POCAHONTAS BANCORP INC
8-K, 2001-01-19
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       PURSUANT TO SECTION 13 OR 15(D) OF

                       THE SECURITIES EXCHANGE ACT OF 1934

        Date of Report (Date of earliest event reported): January 4, 2001
                                                          ---------------

                            POCAHONTAS BANCORP, INC.
                  --------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

         Delaware                      0-23969                  71-0806097
----------------------------    ---------------------       -------------------
(State or Other Jurisdiction    (Commission File No.)       (I.R.S. Employer
      of Incorporation)                                     Identification No.)


203 West Broadway, Pocahontas, Arkansas                            72455
---------------------------------------                          -----------
(Address of Principal Executive Offices)                          (Zip Code)

Registrant's telephone number, including area code:  (870) 892-4595
                                                     --------------

                                 Not Applicable
              ---------------------------------------------------
          (Former name or former address, if changed since last report)





<PAGE>


Items 1, 2, 3, 4 and 6: Not Applicable

Item 5. Other Events
        ------------

     On January 4, 2001,  Pocahontas  Bancorp,  Inc. (the "Registrant")  entered
into an  Agreement  and Plan of Merger  (the  "Agreement")  by and  between  the
Registrant,   Pocahontas  Federal  Savings  and  Loan  Association,   Pocahontas
Acquisition  Corp and  Walden/Smith  Financial  Group,  Inc. and First Community
Bank. The Registrant is the holding  company for Pocahontas  Federal Savings and
Loan Association,  and Walden/Smith Financial Group, Inc. is the holding company
for First  Community  Bank. As of September 30, 2000,  the  Registrant had total
assets of $401 million and Walden/Smith  Financial Group,  Inc. had total assets
of $163 million.

     Under the terms of the  Agreement,  the  Registrant  will acquire by merger
Walden/Smith  Financial Group, Inc. As part of the transaction,  First Community
Bank will be merged with Pocahontas Federal Savings and Loan Association,  which
will  remain  the  wholly-owned  subsidiary  of the  Registrant.  As part of the
transaction, it is expected that Pocahontas Federal Savings and Loan Association
will change its name to First Community Bank.

     In connection with the merger,  all  outstanding  shares of common stock of
Walden/Smith Financial Group, Inc. will be canceled in exchange for the right to
receive  aggregate  merger  consideration  of $28  million,  subject  to certain
adjustments. The transaction will be accounted for using the purchase method.

     A copy of the Agreement  and Plan of Merger and the press release  relating
to the announcement of the transaction is filed as an exhibit to this Form 8-K.

Item 7. Financial  Statements,  Pro Forma  Financial  Information,  and Exhibits
        ------------------------------------------------------------------------

1.   Agreement  and Plan of  Merger,  dated  January  4,  2001,  by and  between
     Pocahontas Bancorp,  Inc., Pocahontas Federal Savings and Loan Association,
     Pocahontas  Acquisition  Corp and Walden/Smith  Financial  Group,  Inc. and
     First Community Bank.

2.   Press  release  relating  to the  execution  of the  Agreement  and Plan of
     Merger.


<PAGE>


                                   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, hereunto duly authorized.

                                          POCAHONTAS BANCORP, INC.

DATE:  January 18, 2001             By:   /s/ James A. Edington
                                          --------------------------------------
                                          James A. Edington
                                          President and Chief Executive Officer


<PAGE>

















                                    EXHIBIT 1

                          Agreement and Plan of Merger


<PAGE>







                          Agreement and Plan of Merger

                                 By and Between

                            Pocahontas Bancorp, Inc.

                 Pocahontas Federal Savings and Loan Association

                           Pocahontas Acquisition Corp

                                       and

                       Walden/Smith Financial Group, Inc.

                                       and

                              First Community Bank

                             Dated: January 4, 2001


<PAGE>



AGREEMENT AND PLAN OF MERGER...................................................1
ARTICLE I.  CERTAIN DEFINITIONS................................................2
         1.1.     Certain Definitions..........................................2
ARTICLE II.  THE MERGER........................................................6
         2.1.     The Merger...................................................6
         2.2.     Effective Time and Closing of the Merger.....................6
         2.3.     Modification of Structure....................................7
ARTICLE III.  EFFECT OF THE COMPANY MERGER; ADDITIONAL ACTIONS.................7
         3.1.     Effect of the Merger.........................................7
         3.2.     Effect on Common Stock of the Company........................8
         3.3.     Payment of Cash..............................................9
         3.4.     Recapitalization or Stock Dividends.........................10
         3.5.     Additional Actions..........................................10
ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY
         AND FIRST COMMUNITY..................................................10
         4.1.     Corporate Organization......................................10
         4.2.     Capitalization..............................................12
         4.3.     Authorization...............................................12
         4.4.     No Violation................................................13
         4.5.     Reports and Consolidated Financial Statements...............13
         4.6.     Consents and Approvals......................................14
         4.7.     Absence of Certain Changes..................................14
         4.8.     Employee and Employee Benefits Matters......................15
         4.9.     Litigation..................................................17
         4.10.    Tax Matters.................................................17
         4.11.    Information in the Company Information Statement............18
         4.12.    Environmental Matters.......................................19
         4.13.    Insurance...................................................20
         4.14.    Compliance with Laws and Orders.............................20
         4.15.    Governmental Regulation.....................................20
         4.16.    Contracts and Commitments...................................21
         4.17.    Agreements with Directors, Officers and Stockholders........22
         4.18.    Accuracy of Information.....................................22
         4.19.    Allowances for Losses.......................................22
         4.20.    Title to Assets; Leases.....................................22
         4.21.    Business of the Company and First Community.................23
         4.22.    Good Faith..................................................23
         4.23.    No Material Adverse Effect..................................24
         4.24.    Deposits....................................................24
         4.25.    Derivative Transactions.....................................24
         4.26.    Loan Portfolio..............................................24
         4.27.    Brokers, Finders and Financial Advisors.....................25
         4.28.    Required Vote of Stockholders...............................25
ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF POCAHONTAS......................25
         5.1.     Corporate Organization......................................25
         5.2.     Authorization...............................................25
         5.3.     No Violation................................................26
         5.4.     Consents and Approvals......................................26
         5.5.     Information Supplied for Inclusion in the Company
                  Information Statement.......................................26
         5.6.     Cash Payment................................................26
         5.7.     Accuracy of Information.....................................27
         5.8.     Regulatory Approvals........................................27
ARTICLE VI.  COVENANTS OF POCAHONTAS AND POCAHONTAS FEDERAL...................27
         6.1.     Negative Covenants..........................................27
         6.2.     Breaches....................................................27
         6.3.     Filing of Applications......................................27
         6.4.     Supplement to Pocahontas Disclosure Schedule................28
ARTICLE VII.  COVENANTS OF THE COMPANY AND FIRST COMMUNITY....................28
         7.1.     Affirmative Covenants.......................................28
         7.2.     Negative Covenants..........................................29
         7.3.     Report to Pocahontas........................................31
         7.4.     Breaches....................................................31
         7.5.     Supplement to Disclosure Schedule...........................32
         7.6.     Consents and Approvals......................................32
ARTICLE VIII.  ADDITIONAL AGREEMENTS..........................................32
         8.1.     Company Shareholders' Meeting...............................32
         8.2.     Information Statement for Company Shareholders' Meeting.....32
         8.3.     Cooperation; Regulatory Approvals...........................32
         8.4.     Reports.....................................................33
         8.5.     Board and Committee Minutes.................................33
         8.6.     Additional Agreements; Reasonable Efforts...................33
         8.7.     Release of Information......................................34
         8.8.     Access to Properties and Records; Confidentiality...........34
         8.9.     Certain Policies............................................35
         8.10.    Employee Benefit Plans; Employment Arrangements.............35
         8.11.    D&O Indemnification and Insurance...........................36
         8.12.    Escrowed Amount.............................................37
ARTICLE IX.  CONDITIONS TO THE OBLIGATIONS OF POCAHONTAS......................38
         9.1.     No Material Adverse Change..................................38
         9.2.     Representations and Warranties..............................38
         9.3.     Performance and Compliance..................................38
         9.4.     No Proceeding or Litigation.................................38
         9.5.     Consents Under Agreements...................................38
         9.6.     No Amendments to Resolutions................................39
         9.7.     Certificate of First Community Officers.....................39
         9.8.     Corporate Proceedings.......................................39
         9.9.     Legal Opinion...............................................39
ARTICLE X.  CONDITIONS TO THE OBLIGATIONS OF THE COMPANYAND FIRST COMMUNITY...39
         10.1.    Representations and Warranties..............................39
         10.2.    Performance and Compliance..................................40
         10.3.    Corporate Proceedings.......................................40
         10.4.    Certificate of Pocahontas Officers..........................40
         10.5.    Legal Opinion...............................................40
ARTICLE XI.  CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES.....................40
         11.1.    Governmental Approvals......................................40
         11.2.    No Injunctions or Restraints................................41
         11.3.    Corporate Proceedings.......................................41
         11.4     Stockholder Approval........................................41
ARTICLE XII.  TERMINATION.....................................................41
         12.1.    Reasons for Termination.....................................41
         12.2.    Effect of Termination.......................................43
ARTICLE XIII.  MISCELLANEOUS..................................................43
         13.1.    Nonsurvival of Representations, Warranties and Agreements...43
         13.2.    Expenses....................................................43
         13.3.    Waivers; Amendments.........................................43
         13.4.    Assignment; Parties in Interest.............................44
         13.5.    Entire Agreement............................................44
         13.6.    Captions and Counterparts...................................44
         13.7.    Enforcement of this Agreement...............................44
         13.8.    Governing Law...............................................44
         13.9.    Notices.....................................................45


<PAGE>


SCHEDULES

Schedule 4.1(b)
Schedule 4.2(a)
Schedule 4.5
Schedule 4.6
Schedule 4.7
Schedule 4.8(a)
Schedule 4.8(b)
Schedule 4.9
Schedule 4.10
Schedule 4.12(f)
Schedule 4.13
Schedule 4.15
Schedule 4.16
Schedule 4.17
Schedule 4.20(a)
Schedule 4.20(b)
Schedule 4.24
Schedule 4.25
Schedule 4.26
Schedule 4.27
Schedule 7.2(b)
Schedule 8.11


EXHIBITS

Exhibit A   Form of Stockholder Voting Agreement
Exhibit B   Plan of Complete Liquidation and Dissolution
Exhibit C   Agreement of Merger (First Community and Pocahontas Federal)
Exhibit D   Form of McAfee & Taft Legal Opinion
Exhibit E   Form of Luse Lehman Gorman Pomerenk & Schick, P.C. Legal Opinion



<PAGE>





                          AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger, dated January 4, 2001 (the "Agreement"),
is entered into by and between Pocahontas Bancorp,  Inc., a Delaware corporation
("Pocahontas"),  Pocahontas  Federal  Savings  and Loan  Association,  a federal
savings  and  loan  association  and a  wholly-owned  subsidiary  of  Pocahontas
("Pocahontas Federal"), Pocahontas Acquisition Corp, an Arkansas corporation and
wholly-owned subsidiary of Pocahontas Federal ("Acquisition Corp"), Walden/Smith
Financial  Group,  Inc.,  an  Arkansas  corporation  (the  "Company")  and First
Community  Bank,  an  Arkansas  state  banking  corporation  and a  wholly-owned
subsidiary of the Company ("First Community").

                                R E C I T A L S:
                                 - - - - - - - -

1.       Pocahontas,  a registered savings and loan association  holding company
         headquartered  in  Pocahontas,  Arkansas,  owns all of the  issued  and
         outstanding  capital stock of Pocahontas Federal, a federal savings and
         loan association headquartered in Pocahontas, Arkansas.

2.       The  Company,  a  registered  bank  holding  company  headquartered  in
         Pocahontas,  Arkansas,  owns all of the issued and outstanding  capital
         stock of First  Community,  a commercial  bank chartered under Arkansas
         law and headquartered in Pocahontas, Arkansas.

3.       The parties  desire to provide for the  acquisition  of the Company and
         First Community by Pocahontas pursuant to the transactions set forth in
         this  Agreement,   and  in  connection  with  such  acquisition,   each
         outstanding  share of capital  stock of the Company  will be  converted
         into the right to receive cash.

4.       In connection  with such  acquisition,  First Community will merge with
         Pocahontas  Federal  whereby  Pocahontas  Federal will be the surviving
         bank.

5.       As a condition and inducement to Pocahontas'  willingness to enter into
         this Agreement,  certain  stockholders of the Company are  concurrently
         entering into a  Stockholder  Voting  Agreement  with  Pocahontas  (the
         "Stockholder  Voting  Agreement"),  in substantially  the form attached
         hereto as  Exhibit A,  pursuant  to which,  among  other  things,  each
         stockholder  agrees to vote his shares of Company Common Stock in favor
         of this Agreement and the transactions contemplated hereby.

     In consideration of the premises and the mutual covenants, representations,
warranties,  and  agreements  herein  contained,  and in order to set  forth the
conditions  upon  which the  foregoing  transactions  will be carried  out,  the
parties hereto, intending to be legally bound, hereby agree as follows:


<PAGE>



                         ARTICLE I. CERTAIN DEFINITIONS

1.1.     Certain Definitions.

     As used in this Agreement,  the following terms have the following meanings
(unless the context otherwise requires, both here and throughout this Agreement,
references  to Articles  and  Sections  refer to Articles  and  Sections of this
Agreement).

     "ABCA" shall mean the Arkansas Business Corporation Act of 1987.

     "Acquisition  Corp" shall mean  Pocahontas  Acquisition  Corp,  an Arkansas
corporation and the wholly-owned subsidiary of Pocahontas Federal.

     "Additional  Merger  Consideration"  shall  mean (i) the  product of 6% and
$28.0 million;  (ii) divided by 365, with the resulting quotient then multiplied
by the  number  of days  elapsed  from  and  including  January  1,  2001 to and
including   the  Closing  Date;   provided,   however,   no  Additional   Merger
Consideration  shall be due for any days  following  the date  that is five days
after the date on which Pocahontas provides the Company with written notice that
Pocahontas has satisfied all conditions for Closing and is prepared to close the
transactions contemplated by this Agreement.

     "Affiliate"  shall  mean,  with  respect  to any  Person,  any  Person  who
directly,  or indirectly,  through one or more intermediaries,  controls,  or is
controlled  by, or is under  common  control  with,  such  Person  and,  without
limiting the  generality of the  foregoing,  includes any  executive  officer or
director of such Person and any Affiliate of such executive officer or director.

     "BHCA" shall mean the Bank Holding Company Act of 1956, as amended.

     "Bank  Merger"  shall  mean the  merger  of First  Community  with and into
Pocahontas Federal, with Pocahontas Federal as the surviving institution.

     "Bank Merger Act" shall mean Section 18(c) of the Federal Deposit Insurance
Act, as amended.

     "Closing" shall have the meaning set forth in Section 2.2 hereof.

     "Closing Date" shall mean the date on which the Closing occurs.

     "Code" shall mean the Internal Revenue Code of 1986, as amended.

     "Commissioner" shall mean the Arkansas State Banking Commissioner.

     "Company"  shall mean  Walden/Smith  Financial  Group,  Inc.,  an  Arkansas
corporation, and any corporation, financial institution or other entity that has
merged with the Company.

     "Company  Common  Stock" shall mean the common  stock,  $0.10 par value per
share, of the Company.

     "Company  Disclosure  Schedule"  shall mean  shall  mean a written,  signed
disclosure  schedule  delivered  by  the  Company  to  Pocahontas   specifically
referring  to the  appropriate  Section  of this  Agreement  and  describing  in
reasonable detail the matters contained therein.

     "Company Financial  Statements" shall have the meaning set forth in Section
4.5(a) hereof.

     "Company  Information  Statement"  shall  mean  the  information  statement
prepared by the Company for use by  shareholders  in connection with the Company
Shareholders' Meeting.

     "Company  Merger" shall mean the merger of  Acquisition  Corp with and into
the Company with the Company as the surviving corporation.

     "Company  Shareholders'  Meeting" shall mean the meeting of stockholders of
the Company  called to consider and vote upon approval of this Agreement and the
transactions contemplated herein.

     "Company Subsidiary" shall mean a Subsidiary of the Company.

     "Continuing  Employees" shall have the meaning set forth in Section 8.10(a)
hereof.

     "Continuing Executives" shall have the meaning set forth in Section 8.10(c)
hereof.

     "DD&F" shall mean DD&F Consulting Group, Inc. of Little Rock, Arkansas.

     "DD&F Fee" shall have the meaning set forth in Section 3.2(a) hereof.

     "Department" shall mean the Arkansas State Bank Department.

     "Effective Time" shall mean the date and time specified pursuant to Section
2.2 hereof as the effective time of the Company Merger.

     "Environmental  Claim" shall mean any written notice from any  governmental
authority  or third  party  alleging  potential  liability  (including,  without
limitation,   potential  liability  for  investigatory   costs,  cleanup  costs,
governmental  response  costs,  natural  resources  damages,  property  damages,
personal injuries or penalties)  arising out of, based on, or resulting from the
presence,  or release into the  environment,  of any Materials of  Environmental
Concern.

     "Environmental  Law" shall mean any federal,  state or local law,  statute,
ordinance,  rule, regulation,  code, license, permit,  authorization,  approval,
consent, order, judgment,  decree, injunction or agreement with any governmental
entity  relating  to (1) the  protection,  preservation  or  restoration  of the
environment  (including,  without limitation,  air, water vapor,  surface water,
groundwater,  drinking water supply,  surface soil,  subsurface  soil, plant and
animal  life or any  other  natural  resource),  and/or  (2) the  use,  storage,
recycling,  treatment,   generation,   transportation,   processing,   handling,
labeling, production, release or disposal of Materials of Environmental Concern.
The term  Environmental Law includes without  limitation:  (1) the Comprehensive
Environmental  Response,  Compensation and Liability Act, as amended,  42 U.S.C.
Section 9601, et. seq.; the Resource  Conservation and Recovery Act, as amended,
42 U.S.C.  Section  6901,  et.  seq.;  the Clean Air Act, as amended,  42 U.S.C.
Section 7401, et. seq.; the Federal Water Pollution Control Act, as amended,  33
U.S.C.  Section 1251, et. seq.; the Toxic Substances Control Act, as amended, 15
U.S.C.  Section 9601,  et. seq.; the Emergency  Planning and Community  Right to
Know Act, 42 U.S.C.  Section  11001,  et. seq.;  the Safe Drinking Water Act, 42
U.S.C.  Section 300f, et. seq.; and all comparable state and local laws; and (2)
any common law (including  without  limitation common law that may impose strict
liability) that may impose  liability or obligations for injuries or damages due
to, or  threatened  as a result of, the presence of or exposure to any Materials
of Environmental Concern.


     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended.

     "FDIC" shall mean the Federal Deposit Insurance Corporation.

     "First  Community"  shall mean First  Community  Bank,  an  Arkansas  state
banking corporation and the wholly-owned subsidiary of the Company.

     "First Community Benefit Plans" shall have the meaning set forth in Section
4.8(a) hereof.

     "First  Community  ESOP"  shall  mean any  employee  stock  ownership  plan
maintained for the benefit of employees of the Company or First Community.

     "First  Community  Reports"  shall  mean  all  reports,  registrations  and
statements,  together  with any  amendments  required  to be made  with  respect
thereto,  that were and are required by applicable law to be filed with the FRB,
the FDIC,  the  Department  and any other  applicable  state  securities or bank
regulatory authorities by either the Company or First Community.

     "FRB" shall mean the Board of Governors of the Federal Reserve System.

     "HOLA" shall mean the Home Owners' Loan Act, as amended.

     "IRS" shall mean the Internal Revenue Service.

     "Indemnified  Parties"  shall have the  meaning  set forth in Section  8.11
hereof.

     "Loan  Portfolio  Properties and Other  Properties  Owned" shall mean those
properties  owned,  leased or operated by the  Company,  First  Community or any
Company  Subsidiary,  including those  properties  serving as collateral for any
loans made and  retained by First  Community  or any Company  Subsidiary  or for
which First Community or any Company  Subsidiary serves in a trust  relationship
for the loans retained in portfolio.

     "Material  Adverse  Effect"  shall mean,  with respect to the Company,  any
adverse effect on its assets,  financial condition or results of operations that
is material to its assets,  financial  condition or results of  operations  on a
consolidated  basis,  except for any material  adverse  effect caused by (i) any
individual  or  combination  of changes  occurring  after the date hereof in any
federal or state law,  rule or regulation  or in generally  accepted  accounting
principles  or  regulatory  accounting  principles,  which  change(s)  affect(s)
financial  institutions  generally,  (ii) any action taken by the Company or any
Company Subsidiary at the request of Pocahontas, or (iii) the Company Merger and
compliance by the Company with the provisions of this Agreement on the operating
performance of the Company or First Community.

     "Materials of Environmental  Concern" shall mean pollutants,  contaminants,
wastes,  toxic  substances,  petroleum  and  petroleum  products  and any  other
materials regulated under Environmental Law.

     "Merger  Consideration"  shall have the meaning set forth in Section 3.2(a)
hereof.

     "Merger  Consideration  Per  Share"  shall  have the  meaning  set forth in
Section 3.2(a) hereof.

     "Merger  Expenses"  shall  have the  meaning  set forth in  Section  3.2(a)
hereof.

     "OTS" shall mean the Office of Thrift Supervision.

     "PBGC" shall mean the Pension Benefit Guarantee Corporation.

     "Person"  shall  mean  any  individual,  corporation,   partnership,  joint
venture,  association,  trust or  "group"  (as that  term is  defined  under the
Securities Exchange Act of 1934, as amended).

     "Plan of  Liquidation"  shall  mean the Plan of  Complete  Liquidation  and
Dissolution  by which the Company shall be liquidated  into  Pocahontas  Federal
pursuant to Section 4-27-1403 et. seq. of the ABCA. --------

     "Pocahontas" shall mean Pocahontas Bancorp, Inc., a Delaware corporation.

     "Pocahontas  Disclosure  Schedule" shall mean a written,  signed disclosure
schedule  delivered by Pocahontas to the Company  specifically  referring to the
appropriate  section of this Agreement and  describing in reasonable  detail the
matters contained therein.

     "Pocahontas  Federal"  shall  mean  Pocahontas  Federal  Savings  and  Loan
Association,  a  federal  savings  and loan  association  and the  wholly  owned
subsidiary of Pocahontas.

     "Pocahontas  Plans" shall mean employee  benefit plans in effect  generally
for employees of Pocahontas or Pocahontas Federal from time to time.

     "Related  Interest"  shall have the meaning set forth in  Regulation  O, 12
C.F.R. Section 215 et. seq. --------

     "Subsidiary"  shall have the meanings set forth in Rule 1-02 of  Regulation
S-X of the Securities and Exchange Commission.

     "Thrift  Regulations"  shall mean the rules and regulations  promulgated by
the OTS under the HOLA.


<PAGE>



                             ARTICLE II. THE MERGER

2.1.     The Merger.

     Subject to the terms and conditions of this  Agreement,  the parties hereto
hereby agree to effectuate  the following  corporate  transactions,  which shall
occur substantially concurrently in the order set forth below:

     (a)  Acquisition  Corp shall merge with and into the Company (the  "Company
Merger") with the Company as the surviving  corporation and with the result that
the Company will become a  wholly-owned  subsidiary  of Pocahontas  Federal.  In
accordance with Section 4-27-1101 et. seq. of the Arkansas Business  Corporation
Act ("ABCA"),  and, in connection  with the Company  Merger,  and subject to the
rights of dissenting  stockholders that have been asserted and duly perfected in
accordance  with the provisions of Section  4-27-1301 et. seq. of the ABCA, each
share of common  stock,  $0.10 par value per  share,  of the  Company  ("Company
Common Stock") outstanding immediately prior to the effective time of the Merger
shall be canceled in exchange for the right to receive the Merger  Consideration
Per Share.

     (b) Pursuant to the Plan of Complete  Liquidation  and  Dissolution  of the
Company  (the  "Plan of  Liquidation"),  attached  hereto  as  Exhibit  B, it is
expected that the Company will be liquidated into Pocahontas Federal immediately
following  consummation of the transaction referred to in Section 2.1(a) hereof,
with the result  that  Pocahontas  Federal  will  acquire  all of the assets and
liabilities of the Company and the Company shall cease to exist.

    (c) Pursuant  to the  Agreement  of  Merger,  attached  hereto as Exhibit C,
between  First  Community  and  Pocahontas  Federal,  it is expected  that First
Community will merge with and into Pocahontas  Federal,  with Pocahontas Federal
as the  resulting  institution  (the "Bank  Merger")  immediately  following the
transaction referred to in Section 2.1(b) hereof.

2.2.     Effective Time and Closing of the Merger.

     As soon as  practicable  after each of the conditions set forth in Articles
IX, X and XI hereof  have been  satisfied  or waived,  Acquisition  Corp and the
Company shall file,  or cause to be filed,  articles of merger with the Arkansas
Secretary of State.  The Company Merger shall become  effective (the  "Effective
Time") at the time such  articles  of merger are filed,  unless a later date and
time is specified as the effective time in such articles of merger.  The closing
of the  transactions  contemplated by this Agreement (the "Closing")  shall take
place  immediately  prior  to the  Effective  Time  on the  fifth  business  day
following the receipt of all necessary regulatory or governmental  approvals and
consents and the expiration of all statutory  waiting periods in respect thereof
and the  satisfaction  or waiver of the  conditions to the  consummation  of the
Company Merger  specified in Article IX and XI of this Agreement (other than the
delivery of certificates and other  instruments and documents to be delivered at
the Closing) at the executive offices of Pocahontas,  or at such other place, at
such other time, or on such other date as the parties hereto may mutually agree.
At the Closing, the parties hereto will exchange certificates, letters and other
documents as required hereby.

2.3.     Modification of Structure.

     Notwithstanding any provision of this Agreement to the contrary, Pocahontas
may elect to modify the  structure of the  transactions  contemplated  hereby so
long  as (i)  there  are no  adverse  federal  income  tax  consequences  to the
stockholders  of  the  Company  as a  result  of  such  modification,  (ii)  the
consideration to be paid to holders of Company Common Stock under this Agreement
is  not  thereby   changed  in  kind  or  reduced  in  amount  because  of  such
modification, and (iii) such modification will not be likely to materially delay
or jeopardize receipt of any required  regulatory  approvals required hereunder,
or otherwise impede the consummation of the  transactions  contemplated  hereby.
Without limiting the generality of the foregoing, the parties hereto acknowledge
that Pocahontas,  in its sole  discretion,  may elect to have First Community be
the survivor of the Bank Merger.  In such event,  the term "Bank Merger" as used
herein  shall  refer to the  merger of  Pocahontas  Federal  with and into First
Community, with First Community as the resulting institution.

          ARTICLE III. EFFECT OF THE COMPANY MERGER; ADDITIONAL ACTIONS

3.1.     Effect of the Merger.

     (a) The Company, as the surviving  corporation in the Merger, shall possess
all of the  properties and rights and be subject to all of the  liabilities  and
obligations of Acquisition Corp, without further act or deed, in accordance with
the applicable laws of the State of Arkansas.

     (b) At the Effective  Time,  each share of Company  Common Stock issued and
outstanding  immediately  prior thereto  (except  shares as to which the holders
have perfected  dissenters' rights in accordance with Section 4-27-1301 et. seq.
of the ABCA) shall, by virtue of the Company  Merger,  be canceled and converted
into the right to receive the Merger  Consideration Per Share in accordance with
Section 3.2(b) hereof. No new shares of Company Common Stock or other securities
or obligations of Pocahontas  Federal or Acquisition  Corp shall be issued or be
deemed issued with respect to or in exchange for such canceled shares,  and such
canceled  shares of Company  Common Stock shall not be converted into any shares
or other securities or obligations of Pocahontas Federal or Acquisition Corp.

     (c) At the Effective Time, each share of common stock,  $0.10 par value per
share,  of  Acquisition  Corp issued and  outstanding  immediately  prior to the
Effective  Time shall be converted  into and exchanged  for one validly  issued,
fully paid and nonassessable share of Company Common Stock.

     (d) At the Effective Time, the Articles of Incorporation  and Bylaws of the
Company,  as in effect  immediately  prior to the Company  Merger,  shall be the
Articles  of  Incorporation  and  Bylaws  of  the  Company,   as  the  surviving
corporation of the Company Merger.

     (e) At the Effective  Time, the directors and officers of Acquisition  Corp
immediately  prior to the  effective  time of the  Company  Merger  shall be the
directors and officers of the surviving  corporation of the Company Merger, each
to hold office until his or her successor is elected and qualified in accordance
with the articles of incorporation and bylaws of the surviving corporation.

3.2.     Effect on Common Stock of the Company.

     (a) For purposes of this Agreement,  "Merger  Consideration" shall mean (a)
the sum of $27,919,250 and the Additional  Merger  Consideration;  minus (b) the
sum of (i) all amounts due and owing by the  Company to DD&F  Consulting  Group,
Inc., Little Rock,  Arkansas ("DD&F") pursuant to that certain letter agreement,
dated September 23, 1999 between DD&F and the Company (the "DD&F Fee"), (ii) the
Merger Expenses,  (iii) the aggregate amounts to be paid to certain  individuals
pursuant  to the terms of  sections  4 and 6 of that  certain  letter  agreement
between  Pocahontas and the Company of even date herewith,  and (iv) the product
of 0.85  multiplied  by the aggregate  amount to be paid to certain  individuals
pursuant  to the terms of section 5 of that  certain  letter  agreement  between
Pocahontas and the Company of even date herewith.

     For purposes of this Agreement, "Merger Expenses" shall mean all reasonable
out-of-pocket expenses of the Company and First Community incurred by them or on
their behalf in connection with the transactions contemplated by this Agreement,
including,  without limitation,  all fees and expenses of counsel,  accountants,
experts and consultants, but excluding the DD&F Fee.

     For purposes of this Agreement, "Merger Consideration Per Share" shall mean
the  quotient of the Merger  Consideration  divided by the  aggregate  number of
issued and outstanding shares of the Company Common Stock determined immediately
prior to the Effective Time.

     (b) As of the Effective  Time, by virtue of the Company  Merger and without
any action  except as  specified  herein on the part of the holders of shares of
Company Common Stock,  each issued and outstanding share of Company Common Stock
(except with respect to the rights of  dissenting  shareholders  of the Company)
shall be converted into the right to receive the Merger Consideration Per Share,
and  all  outstanding  certificates  representing  Company  Common  Stock  shall
thereafter represent solely the right to receive the Merger  Consideration.  Any
holders of  dissenting  shares shall be entitled to payment for such shares only
to the extent  permitted by and in  accordance  with the  provisions  of Section
4-27-1301 et. seq. of the ABCA,  with funds provided by Pocahontas or Pocahontas
Federal.  The Company shall give Pocahontas  prompt notice of any written demand
for the  payment  of the fair  value of any  shares  of  Company  Common  Stock,
withdrawals of such demands,  and any other  instruments  served pursuant to the
ABCA and  received  by the  Company.  The  Company  shall  give  Pocahontas  the
opportunity to participate in all  negotiations  and proceedings with respect to
such  demands,  and shall not  voluntarily  make any payment with respect to any
demands for payment of fair value or settle or offer to settle any such demands.
All shares of Company Common Stock which are held in the treasury of the Company
or First Community or by any direct or indirect  wholly-owned  subsidiary of the
Company and any shares of Company Common Stock owned by Pocahontas or any direct
or indirect  wholly-owned  subsidiary or parent of Pocahontas  shall be canceled
and no consideration  shall be paid or delivered in exchange  therefore.  At the
Effective  Time,  the stock transfer books of the Company shall be closed and no
transfer of Company Common Stock by any holder thereof shall  thereafter be made
or recognized.

     (c) Except as provided in Section  3.2(b)  hereof,  at the Effective  Time,
holders of the Company  Common Stock shall cease to be, and shall have no rights
as,  shareholders  of the  Company,  other than to receive  that  portion of the
Merger  Consideration  to which such  holders are  entitled  pursuant to Section
3.2(b) hereof.

3.3.     Payment of Cash.

     (a)  Immediately  after the Effective Time,  Pocahontas  shall mail to each
record holder of Company Common Stock,  as of the Effective  Time, a form letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates representing Company Common Stock shall pass,
only upon proper delivery of such certificates to Pocahontas),  IRS Form W-9 and
Spousal  Consent,  if  applicable,  and  instructions  for use in effecting  the
surrender  of  such  certificates  for  payment  therefor.   Upon  surrender  to
Pocahontas  of such  certificates,  together  with such  letter of  transmittal,
Spousal Consent,  if applicable,  and IRS Form W-9 duly executed,  and any other
required  documents,  the holder of such certificates  shall receive in exchange
therefor  an  amount  equal to the  aggregate  Merger  Consideration  Per  Share
multiplied  by the  number of shares of Company  Common  Stock  surrendered  for
exchange.  At the holder's option, such amount shall be paid by wire transfer or
company check of Pocahontas (or any of its  Affiliates),  and such  certificates
shall forthwith be canceled. If payment is to be made to a Person other than the
Person in whose name such certificates surrendered is registered,  it shall be a
condition of payment that such  certificates  so  surrendered  shall be properly
endorsed or otherwise in proper form for transfer and that the Person requesting
such  payment  shall pay any  transfer or other taxes  required by reason of the
payment  to a Person  other  than the  registered  holder  of such  certificates
surrendered  or establish to the  satisfaction  of Pocahontas  that such tax has
been paid or is not applicable. Notwithstanding the foregoing, record holders of
Company Common Stock who advise  Pocahontas in writing at least two (2) business
days prior to the Closing Date of their desire to receive  payment of the Merger
Consideration  on the Closing  Date and who are to receive a payment of at least
$100,000,  shall  be paid at the  Closing  (including  payment  by  transfer  of
immediately available funds) subject to providing the certificate(s) and related
documentation, as described in this Section 3.3(a), to Pocahontas at or prior to
the Closing. Notwithstanding any provision of this Agreement, neither Pocahontas
nor any person, firm or entity shall be liable or obligated to any former holder
of any share of Company  Common  Stock (or to anyone  claiming  through any such
former  holder) with respect to amounts to which any such holder would have been
entitled as a consequence of the Company Merger, if such amounts have been paid,
or are  payable,  to any public  official  pursuant to any  abandoned  property,
escheat or similar laws.

     (b) In the event any  certificate  for Company Common Stock shall have been
lost,  stolen or  destroyed,  Pocahontas  or  Pocahontas  Federal  shall deliver
(except as  otherwise  provided in Section  3.2(b)  hereof) in exchange for such
lost, stolen or destroyed  certificate,  upon the making of an affidavit of that
fact by the holder  thereof,  the cash to be paid as provided in Section  3.2(a)
hereof;  provided,  however,  that Pocahontas or Pocahontas  Federal may, in its
sole discretion and as a condition  precedent to the delivery  thereof,  require
the owner of such lost,  stolen or  destroyed  certificate  to deliver a bond in
such reasonable sum as Pocahontas or Pocahontas  Federal may direct as indemnity
against any claim that may be made against  Pocahontas,  Pocahontas  Federal, or
the Company,  or any other party with respect to the certificate alleged to have
been lost, stolen or destroyed.

     (c)  Pocahontas  shall be entitled to deduct and withhold  from any amounts
otherwise  payable  pursuant to this  Agreement to any holder of Company  Common
Stock such amounts as Pocahontas is required under the Internal  Revenue Code of
1986, as amended (the "Code"),  or any provision of state,  local or federal tax
law to deduct and  withhold  with  respect to the  making of such  payment.  Any
amounts so  withheld  and paid to the  applicable  taxing  authorities  shall be
treated for all purposes of this  Agreement as having been paid to the holder of
the Company Common Stock in respect of which such deduction and  withholding was
made by Pocahontas.

3.4.     Recapitalization or Stock Dividends.

     If between the date of this  Agreement and the  Effective  Time, a share of
Company  Common  Stock  shall be changed  into a  different  number of shares of
Company   Common   Stock  or  a   different   class  of   shares  by  reason  of
reclassification,    recapitalization,   split-up,   exchange   of   shares   or
readjustment, or if a stock dividend shall be declared with a record date within
such period, then the Merger  Consideration Per Share shall be appropriately and
proportionately adjusted.

3.5.     Additional Actions.

     If, at any time after the Effective  Time,  Pocahontas  shall consider that
any further  assignments or assurances in law or any other acts are necessary or
desirable to (i) vest, perfect or confirm, of record or otherwise, in Pocahontas
its rights,  title or interest in, to or under any of the rights,  properties or
assets of the Company  acquired or to be acquired by  Pocahontas as a result of,
or in connection  with,  the Company  Merger,  or (ii)  otherwise  carry out the
purposes of this  Agreement,  each of the Company  and its proper  officers  and
directors shall be deemed to have granted to Pocahontas an irrevocable  power of
attorney  to  execute  and  deliver  all  such  proper  deeds,  assignments  and
assurances  in law and to do all acts  necessary  or proper to vest,  perfect or
confirm  title  to and  possession  of such  rights,  properties  or  assets  in
Pocahontas  and otherwise to carry out the purposes of this  Agreement;  and the
proper officers and directors of Pocahontas are fully  authorized in the name of
the Company or otherwise to take any and all such action.

  ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND FIRST COMMUNITY

     The Company and First Community  hereby represent and warrant to Pocahontas
that the statements  contained in this Article IV are correct and complete as of
the date of this  Agreement  and will be correct and  complete as of the Closing
Date (as though made then and as though the Closing  Date were  substituted  for
the date of this Agreement  throughout  this Article IV), except as set forth in
the Company  Disclosure  Schedule  delivered by the Company to Pocahontas on the
date hereof,  and except as to any  representation or warranty that specifically
relates to an earlier  date.  First  Community  and the Company have made a good
faith  effort to ensure  that the  disclosure  on each  schedule  of the Company
Disclosure Schedule  corresponds to the section referenced herein.  However, for
purposes of the Company Disclosure Schedule,  any item disclosed on any schedule
therein is deemed to be fully  disclosed  with  respect to all  schedules  under
which such item may be relevant.

4.1.     Corporate Organization.

     (a) The Company is duly  organized,  validly  existing and in good standing
under the laws of the State of  Arkansas.  The  Company  has the full  corporate
power and  authority  to own or lease all of its  properties  and  assets and to
carry on its  business  as it is now being  conducted,  and is duly  licensed or
qualified to do business and is in good standing in each  jurisdiction  in which
the nature of the business  conducted by it or the  character or location of the
properties   and  assets  owned  or  leased  by  it  makes  such   licensing  or
qualification necessary,  except where the failure to be so licensed,  qualified
or in good standing would not have a material  adverse effect on the operations,
assets,  or financial  condition of the Company and its subsidiaries  taken as a
whole.  The Company is duly  registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA").

     (b) Set forth in Schedule 4.1(b) of the Company Disclosure  Schedule is the
name,  jurisdiction of incorporation and percentage  ownership of each direct or
indirect  Company  Subsidiary.  Except  for (x)  capital  stock  of the  Company
Subsidiaries,  (y) securities and other  interests held in a fiduciary  capacity
and  beneficially  owned by third  parties  or taken in  consideration  of debts
previously contracted, and (z) securities and other interests that are set forth
in the Company Disclosure  Schedule,  the Company does not own or have the right
or obligation to acquire, directly or indirectly,  any outstanding capital stock
or other voting  securities  or ownership  interests of any  corporation,  bank,
savings  association,  partnership,  joint venture or other organization,  other
than  investment  securities  representing  not more than 5% of the  outstanding
capital stock of any entity.  The  outstanding  shares of capital stock or other
ownership  interests of each Company Subsidiary that are owned by the Company or
any Company  Subsidiary have been duly authorized and validly issued,  are fully
paid and  nonassessable and are directly or indirectly owned by the Company free
and clear of all liens, claims, encumbrances,  charges, pledges, restrictions or
rights of third parties of any kind whatsoever. No warrants,  options, or rights
are authorized, issued or outstanding with respect to the capital stock or other
ownership  interests  of any  Company  Subsidiary  and there are no  agreements,
understandings or commitments relating to the right of the Company to vote or to
dispose of such capital stock or other ownership interests.

     (c) First Community is a state banking corporation duly organized,  validly
existing and in good standing under the laws of the State of Arkansas,  and each
Company Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the  jurisdiction  in which it is organized.  Each of
First  Community and each Company  Subsidiary has the full  corporate  power and
authority to own or lease all of its  properties  and assets and to carry on its
business as it is now being  conducted,  and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business  conducted  by it or the  character or location of the  properties  and
assets owned or leased by it makes such  licensing or  qualification  necessary,
except where the failure to be so licensed,  qualified or in good standing would
not have a material  adverse  effect on the  operations,  assets,  or  financial
condition  of the  Company and the Company  Subsidiaries  taken as a whole.  All
eligible  accounts of depositors  in First  Community are insured by the FDIC to
the fullest extent  permitted by law, and all premiums and assessments  required
to be paid in connection  therewith have been paid when due by First  Community.
First  Community  is a member in good  standing of the Federal Home Loan Bank of
Dallas and owns the requisite amount of stock therein.

     (d) The Company has  heretofore  delivered to Pocahontas  true and complete
copies of the articles of incorporation,  charter,  organization  certificate or
other  chartering  instrument  and  bylaws  of  the  Company  and  each  Company
Subsidiary  in effect on the date  hereof.  The minute  books of the Company and
each Company  Subsidiary  contain  accurate minutes of all meetings and accurate
consents  in lieu of  meetings  of the  board of  directors  (and any  committee
thereof) and of the  stockholder(s)  of the Company and each Company  Subsidiary
recorded  therein,  and as of the Effective  Time such minute books will contain
accurate  minutes of all such  meetings  and such  consents  in lieu of meetings
respectively  held or executed  prior  thereto.  These minute  books  accurately
reflect all  transactions  referred to in such  minutes and  consents in lieu of
meetings and disclose all material  corporate actions of the  stockholder(s) and
boards  of  directors  of the  Company  and  the  Company  Subsidiaries  and all
committees  thereof.  Except as  reflected  in such minute  books,  there are no
minutes of meetings  or consents in lieu of meetings of the boards of  directors
(or any  committee  thereof)  or of the  stockholder(s)  of the  Company  or any
Company Subsidiary.

4.2.     Capitalization.

     (a) The authorized  capital stock of the Company consists of 250,000 shares
of Company  Common  Stock,  par value  $0.10 per  share.  As of the date of this
Agreement,  there were issued and  outstanding  176,877 shares of Company Common
Stock.  On such date,  there were no shares of Company  Common Stock held by the
Company as treasury stock. All of such issued and outstanding  shares of Company
Common Stock are validly issued,  fully paid and nonassessable and not issued in
violation of any preemptive  rights.  Except as set forth in Schedule  4.2(a) to
the  Company  Disclosure  Schedule,  the Company  does not have any  outstanding
warrants,  options,  rights,  convertible  securities or other  arrangements  or
commitments  obligating  it to  issue or sell or  otherwise  dispose  of,  or to
purchase or redeem,  shares of its capital stock or any  securities  convertible
into or having the right to purchase  shares of its capital stock.  There are no
agreements,  understandings  or commitments  relating to the right to vote or to
dispose  of shares of the  capital  stock or other  ownership  interests  of any
Company Subsidiary.

     (b) All of the  outstanding  shares  of  capital  stock or other  ownership
interests  of each  Company  Subsidiary  have been duly  authorized  and validly
issued,  are fully paid and nonassessable and are owned,  directly or indirectly
by the Company, free and clear of any liens, encumbrances, charges, restrictions
or rights of third parties of any kind whatsoever. First Community does not have
any  arrangements  or  commitments  obligating  it to issue or sell or otherwise
dispose  of,  or to  purchase  or  redeem,  shares of its  capital  stock or any
securities  convertible  into or  having  the  right to  purchase  shares of its
capital stock. There are no agreements,  understandings or commitments  relating
to the right or obligation of First Community to issue, to vote or to dispose of
shares of its  capital  stock or the  shares  of  capital  stock of any  Company
Subsidiary.

4.3.     Authorization.

     Each of the  Company  and  First  Community  has full  corporate  power and
authority to execute and deliver this Agreement and, subject to the consents and
approvals of federal and state regulatory authorities referred to in Section 4.6
hereof and the  approval  of the  stockholders  of the  Company,  the Company is
authorized to  consummate  the Company  Merger and to carry out its  obligations
hereunder and  thereunder.  The execution and delivery of this Agreement and the
consummation  of the Company Merger by the Company have been duly  authorized by
the board of  directors  of the  Company  and,  except for the  approval  of the
stockholders of the Company,  no other corporate  proceedings on the part of the
Company are necessary to  consummate  the  transactions  so  contemplated.  This
Agreement  has been duly and validly  executed and  delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable in
accordance  with its terms,  except as may be limited by applicable  bankruptcy,
insolvency,   reorganization,   moratorium  or  other  similar  laws   affecting
creditors'  rights  generally,  and except that the  availability  of  equitable
remedies  (including,  without limitation,  specific  performance) is within the
discretion of the appropriate court.

4.4.     No Violation.

     The  execution  and delivery of this  Agreement and the Agreement of Merger
included as Exhibit C hereto by the Company and First Community,  as applicable,
and the  consummation  by the Company and First  Community  of the  transactions
contemplated  hereby and thereby in accordance with their  respective  terms, as
applicable,  and compliance by the Company or First  Community with any of their
respective terms, as applicable,  subject to receipt of all necessary regulatory
approvals,  will  not (i)  violate  any  provision  of the  Company's  or  First
Community's articles of incorporation, charter or other chartering instrument or
bylaws, (ii) violate any statute, code, ordinance,  rule, regulation,  judgment,
order, writ, decree or injunction applicable to the Company, First Community, or
any Company  Subsidiary or any of their properties or assets,  or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event  which,  with  notice or lapse of time,  or both,  would  constitute  a
default),  under,  result in the termination or cancellation of,  accelerate the
performance  required  by,  or  result in the  creation  of any  lien,  security
interest,  charge or other encumbrance upon any of the respective  properties or
assets of the Company,  First  Community,  or any Company  Subsidiary  under the
terms, conditions or provisions of any note, bond, mortgage,  indenture, deed of
trust, license,  lease, agreement or other instrument or obligation to which the
Company, First Community, or any Company Subsidiary is a party, or by which they
or any of their  respective  properties  or  assets  may be  bound or  affected,
except, with respect to clauses (ii) and (iii) above, such as individually or in
the aggregate will not have a Material Adverse Effect on the operations, assets,
or financial  condition of the Company and the Company  Subsidiaries  taken as a
whole and which will not prevent or delay the  consummation of the  transactions
contemplated by this Agreement.

4.5.     Reports and Consolidated Financial Statements.

     (a) Set forth in Schedule 4.5 of the Company Disclosure Schedule are copies
of (i) the audited consolidated balance sheets of the Company as of December 31,
1999 and 1998, and the audited statements of earnings,  stockholders' equity and
cash flows of the Company for each of the fiscal years ended  December 31, 1999,
1998 and 1997 (provided,  such statements for the fiscal year ended December 31,
1997  have been  compiled  and are  unaudited);  (ii) the  audited  consolidated
balance sheet of Rainbow  Investment  Company,  Inc., a predecessor by merger to
the Company,  as of December 31,  1999,  and the audited  statement of earnings,
stockholders' equity and cash flows of Rainbow Investment Company,  Inc. for the
fiscal  year ended  December  31,  1999;  and (iii) the  Company's  Consolidated
Financial  Statements for Bank Holding  Companies filed on Form FR Y-9C with the
Federal  Reserve  Bank  of St.  Louis,  consisting  of the  Company's  unaudited
consolidated balance sheet and consolidated income statement,  together with the
respective  schedules  thereto,  as of  and  for  the  nine-month  period  ended
September 30, 2000 (collectively, with the notes thereto, the "Company Financial
Statements").  Except as set forth in Schedule 4.5 to the  Company's  Disclosure
Schedule, the Company Financial Statements have been prepared in accordance with
generally  accepted   accounting   principles  applied  on  a  consistent  basis
throughout  the  periods  covered  thereby,   present  fairly  the  consolidated
financial  position  of  the  Company  as of  the  dates  and  the  consolidated
statements  of earnings and cash flows (if  applicable)  of the Company for such
periods,  and have been prepared in accordance with the books and records of the
Company and its consolidated  Subsidiaries;  provided that the unaudited balance
sheet and the statement of income,  together with the related schedules thereto,
of the Company for the interim  period ended  September 30, 2000, are subject to
normal year-end  adjustments and do not contain any or all footnotes required by
generally  accepted  accounting  principles.  At December  31,  2000,  the total
stockholders'  equity of the Company was at least  $15.7  million,  based on the
Company's audited  consolidated  balance sheet to be prepared in accordance with
generally accepted accounting principles applied on a consistent basis.

     (b) First  Community has filed all reports,  together  with any  amendments
required to be made with respect  thereto,  that were required to be filed since
January  1,  1998 to the  date of this  Agreement  with (i) the  FDIC;  (ii) the
Arkansas State Bank Department (the  "Department");  and (iii) any other banking
authority,  and has paid all fees and  assessments due and payable in connection
therewith.  The  Company has filed all  reports,  together  with any  amendments
required to be made with respect  thereto,  that were required to be filed since
January 1, 1998 to the date of this  Agreement  with the FRB,  including  Annual
Reports on Form FR Y-6,  Reports on Form FR Y-9C, and Current Reports on Form FR
Y-6A,  and has paid  all fees and  assessments  due and  payable  in  connection
therewith.

4.6.     Consents and Approvals.

     Other than as set forth in Schedule 4.6 to the Company Disclosure  Schedule
and other than the  receipt of  approvals  required  by the Bank  Merger Act and
other  applicable  federal  and state laws,  and the  approval of the holders of
Company  Common  Stock  as  described  in  Section  8.1  hereof,  no  filing  or
registration  with,  no  notice  to and no  permit,  authorization,  consent  or
approval of any third party or any public or  governmental  body or authority is
necessary  for  the  consummation  by the  Company  or  First  Community  of the
transactions  contemplated  by this  Agreement.  The Company  knows of no reason
(including  those  relating  to fair  lending  laws or other  laws  relating  to
discrimination, including, without limitation, the Equal Credit Opportunity Act,
the Fair Housing  Act,  the  Community  Reinvestment  Act and the Home  Mortgage
Disclosure Act, and anti-trust or consumer  disclosure laws and regulations) why
the regulatory  approvals  should not be obtained,  and has no reason to believe
that such  approvals  would  include any term,  condition or  requirement  that,
individually  or in the aggregate,  would have a Material  Adverse Effect on the
results, business, operations, assets, or financial condition of the Company.

4.7.     Absence of Certain Changes.

     Since December 31, 1999, and except as otherwise  permitted or contemplated
by  this  Agreement,  neither  the  Company,  First  Community  or  any  Company
Subsidiary  has,  except as set forth in Schedule 4.7 to the Company  Disclosure
Schedule,  (a) issued or sold any  corporate  debt  securities;  (b) granted any
option for the purchase of its capital stock;  (c) declared or set aside or paid
any dividend or other distribution in respect of its capital stock; (d) incurred
any  material   obligation  or  liability   (absolute  or  contingent),   except
obligations  or  liabilities   incurred  in  the  ordinary  course  of  business
consistent with past practices;  (e) mortgaged,  pledged or subjected to lien or
encumbrance  (other  than  statutory  liens  for taxes  not yet  delinquent  and
landlord  liens) any of its  material  assets or  properties  except  pledges to
secure  government  deposits  and  in  connection  with  repurchase  or  reverse
repurchase  agreements;  (f)  discharged  or  satisfied  any  material  lien  or
encumbrance  or  paid  any  material   obligation  or  liability   (absolute  or
contingent),   other  than  current   liabilities   included  in  the  Company's
consolidated  balance  sheet as of December  31, 1999,  and current  liabilities
incurred  since the date thereof in the ordinary  course of business  consistent
with past  practices;  (g) sold,  exchanged or otherwise  disposed of any of its
material capital assets other than in the ordinary course of business consistent
with past  practices;  (h) made any wage or salary  increase or entered  into or
modified  any  employment  contract  with any  officer or  salaried  employee or
instituted any employee welfare, bonus, stock option, profit sharing, retirement
or similar plan or arrangement,  whether tax-qualified or non tax-qualified (the
representation  and  warranty  being made by this  clause  (h) being  limited to
matters  occurring  after  September  30, 2000,  and excluding any change in the
compensation or bonus payment with respect to any non-managerial  employees made
in the ordinary course of business consistent with past practices); (i) suffered
any damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting its business, property or assets or waived any rights of
value that are material in the  aggregate,  considering  its business taken as a
whole;  (j)  except in the  ordinary  course of  business  consistent  with past
practices,  entered,  or agreed  to enter,  into any  agreement  or  arrangement
granting any  preferential  right to purchase any of its assets,  properties  or
rights or requiring  the consent of any party to the transfer and  assignment of
any such assets, properties or rights; (k) entered into any material transaction
outside the ordinary  course of its  business  consistent  with past  practices,
except  as  expressly  contemplated  by this  Agreement;  or (1)  except  in the
ordinary  course of business  consistent  with past practices or as reflected in
the  Company  Financial  Statements,  sold or  otherwise  disposed of any of its
material investment securities.

4.8.     Employee and Employee Benefits Matters.

     (a)  Schedule  4.8(a) to the  Company  Disclosure  Schedule  lists (i) each
pension, profit sharing, stock bonus, savings, employee stock ownership or other
plan,  program or  arrangement,  which  constitutes  an "employee  pension plan"
within the meaning of Section 3(2) of the Employee  Retirement  Income  Security
Act of 1974, as amended  ("ERISA"),  which is  maintained by the Company,  First
Community or any Company Subsidiary or to which the Company,  First Community or
any  Company  Subsidiary  contributes  or is  maintained  for the benefit of any
current or former employee,  officer,  director,  consultant or agent; (ii) each
plan, program or arrangement for the provision of medical, surgical, or hospital
care or  benefits,  benefits  in the event of  sickness,  accident,  disability,
death, unemployment, severance, vacation, apprenticeship, day care, scholarship,
prepaid legal services or other benefits which  constitute an "employee  welfare
benefit  plan" within the meaning of Section 3(1) of ERISA,  which is maintained
by the  Company,  First  Community  or any  Company  Subsidiary  or to which the
Company,  First Community or any Company Subsidiary  contributes for the benefit
of any current or former employee, officer, director, consultant or agent; (iii)
every  other  retirement  or  deferred  compensation  plan,  bonus or  incentive
compensation plan or arrangement,  stock option plan, stock purchase plan, stock
bonus plan or stock grant plan, severance or vacation pay arrangement,  or other
material fringe benefit plan, program or arrangement  through which the Company,
First Community or any Company Subsidiary  provides benefits for or on behalf of
any current or former employee, officer, director, consultant or agent; and (iv)
every employment, consulting, or severance contract, agreement or arrangement to
which the Company or First Community is a party. The plans, programs, contracts,
agreements or  arrangements  described in this Section 4.8 or listed in Schedule
4.8(a) of the Company  Disclosure  Schedule are  hereinafter  referred to as the
"First Community  Benefit Plans." The Company has delivered or made available to
Pocahontas  a true  and  correct  copy  (or,  if a  copy  is  not  available,  a
description)  of (a) each First  Community  Benefit  Plan,  (b) the most  recent
annual report (Form 5500) filed with the Internal  Revenue  Service ("IRS") with
respect to each First  Community  Benefit  Plan, if  applicable,  (c) each trust
agreement and group annuity  contract,  if any, relating to such First Community
Benefit Plan, (d) the most recent  actuarial  report or valuation  relating to a
First  Community  Benefit  Plan subject to Title IV of ERISA and (e) all rulings
and  determination  letters and any open  requests  for rulings or letters  that
pertain to any First Community Benefit Plan.

     (b) All of the First Community  Benefit Plans that are subject to ERISA and
the  Code  are in  compliance  in all  material  respects  with  all  applicable
requirements  of ERISA and the Code and all other  applicable  federal and state
laws, including,  without limitation,  the reporting and disclosure requirements
of Part I of Title I of ERISA. Each of the First Community Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, savings or employee stock
ownership plan that is qualified  under Section 401(a) of the Code satisfies the
applicable  requirements of such provision and there exist no circumstances that
would adversely affect the qualified status of any such plan under that section,
except with respect to any required retroactive amendment for which the remedial
amendment period has not yet expired.  Except as set forth in Schedule 4.8(b) to
the Company Disclosure  Schedule,  there is no pending or, to the best knowledge
of the Company, threatened litigation, claim, action, governmental proceeding or
investigation against or relating to any First Community Benefit Plan that could
give rise to any material  liability,  and there is no reasonable  basis for any
material  litigation,  claims,  actions or  proceedings  against  any such First
Community  Benefit Plan, and there are not any facts that could give rise to any
material   liability   in  the  event  of  such   litigation,   claim,   action,
investigation,  or  proceeding.  No  First  Community  Benefit  Plan  (or  First
Community  Benefit  Plan  fiduciary)  has  engaged in a  non-exempt  "Prohibited
Transaction"  (as  defined in Section  406 of ERISA and  Section  4975(c) of the
Code)  since the date on which such  sections  became  applicable  to such plan.
There have been no acts or  omissions  by the  Company,  First  Community or any
Company  Subsidiary  that have  given  rise to any  fines,  penalties,  taxes or
related charges under Sections 502(c),  502(i) or 4071 of ERISA or Chapter 43 of
the  Code,  or that may give rise to any  material  fines,  penalties,  taxes or
related  damages under such laws for which the Company,  First  Community or any
Company  Subsidiary may be liable. No liability under Title IV of ERISA has been
incurred by the Company,  First Community,  any Company  Subsidiary,  any former
Affiliate (as such term is defined in Section 12.7 hereof) of the Company, First
Community or the First Community Benefit Plans since the effective date of ERISA
that has not been  satisfied in full,  and no condition  exists that  presents a
material risk of incurring a liability  under such Title,  other than  liability
for  premiums  due the Pension  Benefit  Guaranty  Corporation  ("PBGC"),  which
payments  have been made or will be made when due.  With  respect to each of the
First Community  Benefit Plans that is subject to Title IV of ERISA, the present
value of accrued  benefits  under such plan or plans,  based upon the  actuarial
assumptions  used for  funding  purposes  in the most  recent  actuarial  report
prepared by such plan's  actuary with  respect to such plan,  did not, as of its
latest valuation date,  exceed the then current value of the assets of such plan
allocable to such accrued  benefits and the Company is not aware of any facts or
circumstances  that would materially  change the funded status of any such ERISA
plan.  None of the First  Community  Benefit Plans is a  "multiemployer  pension
plan" as such term is  defined in  Section  3(37) of ERISA.  Except as listed on
Schedule 4.8(b) to the Company Disclosure Schedule,  no employee of the Company,
First  Community or any Company  Subsidiary  will be entitled to any  additional
benefits or any  acceleration  of the time of payment or vesting of any benefits
under  any  First  Community  Benefit  Plan  as a  result  of  the  transactions
contemplated  by this  Agreement.  Other than current or contingent  liabilities
previously  disclosed  on Schedule  4.8(b) to the Company  Disclosure  Schedule,
neither the  Company,  First  Community or any Company  Subsidiary  or any First
Community  Benefit Plan will have any material  current or contingent  liability
with respect to any First Community  Benefit Plan. All group health plans of the
Company,  First  Community  and any Company  Subsidiary,  including any plans of
current and former  Affiliates  of the Company,  First  Community or any Company
Subsidiary  that must be taken into account  under  Section 4980B of the Code or
Section  601 of ERISA or the  requirements  of any similar  state law  regarding
insurance continuation, have been operated in material compliance with the group
health plan continuation  coverage requirements of Section 4980B of the Code and
Section  601 of  ERISA to the  extent  such  requirements  are  applicable.  All
payments due from any First Community  Benefit Plan (or from the Company,  First
Community or any Company  Subsidiary with respect to any First Community Benefit
Plan) have been made, and all amounts properly accrued to date as liabilities of
the Company,  First  Community or any Company  Subsidiary that have not yet been
paid have been properly recorded on the books of the Company, First Community or
any Company Subsidiary.

     (c) No amounts  payable under the First  Community  Benefit  Plans,  or any
employment,  severance  or  termination  agreement  between the  Company,  First
Community, any Company Subsidiary and any employee, officer or shareholder, will
fail to be deductible  for federal income tax purposes by virtue of section 280G
of the Code.

4.9.     Litigation.

     Except as set forth in Schedule 4.9 to the Company Disclosure Schedule,  no
claims have been  asserted  and no relief has been sought  against the  Company,
First  Community  or  any  Company  Subsidiary  in  any  pending  litigation  or
governmental  proceedings  or  otherwise  that would be  reasonably  expected to
result in damages or other relief that would have a Material  Adverse  Effect on
the Company. To the best knowledge of the Company and First Community, there are
no circumstances,  conditions, events or arrangements, contractual or otherwise,
that may hereafter give rise to any proceedings,  claims,  actions or government
investigations  involving the Company, First Community or any Company Subsidiary
that would  reasonably  be  expected  to result in damages or other  relief that
would have a Material  Adverse Effect,  nor, to the knowledge of the Company and
First  Community,  are any  such  proceedings,  claims,  actions  or  government
investigations  threatened.  Except as set forth in Schedule  4.9 to the Company
Disclosure  Schedule,  neither  the  Company,  First  Community  or any  Company
Subsidiary is a party to any order,  judgment or decree that would reasonably be
expected to have a Material Adverse Effect on the Company.

4.10.    Tax Matters.

     The Company,  First Community and each Company  Subsidiary has timely filed
(inclusive of applicable  extension  periods) with the appropriate  governmental
agencies all material federal,  state and local income,  employment,  franchise,
excise, sales, use, real and personal property and other tax returns and reports
(including  information  returns and reports) that are required to be filed, and
neither the Company,  First  Community nor any Company  Subsidiary is materially
delinquent  in the payment of any taxes  shown on such  returns or reports or on
any assessments  for any such taxes received by the Company,  First Community or
any Company Subsidiary.  There are included in the Company Financial  Statements
adequate  reserves for the payment of all accrued but unpaid federal,  state and
local  taxes  of the  Company,  First  Community  and each  Company  Subsidiary,
including interest and penalties,  whether or not disputed for such fiscal years
as reflected  therein and all fiscal years prior  thereto.  Neither the Company,
First Community nor any Company Subsidiary has executed or filed with the IRS or
any state tax authority any agreement  extending the period for  assessment  and
collection of any federal or state tax, nor is the Company,  First  Community or
any Company  Subsidiary a party to any action or proceeding by any  governmental
authority for  assessment  or  collection  of taxes,  except tax liens or levies
against customers of any Company  Subsidiary.  There is no outstanding  material
assessment or claim for collection of taxes against the Company, First Community
or any Company  Subsidiary.  Except as set forth in Schedule 4.10 to the Company
Disclosure  Schedule,  the  federal  income tax  returns of the  Company,  First
Community and each Company  Subsidiary  since 1995 have been examined by the IRS
(or are closed to examination due to the expiration of the applicable statute of
limitations), and no deficiencies were asserted as a result of such examinations
that have not been resolved and paid in full or for which  adequate  reserves or
accruals established in accordance with generally accepted accounting principles
have been taken with respect thereto.

     Neither the Company, First Community nor any Company Subsidiary has, during
the past five (5) years,  except as  disclosed  in Schedule  4.10 to the Company
Disclosure Schedule,  received any notice of deficiency,  proposed deficiency or
assessment from the IRS or any other  governmental  agency,  with respect to any
federal,  state,  county or local  taxes.  No federal or state tax return of the
Company,  First Community or any Company  Subsidiary is currently the subject of
any audit by the IRS or any other governmental agency.  During the past five (5)
years,  no  material  deficiencies  have been  asserted in  connection  with the
federal and state income tax returns of each of the Company, First Community and
the Company  Subsidiaries,  and the  Company  has no reason to believe  that any
material  deficiency would be asserted relating thereto.  Except as disclosed in
Schedule 4.10 to the Company  Disclosure  Schedule,  neither the Company,  First
Community nor any Company  Subsidiary is a party to any agreement  providing for
allocation  or sharing of taxes.  Neither the Company,  First  Community nor any
Company   Subsidiary  has  ever  been  a  member  of  an  "affiliated  group  of
corporations"  (within  the  meaning  of  Section  1504(a)  of the Code)  filing
consolidated returns, other than the affiliated group of which the Company is or
was the common parent.

4.11.    Information in the Company Information Statement.

     The Company represents and warrants that the Company Information  Statement
will not, either at the time it is mailed to the  stockholders of the Company in
connection with the Company  Shareholders' Meeting or at the time of the Company
Shareholders'  Meeting,  contain any untrue statement of a material fact or omit
to state a material fact required to be stated  therein or necessary to make the
statements  therein,  in light of the circumstances in which they were made, not
misleading; provided, however, no representation or warranty is made hereby with
respect to  information  supplied or required to be supplied by  Pocahontas  for
inclusion in the Company Information Statement.

4.12.    Environmental Matters.

     (a) The Company,  First Community and each Company  Subsidiary has been and
is in compliance with all  Environmental  Laws, except for any violations of any
Environmental  Law which would not, singly or in the aggregate,  have a Material
Adverse Effect on the operations,  assets, or financial condition of the Company
and the  Company  Subsidiaries  taken as a whole.  Neither  the  Company,  First
Community nor any Company  Subsidiary  has received any  communication  alleging
that the  Company,  First  Community  or any Company  Subsidiary  is not in such
compliance and, to the knowledge of the Company and First  Community,  there are
no present  circumstances  that would prevent or interfere with the continuation
of such compliance.

     (b) To the  knowledge of the Company and First  Community  and each Company
Subsidiary,  neither the Company,  First Community or any Company Subsidiary has
been or is in  violation of or liable under any  Environmental  Law,  except any
such violations or liabilities  that would not singly or in the aggregate have a
Material  Adverse  Effect  on the  business,  operations,  assets  or  financial
condition of the Company and the Company Subsidiaries taken as a whole.

     (c) To the actual knowledge of directors or officers of the Company,  First
Community or each Company Subsidiary,  none of the Loan Portfolio Properties and
Other  Properties  Owned by them has been or is in  violation of or liable under
any Environmental  Law, except any such violations or liabilities that singly or
in the  aggregate  would not have a  Material  Adverse  Effect on the  business,
operations,  assets  or  financial  condition  of the  Company  and the  Company
Subsidiaries taken as a whole, and there is no Environmental  Claim pending,  or
to the knowledge of the Company and First  Community,  threatened,  in which the
Company  or  First  Community  has  been,  or may be,  named as a  defendant  or
responsible party.

     (d) To the actual  knowledge  of  directors  or officers of the Company and
First  Community,  there  are  no  actions,  suits,  demands,  notices,  claims,
investigations or proceedings pending or threatened relating to the liability of
the Loan Portfolio Properties and Other Properties Owned under any Environmental
Law,  including without  limitation any notices,  demand letters or requests for
information from any federal or state environmental  agency relating to any such
liabilities  under or violations of  Environmental  Law, except such which would
not have or result in a Material  Adverse  Effect on the  business,  operations,
assets or financial condition of the Company and the Company  Subsidiaries taken
as a whole.

     (e) To the knowledge of the Company and First Community,  there are no past
or present actions, activities,  circumstances,  conditions, events or incidents
that could reasonably form the basis of any  Environmental  Claim or other claim
or action or governmental  investigation  that could result in the imposition of
any liability  arising under any  Environmental  Law against the Company,  First
Community  or any  Company  Subsidiary  or against  any  person or entity  whose
liability  for any  Environmental  Claim the  Company,  First  Community  or any
Company  Subsidiary has or may have retained or assumed either  contractually or
by operation of law, except such which would not have a Material  Adverse Effect
on the operations, assets, or financial condition of the Company and the Company
Subsidiaries taken as a whole.

     (f) The Company has set forth on Schedule 4.12(f) to the Company Disclosure
Schedule any  environmental  studies  conducted  by it,  First  Community or any
Company  Subsidiary  during the past five years with  respect to any  properties
owned by it as of the date hereof.

4.13.    Insurance.

     First  Community  or the Company has  delivered  to  Pocahontas  as part of
Schedule 4.13 to the Company Disclosure Schedule a list describing all insurance
policies and  fidelity  bonds of the Company,  First  Community  and the Company
Subsidiaries.  Each such policy is in full force and effect,  with all  premiums
due  thereon on or prior to the  Closing  Date having been paid as and when due.
The Company, First Community and the Company Subsidiaries have not been notified
that  their  fidelity  or  insurance  coverage  will  not be  renewed  by  their
carrier(s) on substantially the same terms as their existing coverage.  All such
policies (i) are sufficient for compliance by the Company,  First  Community and
each Company Subsidiary with all requirements of law and all agreements to which
the Company, First Community or any Company Subsidiary is a party, and (ii) will
not, due to action or inaction by the Company or First  Community,  terminate or
lapse prior to the Effective Time without  similar  policies being obtained that
would continue until the Effective Time.

4.14.    Compliance with Laws and Orders.

     Neither  the  Company,  First  Community  nor any  Company  Subsidiary  has
received notice of any material  violation or alleged material violation of, or,
to the knowledge of the Company or First Community,  is subject to any liability
(whether  accrued,  absolute,  contingent,  direct  or  indirect)  for  past  or
continuing material  violations of, any law, statute or regulation.  Neither the
Company,  First Community nor any Company Subsidiary is in default under, and no
event has  occurred  that,  with the lapse of time or the  giving of notice by a
third party or both,  could result in a default under the terms of any judgment,
decree, order, writ, rule or regulation of any governmental  authority or court,
whether  federal,  state or local and  whether  at law or in  equity,  where the
failure to be in full compliance would reasonably be expected to result alone or
in the aggregate in damages, which would be reasonably likely to have a Material
Adverse Effect.

4.15.    Governmental Regulation.

     The Company, First Community and each Company Subsidiary holds all material
licenses,  certificates,  permits,  franchises  and rights from all  appropriate
federal,  state and other public  authorities  necessary  for the conduct of its
business;  and,  between the date hereof and the Closing  Date,  the Company and
First  Community  will  maintain,  and  the  Company  will  cause  each  Company
Subsidiary to maintain, all such licenses, certificates, permits, franchises and
rights in effect. Except as disclosed in Schedule 4.15 to the Company Disclosure
Schedule,  since  December 31, 1997 neither First  Community nor the Company has
received any  notification or communication  from any bank regulatory  authority
(i) asserting that either of them is not in material  compliance with any of the
statutes,  regulations or ordinances which such regulatory  authority  enforces;
(ii)  threatening  to revoke  any  license,  franchise,  permit or  governmental
authorization  which  is  material  to First  Community  or the  Company;  (iii)
requiring  or  threatening  to  require  First  Community  or  the  Company,  or
indicating that either of them may be required, to enter into a cease and desist
order,  agreement or memorandum of understanding or any other agreement with any
Federal or state  governmental  agency or  authority  which is charged  with the
supervision  or regulation of banks or engages in the insurance of bank deposits
restricting  or limiting,  or purporting  to restrict or limit,  in any material
respect the  operations  of First  Community or the Company,  including  without
limitation  any  restriction  on the payment of  dividends;  or (iv)  directing,
restricting  or limiting,  or  purporting to direct,  restrict or limit,  in any
material  manner the  operations  of First  Community or the Company,  including
without limitation any restriction on the payment of dividends (any such notice,
communication,  memorandum,  agreement or order  described  in this  sentence is
hereinafter  referred to as a "Regulatory  Agreement").  Neither First Community
nor the  Company  has  consented  to or  entered  into any  currently  effective
Regulatory Agreement. The most recent regulatory rating given to First Community
as to compliance with the Community  Reinvestment Act ("CRA") is satisfactory or
better.

4.16.    Contracts and Commitments.

     Except as set forth in Schedule  4.16 to the Company  Disclosure  Schedule,
neither the Company, First Community nor any Company Subsidiary is a party to or
bound by any:  (a)  lease or  license  with  respect  to any  property,  real or
personal requiring annual payments of rental in excess of $20,000;  (b) contract
or commitment  for capital  expenditures  in excess of $10,000;  (c) contract or
commitment  for the purchase of materials,  supplies or for the  performance  of
services  by third  parties  for a period  of more than 60 days from the date of
this Agreement other than agreements  terminable at will and without the payment
of any penalty by the Company,  First Community or any Company  Subsidiary;  (d)
material  contract  or option for the  purchase  or sale of any real or personal
property  other  than  in  the  ordinary  course  of  business;  (e)  agreement,
arrangement or understanding relating to the employment,  election, retention in
office or severance of any present or former director or officer of the Company,
First Community or any Company Subsidiary,  other than agreements,  arrangements
or understandings  terminable at will without future cost or payment obligations
and without the payment of any penalty by the  Company,  First  Community or any
Company   Subsidiary;   (f)  interest-rate   swaps,  caps,  floors,  and  option
agreements,  or other similar interest rate risk management  agreements;  or (g)
any commitment for the  origination of a loan secured by commercial  real estate
or multi-family real estate, any acquisition or development loan, any commercial
business  loan,  or any  residential  loan,  where the amount of the  commitment
exceeds  $25,000.  To their  knowledge,  the Company,  First  Community and each
Company  Subsidiary  has  performed  in all material  respects  all  obligations
required to be  performed by them to date and are not in default  under,  and no
event has occurred  which,  with the lapse of time or action by a third party or
both,  could result in a default  resulting in material  damages to the Company,
First Community or any Company  Subsidiary,  or other material default under any
outstanding  mortgage,  lease,  contract,  commitment  or agreement to which the
Company,  First  Community or any Company  Subsidiary is a party or by which the
Company,  First  Community  or any  Company  Subsidiary  is bound  or under  any
provision of their respective charters or bylaws. Each such outstanding material
mortgage,  lease,  contract,  commitment  or  agreement  is a valid and  legally
binding  obligation of the Company,  First  Community or the Company  Subsidiary
subject  to (x) all  applicable  bankruptcy,  insolvency,  moratorium  or  other
similar laws  affecting the  enforcement  of creditors  rights  generally or the
rights of  creditors  of  institutions  the accounts of which are insured by the
FDIC, and (y) the application of equitable  principles if equitable remedies are
sought.

4.17.    Agreements with Directors, Officers and Stockholders.

     Except as set forth in Schedule 4.17 to the Company Disclosure Schedule, no
director,  executive officer, or beneficial owner of five percent (5.0%) or more
of the outstanding  capital stock of the Company or any Related Interest of such
person (a) is or has during the period  subsequent to December 31, 1999,  been a
party (other than as a depositor) to any  transaction  with the Company or First
Community, whether as a borrower or otherwise; or (b) is a party to any material
loan or loan  commitment,  whether  written  or oral.  Except  as  disclosed  in
Schedule 4.17 to the Company Disclosure Schedule, no director, executive officer
(or any Related  Interest of such person) and, to the  knowledge of the Company,
no beneficial  owner of five percent (5.0%) or more of the  outstanding  capital
stock of the Company or any Related  Interest of such person  holds any position
with or owns more  than five  percent  (5.0%) of the  outstanding  shares of any
class of  voting  stock  of any  depository  organization,  or  holding  company
thereof, other than the Company. For the purposes of this Section 4.17, the term
"depository  organization"  means a  commercial  bank,  a savings  bank, a trust
company, a savings and loan association, a cooperative bank, an industrial bank,
a credit union, or a depository holding company.

4.18.    Accuracy of Information.

     The  statements  made by the Company and First  Community in this Agreement
and in any other written documents  executed and/or delivered by or on behalf of
the Company or First Community  pursuant to the terms of this Agreement are true
and correct in all material respects.

4.19.    Allowances for Losses.

     The allowance for loan losses reflected on the consolidated  balance sheets
included in the  Company's  Financial  Statements  is, or will be in the case of
subsequently  delivered  Company  Financial  Statements,  as the  case  may  be,
adequate  in all  material  respects  as of their  respective  dates  under  the
requirements  of  generally  accepted  accounting   principles  to  provide  for
reasonably  anticipated  losses on outstanding  loans,  net of recoveries.  Real
estate owned reflected on the Company's  Financial  Statements is, or will be in
the case of subsequently  delivered Company Financial Statements,  carried at an
amount no greater than current market value.

4.20.    Title to Assets; Leases

     (a) Except for (i) liens and encumbrances  specifically disclosed in any of
the Company  Financial  Statements,  (ii) landlords' or statutory liens or other
liens incurred in the ordinary course of business and not securing  indebtedness
for  borrowed  money and not yet  delinquent,  and (iii) liens and  encumbrances
which are not material in amount and do not  materially  impair the value of any
property  subject thereto or the use of such property for the purposes for which
it is presently  used or intended to be used, the Company,  First  Community and
each Company  Subsidiary  has good and marketable  title,  free and clear of all
security  interests,  encumbrances,  trust  agreements,  liens or other  adverse
claims,  to all its assets and  property,  real and  personal,  reflected in the
Company Financial  Statements or acquired  thereafter,  that are material to the
conduct of their respective  businesses,  except for property  acquired by First
Community through foreclosure or in lieu thereof,  carried by First Community as
"other  real estate  owned" and  disclosed  on  Schedule  4.20(a) of the Company
Disclosure  Schedule,  or assets and property disposed of in the ordinary course
of business after December 31, 1999.

     (b) The Company,  First Community and each Company Subsidiary as lessee has
the right under valid and existing  leases to occupy,  use, and possess all real
property and all material personal property leased by it as presently  occupied,
used, and possessed by the Company,  First  Community or any Company  Subsidiary
and, except as set forth in Schedule 4.20(b) of the Company Disclosure Schedule,
such leases will not  terminate or lapse prior to May 31, 2001 or be affected in
any material  respect by consummation of the transactions  contemplated  hereby.
Schedule 4.20(b) of the Company Disclosure Schedule contains an accurate listing
of each lease  pursuant to which the  Company,  First  Community  or any Company
Subsidiary  acts as lessor  or lessee  requiring  annual  payments  of rental in
excess of $5,000,  including  the  expiration  date and the terms of any renewal
options  that  relate to the same,  as well as a listing of each  material  real
property  owned by the Company,  First  Community or any Company  Subsidiary and
used in the conduct of its respective business.

     (c) All material  real and personal  property  owned by the Company,  First
Community or any Company  Subsidiary or presently  used by any of them are in an
adequate  condition  (ordinary  wear and tear  excepted) and are in all material
respects sufficient to carry on the business of the Company, First Community and
each Company Subsidiary in the manner conducted currently by them.

4.21.    Business of the Company and First Community.

     Except for the merger of Rainbow Investment Company, Inc. with and into the
Company,  and the  merger  of Bank  of  Tuckerman  with  First  Community  Bank,
Pocahontas,  Arkansas,  since December 31, 1999, the Company and First Community
have conducted their respective  businesses in the ordinary course. For purposes
of the foregoing,  the Company and First  Community have not, since December 31,
1999,  controlled  expenses  through the (i) deferral of routine  maintenance of
real  property  or leased  premises;  (ii)  elimination  of  reserves  where the
liability  related to such  reserve has  remained;  (iii)  reduction  of capital
improvements from previous levels;  (iv) failure to depreciate capital assets in
accordance  with past practice or to eliminate  capital assets no longer used in
the  Company's  or  First  Community's  business;  (v)  capitalization  of  loan
production  expenses  other  than  in  accordance  with  SFAS  No.  91;  or (vi)
extraordinary reduction or deferral of ordinary or necessary expenses.

4.22.    Good Faith.

     Neither the Company, First Community or any Company Subsidiary has taken or
agreed to take any action or has any knowledge of any fact or circumstance  that
would (i) prevent the  transactions  contemplated  hereby from  qualifying  as a
reorganization within the meaning of Section 368 of the Code, or (ii) materially
impede or delay  receipt of any approval  from any  regulatory  authority or the
consummation of the transactions contemplated by this Agreement.

4.23.    No Material Adverse Effect.

     Except as set forth in  Schedule  4.5 to the Company  Disclosure  Schedule,
since December 31, 1999, the Company has not suffered a Material  Adverse Effect
and the Company is not aware of any event or  circumstance,  or series of events
and  circumstances,  which are reasonably likely to result in a Material Adverse
Effect to the Company.

4.24.    Deposits.

     Except as set forth in Schedule  4.24 to the Company  Disclosure  Schedule,
none of the deposits of First Community is a "brokered" deposit as defined in 12
U.S.C. Section 1831f(g).

4.25.    Derivative Transactions.

     Except as set forth in Schedule  4.25 to the Company  Disclosure  Schedule,
neither the Company nor First  Community has entered into any futures  contract,
option  contract,  interest  rate caps,  interest  rate  floors,  interest  rate
exchange agreement or other derivative instruments.

4.26.    Loan Portfolio.

     Except as set forth in Schedule  4.26 to the Company  Disclosure  Schedule,
neither the Company nor First  Community  is a party to any written or oral loan
agreement, note or borrowing arrangement (including,  without limitation, leases
and credit enhancements) (collectively, "Loans") the unpaid principal balance of
which  exceeds  $25,000  and as to which the  obligor is, as of the date of this
Agreement,  over 90 days delinquent in payment of principal or interest.  To the
knowledge of the Company,  all of the Loans originated and held currently and at
the Effective Time by First  Community,  and any other Loans  purchased and held
currently  and at  the  Effective  Time  by  First  Community,  were  solicited,
originated  and  exist,  and  will  exist at the  Effective  Time,  in  material
compliance with all applicable loan policies and procedures of First  Community.
Company Disclosure Schedule 4.26 sets forth as of September 30, 2000, (i) all of
the  Loans  that as of the  date of  this  Agreement  are  classified  by  First
Community   as   "Other   Loans   Specially   Mentioned",   "Special   Mention",
"Substandard",  "Doubtful", "Loss", "Classified",  "Criticized", "Watch list" or
words of similar import,  together with the principal  amount of and accrued and
unpaid  interest on each such Loan and the  identity of the obligor  thereunder,
and (ii) by category  of Loan (i.e.,  commercial,  consumer,  etc.),  all of the
other  Loans  of  First  Community  that as of the  date of this  Agreement  are
classified as such,  together with the aggregate  principal amount of such Loans
by category,  it being understood that no  representation is being made that the
FDIC would agree with the loan classifications contained in Schedule 4.26 to the
Company  Disclosure  Schedule.  The Company shall promptly inform  Pocahontas in
writing of any Loan the unpaid  principal  balance of which exceeds $15,000 that
becomes classified in the manner described in this Section 4.26, or any Loan the
classification  of which is materially  and adversely  changed at any time after
the date of this Agreement.  The information with respect to the Loans furnished
to Pocahontas by the Company is true and complete in all material respects.

4.27.    Brokers, Finders and Financial Advisors.

     Except as set forth in Schedule  4.27 to the Company  Disclosure  Schedule,
neither the  Company,  First  Community  nor any of their  officers,  directors,
employees  or agents has engaged or retained  any  broker,  finder or  financial
advisor in connection with the transactions contemplated by this Agreement.

4.28.    Required Vote of Stockholders.

     The  affirmative  vote of a  majority  of the votes  cast by holders of the
Company Common Stock is necessary to approve this Agreement and the transactions
contemplated hereby.

             ARTICLE V. REPRESENTATIONS AND WARRANTIES OF POCAHONTAS

     Pocahontas  hereby  represents  and  warrants  to  the  Company  and  First
Community  that the  statements  contained  in this  Article V are  correct  and
complete as of the date of this Agreement and will be correct and complete as of
the  Closing  Date (as  though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement throughout this Article V), except as
set forth in the Pocahontas  Disclosure  Schedule delivered by Pocahontas on the
date  hereof.  Pocahontas  has  made a good  faith  effort  to  ensure  that the
disclosure on each schedule of the Pocahontas Disclosure Schedule corresponds to
the  section  referenced  herein.   However,  for  purposes  of  the  Pocahontas
Disclosure Schedule,  any item disclosed on any schedule therein is deemed to be
fully  disclosed  with  respect to all  schedules  under  which such item may be
relevant.

5.1.     Corporate Organization.

     Pocahontas is a corporation  duly organized,  validly  existing and in good
standing  under  the laws of the  State of  Delaware,  and is a duly  registered
savings and loan holding  company under the HOLA.  Pocahontas  has all requisite
corporate  power and  authority  to own,  operate  and lease its  properties  as
presently  owned,  operated  and  leased  and to  engage in the  activities  and
business  now being  conducted  by it.  Pocahontas  Federal  is a stock  savings
association duly organized, validly existing and in good standing under the laws
of the United States.  All eligible  accounts  issued by Pocahontas  Federal are
insured  by the FDIC  through  the  Savings  Association  Insurance  Fund to the
maximum extent  permitted under applicable law, and all premiums and assessments
required  to be  paid  in  connection  therewith  have  been  paid  when  due by
Pocahontas Federal.

5.2.     Authorization.

     The  Board of  Directors  of each of  Pocahontas,  Pocahontas  Federal  and
Acquisition Corp has approved this Agreement and the  transactions  contemplated
hereby and has  authorized  the  execution  and delivery of this  Agreement.  No
corporate  proceeding  on  the  part  of  Pocahontas,   Pocahontas  Federal  and
Acquisition  Corp is necessary to authorize  this Agreement or to consummate the
transactions contemplated hereby, and each of Pocahontas, Pocahontas Federal and
Acquisition  Corp has full  corporate  power and  authority  to enter  into this
Agreement and to consummate the transactions  contemplated hereby subject to the
consents and approvals of federal and state regulatory  authorities  referred to
in Section 5.4 hereof.  This  Agreement  has been duly and validly  executed and
delivered by each of Pocahontas,  Pocahontas  Federal and  Acquisition  Corp and
constitutes the valid and binding obligation of Pocahontas,  enforceable against
it in  accordance  with its  terms,  subject to (a) all  applicable  bankruptcy,
insolvency,  moratorium  or other  similar laws  affecting  the  enforcement  of
creditors' rights generally,  and (b) the application of equitable principles if
equitable remedies are sought.

5.3.     No Violation.

     Neither the execution and delivery of this  Agreement  nor,  subject to the
receipt of the consents and approvals  contemplated  by Section 5.4 hereof,  the
consummation of the  transactions  contemplated  herein will, (a) conflict with,
result in the breach of,  constitute a violation of,  constitute a default under
or  accelerate  the  performance  of the  terms  of any  government  regulation,
judgment,  order or decree of any  court or other  governmental  agency to which
Pocahontas  may be subject,  or any  contract,  agreement or instrument to which
Pocahontas,  Pocahontas  Federal  or  Acquisition  Corp is a party  or by  which
Pocahontas, Pocahontas Federal or Acquisition Corp is bound or committed, or the
Certificate  of  Incorporation,  Charter  or  Bylaws of  Pocahontas,  Pocahontas
Federal  or  Acquisition  Corp or any  law,  or any  rule or  regulation  of any
governmental agency or authority, or (b) constitute an event that with the lapse
of time or action by a third  party could  result in a default  under any of the
foregoing, or (c) result in the creation of any lien, charge or encumbrance upon
any of the assets or properties of Pocahontas, Pocahontas Federal or Acquisition
Corp.

5.4.     Consents and Approvals.

     Other  than the  receipt  of  approvals  required  by the HOLA,  the Thrift
Regulations,  the BHCA and the Bank Merger Act, no filing or registration  with,
no notice to and no permit, authorization,  consent or approval of any public or
governmental  body or authority is necessary for the consummation by Pocahontas,
Pocahontas Federal or Acquisition Corp of the transactions  contemplated by this
Agreement.  Pocahontas  knows of no reason  (including  those  relating  to fair
lending  laws or other  laws  relating  to  discrimination,  including,  without
limitation,  the  Equal  Credit  Opportunity  Act,  the Fair  Housing  Act,  the
Community  Reinvestment Act and the Home Mortgage Disclosure Act, and anti-trust
or consumer disclosure laws and regulations) why the regulatory approvals should
not be obtained in a reasonably timely manner.

5.5.   Information Supplied for Inclusion in the Company Information Statement.

     Any  information  regarding  Pocahontas  or any  Subsidiary  of  Pocahontas
supplied by Pocahontas to the Company  specifically for inclusion in the Company
Information  Statement will not contain any untrue  statement of a material fact
or omit to state a material fact  necessary to make the statements  therein,  in
light of the circumstances in which they were made, not misleading.

5.6.     Cash Payment.

     Pocahontas  or  Pocahontas  Federal  has  sufficient  funds to pay the cash
payment required under Section 3.3 hereof and such payment will not cause either
of them to fail to meet any regulatory  capital  requirements  to which they are
subject.

5.7.     Accuracy of Information.

     The statements made by Pocahontas,  Pocahontas Federal and Acquisition Corp
in this Agreement and in any other written  documents  executed and/or delivered
by or on behalf of Pocahontas,  Pocahontas  Federal or Acquisition Corp pursuant
to the terms of this Agreement are true and correct in all material respects.

5.8.     Regulatory Approvals.

     Pocahontas is aware of no reason that it cannot obtain any of the approvals
of regulatory authorities necessary to consummate the transactions  contemplated
by this  Agreement and neither  Pocahontas  nor any  Pocahontas  Subsidiary  has
received  advice or information  from any regulatory  authority  indicating that
such approvals will be denied or are doubtful.

           ARTICLE VI. COVENANTS OF POCAHONTAS AND POCAHONTAS FEDERAL

     Pocahontas and  Pocahontas  Federal hereby agree that from the date of this
Agreement until the Effective Time:

6.1.     Negative Covenants.

     Except as specifically  contemplated by this Agreement,  neither Pocahontas
nor  Pocahontas  Federal shall agree or commit to do,  without the prior written
consent of the Company, any of the following:

     (a) take action that would or is reasonably  likely to (i) adversely affect
the ability of either  Pocahontas,  Pocahontas  Federal or the Company and First
Community to obtain any necessary approvals of governmental authorities required
for the transactions  contemplated  hereby; (ii) adversely affect the ability of
Pocahontas or Pocahontas  Federal to perform its covenants and agreements  under
this  Agreement;  or (iii) result in any of the conditions to the Company Merger
set forth in Articles X and XI not being satisfied; or

     (b) agree in writing or otherwise to do any of the foregoing.

6.2.     Breaches.

     Pocahontas  shall,  in the  event  it  becomes  aware of the  impending  or
threatened occurrence of any event or condition that would cause or constitute a
material  breach (or would have  caused or  constituted  a breach had such event
occurred or been known prior to the date  hereof) of any of its  representations
or  agreements  contained  or referred to herein,  give  prompt  written  notice
thereof to the  Company and use its best  efforts to prevent or promptly  remedy
the same.

6.3.     Filing of Applications.

     Pocahontas  shall use its best  efforts  promptly to and, in any event,  no
later than 60 days after the date hereof  shall,  prepare,  submit,  publish and
file all applications,  notices or statements required to be filed in connection
with the transactions contemplated hereby.

6.4.     Supplement to Pocahontas Disclosure Schedule.

     Pocahontas  will  promptly  supplement or amend the  Pocahontas  Disclosure
Schedule  with  respect to any matter  hereafter  arising  that,  if existing or
occurring  at the date of this  Agreement,  would have been  required  to be set
forth or described in the  Pocahontas  Disclosure  Schedule.  No  supplement  or
amendment to the  Pocahontas  Disclosure  Schedule  will have any effect for the
purpose of determining  satisfaction  of the condition set forth in Section 10.1
hereof  as to the  accuracy  of  representations  made  as of the  date  of this
Agreement.

            ARTICLE VII. COVENANTS OF THE COMPANY AND FIRST COMMUNITY

     The Company  and First  Community  hereby  agree that from the date of this
Agreement until the Effective Time:

7.1.     Affirmative Covenants.

     Unless the prior written consent of Pocahontas shall have been obtained and
except as otherwise contemplated herein, the Company and First Community will:

     (a) operate their business in the ordinary  course in accordance  with past
business practices;

     (b) use  commercially  reasonable  efforts  to (i)  preserve  intact  their
business organization and assets,  maintain their rights and franchises,  retain
the services of their  officers and key  employees  (except that they shall have
the  right to  terminate  the  employment  of any  officer  or key  employee  in
accordance  with  established  employment  procedures)  and (ii) maintain  their
relationships with customers:

     (c)  maintain  their  corporate  existence  in good  standing  and file all
required First Community Reports;

     (d)  use  commercially  reasonable  efforts  to  maintain  and  keep  their
properties  in as good repair and  condition as at present,  except for ordinary
wear and tear;

     (e) use their best efforts to keep in full force and effect  insurance  and
bonds  comparable in amount and scope of coverage to that now maintained by them
and,  in the event that First  Community  is unable to keep such  insurance  and
bonds in full force and  effect,  to provide  prompt  notice of such  failure to
Pocahontas;

     (f) perform all  obligations  required  to be  performed  by them under all
material  contracts,  leases, and documents relating to or materially  affecting
their assets, properties, and business;

     (g) use commercially  reasonable  efforts to comply with and perform in all
material respects all obligations and duties imposed upon them by all applicable
laws and regulations; and

     (h) as soon as reasonably  practicable,  furnish  Pocahontas  copies of all
First  Community  Reports  and  documents   provided  to  Company   stockholders
subsequent to the date hereof.

7.2.     Negative Covenants.

     Except as specifically contemplated by this Agreement, from the date hereof
until the Effective  Time,  neither the Company nor First  Community  shall,  or
shall permit any Company  Subsidiary  to,  without the prior written  consent of
Pocahontas, do any of the following:

     (a)  incur  any  material  liabilities  or  material  obligations,  whether
directly or by way of guaranty,  including  any  obligation  for borrowed  money
whether or not  evidenced by a note,  bond,  debenture or similar  instrument or
enter into or extend any  material  agreement  or lease,  except in the ordinary
course of business consistent with past business practices or in connection with
the transactions contemplated and permitted by this Agreement;

     (b) (i) Except as set forth on Schedule  7.2(b) of the  Company  Disclosure
Schedule, or as contemplated by Section 8.10 hereof, grant any bonus or increase
in  compensation  to its  directors  or  grant  any  bonus  or any  increase  in
compensation to its officers and employees,  except for regular annual and merit
increases  consistent  with past  practices,  or any mandatory or  discretionary
employer matching contributions to First Community's 401(k) plan consistent with
past  practices,  (ii) effect any change in retirement  benefits to any class of
employees or officers  (unless any such change  shall be required by  applicable
law) that would increase its retirement benefit liabilities,  (iii) adopt, enter
into,  amend or modify any First  Community  Benefit  Plan except as required by
law, (iv) enter into or amend any employment, severance or similar agreements or
arrangements  with any  directors  or  officers  (exclusive  of  renewals in the
ordinary  course of business),  (v) make any  additional  awards under any First
Community  stock bonus plan or First  Community  stock option plan, or (vi) make
any additional contributions to the First Community ESOP;

     (c)  declare  or pay any  dividend  on, or make any other  distribution  in
respect  of, its  outstanding  shares of  capital  stock,  except  for  regular,
quarterly cash dividends, paid on normal dividend payment dates, in an amount no
greater than the dividend rate as of the date hereof.

     (d) (i)  redeem,  purchase or  otherwise  acquire any shares of its capital
stock or any securities or obligations  convertible into or exchangeable for any
shares of its capital  stock,  or any  options,  warrants,  conversion  or other
rights to acquire  any shares of its  capital  stock or any such  securities  or
obligations  (other than any redemption of common stock of the Company  required
to be made pursuant to that certain Employment  Agreement dated October 29, 1999
between First Community and Lindley V. Smith,  Jr.); (ii) merge with or into any
other  corporation,  savings  institution or bank, permit any other corporation,
savings  institution  or bank to merge  into it or  consolidate  with any  other
corporation or bank, or effect any  reorganization  or  recapitalization;  (iii)
purchase or otherwise  acquire any assets,  or shares of any class of stock,  of
any corporation,  savings institution,  bank or other business;  (iv) liquidate,
sell,  dispose of, or encumber  any assets or acquire any assets,  other than in
the  ordinary  course of its business  consistent  with past  practices;  or (v)
split,  combine or reclassify  any of its capital stock or issue or authorize or
propose  the  issuance of any other  securities  in respect of, in lieu of or in
substitution for, shares of its capital stock;

     (e) except  pursuant to the exercise of outstanding  stock options,  issue,
deliver,  award, grant or sell, or authorize or propose the issuance,  delivery,
award, grant or sale of, any shares of its capital stock of any class (including
shares  held in  treasury),  any debt  instrument  having a right to vote or any
securities convertible into, or any rights,  warrants or options to acquire, any
such shares, voting debt or convertible securities;

     (f) initiate, solicit or encourage, or take any other action to facilitate,
any  inquiries or the making of any  proposal  which  constitutes  a proposal to
acquire  the  entire  equity  interest  in the  Company  or First  Community  or
substantially  all of the assets of the Company or First Community (a "Competing
Proposal"),  take any action in  furtherance  of such  inquiries  or to obtain a
Competing Proposal,  or negotiate with any person in, or agree to or endorse any
Competing  Proposal,  or authorize or permit any of its  officers,  directors or
employees or any  investment  banker,  financial  advisor,  accountant  or other
representative retained by it or any Company Subsidiary to take any such action;

     (g) propose or adopt any amendments to its charter or by-laws,  except such
amendments as may be required to consummate  the  transactions  contemplated  by
this Agreement;

     (h) enter into an agreement in principle with respect to any acquisition of
a material  amount of assets or securities or any release or  relinquishment  of
any material contract rights not in the ordinary course of business;

     (i) except in its fiduciary capacity,  purchase any shares of capital stock
of Pocahontas;

     (j)  willfully  take  action  which  would or is  reasonably  likely to (i)
adversely  affect the  ability  of either of  Pocahontas,  the  Company or First
Community to obtain any necessary approvals of governmental authorities required
for  the  transactions   contemplated   hereby;   (ii)  adversely  affect  First
Community's  or the Company's  ability to perform its  covenants and  agreements
under this  Agreement;  or (iii) result in any of the  conditions to the Company
Merger set forth in Articles IX and XI not being satisfied;

     (k) change in any material respect the lending, investment,  deposit, asset
and liability  management and other material policies concerning the business of
First  Community or the Company,  unless  required by law or regulation or, with
respect to lending or depository activities;

     (l) file any applications or make any contract with respect to branching by
First Community (whether de novo or by purchase, sale or relocation);

     (m) form any new  subsidiary  or cause or permit a  material  change in the
activities  presently  conducted by any Company  Subsidiary  or make  additional
material investments in subsidiaries or enter into or invest in any partnership,
joint venture or other business enterprise;

     (n) purchase any debt securities or derivative  securities including CMO or
REMIC products;

     (o) purchase any equity securities other than Federal Home Loan Bank Stock;

     (p)  discharge  or  satisfy  any lien or  encumbrance  or pay any  material
obligation  or  liability  (absolute  or  contingent)  other  than at  scheduled
maturity or in the ordinary course of business;

     (q) sell or  otherwise  dispose of any loan,  mortgage-backed  security  or
investment  security except in the ordinary  course of business  consistent with
past practices and policies;

     (r)  modify or  restructure  the terms of any loan  except in the  ordinary
course of business consistent with prudent banking practices and policies;

     (s) make any  capital  expenditures  in excess of $10,000  individually  or
$25,000 in the aggregate, other than pursuant to binding commitments existing on
the date  hereof and other than  expenditures  necessary  to  maintain  existing
assets in good repair;

     (t) change its method of accounting in effect prior to the Effective  Time,
except as  required  by changes in laws or  regulations  or  generally  accepted
accounting  principles  concurred  in  by  its  and  the  Company's  independent
certified public  accountants,  or change any of its methods of reporting income
and  deductions  for  federal  income tax  purposes  from those  employed in the
preparation  of its  federal  income tax  returns  for the  Company's  last full
taxable year, except as required by changes in laws or regulations;

     (u) acquire in any manner whatsoever (other than to realize upon collateral
for a defaulted loan) any business or entity; or

     (v)  make,  renew,  increase,  extend  or  purchase  any  loan  secured  by
commercial  real estate or  multifamily  real estate,  any land  acquisition  or
development  loan, any commercial  business loan, or any residential  loan in an
amount in excess of  $200,000,  except to the  extent  that First  Community  is
contractually obligated to do so as of the date hereof;

     (w) fail to notify Pocahontas promptly of its receipt of any letter, notice
or other  communication,  whether written or oral, from any regulatory authority
advising  that  it  is  contemplating  issuing,   requiring  or  requesting  any
agreement, memoranda, understanding or similar undertaking, or order, directive,
or extraordinary supervisory letter;

     (x) agree in writing or otherwise to do any of the foregoing.

7.3.     Report to Pocahontas.

     The  Company  and  First  Community  will  use  its  best  efforts  to keep
Pocahontas fully informed  concerning all developments of which it becomes aware
that may have a material  effect upon the business,  any properties or condition
(either  financial  or  otherwise)  of  the  Company  (other  than  developments
affecting financial institutions generally).

7.4.     Breaches.

     The Company and First  Community  shall,  in the event they become aware of
the  impending or threatened  occurrence  of any event or condition  which would
cause or  constitute a material  breach (or would have caused or  constituted  a
breach had such event occurred or been known prior to the date hereof) of any of
their representations or agreements contained or referred to herein, give prompt
written  notice  thereof to Pocahontas  and use their best efforts to prevent or
promptly remedy the same.

7.5.     Supplement to Disclosure Schedule.

     The  Company  will  promptly  supplement  or amend the  Company  Disclosure
Schedule  with  respect to any matter  hereafter  arising  that,  if existing or
occurring  at the date of this  Agreement,  would have been  required  to be set
forth  or  described  in the  Company  Disclosure  Schedule.  No  supplement  or
amendment  to the  Company  Disclosure  Schedule  will have any  effect  for the
purpose of  determining  satisfaction  of the condition set forth in Section 9.2
hereof  as to the  accuracy  of  representations  made  as of the  date  of this
Agreement.

7.6.     Consents and Approvals.

     The  Company  and First  Community  shall use their best  efforts to assist
Pocahontas  in obtaining  the consents and  approvals  referenced in Section 9.5
hereof.

                       ARTICLE VIII. ADDITIONAL AGREEMENTS

8.1.     Company Shareholders' Meeting.

     The Company shall,  as soon as is reasonably  practicable,  call and hold a
meeting of its stockholders (the "Company Shareholders'  Meeting") to submit for
stockholder  approval this  Agreement.  Subject to their fiduciary  duties,  the
members of the Board of Directors of the Company will  recommend that holders of
Company  Common Stock vote in favor of and approve this Agreement at the Company
Shareholders' Meeting.

8.2.     Information Statement for Company Shareholders' Meeting.

     For the purposes of holding the Company Shareholders'  Meeting, the Company
shall  prepare  an  information  statement  satisfying  all  requirements  under
applicable  securities laws (said information  statement,  together with any and
all amendments or supplements thereto,  being herein referred to as the "Company
Information  Statement").  Pocahontas  shall  review and  comment on the Company
Information Statement prior to its distribution to the Company's stockholders.

8.3.     Cooperation; Regulatory Approvals.

     The parties shall  cooperate,  and shall cause each of their affiliates and
subsidiaries  to  cooperate,  in the  preparation  and  submission  by them,  as
promptly as reasonably practicable,  of such applications,  petitions, and other
documents  and  materials  as any of  them  may  reasonably  deem  necessary  or
desirable to the OTS, the Department, and any other regulatory authorities,  for
the purpose of obtaining any approvals or consents  necessary to consummate  the
transactions  contemplated by this Agreement.  Each party will have the right to
review and  comment on such  applications,  petitions  and other  documents  and
materials and shall furnish to the other copies thereof promptly after filing or
submission  thereof.  At the date  hereof,  none of the  parties is aware of any
reason that the regulatory  approvals required to be obtained by it would not be
obtained.  The  obligation  to take action as provided in this Section 8.3 shall
not be construed as including an obligation to accept any terms of or conditions
to a consent,  authorization,  order or approval  of, or any  exemption  by, any
party that are  unduly  burdensome  as  reasonably  determined  by the Boards of
Directors of Pocahontas or the Company.  In the event of a restraining  order or
injunction which prevents the Closing by reason of the operation of Section 11.2
hereof,  each of the parties  hereto  shall use its  respective  best efforts to
cause such order or injunction to be lifted and the Closing to be consummated as
soon as reasonably practicable.

8.4.     Reports.

     Prior to the Effective  Time, the Company and First Community shall prepare
and file as and when required all First Community Reports. First Community shall
prepare  such First  Community  Reports so that (a) they comply in all  material
respects with all of the statutes, rules and regulations enforced or promulgated
by the  regulatory  authority  with which they are filed and do not  contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the  circumstances  under which they were made, not misleading,  and (b) with
respect to any First Community Reports containing Company Financial  Statements,
the financial  information (i) is prepared in accordance with generally accepted
accounting  principles  and  practices  as  utilized  in the  Company  Financial
Statements  applied on a consistent  basis  (except as  otherwise  stated in the
footnote disclosures), (ii) presents fairly the consolidated financial condition
of First Community at the dates, and the consolidated  results of operations and
cash  flows for the  periods,  stated  therein  and (iii) in the case of interim
fiscal periods,  reflects all  adjustments,  consisting only of normal recurring
items,  subject to year-end audit  adjustments  (provided such interim financial
reports may not  contain any or all  footnotes  required by  generally  accepted
accounting  principles).  All  First  Community  Reports  shall be  provided  to
Pocahontas  promptly  following  the filing of such reports with the  respective
regulatory authority.

8.5.     Board and Committee Minutes.

     The Company and First  Community  shall each provide to Pocahontas,  within
twenty-five  (25) days after any meeting of their respective Board of Directors,
or any committee  thereof,  a copy of the minutes of such  meeting,  except that
with  respect to any meeting  held within  twenty-five  (25) days of the Closing
Date, such minutes shall be provided prior to the Closing Date.

8.6.     Additional Agreements; Reasonable Efforts.

     Subject to the terms and conditions of this Agreement,  each of the parties
hereto agrees to use all commercially reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things  necessary,  proper
or advisable  under  applicable  laws and  regulations  to  consummate  and make
effective  the  transactions  contemplated  by this  Agreement,  subject  to the
appropriate  vote of the  stockholders  of the Company  described in Section 8.1
hereof,  including  cooperating  fully with the other party. In case at any time
after the Effective  Time any further  action is necessary or desirable to carry
out the purposes of this Agreement or to vest  Pocahontas with full title to all
properties, assets, rights, approvals, immunities and franchises of the Company,
First Community or the Company  Subsidiaries,  the proper officers and directors
of each party to this Agreement shall take all such necessary action.

8.7.     Release of Information.

     The  Company  and  Pocahontas   agree  that  prior  to  making  any  public
announcement  with respect to the  transactions  contemplated by this Agreement,
each party will consult  with the other and will use its best efforts  either to
agree  upon  the  text of the  proposed  joint  announcement  to be made by both
parties  or to  obtain  the  other's  approval  (which  approval  shall  not  be
unreasonably  withheld)  of the text of an  announcement  to be made  solely  on
behalf of such party.  In the event that the parties do not ultimately  agree on
the text of any proposed public  announcement,  no such disclosure shall be made
unless the party seeking to make an  announcement is advised by counsel that its
failure to do so would be reasonably likely to constitute a violation of law.

8.8.     Access to Properties and Records; Confidentiality.

     (a) Each of the Company,  First Community and each Company Subsidiary shall
permit  Pocahontas  and  its  representatives,   including  financial  advisors,
reasonable  access to its  properties,  and shall disclose and make available to
them all books,  papers and records  relating to the  assets,  stock  ownership,
properties,  operations,  obligations  and  liabilities  of the  Company,  First
Community and each Company Subsidiary,  including, but not limited to, all books
of account (including the general ledger), tax records, minute books of meetings
of  boards  of  directors  (and  any  committees   thereof)  and   stockholders,
organizational  documents,  bylaws,  material contracts and agreements,  filings
with any regulatory authority, accountants' work papers, litigation files (other
than  attorney  work  product  or  materials  protected  by any  attorney-client
privilege),  plans  affecting  employees,  and any other business  activities or
prospects  in which  the  Company  or  First  Community  may  have a  reasonable
interest. The Company and First Community and each Company Subsidiary shall make
their respective officers,  employees and agents and authorized  representatives
(including counsel and independent public accountants)  available to confer with
Pocahontas and its representatives. The Company and First Community shall permit
a representative  of Pocahontas to attend meetings of their respective Boards of
Directors,    including,   without   limitation,   the   loan   committee,   the
asset/liability  committee and executive committee meetings. First Community and
the  Company  shall  permit  Pocahontas,  at its  expense,  to  cause a "phase I
environmental audit" and a "phase II environmental audit" to be performed at any
physical location owned or occupied by either of them,  provided that such audit
is  contracted  for within  thirty (30) days of the date of this  Agreement  and
commenced as soon as practicable thereafter.

     (b)  All   information   furnished   previously  in  connection   with  the
transactions  contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until  consummation
of the  transactions  contemplated  hereby and, if such  transactions  shall not
occur, the party receiving the information  shall,  upon request,  return to the
party  which  furnished  such  information  all  documents  or  other  materials
containing,  reflecting  or  referring to such  information,  shall use its best
efforts to keep  confidential  all such  information,  and shall not directly or
indirectly  use  such  information  for  any  competitive  or  other  commercial
purposes.  The obligation to keep such information  confidential  shall continue
for three years from the date the proposed  transactions are abandoned but shall
not apply to (i) any  information  which (x) the party receiving the information
can establish by convincing  evidence was already in its possession prior to the
disclosure  thereof  by the  party  furnishing  the  information;  (y) was  then
generally  known to the  public;  or (z) became  known to the public  through no
fault of the party receiving the information;  or (ii) disclosures pursuant to a
legal  requirement  or in  accordance  with an  order  of a court  of  competent
jurisdiction,  provided  that the party  which is the  subject of any such legal
requirement or order shall use its best efforts to give the other party at least
ten business days prior notice thereof.

8.9.     Certain Policies.

     At the request of  Pocahontas,  the Company  shall,  prior to the Effective
Time,  (i) establish  and take such  reserves and accruals as  Pocahontas  shall
reasonably request to conform,  on a mutually  satisfactory basis, the Company's
loan, real estate, accrual and reserve policies to Pocahontas' policies and (ii)
establish  and take such  accruals,  reserves  and charges in order to implement
such policies in respect of severance costs,  write-off or write-down of various
assets  and other  appropriate  accounting  adjustments,  and to  recognize  for
financial  accounting  purposes  such expenses  incurred in connection  with the
Company Merger,  provided,  however,  that the Company shall not be obligated to
take any  such  action  pursuant  to this  Section  8.9  unless  and  until  (x)
Pocahontas  specifies  its  request in writing  delivered  to the  Company,  and
acknowledges  that all conditions to the obligations of Pocahontas to consummate
the  Company  Merger  set  forth in  Articles  IX and XI have  been  waived  (if
available) or satisfied and (y) the Company and First Community acknowledge that
the  conditions to its  obligation to consummate the Company Merger set forth in
Articles X and XI have been waived (if available) or satisfied.  The Company and
First  Community  shall  not be  required  to take any such  action  that is not
consistent  with generally  accepted  accounting  principles or any  requirement
applicable to either of them by any bank regulatory agency. The representations,
warranties  and covenants of the Company and First  Community  contained in this
Agreement  shall not be deemed to be untrue or  breached  in any respect for any
purpose as a consequence of any action undertaken on account of this Section 8.9
and  shall  not  constitute   grounds  for  termination  of  this  Agreement  by
Pocahontas.

8.10.    Employee Benefit Plans; Employment Arrangements.

     (a) Except as  otherwise  provided in this  Section 8.10 or as agreed to in
writing between  Pocahontas and the Company,  as of or after the Effective Time,
and subject to the  requirements of the Code, the First Community  Benefit Plans
may  continue  to be  maintained  separately,  or  consolidated  or  terminated.
Employees of First Community who continue employment with Pocahontas on or after
the  Effective  Time (all such  persons are  referred  to herein as  "Continuing
Employees")  shall be eligible to participate in such employee  benefit plans as
may be in effect  generally for  employees of Pocahontas  from time to time (the
"Pocahontas  Plans"),  if such Continuing Employee shall be eligible or selected
for  participation  therein.  Except as  specifically  set forth in this Section
8.10, Continuing Employees shall be entitled to participate on the same basis as
similarly  situated  employees of Pocahontas,  except that Continuing  Employees
shall be entitled to full credit for each year of prior  service (in which 1,000
hours of service are performed) with First Community for purposes of determining
eligibility for participation and vesting, but not for benefit accruals,  in the
Pocahontas Plans, subject to applicable break in service rules.  Notwithstanding
anything in this Section  8.10(a) to the contrary,  participation  by Continuing
Employees  in  employee  benefit  plans  of  Pocahontas  with  respect  to which
eligibility  and  participation  is at the  discretion of the employer,  such as
non-qualified  deferred  compensation  plans,  stock option  plans,  stock bonus
plans,  restricted  stock plans, and other such similar plans (but not including
employee  benefit  plans  generally  available  to all  full-time  employees  of
Pocahontas), shall be discretionary with Pocahontas.

     (b) In  connection  with the execution of this  Agreement,  and pursuant to
amendments  made by the Company to the First Community ESOP, the First Community
ESOP shall automatically  terminate,  effective at the Effective Time. Following
the  termination of the First  Community  ESOP, the  outstanding  balance of the
First  Community  ESOP loan shall be repaid from the cash  proceeds in the First
Community  ESOP  suspense  account  and the  remainder  shall  be  allocated  to
participants  of the plan, in accordance  with ERISA,  the rules and regulations
promulgated  thereunder,  the  Code,  and  the  rules,  regulations  promulgated
thereunder,  and any precedential  rulings issued by the IRS. In connection with
the termination of the First Community ESOP and following the  effectiveness  of
the  Company  Merger,  the  Company  or  First  Community  or  their  respective
successors shall promptly apply to the IRS for a favorable  determination letter
on the  tax-qualified  status of the First  Community ESOP on termination and on
any  amendments  made  to the  First  Community  ESOP  in  connection  with  its
termination or otherwise,  if said  amendments  have not  previously  received a
favorable  determination letter from the IRS with respect to their qualification
under Code Section 401(a).  Any and all  distributions  from the First Community
ESOP after its  termination  shall be made  consistent  with the  aforementioned
determination  letter  issued  by the  IRS  relating  to  such  termination  and
amendments.

     (c) Any  employee of the  Company or First  Community  on the Closing  Date
whose  annual  base  salary on the  Closing  Date is  $37,500  or less  shall be
eligible for a severance  payment from  Pocahontas or Pocahontas  Federal in the
event such  employee's  employment  with  Pocahontas  Federal is  terminated  by
Pocahontas Federal for reasons unrelated to such employee's job performance. The
amount of such  severance  payment  shall be one  week's pay  multiplied  by the
number of completed  years of service by such employee with the Company or First
Community  through  the  Closing  Date,  subject to a maximum  of 13 weeks.  The
obligation  of  Pocahontas  or  Pocahontas  Federal to make  severance  payments
pursuant to this Section  8.10(c)  shall  commence on the Closing Date and shall
terminate six months thereafter.

8.11.    D&O Indemnification and Insurance.

     (a) From and  after  the  Effective  Date  through  the  sixth  anniversary
thereof,  Pocahontas agrees to indemnify,  defend and hold harmless such present
and former  directors and officers of the Company as are listed in Schedule 8.11
of the Company  Disclosure  Schedule  (the  "Indemnified  Parties")  against all
losses, claims,  damages,  costs, expenses (including reasonable attorneys' fees
and expenses),  liabilities,  judgments or amounts paid in settlement  (with the
approval of Pocahontas, which approval shall not be unreasonably withheld) or in
connection with any claim, action, suit, proceeding or investigation arising out
of matters  existing or occurring at or prior to the Effective  Date (a "Claim")
in which an  Indemnified  Party is, or is  threatened  to be made,  a party or a
witness based in whole or in part on, or arising in whole or in part out of, the
fact that such person is or was a director or officer of the Company, regardless
of whether  such Claim is asserted or claimed  prior to, at or after the Closing
Date, to the fullest  extent to which  directors and officers of the Company are
entitled under the articles of incorporation and bylaws of the Company, or other
applicable law as in effect on the date hereof and Pocahontas shall pay expenses
in advance of the final  disposition  of any such action or  proceeding  to each
Indemnified Party to the extent permissible to an Arkansas corporation under the
ABCA and the Company's  articles of incorporation and bylaws as in effect on the
date hereof; provided, that the person to whom expenses are advanced provides an
undertaking  to repay such  expenses if it is  ultimately  determined  that such
person is not entitled to  indemnification).  All rights to  indemnification  in
respect of a Claim asserted or made within the period described in the preceding
sentence  shall  continue  until the final  non-appealable  disposition  of such
Claim.

     (b) Any Indemnified  Party wishing to claim  indemnification  under Section
8.11(a) hereof,  upon learning of any Claim,  shall promptly notify  Pocahontas,
but the failure to so notify shall not relieve  Pocahontas  of any  liability it
may have to such  Indemnified  Party  except to the  extent  that  such  failure
materially  prejudices  Pocahontas.  In the event of any Claim,  (1)  Pocahontas
shall have the right to assume the  defense  thereof  (with  counsel  reasonably
satisfactory  to the Indemnified  Party) and upon such  assumption  shall not be
liable to such  Indemnified  Parties for any legal  expenses of other counsel or
any  other  expenses  subsequently  incurred  by  such  Indemnified  Parties  in
connection with the defense  thereof,  except that, if Pocahontas  elects not to
assume such defense or counsel for the  Indemnified  Parties  advises that there
are  issues  which  raise  conflicts  of  interest  between  Pocahontas  and the
Indemnified  Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Pocahontas  shall pay all reasonable fees and expenses of such counsel
for the  Indemnified  Parties  promptly as  statements  therefor  are  received,
provided  further that  Pocahontas  shall in all cases be obligated  pursuant to
this paragraph to pay for only one firm of counsel for all Indemnified  Parties,
(2) the Indemnified  Parties will cooperate in the defense of any such Claim and
(3) Pocahontas shall not be liable for any settlement effected without its prior
written consent (which consent shall not unreasonably be withheld).

     (c)  Pocahontas  shall  maintain in effect for three years from the Closing
Date, if available,  the current  directors' and officers'  liability  insurance
policy  maintained  by the Company  (provided  that  Pocahontas  may  substitute
therefor policies of at least the same coverage  containing terms and conditions
which are not materially less favorable) with respect to matters occurring at or
prior to the Closing Date, provided,  however, that in no event shall Pocahontas
be required  to expend  pursuant to this  Section  8.11(c)  more than the amount
equal to 150% of the current  annual amount  expended by the Company to maintain
or procure insurance  coverage pursuant hereto. If the premium of such insurance
would  exceed  such  maximum  amount,  Pocahontas  shall  use  its  commercially
reasonable  efforts to purchase such level of insurance as can be obtained for a
premium equal to such maximum  amount.  In connection  with the  foregoing,  the
Company  agrees  to  provide  such  insurer  or  substitute  insurer  with  such
representations  as such  insurer may  reasonably  request  with  respect to the
reporting of any prior claims.

8.12.    Escrowed Amount.

     At or immediately prior to the Effective Date, First Community shall escrow
$95,000 with a third-party  escrow agent.  This escrowed amount shall be used to
pay Bank of Oklahoma,  N.A. in settlement of or following final  adjudication in
the current litigation between Bank of Oklahoma,  N.A. and First Community.  Any
amount from the escrow account not so paid to Bank of Oklahoma,  N.A.  following
the settlement or final  adjudication  of such  litigation  shall be paid by the
escrow agent as follows: (i) 15% of such amount shall be paid to Pocahontas; and
(ii) 85% of such  amount  shall be paid to the  stockholders  of the  Company in
proportion to their ownership of Company Common Stock  immediately  prior to the
Closing  Date,  which  payment,  if any,  shall be additional  consideration  in
payment for such stockholders' Company Common Stock.

             ARTICLE IX. CONDITIONS TO THE OBLIGATIONS OF POCAHONTAS

     The   obligations   of  Pocahontas   under  this  Agreement  to  cause  the
transactions  contemplated  herein to be  consummated  shall be  subject  to the
satisfaction or written waiver by Pocahontas of the following conditions:

9.1.     No Material Adverse Change.

     There  shall not have been any  Material  Adverse  Effect in the  financial
condition,  results of  operations  or business of the Company from December 31,
1999 to the Closing Date.

9.2.     Representations and Warranties.

     Each  of the  representations  and  warranties  of the  Company  and  First
Community in this Agreement  which is qualified as to materiality  shall be true
and correct,  and each such  representation or warranty that is not so qualified
shall be true and correct in all material respects,  in each case as of the date
of this Agreement, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date.

9.3.     Performance and Compliance.

     The Company and First  Community  shall have  performed  or complied in all
material  respects with all covenants and agreements  required by this Agreement
to be performed and satisfied by it on or prior to the Closing Date.

9.4.     No Proceeding or Litigation.

     On the Closing  Date,  no suit,  action or  proceeding  shall be pending or
overtly  threatened,  and no liability or claim shall have been asserted against
the Company,  First  Community or any Company  Subsidiary  involving  any of the
assets,  properties,  business or operations of the Company,  First Community or
any  Company  Subsidiary  that would  reasonably  be expected to have a Material
Adverse Effect.

9.5.     Consents Under Agreements.

     Pocahontas  shall have  received  the consent or approval of each person or
entity  whose  consent  or  approval  shall  be  required  in  order  to  permit
consummation  of the Company  Merger under any loan or credit  agreement,  note,
mortgage,  indenture,  lease or  other  agreement  or  instrument  to which  the
Company,  First  Community or any Company  Subsidiary is a party or to which its
respective  property is subject,  except those for which  failure to obtain such
consents and  approvals  would not,  individually  or in the  aggregate,  have a
Material  Adverse  Effect on  Pocahontas,  whether prior to (if  applicable)  or
following the consummation of the transactions contemplated hereby.

9.6.     No Amendments to Resolutions.

     Neither the Board of  Directors of the Company or First  Community  nor any
committee  thereof  shall have  amended,  modified,  rescinded  or repealed  the
resolutions adopted by such Board of Directors with respect to this Agreement or
shall have adopted any other  resolutions in connection  with this Agreement and
the  transactions   contemplated   hereby  which  are  inconsistent   with  such
resolutions.

9.7.     Certificate of First Community Officers.

     The Company shall have furnished  Pocahontas a  certificate,  signed by its
Chief Executive Officer and its Chief Financial Officer, dated the Closing Date,
to the effect that, based on his knowledge, the conditions described in Sections
9.1 through 9.6, and Section 9.8 of this Agreement have been fully satisfied.

9.8.     Corporate Proceedings.

     All action required to be taken by, or on the part of the Company and First
Community to authorize the execution, delivery and performance of this Agreement
and the  consummation of the  transactions  contemplated by this Agreement shall
have been duly and validly taken by the Company and First Community.

9.9.     Legal Opinion.

     Pocahontas  shall have received an opinion,  dated the Closing  Date,  from
legal McAfee & Taft counsel to the Company, in the form specified on Exhibit D.

   ARTICLE X. CONDITIONS TO THE OBLIGATIONS OF THE COMPANYAND FIRST COMMUNITY

     The  obligations of the Company and First Community under this Agreement to
cause the transactions contemplated herein to be consummated shall be subject to
the  satisfaction  or written  wavier by the Company or First  Community  of the
following conditions:

10.1.    Representations and Warranties.

     Each of the  representations and warranties of Pocahontas in this Agreement
which is qualified as to  materiality  shall be true and correct,  and each such
representation or warranty that is not so qualified shall be true and correct in
all  material  respects,  in each  case as of the  date of this  Agreement,  and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date.

10.2.    Performance and Compliance.

     Pocahontas  shall have performed or complied in all material  respects with
all  covenants  and  agreements  required by this  Agreement to be performed and
satisfied by it on or prior to the Closing Date.

10.3.    Corporate Proceedings.

     All  action  required  to be  taken  by,  or on  the  part  of  Pocahontas,
Pocahontas Federal and Acquisition Corp to authorize the execution, delivery and
performance  of  this  Agreement  and  the   consummation  of  the  transactions
contemplated  by this  Agreement  shall  have  been  duly and  validly  taken by
Pocahontas, Pocahontas Federal and Acquisition Corp.

10.4.    Certificate of Pocahontas Officers.

     Pocahontas shall have furnished to First Community a certificate, signed by
its Chief  Executive  Officer  and its  Chief  Financial  Officer  and dated the
Closing Date, to the effect that, based on their best knowledge,  the conditions
described  in Sections  10.1,  10.2 and 10.3 of this  Agreement  have been fully
satisfied.

10.5.    Legal Opinion.

     The Company shall have  received an opinion,  dated as of the Closing Date,
from Luse Lehman Gorman Pomerenk & Schick, P.C., counsel for Pocahontas,  in the
form specified on Exhibit E.

            ARTICLE XI. CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES

     In addition to the provisions of Articles IX and X hereof,  the obligations
of  Pocahontas,  the  Company  and First  Community  to cause  the  transactions
contemplated  herein to be consummated,  shall be subject to the satisfaction or
written waiver by both Pocahontas and the Company of the following conditions:

11.1.    Governmental Approvals.

     The parties  hereto  shall have  received  all  necessary  approvals of the
transactions  contemplated  by this  Agreement  from  governmental  agencies and
authorities, including, without limitation, those of the Department and the OTS,
and each of such  approvals  shall  remain  in full  force  and  effect  and all
statutory  waiting  periods in  connection  therewith  shall have expired at the
Closing Date and such approvals and the transactions  contemplated thereby shall
not have been  contested by any federal or state  governmental  authority nor by
any other third party by formal proceeding;  provided, however, that no approval
or  consent  referred  to in this  Section  11.1  shall be  deemed  to have been
received by Pocahontas if it shall include any non-standard  term,  condition or
requirement that,  individually or in the aggregate would reduce the economic or
business  benefits  of  the  transactions  contemplated  by  this  Agreement  to
Pocahontas  in so  significant  a  manner  that  Pocahontas,  in its  reasonable
judgment, would not have entered into this Agreement.

11.2.    No Injunctions or Restraints.

     No suit, action or proceeding shall be pending or overtly threatened before
any court or other governmental agency by the federal or any state government in
which it is sought to  restrain  or  prohibit  the  consummation  of the Company
Merger and no temporary  restraining order,  preliminary or permanent injunction
or other  order  issued by any court of  competent  jurisdiction  or other legal
restraint or prohibition preventing the consummation of the Company Merger shall
be in effect.

11.3.    Corporate Proceedings.

     The  obligations of the parties to this Agreement  required to be performed
at or prior to the Closing Date shall have been duly performed and complied with
in all material respects. All action required to be taken by, or on the part of,
the  parties  to  this  Agreement  to  authorize  the  execution,  delivery  and
performance  of  this  Agreement,  and  the  consummation  of  the  transactions
contemplated  hereby,  shall  have been duly and  validly  taken by the  parties
hereto.

11.4     Stockholder Approval.

     This Agreement  shall have been duly approved by the requisite  affirmative
vote of the stockholders of the Company, as contemplated by Section 8.1 hereof.

                            ARTICLE XII. TERMINATION

12.1.    Reasons for Termination.

     This Agreement may be terminated  and the Company  Merger  abandoned at any
time before the Closing Date,  whether  before or after the approval or adoption
of this Agreement by the stockholders of the Company:

     (a) By mutual  written  consent of the Board of Directors of Pocahontas and
the Board of Directors of the Company;


     (b) By written notice from Pocahontas to the Company if:

          (i) any condition set forth in Article IX of this Agreement shall have
     become  impossible  to  substantially  satisfy  at any time or has not been
     substantially satisfied or waived in writing; or

          (ii) any  condition  set forth in Article XI of this  Agreement  shall
     have become impossible to substantially satisfy at any time or has not been
     substantially satisfied or waived in writing, provided, however, Pocahontas
     shall not have the  right to  terminate  this  Agreement  pursuant  to this
     Section  12.1(b)(ii)  if any  condition  imposed by  Sections  11.1 or 11.3
     hereof was not met due to the failure of  Pocahontas  to perform or observe
     the covenants and agreements set forth in this Agreement; or

          (iii) any representation or warranty as set forth in Article IV hereof
     made by the Company or First Community shall be discovered to be or to have
     become untrue or incorrect in any material respect,  or where any statement
     in  a  representation  or  warranty   expressly   includes  a  standard  of
     materiality,  such  statement  shall be  discovered to be or to have become
     untrue or incorrect in any respect taking into  consideration  the standard
     of materiality  contained therein, in either case where any such breach has
     not been cured within thirty (30) days following  receipt by the Company or
     First Community of notice of such discovery; or

          (iv) The Company or First  Community  shall have  breached one or more
     covenants of this Agreement in any material  respect  considering  all such
     breaches  in the  aggregate,  where such  breach has not been cured  within
     thirty (30) days  following  receipt by the Company or First  Community  of
     notice of such breach.

    (c) By written notice from the Company to Pocahontas if

          (i) any condition set forth in Article X of this Agreement  shall have
     become  impossible  to  substantially  satisfy  at any time or has not been
     substantially satisfied or waived in writing; or

          (ii) any  condition  set forth in Article XI of this  Agreement  shall
     have become impossible to substantially satisfy at any time or has not been
     substantially  satisfied  or  waived in  writing;  provided,  however,  the
     Company shall not have the right to terminate  this  Agreement  pursuant to
     this Section  12.1(c)(ii) if any condition imposed by Sections 11.1 or 11.3
     hereof was not met due to the failure of the Company or First  Community to
     perform  or  observe  the  covenants  and  agreements  set  forth  in  this
     Agreement; or

          (iii) any  representation or warranty as set forth in Article V hereof
     made by  Pocahontas  shall be  discovered to be or to have become untrue or
     incorrect  in  any  material   respect,   or  where  any   statement  in  a
     representation  or warranty  expressly  includes a standard of materiality,
     such  statement  shall be  discovered  to be or to have  become  untrue  or
     incorrect  in  any  respect  taking  into  consideration  the  standard  of
     materiality contained therein, in either case where any such breach has not
     been cured  within  thirty (30) days  following  receipt by  Pocahontas  of
     notice of such discovery; or

          (iv)  Pocahontas  shall have  breached  one or more  covenants of this
     Agreement  in any material  respect  considering  all such  breaches in the
     aggregate,  where such  breach has not been cured  within  thirty (30) days
     following receipt by Pocahontas of notice of such breach.

     (d) By the Board of  Directors of  Pocahontas  if the Board of Directors of
the Company shall not recommend, or shall withdraw or modify in a manner adverse
to  Pocahontas,  its  recommendation  to the holders of Company  Common Stock to
approve this Agreement.

     (e) By the Board of  Directors  of  Pocahontas  or the  Company at any time
after the Company  Shareholders'  Meeting as contemplated in Section 8.1, if the
stockholders  of the Company have not approved  this  Agreement by the requisite
affirmative vote.

     (f) By the Board of Directors of  Pocahontas  or the Company if the Company
Merger has not been consummated on or before September 30, 2001.

12.2.    Effect of Termination.

     In the event of  termination  of this  Agreement  by either the  Company or
Pocahontas as provided in Section 12.1 hereof,  this Agreement  shall  forthwith
become  void,  and there  shall be no  liability  or  obligation  on the part of
Pocahontas or the Company or their respective  officers or directors except with
respect to Section 8.8 and as otherwise set forth in Section 13.2 hereof.

                           ARTICLE XIII. MISCELLANEOUS

13.1.    Nonsurvival of Representations, Warranties and Agreements.

     None of the representations,  warranties,  covenants and agreements in this
Agreement  or in any  instrument  delivered  pursuant  to this  Agreement  shall
survive the Effective  Time,  except for the covenants and  agreements  which by
their terms are contemplated to be performed after the Effective Time.

13.2.    Expenses.

     Except as otherwise  provided in Section 3.2 hereof,  all expenses incurred
by  Pocahontas   and  the  Company  in   connection   with  or  related  to  the
authorization,  preparation and execution of this Agreement, the solicitation of
stockholder  approvals  and all other  matters  related  to the  closing  of the
transactions  contemplated  thereby,   including,   without  limitation  of  the
generality  of the  foregoing,  all  fees  and  expenses  of  agents,  financial
advisors, representatives, counsel and accountants employed by either such party
or its  Affiliates,  shall be borne  solely and  entirely  by the party that has
incurred the same. In the event of any termination of this Agreement  because of
a willful  breach of this  Agreement  by one of the parties,  the  non-breaching
party shall be entitled to payment of, and the breaching  party shall pay to the
non-breaching party, all reasonable out-of-pocket costs and expenses, including,
without limitation, reasonable legal, accounting and investment banking fees and
expenses,  incurred by the non-breaching  party in connection with entering into
this  Agreement  and  carrying out of any and all acts  contemplated  hereunder;
provided, however, that this clause shall not be construed to relieve or release
a breaching party from any additional  liabilities or damages arising out of its
willful breach of any provision of this Agreement.

13.3.    Waivers; Amendments.

     At any time prior to the Closing Date, either  Pocahontas,  by action taken
by its Board of Directors, or any committee or officers thereunto authorized, or
the Company or First  Community,  by action taken by its Board of Directors,  or
any committee or officers thereunto authorized, may waive the performance of any
of the obligations of the other or waive compliance by the other with any of the
covenants or conditions contained in this Agreement or agree to the amendment or
modification  of this Agreement by an agreement in writing  executed in the same
manner as this Agreement.

13.4.    Assignment; Parties in Interest.

     This Agreement shall be binding upon and inure solely to the benefit of the
parties hereto and their  respective  successors  and assigns,  but shall not be
assigned by the parties  hereto,  by operation of law or otherwise,  without the
prior written consent of the other parties.  Nothing in this Agreement,  express
or implied, is intended to confer upon any third party any rights or remedies of
any nature whatsoever under or by reason of this Agreement.

13.5.    Entire Agreement.

     This  Agreement,  including the Exhibits and Disclosure  Schedules  hereto,
together with that certain letter  agreement  from  Pocahontas to the Company of
even date herewith  relating to Section  3.2(a)  hereof and that certain  letter
agreement  from  Pocahontas  to the  Company of even date  herewith  relating to
Section 7.2 hereof,  supersedes any other  agreement,  whether  written or oral,
that may have been made or  entered  into by the  Company,  First  Community  or
Pocahontas  or by any  officer  or  officers  of such  parties  relating  to the
acquisition  of the  business  or the  capital  stock  of the  Company  or First
Community by Pocahontas.  This Agreement,  including the Exhibits and Disclosure
Schedules hereto, together with that certain letter agreement from Pocahontas to
the  Company  of even date  herewith,  constitute  the entire  agreement  by the
respective  parties,  and there are no agreements or  commitments  except as set
forth herein and therein.

13.6.    Captions and Counterparts.

     The captions in this  Agreement are for  convenience  only and shall not be
considered  a part  of or  affect  the  construction  or  interpretation  of any
provision  of  this  Agreement.  This  Agreement  may  be  executed  in  several
counterparts, each of which shall constitute one and the same instrument.

13.7.    Enforcement of this Agreement.

     The parties hereto agree that  irreparable  damage would occur in the event
that any of the  provisions of this  Agreement  were not performed in accordance
with their specific terms or were otherwise  breached.  It is accordingly agreed
that the parties  hereto will be entitled to an  injunction  or  injunctions  to
prevent  breaches of this  Agreement and to enforce  specifically  the terms and
provisions  hereof  in any  court  of the  United  States  or any  state  having
jurisdiction,  this  being in  addition  to any other  remedy to which  they are
entitled at law or in equity.

13.8.    Governing Law.

     This Agreement  shall be construed and  interpreted in accordance  with the
laws of the State of  Arkansas,  except to the effect that  Federal Law applies,
without regard to the conflicts of laws rules.

13.9.    Notices.

     All  notices  given  hereunder  shall  be in  writing  and  shall  be  hand
delivered,  sent by facsimile  transmission  or sent by a nationally  recognized
overnight delivery service, addressed as follows:

     (a) If to Pocahontas, to:

         Pocahontas Bancorp, Inc.
         203 West Broadway
         Pocahontas, Arkansas 72455
         Attention:  James A. Edington, President and Chief Executive Officer
         Facsimile:  (870) 892-8876

         With a Copy to:

         Luse Lehman Gorman Pomerenk & Schick
         5335 Wisconsin Avenue, N.W.
         Suite 400
         Washington, D.C.  20015
         Attention:  Eric Luse, Esq.
                     Robert B. Pomerenk, Esq.
         Facsimile:  (202) 362-2902

     (b) If to the Company, to:

         Walden/Smith Financial Group, Inc.
         1700 East Highland Drive
         Jonesboro, Arkansas 72402
         Attention: Frank E. Walden, Chairman of the Board
         Facsimile:  (870) 892-8251

         With a Copy to:

         McAfee & Taft
         Tenth Floor
         2 Leadership Square

         Oklahoma City, Oklahoma 73102
         Attention:  Bruce Crum, Esq.
         Facsimile:  (405) 235-0439

     Any notice provided hereunder shall be effective upon receipt thereof.


<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed effective as of the date first above written.

ATTEST:                          POCAHONTAS BANCORP, INC.


By:/s/                        By: /s/ James A. Edington
   ---------------------------   ----------------------------------------------
                                 James A. Edington, President and Chief
                                 Executive Officer


ATTEST:                          POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION


By:/s/                        By:/s/James A. Edington
   --------------------------    ----------------------------------------------
                                 James A. Edington, President and Chief
                                 Executive Officer


ATTEST:                         POCAHONTAS ACQUISITION CORP


By:/s/                       By: /s/James A. Edington
   -------------------------    -----------------------------------------------
                                James A. Edington, President and Chief
                                Executive Officer


ATTEST:                         FIRST COMMUNITY BANK


By:/s/                       By:/s/Glenda Fragenberg
   -------------------------    -----------------------------------------------
                                Glenda Fragenberg, Senior Vice President


ATTEST:                         WALDEN/SMITH FINANCIAL GROUP, INC.


By:/s/                      By:/s/Frank E. Walden
   ------------------------    ------------------------------------------------
                               Frank E. Walden, Chairman of the Board



<PAGE>



                                                                       EXHIBIT A

                      FORM OF STOCKHOLDER VOTING AGREEMENT

January 4, 2001


Pocahontas Bancorp, Inc.
203 West Broadway
Pocahontas, Arkansas 72455

Gentlemen:

     The undersigned  stockholder of Walden/Smith  Financial  Group,  Inc. ("The
Company")   understands  that  Pocahontas   Bancorp,   Inc.   ("Pocahontas")  is
concurrently  herewith  entering  into an  Agreement  and  Plan of  Merger  (the
"Agreement") with the Company and the Company's wholly owned  subsidiary,  First
Community Bank. The Agreement provides for the merger of an Arkansas corporation
("Acquisition  Corp") with and into the Company (the  "Company  Merger") and the
conversion of the issued and  outstanding  shares of common stock of the Company
("Company  Common  Stock") into cash in  accordance  with the terms  therein set
forth.  Capitalized terms used but not separately  defined herein shall have the
respective meanings given to such terms in the Agreement.

     1. In order to induce  Pocahontas  and  Acquisition  Corp to enter into the
Agreement,  and  intending to be legally bound hereby,  the  undersigned  hereby
represents,   warrants  and  agrees  that  at  the  meeting  of  the   Company's
shareholders  contemplated  by Section 8.1 of the Agreement and any  adjournment
thereof,  the undersigned will, in person or by proxy, vote or cause to be voted
in favor of the Agreement the shares of Company Common Stock  beneficially owned
by  the  undersigned  individually  or,  to  the  extent  of  the  undersigned's
proportionate  voting interests,  jointly with other persons, as well as (to the
extent of the undersigned's  proportionate  voting interest) any other shares of
Company Common Stock over which the undersigned may hereafter acquire beneficial
ownership  (collectively,  the "Shares").  The term "beneficially  owned" in the
preceding  sentence shall not be deemed to refer to shares held by the Company's
Employee Stock Ownership  Plan. The undersigned  further agrees that he will use
his best efforts to cause any other shares of Company Common Stock over which he
has or shares  voting power  (other than shares of Company  Common Stock held by
the  Company's  Employee  Stock  Ownership  Plan)  to be  voted  in favor of the
Agreement.

     2. The  undersigned  represents  and  warrants  that he has or  shares  the
beneficial  ownership of the number of shares of Company  Common Stock set forth
opposite  his name on Schedule I hereto.  The  undersigned  further  represents,
warrants  and agrees  that  until the  earlier  of (i) the  consummation  of the
transactions  contemplated  by the  Agreement  or (ii)  the  termination  of the
Agreement in accordance with its terms,  the undersigned  will not,  directly or
indirectly:

     (a) vote any of the  Shares,  or cause or  permit  any of the  Shares to be
voted, in favor of any other merger, consolidation, plan of liquidation, sale of
assets,  reclassification or other transaction  involving the Company that would
have the  effect  of any  person,  other  than  Pocahontas  or an  affiliate  of
Pocahontas, acquiring control over the Company or any substantial portion of the
assets of the Company.  As used herein, the term "control" means (1) the ability
to direct the voting of 10% or more of the  outstanding  voting  securities of a
person  having  ordinary  voting  power in the  election of  directors or in the
election  of any other body  having  similar  functions,  or (2) the  ability to
direct the management  and policies of a person,  whether  through  ownership of
securities, through any contract, arrangement or understanding or otherwise.

     (b) sell,  assign,  transfer or otherwise  dispose of any of the Shares, or
cause or permit any of the Shares to be sold, assigned, transferred or otherwise
disposed of,  whether such shares of Company Common Stock are owned of record or
beneficially by him on the date hereof or are subsequently acquired,  except (i)
for  transfers by will or by  operation  of law (in which case this  Stockholder
Voting Agreement shall bind the transferee);  (ii) for gifts by the undersigned,
subject to the donee  expressly  assuming  the  obligations  of the  undersigned
arising under this Stockholder Voting Agreement;  (iii) for sales,  assignments,
transfers or other dispositions necessitated by hardship, with the prior written
consent of Pocahontas,  provided that such transferee  agrees to be bound by the
terms hereof; or (iv) as Pocahontas may otherwise agree in writing.

     3. The undersigned represents that (i) he has the complete and unrestricted
power and the  unqualified  right to enter  into and  perform  the terms of this
Stockholder Voting Agreement and that this Stockholder Voting Agreement does not
conflict with the terms of any agreement,  understanding or document to which he
is a party;  (ii) this  Stockholder  Voting  Agreement  constitutes  a valid and
binding  agreement  with respect to him,  enforceable  against him in accordance
with its terms; and (iii) he has either sole and unrestricted  voting power with
respect  to such  Shares or such  voting  power is shared  with  another  person
entering  into  an  agreement  substantially  identical  to  this  Stock  Voting
Agreement.

     4. It is a  condition  to the  effectiveness  of this  Stockholder  Voting
Agreement that the Agreement shall have been executed and delivered.

     5. For a period of three  years  from the  Closing  Date,  the  undersigned
agrees that (i) he will not  acquire,  or offer or agree to  acquire,  or act in
concert  with any  Affiliate,  group or other  Person to  acquire,  directly  or
indirectly,  by purchase or otherwise,  beneficial ownership of, or the right to
vote,  more than 5% of Pocahontas'  outstanding  common stock, or any securities
convertible  into such common stock, and (ii) he will not directly or indirectly
solicit,  or act in  concert  with any  Affiliate,  group,  or other  person  to
solicit,  "proxies,"  or  directly  or  indirectly,  become a  "participant"  or
otherwise engage in any  "solicitation" (as such terms are defined in Regulation
14A under the  Securities  Exchange Act of 1934, as amended) with respect to any
matter not  recommended or approved by a majority of the members of the Board of
Directors of Pocahontas then in office.

     6. For a period of two years  following the Closing Date,  the  undersigned
agrees  that he will not work for or advise,  consult or  otherwise  serve with,
directly or indirectly,  any entity whose business  materially competes with the
depository, lending or other business activities of Pocahontas and/or Pocahontas
Federal and/or First Community Bank in Jackson,  Craighead or Randolph counties.
The undersigned  represents and admits that his experience and  capabilities are
such that he can obtain  employment in a business  engaged in other lines and/or
of a different  nature than  Pocahontas,  Pocahontas  Federal or First Community
Bank, and that the enforcement of a remedy by way of injunction will not prevent
him from earning a livelihood.

     7. The parties  hereto  agree that  irreparable  damage  would occur in the
event that any of the provisions of this  Stockholder  Voting Agreement were not
performed by the  undersigned  in accordance  with their  specific terms or were
otherwise  breached.  It is accordingly agreed that Pocahontas shall be entitled
to  seek  such  an  injunction  or  injunctions  to  prevent  breaches  of  this
Stockholder Voting Agreement by the undersigned and to enforce  specifically the
terms  and  provisions  hereof in any  court of the  United  States or any state
having  competent  jurisdiction,  this being in addition to any other  remedy to
which Pocahontas is entitled at law or in equity.

     8. This Stockholder  Voting Agreement is to be governed by Arkansas law. If
any  provision   hereof  is  deemed   unenforceable  by  a  court  of  law,  the
enforceability of the other provisions hereof shall not be affected.

                                                     Very truly yours


                                                     Name

Accepted and Agreed to:

POCAHONTAS BANCORP, INC.


By:      _____________________________
         James A. Edington, President

         Schedule I

                                                  Number of Shares Beneficially

Name of Stockholder                               Owned of Company Common Stock


_______________________                           _____________________________





<PAGE>


                                                                       EXHIBIT B

                          PLAN OF COMPLETE LIQUIDATION

              AND DISSOLUTION OF WALDEN/SMITH FINANCIAL GROUP, INC.

     This Plan of Complete Liquidation and Dissolution (the "Plan") shall effect
the complete  liquidation and dissolution of Walden/Smith  Financial Group, Inc.
(the "Company"), an Arkansas corporation,  in accordance with Section 332 of the
Internal  Revenue Code of 1986, as amended (the "Code"),  and Section  4-27-1402
et.seq. of the Arkansas Business  Corporation Act of 1987 ("ABCA") following the
merger of Pocahontas  Acquisition Corp, an Arkansas  corporation,  with and into
the  Company,  pursuant  to that  certain  Agreement  and Plan of  Merger by and
between  Pocahontas   Bancorp,   Inc.,   Pocahontas  Federal  Savings  and  Loan
Association, Pocahontas Acquisition Corp, Walden/Smith Financial Group, Inc. and
First Community Bank, dated as of January 4, 2001 (the "Agreement of Merger").

     1. Adoption of Plan. This Plan shall become effective upon its approval and
adoption   by   Pocahontas    Federal   Savings   and   Loan   Association,    a
federally-chartered  savings association  ("Pocahontas Federal"), and the filing
of the Articles of Dissolution,  pursuant to Section  4-27-1403 of the ABCA. The
aforesaid actions shall take place following Pocahontas Federal's acquisition of
all of the  outstanding  stock  of the  Company  upon  the  consummation  of the
Agreement of Merger.

     2. Filing of Forms.  The officers of Pocahontas  Federal are authorized and
directed to execute and file, or cause the Company to execute and file, a United
States Treasury Form 966 pursuant to Section 6043 of the Code within thirty (30)
days after the  adoption of this Plan in  accordance  with  Section 1 hereof and
such  additional  or other forms and reports  with and to the  Internal  Revenue
Service as may be necessary,  desirable or  appropriate  in connection  with the
implementation of this Plan.

     3. Dissolution.  Pocahontas  Federal shall execute and file the Articles of
Dissolution  for the Company in accordance  with Section  4-27-1403 of the ABCA.
After dissolution, the Company shall carry on no business except for the purpose
of winding up its affairs in accordance with Section 4-27-1405 of the ABCA.

     4.  Authorization  to  Officers.  The  officers of  Pocahontas  Federal are
authorized  to execute and deliver such  agreements,  conveyances,  assignments,
transfers,  certificates  and other  documents and to take such other actions as
such officers may deem necessary, appropriate or desirable in order to carry out
the provisions of this Plan and effect a complete liquidation and dissolution of
the Company in accordance with Section 332 of the Code and Section 4-27-1402 et.
seq. of the ABCA.

                                      * * *

     Adopted by the duly authorized vote of the Board of Directors of Pocahontas
Federal this ____ day of ___________, 2001.


<PAGE>



                                                                       EXHIBIT C

                               AGREEMENT OF MERGER

     THIS AGREEMENT OF MERGER (this  "Agreement") is dated as of ______________,
2001,  by  and  between   Pocahontas   Federal  Savings  and  Loan   Association
("Pocahontas  Federal"),  a federally chartered savings  association,  and First
Community Bank ("First Community"), an Arkansas state banking corporation.

                              W I T N E S S E T H:

     WHEREAS,  pursuant  to  an  Agreement  and  Plan  of  Merger  (the  "Merger
Agreement")   dated  as  of  January  4,  2001,   Pocahontas   Acquisition  Corp
("Acquisition  Corp"),  an  Arkansas  corporation   wholly-owned  by  Pocahontas
Federal,  merged with and into Walden/Smith  Financial Group,  Inc., an Arkansas
corporation  (the  "Company"),  with the result  that the  Company  has become a
wholly-owned subsidiary of Pocahontas Federal; and

     WHEREAS, the Merger Agreement provides that after the merger of Acquisition
Corp  with and into the  Company,  the  Company  shall be  liquidated  and First
Community shall be merged with and into Pocahontas Federal;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
and  agreements  contained  herein and in the Merger  Agreement and for good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  First Community and Pocahontas Federal hereby agree that, subject
to the terms and conditions  hereinafter  set forth,  and in accordance with all
applicable laws and  regulations,  First Community shall be merged with and into
Pocahontas  Federal as of the date  herewith  (the "Bank  Merger").  The parties
hereto do hereby agree and covenant as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Except as otherwise  provided herein, the capitalized terms set forth below
shall have the following meanings:

     1.1.  "Bank Merger" shall refer to the merger of First  Community  with and
into Pocahontas Federal as provided in Section 2.1 of this Agreement.

     1.2.  "Effective  Time"  shall  mean the date and time at which the  merger
contemplated by this Agreement  becomes  effective as provided in Section 2.2 of
this Agreement.

     1.3.  "Merging  Banks"  shall  collectively  refer to First  Community  and
Pocahontas Federal.

     1.4. "Thrift Regulations" shall mean the rules and regulations  promulgated
under the Home Owners' Loan Act, as amended.

     1.5. "OTS" shall mean the Office of Thrift Supervision.

     1.6.  "Surviving  Bank" shall refer to Pocahontas  Federal as the surviving
bank of the Merger.

                                   ARTICLE II

                            TERMS OF THE BANK MERGER

     2.1. The Bank Merger.

     (a) Subject to the terms and conditions set forth in this Agreement and the
Merger  Agreement,  at the Effective Time,  First Community shall be merged with
and into Pocahontas Federal pursuant to Section 552.13 and Section 563.22 of the
Thrift  Regulations.  Pocahontas Federal shall be the surviving bank of the Bank
Merger and shall  continue  to be  governed  by the Home  Owners'  Loan Act,  as
amended, and the Thrift Regulations.

     (b) As a result of the Bank  Merger,  (i) each share of common  stock,  par
value $____ per share,  of First Community  issued and  outstanding  immediately
prior to the  Effective  Time  shall be  canceled  and (ii) each share of common
stock,  par value $0.10 per share, of Pocahontas  Federal issued and outstanding
immediately  prior to the Effective Time shall remain issued and outstanding and
shall  constitute  the only shares of capital stock of the Surviving Bank issued
and outstanding immediately after the Effective Time.

     (c) At the Effective  Time, the Surviving Bank shall be considered the same
business and  corporate  entity as each of the Merging  Banks and  thereupon and
thereafter  all the  property,  rights,  powers  and  franchises  of each of the
Merging Banks shall vest in the Surviving  Bank and the Surviving  Bank shall be
subject  to and be  deemed  to  have  assumed  all  of the  debts,  liabilities,
obligations  and duties of each of the Merging Banks and shall have succeeded to
all of each of their relationships,  fiduciary or otherwise, as fully and to the
same extent as if such property, rights, privileges,  powers, franchises, debts,
obligations,  duties and relationship had been originally acquired,  incurred or
entered  into by the  Surviving  Bank.  The  deposit  taking  offices  of  First
Community shall be operated by the Surviving Bank. In addition, any reference to
either of the Merging Banks in any contract, will or document,  whether executed
or taking  effect  before or after the  Effective  Time,  shall be  considered a
reference to the Surviving Bank if not inconsistent with the other provisions of
the  contract,  will or  document;  and any  pending,  action or other  judicial
proceeding  to which either of the Merging  Banks is a party shall not be deemed
to have abated or to have been  discontinued  by reason of the Bank Merger,  but
may be  prosecuted to final  judgment,  order or decree in the same manner as if
the Bank Merger had not been made or the Surviving  Bank may be substituted as a
party to such action or  proceeding,  and any  judgment,  order or decree may be
rendered for or against it that might have been  rendered for or against  either
of the Merging Banks if the Bank Merger had not occurred.

     2.2. Effective Time. The Bank Merger shall become effective on the date and
at the time the Articles of Combination  for such merger are endorsed by the OTS
pursuant to Section 552.13(k) of the Thrift Regulations.

     2.3. Name of Surviving Bank. The name of the Surviving Bank shall be "First
Community Bank."

     2.4.  Charter.  On and after the Effective  Time, the Charter of Pocahontas
Federal shall be the Charter of the  Surviving  Bank until amended in accordance
with applicable law;  provided that at the Effective Time, such Charter shall be
amended to change the name of the Surviving Bank in accordance  with Section 2.3
hereof.

     2.5.  Bylaws.  On and after the  Effective  Time,  the Bylaws of Pocahontas
Federal  shall be the Bylaws of the  Surviving  Bank until amended in accordance
with applicable law.

     2.6. Directors and Officers. On and after the Effective Time, until changed
in  accordance  with the  Charter  and  Bylaws of the  Surviving  Bank,  (i) the
directors of the Surviving  Bank shall be the  directors of  Pocahontas  Federal
immediately  prior to the Effective  Time and (ii) the officers of the Surviving
Bank  shall be the  officers  of  Pocahontas  Federal  immediately  prior to the
Effective  Time.  The directors  and officers of the  Surviving  Bank shall hold
office in accordance with the Charter and Bylaws of the Surviving Bank.

                                   ARTICLE III

                                  MISCELLANEOUS

     3.1. Conditions Precedent.  The respective  obligations of each party under
this Agreement shall be subject to (i) the satisfaction,  or waiver by the party
permitted to do so, of the  conditions set forth in Articles IX, X and XI of the
Merger  Agreement and (ii) the approval of this Agreement by Pocahontas  Federal
as sole stockholder of First Community.

     3.2. Termination.  This Agreement shall be terminated automatically without
further  act or deed  of  either  of the  parties  hereto  in the  event  of the
termination of the Merger Agreement in accordance with Section 12.1 thereof.

     3.3.  Amendments.  To the extent permitted by the Thrift Regulations,  this
Agreement may be amended by a subsequent  writing  signed by the parties  hereto
upon the approval of the board of directors of each of the parties hereto.

     3.4. Successors. This Agreement shall be binding on the successors of First
Community and Pocahontas Federal.

     IN WITNESS WHEREOF, First Community and Pocahontas Federal have caused this
Agreement  to be  executed by their duly  authorized  officers as of the day and
year first above written.

                               POCAHONTAS FEDERAL SAVINGS AND LOAN ASSOCIATION

ATTEST:

                          By:
------------------------       ------------------------------------------------
Secretary                      President and Chief Executive Officer


                               FIRST COMMUNITY BANK

ATTEST:

                          By:
------------------------       ------------------------------------------------
Secretary                      President and Chief Executive Officer


<PAGE>


                                                                       EXHIBIT D

[Matters  to be covered in Opinion  of  Counsel to be  delivered  to  Pocahontas
Bancorp, Inc. pursuant to Section 9.9 of the Agreement]

     (a) Each of the  Company  and  First  Community  is  incorporated,  validly
existing  and  in  good  standing  under  the  laws  of  its   jurisdiction   of
incorporation.  Each such entity has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being  conducted.  First  Community is a member of the Federal Home Loan Bank of
Dallas and all eligible accounts of depositors in First Community are insured by
the FDIC to the fullest extent  permitted by law. The Company is duly registered
as a bank  holding  company  under  the  BHCA  and  the  regulations  of the FRB
thereunder.

     (b) The authorized  capital stock of the Company consists of 250,000 shares
of common stock,  $0.10 par value per share (the "Company Common Stock").  As of
the date of this  opinion,  there were  176,877  shares of Company  Common Stock
issued and  outstanding.  All issued and  outstanding  shares of Company  Common
Stock,  and all issued and  outstanding  shares of capital stock of each Company
Subsidiary,  have been duly  authorized  and validly  issued and are fully paid,
nonassessable and free of preemptive  rights. To the best of our knowledge,  all
of the outstanding shares of First Community are owned,  directly or indirectly,
by the Company free and clear of any adverse  claims,  and,  neither the Company
nor any of its  subsidiaries is a party to any  subscription,  option,  warrant,
call,  commitment or similar agreement  providing for the transfer,  purchase or
issuance  of  any  shares  of  capital  stock  of  the  Company  or  any  of its
subsidiaries or any securities  representing  the right to purchase or otherwise
acquire any shares of such capital stock or any securities  convertible  into or
representing the right to purchase or otherwise acquire any such stock.

     (c) The  Company  has the  corporate  power and  authority  to execute  and
deliver the Agreement, and to consummate the Company Merger and to carry out all
of its obligations  thereunder.  The execution and delivery of the Agreement and
the  consummation of the Company Merger by the Company have been duly authorized
by the board of directors and stockholders of the Company and no other corporate
proceedings  on the part of the Company or any Company  Subsidiary are necessary
to consummate the transactions so contemplated.  The Agreement has been duly and
validly  executed and delivered by the Company,  and  constitutes  the valid and
legally  binding  obligation of the Company  enforceable in accordance  with its
terms, except as may be limited by bankruptcy,  insolvency,  moratorium or other
similar  laws  affecting  creditors'  rights and except as may be limited by the
exercise of judicial  discretion in applying principles of equity (regardless of
whether the Agreement is considered in a proceeding in equity or at law).

     (d) Neither of the  execution and delivery of the Agreement by the Company,
nor the consummation by the Company of the transactions  contemplated thereby in
accordance with its terms, nor compliance by the Company or First Community with
any of its terms,  will (i)  violate any  provision  of the  Company's  or First
Community's  articles of incorporation,  charter or bylaws, nor (ii) violate any
federal banking statute, code, rule or regulation,  or, to the knowledge of such
counsel,  any judgment,  order,  writ,  decree or  injunction  applicable to the
Company,  First  Community,  or any of their  respective  properties  or assets,
except,  with  respect to clause  (ii)  above,  such as  individually  or in the
aggregate will not have a material  adverse effect on the business,  operations,
assets or  financial  condition of the Company and its  subsidiaries  taken as a
whole.

     (e)  All  regulatory  or  governmental  approvals  and  consents  that  are
necessary  to be obtained by the Company to permit the  execution,  delivery and
performance of the Agreement have been obtained.

     (f) The Agreement,  including consummation of the transactions contemplated
thereby, has been approved by the requisite vote of stockholders of the Company.

     (g)  Assuming  due  authorization  of the Company  Merger by all  necessary
corporate  and  governmental  proceedings  on the part of parties other than the
Company and First  Community  and that such other  parties have taken all action
required to be taken by them prior to the Effective Time, upon the proper filing
of [describe regulatory filings,] the Company Merger will be validly consummated
in accordance  with the Agreement and applicable  laws and  regulations and each
outstanding  share of Company  Common Stock will be converted  into the right to
receive a cash payment in the manner specified in the Agreement.

     (h)  To  the   knowledge   of  such   counsel,   there  are  no   judicial,
administrative,  arbitral or other actions, suits, proceedings or investigations
pending or threatened,  which (i) if adversely  determined,  would result in any
material  adverse  change  in the  business,  operations,  assets  or  financial
condition of the Company and its  subsidiaries  taken as a whole or (ii) seek to
restrain  or  prohibit  the  Company  Merger or to obtain  monetary  damages  in
connection therewith.

     In  rendering  their  opinion,  such  counsel may rely,  to the extent such
counsel deems such  reliance  necessary or  appropriate,  upon  certificates  of
governmental  officials and, as to matters of fact,  certificates of any officer
or officers of the Company and its subsidiaries. The opinion of such counsel may
include such  qualifications  and  explanations  of the basis  thereof as may be
reasonably acceptable to Pocahontas.


<PAGE>


                                                                       EXHIBIT E

[Matters  to be covered in Opinion  of Counsel to be  delivered  to the  Company
pursuant to Section 10.5 of the Agreement]

     (a)  Each of  Pocahontas  and  Pocahontas  Acquisition  Corp  ("Acquisition
Corp"), is incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation,  and has the corporate power and authority to
own or lease all of its properties and assets and to carry on its business as it
is now being  conducted.  All  eligible  accounts of  depositors  in  Pocahontas
Federal are insured by the FDIC to the fullest extent permitted by law.

     (b) Each of Pocahontas  and  Acquisition  Corp has the corporate  power and
authority to adopt or execute and deliver the  Agreement,  and to consummate the
corporate  transactions  contemplated  thereby and to carry out their respective
obligations thereunder.  The adoption or execution and delivery of the Agreement
and the consummation of the transactions  contemplated  thereby,  have been duly
authorized by the board of directors of Pocahontas and Acquisition  Corp, as the
case may be, and no other corporate proceedings on the part of such entities are
necessary to consummate the transactions so contemplated. The Agreement has been
duly and validly executed and delivered by Pocahontas and Acquisition  Corp, and
in  each  case  such  instrument  constitutes  the  valid  and  legally  binding
obligation of Pocahontas and  Acquisition  Corp,  enforceable in accordance with
its terms, except as may be limited by bankruptcy,  insolvency,  reorganization,
moratorium or other similar laws  affecting  creditors'  rights  generally,  and
except  that  the  availability  of  equitable  remedies   (including,   without
limitation,  specific  performance)  is within the discretion of the appropriate
court.

     (c) None of the  adoption or  execution  and  delivery of the  Agreement by
Pocahontas and  Acquisition  Corp, nor the  consummation by such entities of the
transactions contemplated thereby in accordance with its terms, will (i) violate
any provision of their  respective  articles of  incorporation,  certificate  of
incorporation,  or bylaws,  nor (ii) violate any federal banking statute,  code,
rule or regulation  or, to the knowledge of such counsel,  any judgment,  order,
writ,  decree or  injunction  applicable to any of such entities or any of their
respective properties or assets, except, with respect to clause (ii) above, such
as individually  or in the aggregate will not have a material  adverse effect on
the business,  operations,  assets or financial  condition of Pocahontas and its
subsidiaries taken as a whole.

     (d)  All  regulatory  or  governmental  approvals  and  consents  that  are
necessary  to be  obtained  by  Pocahontas  and  Acquisition  Corp to permit the
execution, delivery and performance of the Agreement have been obtained.

     (e)  Assuming  due  authorization  of the Company  Merger by all  necessary
corporate and  governmental  proceedings on the part of the Company and that the
Company has taken all action  required to be taken by it prior to the  Effective
Time,  upon the filing of articles of merger with the  Secretary of State of the
State of Arkansas,  the Company Merger will be validly consummated in accordance
with the Agreement and  applicable  laws and  regulations  and each  outstanding
share of Company Common Stock will be converted into the right to receive a cash
payment in the manner specified in the Agreement.

     (f)  To  the   knowledge   of  such   counsel,   there  are  no   judicial,
administrative,  arbitral or other actions, suits, proceedings or investigations
pending or threatened which (i) if adversely  determined,  would have a material
adverse  effect on the ability of Pocahontas or  Acquisition  Corp to consummate
the  transactions  contemplated  by the  Agreement  or (ii) seek to  restrain or
prohibit  the  Company  Merger  or to  obtain  monetary  damages  in  connection
therewith.

     In  rendering  their  opinion,  such  counsel may rely,  to the extent such
counsel deems such  reliance  necessary or  appropriate,  upon  certificates  of
governmental  officials and, as to matters of fact,  certificates of any officer
or officers of Pocahontas or  Acquisition  Corp. The opinion of such counsel may
include such  qualifications  and  explanations  of the basis  thereof as may be
reasonably acceptable to the Company.


<PAGE>


















                                    EXHIBIT 2

                                  Press Release


<PAGE>


                                                                 January 4, 2001
                                                           FOR IMMEDIATE RELEASE
                                           Contact: James A. Edington, President
                                                     and Chief Executive Officer
                                                              Pocahontas Bancorp
                                                              Tel (870) 892-4595

                                Contact:  Frank E. Walden, Chairman of the Board
                                      Lindley V. Smith, Jr., Chairman, President
                                                     and Chief Executive Officer
                                                            First Community Bank
                                                              Tel (870) 802-1700


           POCAHONTAS BANCORP TO ACQUIRE WALDEN/SMITH FINANCIAL GROUP
                    AND ITS SUBSIDIARY, FIRST COMMUNITY BANK



     Pocahontas,   Arkansas  -  January  4,  2001  -  Pocahontas  Bancorp,  Inc.
(NASDAQ/NMS: PFSL), Pocahontas, Arkansas and Walden/Smith Financial Group, Inc.,
Jonesboro,  Arkansas,  jointly  announced  today that they have  entered  into a
definitive   agreement   pursuant  to  which  Pocahontas  Bancorp  will  acquire
Walden/Smith Financial Group and its bank subsidiary,  First Community Bank. The
purchase  price  will  be $28  million,  subject  to  certain  adjustments.  The
acquisition  has  been  approved  unanimously  by the  Boards  of  Directors  of
Pocahontas Bancorp and Walden/Smith  Financial Group, and due diligence has been
completed.

     Pocahontas  Bancorp is the holding  company for Pocahontas  Federal Savings
and Loan  Association,  a $401 million  savings bank  operating 14  full-service
offices in its market area of northeast Arkansas.  Walden/Smith  Financial Group
is the holding company for First Community Bank, a $163 million  commercial bank
operating  eight  offices  in  northeast  Arkansas.  In the  transaction,  First
Community  Bank  will  be  merged  with  Pocahontas  Federal  Savings  and  Loan
Association,  which  will  remain  the  wholly-owned  subsidiary  of  Pocahontas
Bancorp.  As part of the merger,  it is expected  that  Pocahontas  Federal will
change its name to First  Community  Bank.  On a pro forma  basis,  the combined
company will have assets of $547 million and deposits of $368 million, making it
the largest financial institution headquartered in northeast Arkansas.

     The  acquisition  is  subject to the  approval  of  Walden/Smith  Financial
Group's stockholders and federal and state bank regulatory authorities,  as well
as other  customary  conditions.  The acquisition is expected to be completed in
the second quarter of 2001.

     James A.  Edington,  President  and Chief  Executive  Officer of Pocahontas
Bancorp,  stated  "This  acquisition  complements  the  extension of our banking
operations,  particularly in the Randolph,  Craighead and Jackson  counties.  We
believe the transaction will greatly expand our commercial banking operations in
the Jonesboro market area and significantly  add to our franchise.  Consumer and
business  customers of both  institutions  will benefit from an expanded  branch
distribution  network,  a shared  commitment  to  community-based  banking,  and
enhanced business lending capabilities."

     Frank E. Walden,  Chairman of the Board of  Walden/Smith  Financial  Group,
noted "Our customers and employees will greatly  benefit from this  transaction.
In an era of  mega-bank  consolidations,  we believe that a  combination  with a
strong, independent,  community-focused institution like Pocahontas Bancorp will
enhance customer service." Lindley V. Smith, Jr., Chairman,  President and Chief
Executive Officer of First Community Bank, added "Pocahontas Bancorp's knowledge
of our market and commitment to customers and employees makes this a good fit."

     This release contains forward looking  statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as it contains descriptions of
the terms of transactions that may occur in the future. These statements are not
historical  facts and include  expressions  about  management's  confidence  and
strategies and management's  expectations about  transactions,  all of which are
subject various  contingencies.  Such forward looking statements involve certain
risks and uncertainties.  Actual terms of the transactions may differ materially
from those  discussed in these forward  looking  statements.  Factors that might
cause such a difference include, but are not limited to, changes in the terms as
a result of regulatory requirements and policy and changes in the businesses and
operations  of  Pocahontas  Bancorp  and  Walden/Smith  Financial  Group.  These
entities  assume no obligation for updating such forward  looking  statements at
any time.

     Pocahontas  Bancorp  common stock is traded on the NASDAQ  National  Market
System under the symbol "PFSL."



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