SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended September 30, 1999
----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number ______________
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Pocahontas Federal Savings and Loan Association 401(k) Savings and Employee
Stock Ownership Plan
B: Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Pocahontas Bancorp, Inc.
203 West Broadway
Pocahontas, Arkansas 72455
<PAGE>
<TABLE>
<CAPTION>
POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION
401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------
1999 1998
--------------------------------------- ---------------------------------------------
Allocated Unallocated Total Allocated Unallocated Total
<S> <C> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS AT, FAIR VALUE:
Cash $ 269,305 $ 269,305 $ 120,869 $ 120,869
Pocahontas Bancorp, Inc., common stock 1,961,965 $ 1,542,356 3,504,321 2,532,986 $ 2,550,944 5,083,930
Merrill Lynch Basic Value Fund 306,300 306,300 189,192 189,192
Merrill Lynch Capital Fund 193,823 193,823 112,846 112,846
Merrill Lynch Growth Fund 142,521 142,521 103,712 103,712
Merrill Lynch Fundamental Growth 36,664 36,664
Oppenheimer Main Street Fund 127,496 127,496 119,186 119,186
Templeton Foreign Fund 233 233
Union Planters common 4,931 4,931
Participant Loans 77,001 77,001 102,836 102,836
------- ----- ------- -------- ----- -------
Total investments 3,120,006 1,542,356 4,662,362 3,281,860 2,550,944 5,832,804
RECEIVABLES:
Employer contributions 65,852 65,852 137,967 137,967
Employee salary deferrals 4,281 4,281 5,901 5,901
Loan payments 6,730 6,730 3,597 3,597
------ --- ------ ------ ----- -----
Total receivables 76,863 76,863 147,465 147,465
------- --- ------- -------- ----- -------
Total assets 3,196,869 1,542,356 4,739,225 3,429,325 2,550,944 5,980,269
---------- ---------- ---------- ---------- ---------- ---------
LIABILITIES
Loan payable 2,443,525 2,443,525 2,856,600 2,856,600
Excess contribution payable 134,411 134,411
Accrued interest payable 71,409 71,409 77,366 77,366
Loan fees payable 319 319 600 600
---- --- ---- ---- ----- ---
Total liabilities 319 2,649,345 2,649,664 600 2,933,966 2,934,566
---- ---------- ---------- ---- ---------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS $ 3,196,550 $ (1,106,989) $ 2,089,561 $ 3,428,725 $ (383,022) $ 3,045,703
============ ============= =========== ============ ============ ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION
401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN ASSETS AVAIALBLE FOR BENEFITS
YEAR ENEDED SEPTEMBER 30, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------
1999 1998
-------------------------------------- -------------------------------------
Allocated Unallocated Total Allocated Unallocated Total
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTABLE TO:
Interest and dividends $ 157,729 $ 31,359 $ 189,088 $ 150,499 $ 150,499
Employee contributions 96,507 96,507 85,664 85,664
Employer cash contributions 204,865 260,730 465,595 137,968 $ 104,650 242,618
Allocation of 41,307 and 10,465 shares of
common stock of Pocahontas Bancorp, Inc.,
at market at September 30, 1999 and 1998,
respectively 260,730 260,730 345,345 345,345
Transfer from 401(k) Savings
and Profit Sharing Plan 1,339,423 1,339,423
Transfer from ESOP 1,428,672 240,695 1,669,367
----- ----- ----- ---------- -------- ---------
Total additions 719,831 292,089 1,011,920 3,487,571 345,345 3,832,916
DEDUCTIONS FROM NET ASSETS
ATTRIBUTABLE TO:
Net (appreciation) depreciation in fair value
of investments 785,177 640,204 1,425,381 (10,745) 305,656 294,911
Allocation of 41,307 and 10,465 shares of
common stock of Pocahontas Bancorp, Inc.,
at market at September 30, 1999 and 1998,
respectively 260,730 260,730 345,345 345,345
Interest expense 115,122 115,122 3,364 77,366 80,730
Distributions to participants 165,976 165,976 65,927 65,927
Administrative expenses 853 853 300 300
---- ---- ---- -- ---
Total deductions 952,006 1,016,056 1,968,062 58,846 728,367 787,213
-------- ---------- ---------- ------- -------- -------
NET INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS (232,175) (723,967) (956,142) 3,428,725 (383,022) 3,045,703
NET ASSETS, BEGINNING OF YEAR 3,428,725 (383,022) 3,045,703 0 0 0
---------- --------- ---------- -- -- --
NET ASSETS, END OF YEAR $3,196,550 $(1,106,989) $ 2,089,561 $3,428,725 $(383,022) $3,045,703
=========== ============ ============ =========== =========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION
401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following brief description of the Pocahontas Federal Savings and Loan
Association 401(k) Savings and Employee Stock Ownership Plan (the "Plan")
provides only general information. Participants should refer to the Plan
agreement for a more complete description of the Plan's provisions.
General - The Plan is a qualified employee stock ownership plan with a
salary reduction feature. Pocahontas Federal Savings and Loan Association
(the "Employer") formed the Plan by combining its existing 401(k) plan,
which had been effective since January 1, 1986, and its Employee Stock
Ownership Plan ("ESOP"), which had been effective since October 1, 1993.
The Company accomplished the combination of the existing plans through a
combination and restatement, with neither the 401(k) nor the ESOP being
the surviving plan, effectively creating a new plan with an effective date
of October 1, 1997. The Plan covers substantially all employees of the
Employer. Pocahontas Federal Savings and Loan Association is 100% owned by
Pocahontas Bancorp, Inc. (the "Company"). It is subject to the provisions
of the Employee Retirement Income Security Act of 1974.
Contributions - Each eligible participant may, but shall not be required
to, enter into an elective deferral agreement with the employer under
which the participant agrees to reduce his cash compensation by a
specified percentage, up to a maximum of 15%, and contribute such amounts
to the Plan. The amount of any matching contributions, qualified matching
contributions, discretionary contributions, qualifying non-elective
contributions, and ESOP contributions for each plan year will be made at
the sole discretion of the Board of Directors.
Participation - Employees are generally eligible to participate in the
Plan after completing one year of service. Only participants at least 21
years of age, who complete at least 1,000 hours of service during the Plan
year, and are employed on the last day of the Plan year are eligible to
share in the Employer's discretionary contribution for the year. An
employee may decline to participate in the Plan. For purposes of
participation in any election deferral contributions completion of one
hour of service is required.
Participant Accounts - Each participant's account is credited with an
allocation of (a) the Employer's discretionary and ESOP contributions, (b)
eligible forfeitures of terminated participants' nonvested accounts, (c)
and earnings of the Plan for the year. Allocations are based on
participant wages as defined in the Plan agreement. The benefit to which a
participant is entitled, subject to vesting, is the benefit that can be
provided from the participant's account.
Participant Loans - Participants may borrow, upon written application, any
amount provided that the aggregate amount of all outstanding loans to the
participant from the Plan and from any other qualified plan maintained by
the employer, including accrued interest thereon, shall not exceed the
lesser of $50,000 or 50% of the participants vested account balance. Loan
transactions are treated as a transfer to (from) the investment fund from
(to) the Participant Loan fund. Loan terms shall not exceed 5 years,
except for the purchase of a primary residence. The loans are
collateralized by the balance in the
<PAGE>
participant's account and bear interest at a rate commensurate with local
prevailing rates as determined quarterly by the Plan administrator.
Principal and interest is paid ratably not less than quarterly through
payroll deductions.
Plan Borrowings - The Plan purchased Company stock using the proceeds of
borrowings from the Company. The Plan's debt is collateralized by the
stock. A trustee holds such stock in a suspense account in a trust
established under the Plan. As the Plan makes payments of principal and
interest, shares are released into a suspense account to be allocated to
eligible employees' accounts at the end of the Plan year, in accordance
with the Plan. The lender has no rights against shares once they are
allocated under the Plan. Accordingly, the financial statements of the
Plan present separately the assets and liabilities and changes therein
pertaining to:
(a) the accounts of employees with rights in allocated stock
("Allocated") and
(b) stock not yet allocated to employees ("Unallocated").
Vesting - Vesting of accounts is based upon years of service as defined in
the Plan agreement. A participant becomes fully vested after five years of
credited service.
Voting and Dividend Rights - No participant shall have any voting or
dividend rights or other rights of a stockholder prior to the time that
shares are allocated to the participant.
Termination of the Plan - The Employer reserves the right to amend or
terminate the Plan agreement at any time by action of the Board of
Directors. Upon full or partial termination of the Plan, participants'
accounts will become 100% vested and all unallocated shares will be
allocated to the accounts of all participants in accordance with the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The financial statements of the Plan are prepared
under the accrual method of accounting.
Investment Valuations and Income Recognition - Investments are stated at
fair value as determined from quoted market prices. The investment in
shares of the Company's common stock is stated at fair value and is based
on the closing price in an active market as of the last trading day of the
year.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
<PAGE>
3. INVESTMENT PROGRAMS
Upon enrollment, each participant shall direct that his elective
contribution be invested in one or more of the following investment
options. Investment direction may be revised by a participant quarterly.
All ESOP contributions are invested in Company stock.
Merrill Lynch Funds:
Basic Value Fund - This fund's main goal is growth of capital by
investing in common stocks of U.S. companies that are believed to
be undervalued in relation to their price.
Capital Fund - This fund seeks to achieve the highest total
investment return consistent with prudent rise through a fully
managed investment policy utilizing equity, debt (including money
market), and convertible securities.
Growth Fund - This fund's main goal is long-term growth of capital.
The fund purchases primarily common stocks of U.S. companies that
have shown above average rates of growth earnings over the
long-term. The fund may invest up to 10% of its total assets in
securities issued by foreign companies.
Fundamental Growth Fund - The fund seeks long-term growth of
capital by investing in a diversified portfolio of equity
securities, placing particular emphasis on companies that have
exhibited above-average growth rates in earnings.
Oppenheimer Main Street Fund - This fund's objective is to seek total
return, which includes current income and capital appreciation in value of
its shares, from equity and debt securities.
Templeton Foreign Fund - This fund invests primarily in stocks and debt
securities of companies and governments outside the United States.
4. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 18, 1998, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections
of the Internal Revenue Code. The Plan has been amended since receiving
the determination letter. However, the Plan administrator and the Plan's
tax counsel believe that the Plan is currently designed and being operated
in compliance with the applicable requirements of the Internal Revenue
Code. Therefore, they believe that the Plan is qualified and the related
trust is tax-exempt.
5. ADMINISTRATION OF PLAN ASSETS
The Plan's assets, which consist principally of Company common stock and
mutual funds, are held by the Company's trustee, Merrill Lynch. The
Company administers the payment of principal and interest on the loan and
makes distributions to participants.
Certain administrative functions are performed by officers or employees of
the Company. No such officer or employee receives compensation from the
Plan.
<PAGE>
6. INVESTMENTS
Included in the September 30, 1999 and 1998, investment portfolio are the
following investments representing more than 5% of net assets available
for benefits:
<TABLE>
<CAPTION>
1999
------------------------------------------------------------------------------------
Pocahontas Bancorp, Inc. Merril Lynch Merril Lynch
Common Stock Basic Value Fund Capital Fund
------------------------------------------------------------------------------------
Allocated Unallocated Allocated Unallocated Allocated Unallocated
<S> <C> <C> <C> <C> <C> <C>
Number of Shares 324,956 244,353 8,125 5,980
Cost of Plan shares $ 3,235,973 $ 2,443,525 $ 306,300 $ 193,823
</TABLE>
<TABLE>
<CAPTION>
1998
-------------------------------------------------------------------
Pocahontas Bancorp, Inc. Merril Lynch
Common Stock Basic Value Fund
-------------------------------------------------------------------
Allocated Unallocated Allocated Unallocated
<S> <C> <C> <C> <C>
Number of Shares 283,649 285,660 5,578
Cost of Plan shares $2,430,000 $2,856,600 $207,950
</TABLE>
7. LOAN PAYABLE
The Plan has entered into a loan agreement at 6.5% interest maturing
December 31, 2017, with the Company, the proceeds of which were used to
purchase Company stock. The loan is collateralized by all unallocated
shares of the Plan. The repayment schedule for principal is as follows as
of September 30, 1999:
<TABLE>
<CAPTION>
Year ended September 30:
<S> <C>
2000 $ 142,830
2001 142,830
2002 142,830
2003 142,830
2004 142,830
Thereafter 1,729,375
-----------
TOTAL $2,443,525
===========
</TABLE>
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION 401(k)
SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
Date: June 26, 2000 By: /s/ James A. Edington
Name: James A. Edington
Title: President and Chief Executive
Officer
