price of $9.33 per share. Approximately
$147,000 in compensation expense was recognized in the three months ended
December 31, 1998.
5. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components. The Company adopted SFAS 130 on
October 1, 1998, which required it to classify items of other
5
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comprehensive income by their nature in a financial statement and display
the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of
the statement of financial condition.
* * * * * *
6
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INDEPENDENT ACCOUNTANTS' REPORT
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 December 31, 1998,
and the related condensed consolidated statements of income and comprehensive
income and of cash flows for the three-month periods ended December 31, 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
Bancorp, Inc. and subsidiaries as of September 30, 1998, 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 November 11,
1998, 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,
1998, 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
February 9, 1999
7
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ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL CONDITION AT DECEMBER 31, 1998, AS COMPARED TO SEPTEMBER 30, 1998
GENERAL. The Company's total assets decreased $6.8 million or 1.7% to $400.2
million at December 31, 1998, as compared to $407.0 million at September 30,
1998.
LOANS RECEIVABLE, NET. Net loans receivable increased by $1.7 million or 0.8% to
$195.4 million at December 31, 1998, from $193.7 million as of September 30,
1998. Growth in the loan portfolio was due to loan demand in the Company's local
market.
INVESTMENT SECURITIES HELD TO MATURITY. Investment securities held to maturity
increased $0.1 million, or .85% to $9.5 million at December 31, 1998, from $9.4
million at September 30, 1998. The increase in the Company's held to maturity
investment portfolio was due to accretion of discounts.
INVESTMENT SECURITIES AVAILABLE FOR SALE. Investment securities available for
sale decreased $14.2 million, or 8.2%, to $159.4 million at December 31, 1998,
from $173.6 million at September 30, 1998. The decrease in investment securities
available for sale was primarily due to acceleration of prepayments due to the
current relatively low interest rate environment. Cash flow from investments was
primarily used to fund growth in net loans receivable.
TRADING SECURITIES. Trading securities increased $0.1 million, or 5.0%, to $1.7
million at December 31, 1998, from $1.6 million at September 30, 1998. This
increase is the result of an increase in market value of trading securities.
DEPOSITS. Deposits increased $0.3 million or 0.2% to $195.8 million at December
31, 1998, from $195.5 million at September 30, 1998, primarily due to continued
growth within the Company's market area.
FEDERAL HOME LOAN BANK ADVANCES AND SECURITIES SOLD UNDER AGREEMENTS TO
REPURCHASE. FHLB advances decreased $1.8 million or 1.3% to $141.9 million at
December 31, 1998 from $143.7 million at September 30, 1998. This decrease
resulted from repayments, funds for which were provided primarily by maturities
and other repayments of investment securities.
STOCKHOLDERS' EQUITY. Stockholders' equity decreased $5.2 million or 8.6% to
$55.4 million at December 31, 1998, from $60.6 million at September 30, 1998.
Such decrease was due to the repurchase of 583,072 shares of the Company's
common stock at a total cost of $5.4 million, a decrease in the unrealized gain
on available for sale securities, net of tax of 0.8 million net of net income
net of dividends.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1998
AND 1997
OVERVIEW. For the three-month periods December 31, 1998 and 1997, net income was
$810,414 and $578,545, respectively.
NET INTEREST INCOME. For the three-month periods ended December 31, 1998 and
1997, net interest income increased approximately $759,000, or 40.2% to $2.6
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
8
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changes in financial condition). The changes in the Company's asset/liability
mix resulted in an increase in the Company's interest rate margin to 2.8% for
the three months ended December 31, 1998, compared to 2.0% for the quarter ended
December 31, 1997. 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 and repay Federal Home Loan Bank advances. 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 for loan losses was made during the three
month periods ended December 31, 1998 and 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>
December 31, 1998 December 31, 1997
----------------- -----------------
(Dollars in Thousands)
<S> <C> <C>
Delinquent loans:
Single family mortgage $2,284 $2,240
Other mortgage loans 10 15
Other loans 30 41
------ ------
Total delinquent loans 2,324 2,296
Total real estate owned (1) 29 16
------ ------
Total non-performing assets 2,353 2,312
Total loans delinquent 90 days or more to net
loans receivable 1.26 % 1.19 %
Total loans delinquent 90 days or more to total assets 0.23 % 0.56 %
Total nonperforming loans and REO to total assets 0.59 % 0.57 %
(1) Net of valuation allowances
</TABLE>
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 $28,000 or 1.2% during the three-month period ended December
31, 1998.
COMPENSATION EXPENSE. For the three-month periods ended December 31, 1998 and
1997, compensation expenses increased approximately $0.5 million, or 53.9%, to
$1.3 for the three-months ended December 31, 1998, from $0.8 million for the
three-months ended December 31, 1997. Such increase was primarily due to an
increase in personnel in connection with the purchase of six branches and
opening one new branch during the intervening twelve month period. In addition,
the Company's recognition and retention plan was adopted in October 1998 with
its resulting increase in compensation expense.
9
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YEAR 2000 ("Y2K") COMPLIANCE
Changing from the year 1999 to 2000 has the potential to cause problems in data
processing and other date-sensitive systems, a problems known as the Year 2000
or Y2K dilemma. The Year 2000 date change can affect any system that uses
computer software programs or computer chips, including automated equipment and
machinery. For example, many software programs or computer chips store calendar
dates as two-digits rather than four-digit numbers. These software programs
record the year 1998 as "98." This approach will work until the Year 2000 when
"00" may be read as 1900 instead of 2000.
Regarding the Company, computer systems are used to perform financial
calculations, track deposits and loan payments, transfer funds and make direct
deposits. The processing of the Company's loan and deposit transactions is
outsourced to a third-party data processing vendor. Computer software and
computer chips also are used to run security systems, vaults, communications
networks and other essential bank equipment. Because of its reliance on these
systems (including those used by its third-party data processing vendor), the
Company is following a comprehensive process to ensure that such systems are
ready for the Year 2000 date change.
To become Y2K compliant, the Company is following a five-step process suggested
by federal bank regulatory agencies. A description of each of the steps and the
status of the Company's efforts in completing the steps is as follows:
Step 1. Awareness and Understanding of the Problem. The Company has formed
a Year 2000 team that has investigated the problem and its potential
impact on the Company's systems. This phase also includes education of the
Company's employees and customers about Y2K issues. The awareness and
understanding phase of this step has been completed. Training and
communication has taken place and will continue in 1999.
Step 2. Identification of All Potentially Affected Systems. This step has
included a review of all major information technology ("IT") and
non-information technology ("non-IT") systems to determine how they are
impacted by Y2K issues. An inventory has been prepared of all vendors who
render IT and non-IT services to the Company. This step is considered
complete.
Step 3. Assessment and Planning. The Year 2000 team has completed its
assessment of which systems and equipment are most prone to placing the
Company at risk if they are not Y2K compliant. The project team has
developed an inventory of its vendors, an inventory of actions to be
taken, identification of the team members responsible for completion of
each action, a completion timetable and a project tracking methodology.
Significant vendors have been requested to advise the Company in writing
of their Y2K readiness, including actions to become compliant if they are
not already compliant. A plan has been developed to repair or replace
systems and equipment not currently Y2K compliant. This step is
substantially complete. Responses from certain vendors have not yet been
received.
Step 4. Correction and Testing. The Company's third party data processing
services as well as vendors who provide significant technology-related
services have modified their systems to become Y2K compliant. It has also
arranged for repair or replacement of equipment programs affected by Y2K
issues. Most of the testing and corrections has taken place. The
monitoring of certain non-IT vendors will continue.
10
<PAGE>
Step 5. Implementation. This step includes repair or replacement of
systems and computer equipment and the development of contingency plans.
The repair and replacement phase is substantially completed. Contingency
plans for how the Company would resume business if unanticipated problems
arise from non-performance by IT and non-IT vendors is in the process of
being addressed. Such plans are expected to be completed by March 31,
1999.
The Company's efforts to become Y2K compliant are being monitored by its federal
banking regulators. Failure to be Y2K compliant could subject the Company to
formal supervisory or enforcement actions.
The Company's expenses related to Y2K have not been material. The Company
expects to incur additional costs to become Y2K compliant. It does not expect
such costs to be material to the operating expenses of the Company. Some of the
costs are not expected to be incremental to the Company, but rather represent
new equipment and software that would otherwise be purchased in the normal
course of the Company's business. The Company presently believes the Y2K issue
will not pose significant operating problems for the Company. However, if
implementation and testing plans are not completed in a satisfactory and timely
manner, in particular by third parties on which the Company is dependent, or
other unforeseen problems arise, the Y2K issue could have a material adverse
effect on the operations of the Company.
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 long than five years. The Office of Thrift Supervision
requires 1.0% total liquidity. The Bank met all liquidity requirements during
the three-months ended December 31, 1998.
At December 31, 1998, the Company had various commitments arising in the normal
course of business. Such commitments were not material and are not expected to
have a material adverse impact on the operations of the Company.
At December 31, 1998, the Bank's capital to assets 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, 1998,
annual report. There have been no material changes in the market risk of the
Company in the intervening three-month period.
11
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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
The Company convened a Special Meeting of Stockholders on October 23, 1998. At
the meeting, the stockholders of the Company considered and voted on:
1. The 1998 Stock Option Plan
2. The 1998 Recognition and Retention Plan
The ratification of the 1998 Stock Option Plan was approved by a vote of
3,849,592 in favor, 317,140 against, 49,754 abstentions.
The ratification of the 1998 Recognition and Retention Plan was approved by a
vote of 3,774,061 in favor, 392,631 against, and 49,794 abstentions.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
POCAHONTAS BANCORP, INC.
Date: 2-11-99 /s/ Skip Martin
-------------- -------------------------------------
Skip Martin
President and Chief Executive Officer
Date: 2-11-99 /s/ James Edington
-------------- -------------------------------------
James Edington
Executive Vice President
Date: 2-11-99 /s/ Dwayne Powell
-------------- -------------------------------------
Dwayne Powell
Chief Financial Officer
13
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<PAGE>
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<S> <C>
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0
0
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</TABLE>
