SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
POCAHONTAS BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
<PAGE>
[POCAHONTAS BANCORP, INC. LOGO]
March 20, 1999
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Pocahontas Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the
Company's main office, 203 West Broadway, Pocahontas, Arkansas, at 1:00 p.m.
(Arkansas time) on April 21, 1999.
The business to be conducted at the Annual Meeting includes the election of two
directors to the Board of Directors of the Company and the ratification of the
appointment of Deloitte & Touche, LLP as auditors for the Company for the fiscal
year ending September 30, 1999.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. The Board of Directors unanimously recommends a vote "FOR" each
matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Sincerely,
/s/Skip Martin
- --------------
Skip Martin
President and Chief Executive Officer
<PAGE>
POCAHONTAS BANCORP, INC.
203 West Broadway
P.O. Box 427
Pocahontas, Arkansas 72455
(870) 892-4595
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 21, 1999
Notice is hereby given that the Annual Meeting of Stockholders of
Pocahontas Bancorp, Inc. (the "Company") will be held at the Company's main
office, 203 West Broadway, Pocahontas, Arkansas, on April 21, 1999 at 1:00 p.m.
Arkansas time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors to the Board of Directors of the
Company; and
2. The ratification of the appointment of Deloitte & Touche, LLP
as auditors for the Company for the fiscal year ending
September 30, 1999; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on March 15, 1999 are
the stockholders entitled to vote at the Meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE HIS OR
HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE
PERSONALLY AT THE MEETING.
By Order of the Board of Directors
/s/ James A. Edington
---------------------
James A. Edington
Secretary
Pocahontas, Arkansas
March 20, 1999
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
PROXY STATEMENT
POCAHONTAS BANCORP, INC.
203 West Broadway
P.O. Box 427
Pocahontas, Arkansas 72455
(870) 892-4595
ANNUAL MEETING OF STOCKHOLDERS
April 21, 1999
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Pocahontas Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of Pocahontas
Bancorp, Inc. (the "Meeting"), which will be held at the Company's main office,
203 West Broadway, Pocahontas, Arkansas, on April 21, 1999, at 1:00 p.m.,
Arkansas Time, and all adjournments of the Meeting. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first being mailed
to stockholders on or about March 20, 1999.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain
the right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon.
Please sign and return your proxy to the Company in order for your vote to be
counted. Proxies which are signed, but contain no instructions for voting, will
be voted "FOR" the proposals set forth in this Proxy Statement for consideration
at the Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, James A. Edington, at the address of the Company shown
above, or by delivering a duly executed proxy bearing a later date. The presence
at the Meeting of any stockholder who has given a proxy shall not revoke such
proxy unless the stockholder delivers his or her ballot in person at the Meeting
or delivers a written revocation to the Secretary of the Company prior to the
voting of such proxy.
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. Proxies may also be solicited personally or by mail,
telephone or telegraph by the Company's directors, officers and employees,
without additional compensation therefor. The Company will also request persons,
firms and corporations holding shares in their names, or in the names of their
nominees which are beneficially owned by others, to send proxy materials to and
to obtain proxies from such beneficial owners, and will reimburse such holders
for their reasonable expenses in doing so.
<PAGE>
VOTING SECURITIES AND METHOD OF COUNTING VOTES
Holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock") as of the close of business on March 15, 1999 (the
"Record Date"), are entitled to one vote for each share then held. As of the
Record Date, there were 6,059,444 shares issued and outstanding. The presence in
person or by proxy of a majority of the outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Meeting. In the
event there are not sufficient votes for a quorum, or to approve or ratify any
matter being presented at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.
1
<PAGE>
Directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which the authority to vote for the
nominees being proposed is withheld. The affirmative vote of holders of a
majority of the total votes present at the Meeting in person or by proxy is
required for the ratification of Deloitte & Touche, LLP as the Company's
auditors. Abstentions and broker non-votes will be counted for purposes of
determining that a quorum is present, but will not be counted as votes in favor
of Proposal II.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons and groups who beneficially own in excess of 5% of the Common
Stock are required to file certain reports with the Securities and Exchange
Commission (the "SEC") regarding such ownership pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act").
The following table sets forth, as of the Record Date, the shares of
Common Stock beneficially owned by the Company's directors and executive
officers as a group, as well as each person who was the beneficial owner of more
than 5% of the outstanding shares of Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Amount of Shares
Owned and Nature Percent of Shares
of Beneficial of Common Stock
Holder Ownership (1) Outstanding (4)
- -------- --------------------- -------------------
<S> <C> <C>
All Directors and Executive Officers 738,687 12.0
as a Group (10 persons)
Pocahontas Federal Savings and Loan Association 536,582 8.7
401(k) Savings and Employee Stock
Ownership Plan (2)(3)
203 West Broadway
Pocahontas, Arkansas 72455
Drake Associates, L.P. and affiliates 501,224 8.1
55 Brookville Road
Glen Head, New York 11545
Friedman, Billings, Ramsey Group, Inc. 377,839 6.1
1001 19th Street North
Arlington, Virginia 22209-1710
</TABLE>
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(1) Based solely upon the filings made pursuant to the Exchange Act and
information furnished by the respective persons. In accordance with Rule
13d-3 under the Exchange Act, a person is deemed to be the beneficial owner
for purposes of this table, of any shares of Common Stock if he has sole or
shared voting or investment power with respect to such shares, or has a
right to acquire beneficial ownership at any time within 60 days from the
date as to which beneficial ownership is being determined. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Includes all shares held directly as well as shares owned by
spouses and minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or shared
voting or investment power.
<PAGE>
(2) Under the Pocahontas Federal Savings and Loan Association 401(k) Savings
and Employee Stock Ownership Plan (the "ESOP"), shares allocated to
participants' accounts are voted in accordance with the participants'
directions. Unallocated shares held by the ESOP are voted by the ESOP
Trustee in the manner calculated to most accurately reflect the
instructions received from the participants regarding the allocated shares.
As of the Record Date, 215,035 shares of Common Stock were allocated under
the ESOP.
(3) Excludes 44,123 shares of Common Stock or 0.66% of the shares of Common
Stock outstanding, owned by the ESOP for the benefit of the named executive
officers of the Company.
(4) Total Common Stock outstanding includes shares that may be acquired
pursuant to presently exercisable options.
2
<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven
members. The Company's bylaws provide that approximately one-third of the
Directors are to be elected annually. Directors of the Company are generally
elected to serve for a three-year period or until their respective successors
shall have been elected and shall qualify. Two directors will be elected at the
Meeting to serve for three-year periods and until their respective successors
shall have been elected and shall qualify. The Board of Directors has nominated
to serve as directors James A. Edington and Robert Rainwater.
The table below sets forth certain information regarding members of the
Company's Board of Directors, including the terms of office of Board members. It
is intended that the proxies solicited on behalf of the Board of Directors
(other than proxies in which the vote is withheld as to a nominee) will be voted
at the Meeting for the election of the nominees identified below. If a nominee
is unable to serve, the shares represented by all such proxies will be voted for
the election of such substitute as the Board of Directors may recommend. At this
time, the Board of Directors knows of no reason why the nominees might be unable
to serve, if elected. Except as indicated herein, there are no arrangements or
understanding between the nominees and any other person pursuant to which such
nominees were selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Positions Beneficially
Held in the Served Current Term Owned on Percent
Name (1)Age (4) Company Since (2) to Expire Record Date (3) of Class
--------------- ------- --------- --------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Nominees
James A. Edington 48 Executive Vice 1994 1999 164,799 2.7%
President and Director
Robert Rainwater 64 Director 1981 1999 32,924 0.5%
<CAPTION>
Directors Continuing in Office
<S> <C> <C> <C> <C> <C> <C>
Ralph P. Baltz 50 Chairman 1986 2000 130,502 2.1%
Marcus Van Camp 50 Director 1990 2000 32,752 0.5%
Skip Martin 50 President, Chief 1988 2001 175,942 2.8%
Executive Officer
and Director
Charles R. Ervin 61 Director 1988 2001 61,077 1.0%
N. Ray Campbell 49 Director 1992 2000 41,599 0.7%
Executive Officer
Dwayne Powell 34 Chief Financial 58,871 1.0%
Officer
Bill B. Stacy 56 Senior Vice President 12,980 0.2%
Richard M. Olvey 55 Senior Vice President 27,241 0.4%
</TABLE>
<PAGE>
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(1) The mailing address for each person listed is 203 West Broadway,
Pocahontas, Arkansas 72455. Each of the persons listed is also a director
of Pocahontas Federal Savings and Loan Association (the "Bank"), the
Company's wholly owned subsidiary.
(footnotes continued on following page)
3
<PAGE>
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(2) Reflects initial appointment to the Board of Directors of the Bank's mutual
predecessor.
(3) See definition of "beneficial ownership" in the table "Security Ownership
of Certain Beneficial Owners and Management."
(4) As of March 11, 1999.
Skip Martin has been the President and Chief Executive Officer of the
Bank since 1990, and of the Company since its formation in 1998. He has been a
member of the Board of Directors of the Bank since 1988 and of the Company since
its formation. Prior to his appointment as President and Chief Executive
Officer, Mr. Martin served as Vice President of the Bank. Mr. Martin has been
employed by the Bank since 1972 and has been an officer of the Bank since 1978.
Mr. Martin has announced his intention of retiring as President and Chief
Executive Officer of the Company and the Bank, effective April 30, 1999.
Ralph P. Baltz has been Chairman of the Board of the Bank since January
1997 and of the Company since its formation. Mr. Baltz is a general contractor
and residential developer and is the President and owner/operator of Tri-County
Sand and Gravel, Inc.
Marcus Van Camp is the Superintendent of Schools at Pocahontas Public
Schools, and has been employed by such schools for 25 years.
James A. Edington has been Executive Vice President of the Bank since
1991 and of the Company since its formation. He has been the Bank's compliance
officer, security officer, secretary and treasurer. Mr. Edington has been
employed in executive roles with the Bank since 1983. The Company has announced
that Mr. Edington will succeed Mr. Martin as President and Chief Executive
Officer of the Company and the Bank, effective April 30, 1999.
Charles R. Ervin is retired. Prior to his retirement, Mr. Ervin was
President and owner of C.E.C., Inc., a construction company, since March 1992.
Prior to that, Mr. Ervin was President and part-owner of M.T.C., Inc., a general
contractor specializing in tenant construction in shopping centers nationally.
N. Ray Campbell is the owner and operator of Big Valley Trailer
Manufacturing. Prior to this, Mr. Campbell was the Plant Manager of Waterloo
Industries, an industrial firm located in Pocahontas, Arkansas.
Robert Rainwater is semi-retired. Prior to his retirement, Mr.
Rainwater was the owner of Sexton Pharmacy in Walnut Ridge, Arkansas.
Dwayne Powell, CPA, has served as Chief Financial Officer of the Bank
since October 1996 and of the Company since its formation. Prior to that, Mr.
Powell was an Audit Manager for Deloitte & Touche LLP, primarily serving
financial institution clients.
Bill B. Stacy has served as Senior Vice President of the Bank since
1997. Mr. Stacy has been affiliated with the Bank since 1988 and began service
as a Vice President of Mortgage Banking.
Richard M. Olvey has served as a Senior Vice President of the Bank
since 1987. Mr. Olvey has been affiliated with the Bank since 1968. During his
tenure with the Bank, Mr. Olvey has been a Branch Manager and Mortgage Lending
Officer.
<PAGE>
Meetings and Committees of the Board of Directors
The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the fiscal year
ended September 30, 1998, the Board of Directors held 12 regular and one special
meeting. During the fiscal year ended September 30, 1998, no director attended
fewer than 75 percent of the total meetings of the Board of Directors and
committees on which such director served.
4
<PAGE>
The Audit Committee of the Company consists of all the non-employee
Directors of the Board of Directors. The Audit Committee met once during the
fiscal year ended September 30, 1998. The Audit Committee normally meets on a
quarterly basis and serves as a liaison between the Board, the Company's
independent auditors, federal regulators and management.
The Nominating Committee consists of Directors Robert Rainwater, Marcus
Van Camp and James A. Edington, and meets annually to present officer and
director candidates to the Company. The Nominating Committee met once during the
fiscal year ended September 30, 1998.
The Dividend Committee consists of the entire Board of Directors. The
Dividend Committee meets at least quarterly to recommend the amount and type of
dividend to be paid by the Company. The Dividend Committee met four times during
the fiscal year ended September 30, 1998.
Directors' Compensation
The Company's directors received no separate fees during the fiscal
year ended September 30, 1998. During the fiscal year ended September 30, 1998,
members of the Board of Directors of the Bank each received fees of $1,750 per
month. In addition, the Chairman of the Board received an additional $625 per
month during the fiscal year ended September 30, 1998. No additional
compensation or fees are received for serving as directors of the Bank.
Executive Compensation
The following table sets forth for the years ended September 30, 1998,
1997, and 1996, certain information as to the total remuneration paid by the
Company to the Chief Executive Officer and all other executive officers whose
salary and bonuses exceeded $100,000 ("Named Executive Officers"). For the
period prior to formation of the Company in 1998, the remuneration information
relates to that paid by the Bank to the Named Executive Officers.
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- --------------------------------
Year Other Restricted Options/ All
Name and Ended Annual Com- Stock SARS LTIP Other
Principal Position Sept. 30, Salary (1) Bonus pensation Awards (3) (#) Payouts Compensation (2)
- ------------------ --------- ---------- ----- --------- ---------- --- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Skip Martin............ 1998 $196,000 $ -- -- -- -- -- $20,161
President and Chief 1997 166,100 10,200 -- -- -- -- 18,957
Executive Officer 1996 141,100 9,900 -- -- -- -- 20,551
James A. Edington...... 1998 171,000 -- -- -- -- -- 20,161
Executive Vice 1997 140,000 9,700 -- -- -- -- 19,778
President and Secretary 1996 95,000 9,700 -- -- -- -- 13,071
Dwayne Powell.......... 1998 125,000 -- -- -- -- -- 20,161
Chief Financial 1997 100,000 -- -- 53,047 -- -- 88
Officer(4)
</TABLE>
<PAGE>
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(1) Includes Board of Director and committee fees.
(2) Consists of payments made pursuant to the Bank's Profit Sharing Plan. See
"--Executive Compensation." Also includes the Bank's contributions or
allocations (but not earnings) pursuant to the Bank's ESOP. Does not
include benefits pursuant to the Bank's Pension Plan. The Company also
provides its Chief Executive Officer with use of a Company-owned
automobile, the value of which use did not exceed the lesser of $50,000 or
10% of such officer's cash compensation.
(3) Represents awards made pursuant to the Bank's Recognition and Retention
Plan for Employees, which awards vest in five equal annual installments
commencing on March 31, 1995 and the Company's Recognition and Retention
Plan. Dividends on such shares accrue and are paid to the recipient when
the shares are granted. The value of such shares was determined by
multiplying the number of shares awarded by the price at which the shares
of common stock were sold. Pursuant to resolution of the Board of Directors
adopted on January 21, 1998, all outstanding unvested awards were deemed
earned as of January 21, 1998.
(4) Mr. Powell was not employed by the Bank in fiscal year 1996.
5
<PAGE>
Employment Agreements. The Bank has entered into employment agreements
with Skip Martin, its President and Chief Executive Officer, James A. Edington,
its Executive Vice President and Dwayne Powell, its Chief Financial Officer. On
March 2, 1999, the Company announced the retirement of Skip Martin as President
and Chief Executive Officer, effective April 30, 1999. In connection with his
retirement, Mr. Martin terminated his employment agreement and entered into an
Employment Separation Agreement and Release, which is described in greater
detail below.
Each employment agreement provides for a term of three years.
Commencing on the first anniversary date and continuing on each anniversary date
thereafter, the Board of Directors may extend each agreement for an additional
year such that the remaining terms shall be up to three years unless written
notice of nonrenewal is given by the Board of Directors after conducting a
performance evaluation. The agreements provide that the base salary of the
executive will be reviewed annually. In addition to the base salary, the
agreements provide that the executive is to receive all benefits provided to
permanent full time employees of the Bank, including among other things,
disability pay, participation in stock benefit plans and other fringe benefits
applicable to executive personnel. Each agreement permits the Bank to terminate
the executive's employment for cause at any time. In the event the Bank chooses
to terminate the executive's employment for reasons other than for cause, or
upon the termination of the executive's employment for reasons other than a
change in control, as defined, or in the event of the executive's resignation
from the Bank upon (i) failure to be reelected to his current office, (ii) a
material change in his functions, duties or responsibilities, (iii) relocation
of his principal place of employment, (iv) the liquidation or dissolution of the
Bank or the Company, or (v) a breach of the agreement by the Bank, the
executive, or in the event of death, his beneficiaries, would be entitled to
receive an amount equal to the greater of the remaining payments, including base
salary, bonuses and other payments due under the remaining term of the agreement
or three times the average of the executive's base salary, including bonuses and
other cash compensation paid, and the amount of any benefits received pursuant
to any employee benefit plans maintained by the Bank.
If termination, voluntary or involuntary, follows a change in control
of the Bank, as defined in the agreement, the executive or, in the event of his
death, his beneficiaries, would be entitled to a payment equal to the greater of
(i) the payments due under the remaining term of the agreement or (ii) 2.99
times his average annual compensation over the five years preceding termination.
The Bank would also continue the executive's life, health, and disability
coverage for the remaining unexpired term of the agreement to the extent allowed
by the plan or policies maintained by the Bank from time to time.
Each employment agreement provides that for a period of one year
following termination, the executive agrees not to compete with the Bank in any
city, town or county in which the Bank maintains an office or has filed an
application to establish an office.
Employment Separation Agreement and Release. On March 2, 1999, the
Company and the Bank entered into an Employment Separation Agreement and Release
with Skip Martin in connection with his retirement as President and Chief
Executive Officer of the Company. The agreement provides, among other things,
for the payment by the Company to Mr. Martin of $2.75 million, in installments
of no less than $150,000 annually, with the entire unpaid amount due upon Mr.
Martin's death. The agreement provides that Mr. Martin will be entitled to an
additional payment equal to $550,000 should there be a change in control of the
Company or the Bank on or before April 30, 2003.
<PAGE>
Pursuant to the agreement, Mr. Martin forfeits all shares of restricted
stock awarded to him under the Company's Recognition and Retention Plan and
foregoes any additional benefits accruals or contributions under the Company's
Restated Supplemental Executive Retirement Agreement. Pursuant to the agreement,
Mr. Martin's employment agreement will be terminated (except for certain
specified provisions) and no further payouts under the employment agreement will
be due to him.
6
<PAGE>
1994 Stock Option Plan for Outside Directors. The Bank adopted the 1994
Stock Option Plan for Outside Directors of the Bank (the "1994 Directors' Plan")
in April 1994, and such plan was subsequently approved by the Bank's
stockholders. At that time, non-statutory stock options to purchase 20,643
shares were granted to the outside directors of the Bank. The 1994 Directors'
Plan reserved 4,274 options for future grant. Any person who became a
non-employee director subsequent to the effective date of the 1994 Directors'
Plan was entitled to receive options for 1,424 shares of Bank common stock to
the extent options were available. Options granted in 1994 vested ratably at 20%
per year commencing on the first September 30th after the effective date of the
1994 Directors' Plan. The exercise price of the options was equal to the fair
market value of the shares of Bank Common Stock underlying such option at the
time the option was granted, or $10.00 per share of Bank Common Stock for
options granted in conjunction with the Bank's initial stock offering. All
options granted under the 1994 Directors' Plan were exercisable from time to
time in whole or in part, and expired upon the earlier of ten years following
the date of grant or three years following the date the optionee ceased to be a
director. No options were granted under the 1994 Directors' Plan during the
fiscal year ended September 30, 1998. In fiscal year 1998, no options were
exercised under the 1994 Directors' Plan. On March 31, 1998, each share of
Common Stock of the Bank, including shares underlying the options granted in the
1994 Directors' Plan, was converted (the "Conversion") into 4.0245 shares of
Common Stock of the Company as part of the mutual to stock conversion of
Pocahontas Federal Mutual Holding Company.
Pocahontas Bancorp, Inc. Stock Option Plan. In October 1998, the
Company adopted the Pocahontas Bancorp, Inc. Stock Option Plan (the "Stock
Option Plan") for directors, officers and employees of the Bank and its
affiliates and such plan was subsequently approved by the Company's
stockholders. The Stock Option Plan is administered by a committee of
non-employee directors. The Stock Option Plan authorizes the grant of incentive
stock options within the meaning of Section 422 of the Code, "non-statutory
stock options" which do not qualify as incentive stock options, certain "limited
rights" exercisable only upon a change in control of the Company or the Bank,
"dividend equivalent rights" payable only upon declaration of an extraordinary
dividend and "reload options", which provide an option to acquire shares of
Common Stock equivalent to the shares used to pay for an option or deducted from
a distribution to satisfy income tax withholding.
On the effective date of the Stock Option Plan, incentive stock options
for 277,075 shares of Company Common Stock were granted to employees and
officers and non-statutory stock options for 80,000 shares were granted to
outside directors. No shares were reserved for future grant. Options granted in
1998 vest ratably at 20% per year commencing on October 23, 1999. The exercise
price of the options is equal to the fair market value of the shares of Company
Common Stock underlying such options. Incentive stock options granted under the
Stock Option Plan are exercisable in whole or in part and expire upon the
earlier of ten years following the date of grant or three years following the
date the optionee ceases to be an officer or employee. Non-statutory options
expire upon the earlier of ten years and one day following the date of grant or
three years following the date the optionee ceases to be a director.
Pocahontas Bancorp, Inc. Recognition and Retention Plan. In October
1998, the Company adopted the Pocahontas Bancorp, Inc. Recognition and Retention
Plan (the "Recognition and Retention Plan"), which was subsequently approved by
the Company's stockholders. At the time of implementation of this plan, 142,830
shares of Company Common Stock were awarded to officers, directors and employees
of the Company.
<PAGE>
A Committee of the Board of Directors of the Company composed of two or
more non-employee directors of the Company administers the Recognition and
Retention Plan. Awards were granted in the form of shares of Company Common
Stock that were restricted by the terms of the Recognition and Retention Plan
("Restricted Stock"). Restricted Stock is nontransferable and nonassignable.
Participants in the Recognition and Retention Plan become vested in shares of
Company Common Stock covered by an award and all restrictions lapse at a rate of
20% per year commencing on January 3, 2000. Awards become fully vested (i.e.,
all restrictions lapse) upon termination of employment or cessation of service
due to death or disability. Upon termination of employment for any other reason,
7
<PAGE>
unvested shares of Restricted Stock are forfeited. The holders of the Restricted
Stock have the right to vote such shares during the restricted period and
receive the cash and stock dividends with respect to the Restricted Stock when
declared and paid. The holders may not sell, assign, transfer, pledge or
otherwise encumber any of the Restricted Stock during the restricted period.
Director Plan. The Bank maintains a non-tax qualified Director Plan
that provides directors who serve on the Board of Directors until the age of 60
or, in some cases, 65, with an annual benefit equal to a predetermined amount
ranging between $29,316 and $35,640 following the directors' termination of
service due to retirement, death, or after a change in control. Benefits are
payable monthly to the director, or in the case of his death, to his
beneficiary, over a period of twenty years. The Director Plan provides for a
$15,000 "burial benefit," which is designated for the payment of burial and/or
funeral expenses. In the event of a director's disability, the director will be
entitled to a disability benefit equal to the annuitized present value of his
accrued benefit payable monthly for twenty years. In addition, upon the
director's death following disability, the director's beneficiary will receive
an additional lump sum benefit equal to up to $600,000, reduced by all prior
contributions made to the Director Plan on behalf of the director.
The Bank and the Director Plan participants have each established an
irrevocable trust in connection with the Director Plan. These trusts will be
funded with contributions from the Bank for the purpose of providing the
benefits promised under the terms of the Director Plan. The assets of the trusts
established by the participants will be beneficially owned by the Director Plan
participants, who will recognize income as contributions are made to the trust.
Earnings on the trusts' assets are taxable to the participants. The trustee of
the trusts may invest the trusts' assets in the Company Common Stock and may
purchase life insurance on the lives of the participants with assets of the
trusts.
Director Emeritus Plan. The Bank currently has two former directors who
have been appointed "Directors Emeritus." Upon reaching age 70 with 10 years of
continuous service as a director, each current Director Emeritus was, upon
retirement from the Board of Directors, appointed a "Director Emeritus" in
exchange for performing consulting services for the Board of Directors. Under
the current plan, in consideration of his services, a Director Emeritus will
receive an annual fee of $18,000 for a ten year period (the "benefit period")
following the director's designation as a Director Emeritus. The Director
Emeritus Plan provides for survivor benefits payable to a designated beneficiary
in an amount equal to the annual fee for the remainder of the ten year period,
plus a $10,000 "burial benefit," which is designated for the payment of burial
and/or funeral expenses.
1994 Incentive Stock Option Plan. In April 1994, the Bank adopted the
1994 Incentive Stock Option Plan (the "Incentive Option Plan") for officers and
employees of the Bank and its affiliates, and such plan was subsequently
approved by the Bank's stockholders. The Incentive Option Plan is administered
by a committee of non-employee directors. The Incentive Option Plan authorizes
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), "non-statutory options," which do
not qualify as incentive stock options, and certain "limited rights" exercisable
only upon a change in control of the Bank.
<PAGE>
Incentive stock options (with limited rights) for 200,553 shares of
Bank Common Stock were granted to employees and officers contemporaneously with
the completion of the Bank's initial stock offering in April 1994 at an exercise
price of $10.00. Skip Martin exercised options for 16,098 shares under the
Incentive Option Plan during the fiscal year ended September 30, 1998.
At September 30, 1998, the number of shares of Bank Common Stock
underlying unexercised options granted to all participants as a group was
134,313 and the unrealized value of such stock options was $0.9 million (based
on the difference between the strike price for such options and the price for
the Bank Common Stock underlying such options on the last sale date reported on
Nasdaq on September 30, 1998). All such options granted were exercisable at
$2.48 per share. The following table sets forth certain information regarding
the shares acquired and the value realized during fiscal year 1998 by certain
executive officers of the Bank at September 30, 1998. As part of the Conversion
on March 31, 1998, each share of common stock of the Bank, including shares
underlying the options granted in the Incentive Option Plan, was converted into
4.0245 shares of Common Stock of the Company.
8
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
Shares Number of Unexercised Value of Unexercised In-
Acquired Options at The-Money Options at
upon Value Fiscal Year-End Fiscal Year-End
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Skip Martin 16,098 $123,182 64,121/20,055 $413,580/$120,355
James A. Edington -- -- 40,110/10,027 $258,710/$64,674
========================== ============== ============ ================================ ==============================
</TABLE>
401(k) Savings and Employee Stock Ownership Plan. The Bank merged its
Employee Stock Ownership Plan ("ESOP") and Profit Sharing Plan to form the
401(k) Savings and Employee Stock Ownership Plan (the "KSOP"), effective October
1, 1997, to enable participants to invest in Bank Common Stock with the pre-tax
deferral of their salary ("Elective Deferrals"). The KSOP is a tax-qualified
plan subject to the requirements of the Employee Retirement Income Security Act
of 1974 ("ERISA") and the Code. Employees with a year of service with the Bank
during which they worked at least 1,000 hours and who have attained age 21 are
eligible to participate in any ESOP, matching or discretionary contributions
under the plan. Any employee with one hour of service may participate in making
any Elective Deferrals.
The ESOP portion of the KSOP provides the plan with the ability to
borrow money for the purpose of purchasing Bank Common Stock. As part of the
Conversion, the ESOP portion of the KSOP borrowed funds from the Company and
used those funds to purchase a number of shares equal to 8% of the Common Stock
issued in the Conversion. Collateral for the loan was the Common Stock purchased
by the KSOP. Shares purchased with the ESOP loan are held in a suspense account
for allocation among participants' accounts as the loan is repaid. As the ESOP
loan is repaid from contributions the Bank makes to the ESOP portion of the
KSOP, shares are released from the suspense account in an amount proportional to
the repayment of the KSOP loan. The released shares are allocated among the ESOP
accounts of participants who have a 1000 hours of service for the current plan
year and are employed on the last day of the plan year, on the basis of
compensation in the year of allocation, up to an annual adjusted maximum level
of compensation. As part of the Conversion on March 31, 1998, each share of
common stock of the Bank, including shares in the KSOP, was converted into
4.0245 shares of Common Stock of the Company.
Participants may elect to defer up to 15% of their salary into the KSOP
("Elective Deferrals") . The Bank may, in its discretion, make discretionary
("Discretionary Contributions") and/or matching contributions ("Matching
Contributions") to the KSOP. Benefits in the ESOP, Discretionary Contributions
and Matching Contributions generally will become 100% vested after five years of
credited service. Employees are 100% vested in the Elective Deferral accounts
and rollover accounts at all times under the plan. Participants will be credited
for years of service with the Bank prior to the effective date of the plan.
Forfeitures of Matching and Discretionary Contributions will be used to reduce
such contributions in succeeding plan years; forfeitures of ESOP Contributions
are reallocated among remaining participating employees in the same proportion
<PAGE>
as contributions. Benefits may be payable upon death, retirement, early
retirement, disability, or separation from service in a lump sum or, at the
election of the participant, in installments not to exceed five years. The
Bank's contributions to the KSOP are discretionary, subject to the ESOP loan
terms and tax law limits, so benefits payable under the KSOP cannot be
estimated.
The KSOP provides for loans to employees not to exceed 50% of their
vested Discretionary Contribution, Elective Deferral, Matching Contribution or
Rollover Account balances, or $50,000. Withdrawals are permitted only to the
extent of hardship (e.g., medical expenses), to purchase a primary residence,
for limited education expenses
9
<PAGE>
or any other condition or event as determined by the Commissioner of the
Internal Revenue Service from the vested portion of the Discretionary
Contribution, Elective Deferral, Matching Contribution or Rollover Accounts.
A committee was appointed by the Board of Directors of the Bank to
administer the KSOP (the "KSOP Committee"). The KSOP Committee instructs the
trustee regarding investment of funds contributed to the KSOP. The KSOP trustee
is required to vote all allocated shares held in the KSOP in accordance with the
instructions of the participants; unallocated shares shall be voted in a manner
calculated to reflect most accurately the instructions the KSOP trustee has
received from participants regarding the allocated stock. If no shares have been
allocated, KSOP participants will be deemed to have one share of stock allocated
to his account for the sole purpose of providing the trustee with voting
instructions. Under ERISA, the Secretary of Labor is authorized to bring an
action against the KSOP trustee for the failure of the KSOP trustee to comply
with its fiduciary responsibilities. Such a suit could seek to enjoin the KSOP
trustee from violating its fiduciary responsibilities and could result in the
imposition of civil penalties or criminal penalties if the breach is found to be
willful.
Supplemental Retirement Plan. In November 1993, management of the Bank
approved a supplemental retirement plan (the "Retirement Plan") for the Bank's
former Chairman of the Board, Mr. Joe R. Martin, who retired in January 1996.
The plan provides for an annual payment of $75,000 per year for ten years. The
payment will be made to Mr. Martin's spouse in the event of his death during
such ten-year period. In fiscal 1998, the Board approved an additional $75,000
and a one year extension of the Retirement Plan.
Supplemental Executive Retirement Plan. The Bank has implemented a
non-qualified Supplemental Executive Retirement Plan ("SERP") to provide a
select group of management and highly compensated employees with additional
benefits following termination of employment due to retirement, death, after a
change in control or involuntary termination. The contribution made to the SERP
is intended to provide an actuarially determined annual benefit of $182,143 for
Skip Martin, $147,143 for James A. Edington, and $214,286 for Dwayne Powell,
payable monthly for 20 years. In the event of the employee's disability, the
employee will be entitled to a disability benefit equal to the annuitized
present value of his accrued benefit payable monthly for twenty years. In
addition, upon the employee's death following disability, the employee's
beneficiary will receive an additional lump sum death benefit equal to $3.0
million, $2.7 million and $2.6 million in the case of Messrs. Martin, Edington,
and Powell, respectively, reduced by all prior contributions made to the SERP on
behalf of the participant. The SERPs also provide for a $15,000 "burial
benefit," which is designated for the payment of burial and/or funeral expenses.
The Bank and the SERP participants have each established an irrevocable
trust in connection with each SERP. These trusts will be funded with
contributions from the Bank for the purpose of providing the benefits promised
under the terms of the SERP. The assets of the trusts will be beneficially owned
by the SERP participants, who will recognize income as contributions are made to
the trusts. Earnings on the trust's assets are taxable to the participant. The
trustee of the trust may invest the trust's assets in the Company Common Stock
and may purchase life insurance on the life of the participant with assets of
the trust.
<PAGE>
Stock Performance Graph
The Common Stock of the Company has traded only since March 31, 1998.
Following the close of trading on March 31, 1998, each share of common stock of
the Bank was converted into 4.0245 shares of Common Stock in connection with the
Conversion. The graph compares the cumulative total return including dividends
for the period ended on September 30, 1998, for the following: (a) the common
stock of the Bank (the predecessor of the Company) beginning with the sale of
Bank Common Stock in the Bank's stock offering on April 5, 1994, (b) stocks
included in the Nasdaq Composite Index, beginning with the close of trading on
April 5, 1994, and (c) stocks included in the SNL Thrift Index, beginning with
the close of trading on April 5, 1994.
10
<PAGE>
Pocahontas Bancorp Inc.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
Period Ending
===========================================================================
Index 4/5/94 9/30/94 9/30/95 9/30/96 9/30/97 9/30/98
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Pocahontas Bancorp Inc. 100.00 132.14 175.41 238.55 601.51 695.89
NASDAQ - Total U.S. 100.00 102.11 141.05 167.34 229.70 234.79
SNL Thrift Index 100.00 117.38 153.71 185.65 322.59 289.21
</TABLE>
Certain Transactions
The Bank has followed a policy of granting consumer loans and loans
secured by one- to four-family real estate to officers, directors and employees.
Loans to directors and executive officers are made in the ordinary course of
business and on the same terms and conditions as those of comparable
transactions with the general public prevailing at the time, in accordance with
the Bank's underwriting guidelines, and do not involve more than the normal risk
of collectibility or present other unfavorable features.
All loans by the Bank to its directors and executive officers are
subject to OTS regulations restricting loan and other transactions with
affiliated persons of the Bank. Federal law generally requires that all loans to
directors and executive officers be made on terms and conditions comparable to
those for similar transactions with non-affiliates,
11
<PAGE>
subject to limited exceptions. However, recent regulations now permit executive
officers and directors to receive the same terms on loans through plans that are
widely available to other employees, as long as the director or executive
officer is not given preferential treatment compared to the other participating
employees. Loans to all directors, executive officers, and their associates
totaled $705,697 at September 30, 1998, which was 2.2% of the Company's
stockholders' equity at that date. There were no loans outstanding to any
director, executive officer or their affiliates at preferential rates or terms
which in the aggregate exceeded $60,000 during the three years ended September
30, 1998. All loans to directors and officers were performing in accordance with
their terms at September 30, 1998.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has approved the engagement of
Deloitte & Touche, LLP to be the Company's auditors for the 1999 fiscal year,
subject to the ratification of the engagement by the Company's stockholders. At
the Meeting, stockholders will consider and vote on the ratification of the
engagement of Deloitte & Touche, LLP, for the Company's fiscal year ending
September 30, 1999. A representative of Deloitte & Touche, LLP, is expected to
attend the Meeting to respond to appropriate questions and to make a statement
if he so desires.
In order to ratify the selection of Deloitte & Touche, LLP, as the
auditors for the 1999 fiscal year, the proposal must receive at least a majority
of the votes cast, either in person or by proxy, in favor of such ratification.
The Board of Directors recommends a vote "FOR" the ratification of Deloitte &
Touche, LLP, as auditors for the 1999 fiscal year.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting has to be received at the Company's executive office, 203
West Broadway, P.O. Box 427, Pocahontas, Arkansas 72445, no later than September
23, 1999. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act as directed by a majority of the Board of
Directors except for matters related to the conduct of the Meeting, as to which
they shall act in accordance with their best judgment.
The Bylaws of the Company provide an advance notice procedure for
certain business, or nominations to the Board of Directors to be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than ninety (90)
days before the date fixed for such meeting; provided, however, that in the
<PAGE>
event that less than one hundred (100) days notice or prior public disclosure of
the date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
12
<PAGE>
The date on which the next annual meeting of stockholders is expected
to be held is January 19, 2000. Accordingly, advance written notice of business
or nominations to the Board of Directors to be brought before this annual
meeting of stockholders must be given to the Company no later than October 20,
1999.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30,
1998, AND A COPY OF THE COMPANY'S 1998 ANNUAL REPORT TO STOCKHOLDERS WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO JAMES A. EDINGTON, SECRETARY, POCAHONTAS BANCORP, INC., 203 WEST
BROADWAY, P.O. BOX 427, POCAHONTAS, ARKANSAS 72455.
BY ORDER OF THE BOARD OF DIRECTORS
/S/James A. Edington
--------------------
James A. Edington
Secretary
Pocahontas, Arkansas
March 20, 1999
13
<PAGE>
REVOCABLE PROXY
POCAHONTAS BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
The undersigned hereby appoints the official proxy committee consisting of
those members of the Board of Directors not nominated hereon, with full powers
of substitution, to act as attorneys and proxies for the undersigned to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders ("Annual Meeting") to be held at the
Company's main office, 203 West Broadway, Pocahontas, Arkansas, on April 21,
1999 at 1:00 p.m., Arkansas time. The official proxy committee is authorized to
cast all votes to which the undersigned is entitled as follows:
1. The election as Directors of all nominees listed below, each to serve for a
three-year term.
James A. Edington Robert Rainwater
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. The ratification of Deloitte & Touche, LLP as the Company's independent
auditor for the fiscal year ending September 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [ ]
The Board of Directors recommends a vote "FOR" each of the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUALMEETING, THIS PROXY WILL BE VOTED BY THE
MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
Please be sure to sign and date
this Proxy in the box below.
-----------------------------------------
Date
-----------------------------------------
Stockholder sign above
-----------------------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
POCAHONTAS BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should the above-signed be present and elect to vote at the Annual Meeting or
at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set forth on the
Notice of Annual Meeting of Stockholders, or by the filing of a later proxy
prior to a vote being taken on a particular proposal at the Annual Meeting.
The above-signed acknowledges receipt from the Company prior to the execution
of this proxy of a notice of the Annual Meeting, a proxy statement dated March
20, 1999, and audited financial statements.
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title.
PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY
