<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C., 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the transition period from____________________to____________________
Commission file number: 0-11671
POCAHONTAS BANKSHARES CORPORATION
(Exact name of registrant as specified in its charter)
West Virginia 55-0628089
------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
500 Federal Street, Bluefield, WV 24701
--------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (304) 325-8181
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No_______
---------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
$1.25 Par Value - Common Stock - 2,000,000 shares
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Financial Statements (Unaudited)
Consolidated Statements of Financial Condition.............. 3
Consolidated Statements of Income........................... 4
Consolidated Statements of Cash Flows....................... 5
Consolidated Statements of Changes on Stockholders' Equity.. 6
Notes to Consolidated Financial Statements...................... 6 - 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7
PART II. OTHER INFORMATION
Submission of Matters to a Vote of Security Holders............. 8
Exhibits and Reports on Form 8-K................................ 8
SIGNATURES...................................................... 8
The total number of pages of the Form 10-Q Quarterly Report is eight (8) pages.
2
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited) June 30, December 31,
------- ------------
(Dollars in thousands)
ASSETS 1996 1995
---------- ----------
<S> <C> <C>
Cash and due from banks $ 10,532 $ 10,000
Interest-bearing balances with banks 1,598 3,833
Securities available for sale: (cost approximated $13,500 at
June 30, 1996, and $5,419 at December 31, 1995) 13,082 5,419
Securities held to maturity: (market value approximated $51,709 at
June 30, 1996 and $53,931 at December 31, 1995) 51,887 53,440
Federal funds sold 2,000 6,300
Loans 184,027 177,794
Less allowance for loan losses 2,158 2,145
---------- ----------
Net loans 181,869 175,649
Premises and equipment 6,728 5,417
Real estate owned other than bank premises 1,568 1,206
Other assets 4,555 4,285
Goodwill and other intangible assets 411 431
---------- ----------
TOTAL ASSETS $ 274,230 $ 265,980
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 26,746 $ 27,361
Interest-bearing 208,275 204,811
---------- ----------
Total deposits 235,021 232,172
Federal funds purchased and securities sold under
agreements to repurchase 9,294 8,922
Demand notes to U. S. Treasury and other
liabilities for borrowed money 4,995 720
Other liabilities 1,271 980
---------- ----------
TOTAL LIABILITIES 250,581 242,794
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - par value per share $1.25
Shares authorized: 10,000,000
Shares issued and outstanding: 2,000,000 2,500 1,250
Paid-in capital 785 2,035
Retained earnings 20,711 19,901
Unrealized losses on securities (347) -----
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 23,649 23,186
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 274,230 $ 265,980
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three Months Ended Six Months Ended
June 30, June 30,
--------- --------
(Dollars in thousands, except per share data)
INTEREST INCOME 1996 1995 1996 1995
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Interest and fees on loans $ 4,259 $ 4,167 $ 8,383 $ 8,074
Interest on balances with banks 5 3 43 6
Interest and dividends from securities available for 194 98 322 191
sale
Interest and dividends from securities held to 785 777 1,586 1,567
maturity
Interest on federal funds sold 35 119 126 286
-------- -------- --------- ---------
TOTAL INTEREST INCOME 5,278 5,164 10,460 10,124
INTEREST EXPENSE
Interest on time certificates of $100,000 or more 302 271 614 486
Interest on other deposits 1,949 1,843 3,898 3,577
Interest on federal funds purchased and securities
sold under agreements to repurchase 84 80 172 155
Interest on demand notes to U. S. Treasury
and other liabilities for borrowed money 14 28 28 74
-------- -------- --------- ---------
TOTAL INTEREST EXPENSE 2,349 2,222 4,712 4,292
-------- -------- --------- ---------
Net interest income 2,929 2,942 5,748 5,832
Provision for loan losses 257 245 366 346
-------- -------- --------- ---------
Net interest income after provision for loan losses 2,672 2,697 5,382 5,486
NONINTEREST INCOME
Income from fiduciary activities 180 180 360 360
Other operating income 296 300 535 602
Securities gains (losses) -- -- -- --
-------- -------- --------- ---------
TOTAL NONINTEREST INCOME 476 480 895 962
NONINTEREST EXPENSE
Salaries, wages, and other employee benefits 1,063 1,044 2,142 2,062
Furniture and equipment expense 251 270 518 540
Other noninterest expense 771 883 1,566 1,833
-------- -------- --------- ---------
TOTAL NONINTEREST EXPENSE 2,085 2,197 4,226 4,435
-------- -------- --------- ---------
Income before income taxes 1,063 980 2,051 2,013
Applicable income taxes 351 324 691 651
-------- -------- --------- ---------
NET INCOME $ 712 $ 656 $ 1,360 $ 1,362
======== ======== ========= =========
NET INCOME PER COMMON SHARE $ 0.36 $ 0.33 $ 0.68 $ 0.68
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Six Months Ended
June 30,
-----------------------------
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995
---------- ----------------
<S> <C> <C>
Net income $ 1,360 $ 1,362
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 366 346
Depreciation and amortization 240 253
Securities gains -- --
(Increase) decrease in interest receivable (59) 15
Net investment amortization and accretion 307 397
Decrease in other assets 25 207
Increase in interest payable and other liabilities 126 219
---------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,365 2,799
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in federal funds sold 4,300 700
Purchases of securities held to maturity (8,382) (2,302)
Purchases of securities available for sale (8,091) --
Proceeds from maturities of securities held to maturity 9,640 5,163
Net increase in loans (6,831) (7,080)
Acquisition of fixed assets (1,527) (233)
---------- -----------
NET CASH USED BY INVESTING ACTIVITIES (10,891) (3,752)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand and savings deposits 1,081 (11,468)
Net increase in time deposits 1,768 11,403
Net increase in short-term borrowings 4,524 1,615
Cash dividends paid (550) (400)
---------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,823 1,150
---------- -----------
NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS $ (1,703) $ 197
CASH AND DUE FROM BANKS AT JANUARY 1, 13,833 10,977
---------- -----------
CASH AND DUE FROM BANKS AT JUNE 30, $ 12,130 $ 11,174
========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 4,488 $ 4,029
Income taxes 761 692
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY
(Unaudited) Six Months Ended
June 30,
--------
(Dollars in thousands)
1996 1995
----------- --------------
<S> <C> <C>
BALANCE, JANUARY 1, $ 23,186 $ 21,161
Net income 1,360 1,362
Cash dividends declared - $0.275 per share
in 1996, and $0.20 per share in 1995 550 400
Change in unrealized losses on securities (347) 305
----------- --------------
BALANCE, JUNE 30, $ 23,649 $ 22,428
=========== ==============
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally ac cepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Rule S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All such adjustments were of a
normal recurring nature. Certain reclassifications have been made to the prior
period's financial statements to place them on a comparable basis with the
current period's financial statements. Operating results are for the six-month
period ended June 30, 1996, and are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996. For further
information refer to the financial statements and footnotes thereto included as
Exhibit 13 to Corporation's annual report on Form 10-K for the year ended
December 31, 1995.
NOTE B - REGULATORY CAPITAL REQUIREMENTS
Regulators of the corporation and its subsidiaries have implemented risk-based
capital guidelines which require the maintenance of certain minimum capital as a
percent of assets and certain off-balance sheet items adjusted for predefined
credit risk factors. The regulatory minimums for Tier 1 and combined Tier 1 and
Tier 2 capital ratios were 4.0% and 8.0% respectively. Tier 1 capital includes
tangible common shareholders' equity reduced by goodwill and certain other
intangibles. Tier 2 capital includes portions of the allowance for loan losses,
not to exceed Tier 1 capital. In addition to the risk-based guidelines, a
minimum leverage ratio (Tier 1 capital as a percentage of average total
consolidated assets) of 4% is required. This minimum may be increased by at
least 1% or 2% for entities with higher levels of risk or that are experiencing
or anticipating significant growth. The following table contains the capital
ratios for the Corporation and each subsidiary as of June 30, 1996.
<TABLE>
<CAPTION>
Combined Capital
Entity Tier 1 (Tier 1 and Tier 2) Leverage
------------------------ ------- ------------------- ---------
<S> <C> <C> <C>
Consolidated 12.17% 13.30% 8.57%
First Century Bank, N.A. 12.12% 13.25% 8.51%
First Century Bank 11.04% 12.17% 7.96%
</TABLE>
6
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 (Continued)
NOTE C - STOCK SPLIT
On April 16, 1996, the Board of Directors approved a two-for-one stock split
which was effected in the form of a 100% stock dividend, payable on May 6, 1996,
to shareholders of record on April 26, 1996. Accordingly, all per common share
data has been adjusted to reflect the stock split.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
During the second quarter of 1996 net income increased $56,000 or 8.5% from the
$656,000 earned during the second three months of 1995, to $712,000 earned
during the same period in 1996. This improvement was primarily the result of an
decrease in noninterest expenses of $112,000 or 5% reflecting management's
ongoing commitment to controlling operating costs. This increase was offset by
an increase in the provision for loan losses of $12,000, and a slight decline in
the net interest margin of $13,000. Earnings per share for the second quarter of
1996 were $0.36 compared to $0.33 per share for the second quarter of 1995. When
compared to the first quarter of 1996, net income increased $64,000, from
$648,000 for the quarter ended March 31, 1996, to $719,000 for the quarter ended
June 30, 1996. This was attributable to an increase in noninterest income of
$57,000 and a reduction in noninterest expenses of $56,000 which helped offset a
decrease in the provision for loan losses of $148,000 when compared with the
first quarter of 1996. Earnings were additionally enhanced by an increase in the
net interest margin of $110,000 from $2,819,000 at March 31, 1996, to $2,929,000
for the quarter ended June 30, 1996. Earnings per share increased $0.04 per
share from $0.32 per share for the quarter ended March 31, 1996, to $0.36 per
share for the quarter ended June 30, 1996.
The improved performance during the second quarter enhanced the earnings for the
six-month period ended June 30, 1996. Net income was $1,360,000 for the first
six months of 1996 which brought earnings back in line with the 1995 level of
$1,362,000, or a decrease of only 0.1%. A reduction in noninterest expense was
the main contributor to the improved earnings. Noninterest expenses declined
$209,000 to $4,226,000 for the six months ended June 30, 1996, from $4,435,000
for the same period in 1995. Earnings per share for the six month periods ended
June 30, 1996 and 1995 were $0.68. The Corporation's performance through June
30, 1996 reflects an annualized return on average assets of 1.01% and a return
on beginning equity of 11.73%.
Total assets increased $8.3 million from December 31, 1995 to June 30, 1996.
Total assets at June 30, 1996 were $274.2 million as compared to $265.9 million
at December 31, 1995. The loan portfolio continued to grow during this six month
period, increasing to $184.0 million or an increase of $6.2 million or 3.5%.
Additionally, the investment portfolio grew by $9.1 million as management
continued to improve the Corporations's earnings potential during the period of
rising interest rates experienced through the first half of 1996. Total deposits
grew approximately $2.8 million during the first half of 1996, with most of this
growth occurring in the interest-bearing category.
7
<PAGE>
POCAHONTAS BANKSHARES CORPORATION
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Stockholders was held on April 16, 1996. Total outstanding
shares were 1,000,000 at April 16, 1996. Matters brought before the stockholders
and the voting results are as follows:
(1) To elect fifteen (15) nominees for director to serve for a term of one year.
<TABLE>
<CAPTION>
Nominee Shares For Shares Against Abstentions
- --------------------------------- ---------- -------------- -----------
<S> <C> <C> <C>
Eustace Frederick 689,380 -- --
P. Stanley Hodges 689,380 -- --
B. L. Jackson, Jr. 689,380 -- --
Robert M. Jones, Jr., M.D. 689,380 -- --
Harold L. Miller 689,380 -- --
Charles A. Peters 689,378 2 --
C. E. Richner 686,278 3,102 --
Byron K. Satterfield 689,380 -- --
John C. Shott 689,380 -- --
Scott H. Shott 689,380 -- --
Walter L. Sowers 689,380 -- --
J. Brookins Taylor, M.D. 689,380 -- --
James P. Thomas, M.D. 689,380 -- --
Frank W. Wilkinson 688,248 1,132 --
R. W. Wilkinson 689,380 2 --
</TABLE>
(2) To ratify the selection of Coopers & Lybrand, Certified Public Accountants,
to serve as independent auditors for the registrant for the year ending December
31, 1996. Shares for: 774,068; Shares against: 500; Abstentions: 2,074.
(3) To approve a proposal to amend the Articles of Incorporation to increase the
number of authorized shares of the Registrant's common stock from 2,000,000
shares to 10,000,000 shares. Under the Articles of Incorporation of the
Registrant, any amendment to the Articles of the Registrant requires the
approval of two-thirds (2/3) of the holders of outstanding stock of the
Registrant entitled to vote at the meeting. Approximately 77% of the
Registrant's outstanding shares were represented for purposes of this vote.
Shares For: 766,318; Shares Against: 6,728; Abstentions: 3,596.
The text for the matters listed in this Item 4 is set forth in the definitive
proxy solicitation materials which were filed with the Commission on or about
March 29, 1996, and are incorporated herein by reference.
Item 6 - Exhibits and Reports on Form 8-K.
(a.) Exhibit 3 (I) - Amended Articles of Incorporation
Exhibit 27 - Financial Data Schedule
(b.) None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pocahontas Bankshares Corporation
---------------------------------
By: /s/ J. Ronald Hypes
--------------------------------------
J. Ronald Hypes, Treasurer
(Principal Accounting and Financial Officer)
Date: August 9, 1996
-----------------------
8
<PAGE>
BOOK 771 PAGE 46
STATE OF WEST VIRGINIA
[LOGO OF THE STATE OF WEST VIRGINIA]
CERTIFICATE
I, Ken Hechler, Secretary of State of the State of West Virginia, hereby certify
that
originals of the Articles of Amendment to the Articles of Incorporation of
POCAHONTAS BANKSHARES CORPORATION
are filed in my office, signed and verified, as required by the provisions of
Chapter 31, Article 1, Section 31 of the West Virginia Code and conform to law.
Therefore, I issue this
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
of the corporation, to which I have attached a duplicate original of the
Articles of Amendment.
[LOGO OF THE STATE OF WEST VIRGINIA]
Given under my hand and the
Great Seal of the State of
West Virginia, on this
Twentieth day of
May 1996
/s/ Ken Hechler
Secretary of State.
<PAGE>
BOOK 771 PAGE 47
ACKNOWLEDGED
Tracy M. Hudson
Staff Analyst
for 5-20-96
COMMISSIONER OF BANKING
STATE OF WEST VIRGINIA
FILED
MAY 20 1996
IN THE OFFICE OF
SECRETARY OF STATE
WEST VIRGINIA
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
POCAHONTAS BANKSHARES CORPORATION
Pursuant to the provisions of Sections 106, 107, and 109, Article 1,
Chapter 31 of the Code of West Virginia, the undersigned corporation adopts the
following Articles of Amendment to its Articles of Incorporation, FILED IN
DUPLICATE:
FIRST: The name of the corporation is Pocahontas Bankshares Corporation.
-----
SECOND: The following amendment to the Articles of Incorporation was
------
adopted by the Board of Directors on February 21, 1996, in the manner prescribed
by Section 31-1-107:
RESOLVED: That, Article VI of the Articles of Incorporation be further
--------
amended in its entirety to read as follows:
"VI. The amount of total authorized capital stock of said Corporation
shall be Twelve Million Five Hundred Thousand Dollars ($12,500,000.00) which
shall be divided into Ten Million (10,000,000) shares of the par value of One
Dollar and Twenty-Five Cents ($1.25) each."
THIRD: The amendment was adopted by the shareholders of the corporation on
-----
April 16, 1996.
<PAGE>
BOOK 771 PAGE 48
FOURTH: The number of shares of the corporation outstanding at the time of
------
such adoption was 1,000,000; and the number of shares entitled to vote thereon
was 1,000,000.
FIFTH: The designation and number of outstanding shares of each class
-----
entitled to vote thereon as a class were as follows:
Class Number of Shares
----- ----------------
Common 1,000,000
SIXTH: The number of shares voted for such amendment was 766,318; the
-----
number of shares voted against such amendment was 6,728; the number of shares
abstaining was 3,596; and the number of shares not voting was 223,358.
SEVENTH: The amendment effects a change in stated capital by increasing
-------
the stated capital from Two Million Five Hundred Thousand Dollars ($2,500,000),
to Twelve Million Five Hundred Thousand ($12,500,000).
DATE: May 15, 1996.
POCAHONTAS BANKSHARES CORPORATION
By: /s/ R. W. Wilkinson
_________________________________
R. W. Wilkinson
Its: President
By: /s/ William E. Albert
________________________________
William E. Albert
Its: Assistant Secretary
CHS39230
2
<PAGE>
BOOK 771 PAGE 49
STATE OF WEST VIRGINIA,
COUNTY OF MERCER, TO-WIT:
I, Brenda S. Davis, a notary public in and for the State and County
aforesaid, do hereby certify that on this day there personally appeared before
me, R. W. Wilkinson, being by me first duly sworn, declared that he is President
of Pocahontas Bankshares Corporation, that he signed the foregoing document as
President of that corporation, and that to the best of his knowledge and belief
the statements contained therein are true and correct.
IN TESTIMONY WHEREOF, witness my signature and notarial seal this 16th
day of May, 1996.
/s/ Brenda S. Davis
______________________________
Notary Public
My commission expires: 3/22/2005.
_____________
[SEAL]
[NOTARY STAMP OF BRENDA S. DAVIS]
3
<PAGE>
BOOK 771 PAGE 50
STATE OF WEST VIRGINIA,
COUNTY OF MERCER, TO-WIT:
I, Brenda S. Davis, a notary public in and for the State and County
aforesaid, do hereby certify that on this day there personally appeared before
me, Wm. E. Albert, being by me first duly sworn, declared that he is Assistant
Secretary of Pocahontas Bankshares Corporation, that he signed the foregoing
document as Assistant Secretary of that corporation, and that to the best of his
knowledge and belief the statements contained therein are true and correct.
IN TESTIMONY WHEREOF, witness my signature and notarial seal this 16th
day of May, 1996.
/s/ Brenda S. Davis
______________________________
Notary Public
My commission expires: 3/22/2005.
_____________
[SEAL]
[NOTARY STAMP OF BRENDA S. DAVIS]
This instrument prepared by:
Sandra M. Murphy
Bowles Rice McDavid Graff & Love
1600 Huntington Square
Post Office Box 1386
Charleston, West Virginia 25325-1386
(304) 347-1131
CHS39230
WEST VIRGINIA:
IN MERCER COUNTY COMMISSION CLERK'S OFFICE
THIS JUN 03 1996 11:45
the foregoing writing was presented in said
office and duly admitted to record therein.
Teste: /s/ Rudolph D. Jennings, Clerk
4
<PAGE>
BOOK 771 PAGE 51
STATE OF WEST VIRGINIA
[LOGO OF THE STATE OF WEST VIRGINIA]
CERTIFICATE
I, Ken Hechler, Secretary of State of the State of West Virginia, hereby certify
that
originals of the Restated Articles of Incorporation of
POCAHONTAS BANKSHARES CORPORATION
are filed in my office, signed and verified, as required by the provisions of
Chapter 31, Article 1, Section 33 of the West Virginia Code and conform to law.
Therefore, I issue this
RESTATED CERTIFICATE OF INCORPORATION
of the corporation, to which I have attached a duplicate original of the
Restated Articles of Incorporation.
[LOGO OF THE STATE OF WEST VIRGINIA]
Given under my hand and the
Great Seal of the State of
West Virginia, on this
Twentieth day of
May 1996
/s/ Ken Hechler
Secretary of State.
<PAGE>
BOOK 771 PAGE 52
ACKNOWLEDGED
Tracy M. Hudson
Staff Analyst
for 5-20-96
COMMISSIONER OF BANKING
STATE OF WEST VIRGINIA
FILED
MAY 20 1996
IN THE OFFICE OF
SECRETARY OF STATE
WEST VIRGINIA
RESTATED
ARTICLES OF INCORPORATION
OF
POCAHONTAS BANKSHARES CORPORATION
Pursuant to the provisions of Sections 110 and 33 of Article 1, Chapter 31
of the Code of West Virginia, the undersigned corporation adopts the following
Restated Articles of Incorporation:
I. The undersigned agrees to become a corporation by the name of
POCAHONTAS BANKSHARES CORPORATION.
II. The address of the principal office of said corporation will be
located at P. O. Box 1559, in the County of Mercer and State of West Virginia
24701.
Principal office or place of business is located in the State of West
Virginia.
III. The purpose or purposes for which this corporation is formed are as
follows:
To act as a bank holding company and to acquire, own, hold, sell,
exchange, assign, transfer, create security interests in, pledge or
otherwise dispose of shares, or voting trust certificates or depository
receipts for shares, or capital stock of, or any bonds, notes, debentures
or other evidence of indebtedness, options, warrants or other securities
issued by any other business of any lawful character, including, but not
limited to, banks and other businesses providing goods or services related
to banking; to
<PAGE>
BOOK 771 PAGE 53
acquire and hold other investment assets and to engage in any lawful
activities related thereto.
In general, to carry on and transact any other lawful business
whatsoever, and to have, enjoy, and exercise all the rights, powers, and
privileges which are now or which may hereafter be conferred upon
corporations under the corporation law of the State of West Virginia.
IV. Provisions granting preemptive rights are: None.
None of the holders of the capital stock of the Corporation shall be
entitled, as a matter of right by virtue of their holding of capital stock of
the Corporation, to purchase, subscribe for or otherwise acquire: (i) any new
or additional shares of stock of the Corporation of any class; or (ii) any
options or warrants to purchase, subscribe for or otherwise acquire any such new
or additional shares; or (iii) any shares, evidences of indebtedness or other
securities convertible into or carrying options to purchase, subscribe for or
otherwise acquire any such new or additional shares.
V. Provisions for the regulation of the internal affairs of the
Corporation are as follows:
(a) The Board of Directors of the Corporation may, from time to time,
and at its discretion, distribute a portion of the assets of the Corporation to
its shareholders out of the capital surplus of the Corporation.
(b) The Board of Directors of the Corporation may, from time to time,
and at its discretion, cause the Corporation to purchase its own shares to the
extent of unreserved and unrestricted capital surplus available for said
purchase.
2
<PAGE>
BOOK 771 PAGE 54
(c) The entire Board of Directors or any individual Director may be
removed without cause at any shareholders' meeting, with respect to which notice
of such purpose has been given, by the affirmative vote of the holders of at
least two-thirds (66 2/3%) of the shares of the Corporation entitled to vote at
an election of Directors.
(d) These Articles of Incorporation shall not be amended, altered or
repealed except by an affirmative vote of the holders of at least two-thirds (66
2/3%) of the shares of the Corporation entitled to vote thereon.
(e) The power to adopt, alter, amend or repeal bylaws of the
Corporation shall be vested in the Board of Directors, but the shareholders, by
an affirmative vote of at least two-thirds (66 2/3%) of the shares of the
Corporation entitled to vote at an election of Directors, may adopt, alter,
amend or repeal bylaws adopted by either the shareholders or the Board of
Directors.
(f) (A) Except as provided in Subparagraph (B) of this Paragraph (f),
the affirmative vote of at least two-thirds (66 2/3%) of the votes which all
shareholders are entitled to cast thereon shall be required to approve any of
the following transactions ("Business Combinations") which occur within one year
of the date the Majority Shareholder (hereinafter defined) involved in the
Business Combination first became a Majority Shareholder:
(1) any merger or consolidation of the corporation or any subsidiary
thereof with or into (i) any Majority Shareholder or (ii) any other
corporation which after such merger or consolidation, would be an
Affiliate (hereinafter defined) of a Majority Shareholder, or
3
<PAGE>
BOOK 771 PAGE 55
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions)
to or with any Majority Shareholder of any substantial part
(hereinafter defined) of the assets of the Corporation or any
subsidiary thereof, or
(3) the issuance or transfer by the Corporation or by any subsidiary
thereof (in one transaction or series or related transactions) of any
equity securities, or rights with respect to equity securities, of the
Corporation or any subsidiary thereof to any Majority Shareholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $5,000,000 or more,
or
(4) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation if, as of the record date for the
determination of shareholders entitled to notice thereof and to vote
thereon, any person shall be a Majority Shareholder, or
(5) any reclassification of securities (including any reverse stock
split) or recapitalization of the Corporation, or any reorganization,
merger or consolidation of the Corporation with any of its subsidiaries
or any similar transaction (whether or not with or into or otherwise
involving a Majority Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
securities of any class of equity securities of the Corporation or any
subsidiary which is directly or indirectly beneficially owned (as
hereinafter defined) by any Majority Shareholder.
4
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BOOK 771 PAGE 56
(B) Subparagraph (A) of Paragraph (f) of this Article V shall not
apply to a Business Combination if either (i) the Business Combination is
approved by a vote of three-quarters of the members of the Board of Directors at
the time of the vote who held such office prior to the time the Majority
Shareholders became a Majority Shareholder, or (ii) the Majority Shareholder
shall have complied with the provisions of Subparagraph (C) of Paragraph (f) of
this Article V and all other shareholders of the Corporation shall have given a
reasonable opportunity, immediately before the consummation of the Business
Combination, to have all of their shares of capital stock of the Corporation
purchased for cash, the price per share of which will not, at the time the
Business Combination is effected, be less than the highest price per share
(including brokerage commissions, soliciting dealers fees and all other
expenses) paid by the Majority Shareholder in acquiring any of its shares of
capital stock of the Corporation.
(C) Without the approval of three-quarters of the then members of the
Board of Directors who held such office prior to the time the Majority
Shareholder became a Majority Shareholder, a Majority Shareholder, after the
time it became such, seeking to comply with clause (ii) of Subparagraph (B) of
Paragraph (f) of this Article V shall not have (i) made any material change in
the Corporation's business or capital structure, (ii) received the benefit
directly or indirectly (except proportionately as a shareholder) of any loans,
advances, guarantees, pledges or other financial assistance provided by the
Corporation, (iii) made, caused or brought about, directly or indirectly, any
change in the Corporation's Articles of Incorporation or bylaws or in the
membership of the Corporation's Board of Directors or any committee thereof, or
(iv) acquired any newly issued or treasury shares of the Corporation's capital
stock directly or indirectly from the Corporation (except as a result of pro
rata dividend or share split).
(D) Certain Definitions. The following terms when used herein
shall have the meanings set forth below:
5
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BOOK 771 PAGE 57
(1) The term "Majority Shareholder" shall mean any person,
corporation, or other entity, together with any other entity with
which it or its Affiliate or Associate (hereinafter defined) has any
agreement, arrangement or understanding for the purpose of acquiring
holding, voting or disposing of capital stock of the Corporation,
which holds immediately prior to any Business Combination more than
50% of the outstanding shares of capital stock of the Corporation
entitled to vote in the election of Directors generally.
(2) The terms "Affiliate" and "Associate" shall have the meaning
ascribed thereto in Rule 12b-2 promulgated under the Securities
Exchange Act of 1934, as amended, in effect on March 1, 1983.
(3) The term "beneficial ownership" shall have the meaning ascribed
thereto in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, in effect on March 1, 1983.
(4) The term "substantial part" shall mean assets having a book value
in excess of 10% of the book value of the total consolidated assets of
this Corporation at the end of its most recent fiscal year ending
prior to the time the determination is made, all determined in
accordance with generally accepted accounting principals.
VI. The amount of total authorized capital stock of said Corporation
shall be Two Million Five Hundred Thousand Dollars ($12,500,000.00) which shall
be divided into Ten Million (10,000,000) shares of the par value of One Dollar
and Twenty-Five Cents ($1.25) each.
6
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BOOK 771 PAGE 58
VII. The full name and address of the incorporator, including street
and street numbers, if any, and the city, town or village, including ZIP number,
and if a stock corporation, the number of shares subscribed by each are as
follows:
NAME ADDRESS NO. OF SHARES
---- ------- -------------
B. L. Jackson, Jr. P. O. Box 1559 80
Bluefield, WV 24701
VIII. The existence of this Corporation is to be perpetual.
IX. The address of the initial registered office of the corporation
is P. O. Box 1559, Bluefield, West Virginia 24701 and the name of its initial
registered agent at such address is B. L. Jackson, Jr.
X. The number of the directors constituting the initial board of
directors of the corporation is five (5), and the names and addresses of the
persons who are to serve as directors until the first annual meeting of
shareholders or until their successors are elected and shall qualify are:
<TABLE>
<CAPTION>
NAME ADDRESS
- -------------------- --------------------
<S> <C>
B. J. Jackson, Jr. P. O. Box 1559
Bluefield, WV 24701
Charles A. Peters P. O. Box 1559
Bluefield, WV 24701
Ned Shott P. O. Box 1559
Bluefield, WV 24701
Walter Lee Sowers P. O. Box 1559
Bluefield, WV 24701
</TABLE>
7
<PAGE>
BOOK 771 PAGE 59
<TABLE>
<S> <C>
R. W. Wilkinson P. O. Box 1559
Bluefield, WV 24701
</TABLE>
These Restated Articles of Incorporation correctly set forth without
change the corresponding provisions of the Articles of Incorporation as
heretofore amended. These Restated Articles of Incorporation supersede the
original Articles of Incorporation and all amendments thereto.
DATE: May 15, 1996.
POCAHONTAS BANKSHARES CORPORATION
By: /s/ R. W. Wilkinson
_________________________________
R. W. Wilkinson
Its: _________________________________
President
By: /s/ William E. Albert
_________________________________
William E. Albert
Its: _________________________________
Assistant Secretary
CHS39231
8
<PAGE>
BOOK 771 PAGE 60
STATE OF WEST VIRGINIA,
COUNTY OF MERCER, TO-WIT:
I, Brenda S. Davis, a notary public in and for the State and County
aforesaid, do hereby certify that on this day there personally appeared before
me, R. W. Wilkinson, being by me first duly sworn, declared that he is President
of Pocahontas Bankshares Corporation, that he signed the foregoing document as
President of that corporation, and that to the best of his knowledge and belief
the statements contained therein are true and correct.
IN TESTIMONY WHEREOF, witness my signature and notarial seal this
16th day of May, 1996.
/s/ Brenda S. Davis
---------------------
Notary Public
My commission expires: 3/22/2005.
___________
[SEAL]
[NOTARY STAMP OF BRENDA S. DAVIS]
9
<PAGE>
BOOK 771 PAGE 61
STATE OF WEST VIRGINIA,
COUNTY OF MERCER, TO-WIT:
I, Brenda S. Davis, a notary public in and for the State and County
aforesaid, do hereby certify that on this day there personally appeared before
me, William E. Albert, being by me first duly sworn, declared that he is
Assistant Secretary of Pocahontas Bankshares Corporation, that he signed the
foregoing document as Assistant Secretary of that corporation, and that to the
best of his/her knowledge and belief the statements contained therein are true
and correct.
IN TESTIMONY WHEREOF, witness my signature and notarial seal this
16th day of May, 1996.
/s/ Brenda S. Davis
---------------------
NOTARY PUBLIC
My commission expires: 3/22/2005.
___________
[SEAL]
[NOTARY STAMP OF BRENDA S. DAVIS]
This instrument prepared by:
Sandra M. Murphy
Bowles Rice McDavid Graff & Love
1600 Huntington Square
Post Office Box 1386
Charleston, West Virginia 25325-1386
(304) 347-1131
CHS39231
WEST VIRGINIA:
IN MERCER COUNTY COMMISSION CLERK'S OFFICE
THIS JUN 03 1996 11:45
the foregoing writing was presented in said
office and duly admitted to record therein.
Teste: /s/ Rudolph D. Jennings, Clerk
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 10,532
<INT-BEARING-DEPOSITS> 1,598
<FED-FUNDS-SOLD> 2,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,082
<INVESTMENTS-CARRYING> 51,887
<INVESTMENTS-MARKET> 51,709
<LOANS> 184,027
<ALLOWANCE> 2,158
<TOTAL-ASSETS> 274,230
<DEPOSITS> 235,021
<SHORT-TERM> 14,289
<LIABILITIES-OTHER> 1,271
<LONG-TERM> 0
0
0
<COMMON> 2,500
<OTHER-SE> 21,149
<TOTAL-LIABILITIES-AND-EQUITY> 274,230
<INTEREST-LOAN> 8,383
<INTEREST-INVEST> 1,908
<INTEREST-OTHER> 169
<INTEREST-TOTAL> 10,460
<INTEREST-DEPOSIT> 4,512
<INTEREST-EXPENSE> 4,712
<INTEREST-INCOME-NET> 5,748
<LOAN-LOSSES> 366
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,226
<INCOME-PRETAX> 2,051
<INCOME-PRE-EXTRAORDINARY> 1,360
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,360
<EPS-PRIMARY> 0.68
<EPS-DILUTED> 0.68
<YIELD-ACTUAL> 0.00
<LOANS-NON> 1,488
<LOANS-PAST> 782
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 2,145
<CHARGE-OFFS> 369
<RECOVERIES> 16
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</TABLE>
