Pocahontas Bancorp, Inc. (Nasdaq-NMS:PFSL) announced earnings for
the third quarter of the fiscal year ending September 30, 2005. Net
income was $0.84 million for the quarter ended June 30, 2005,
compared to net income of $0.93 million for the quarter ended June
30, 2004, a decrease of $0.09 million or 9.7%. Basic earnings per
share were $0.19 and diluted earnings per share were $0.18 for the
quarter ended June 30, 2005 compared to basic earnings per share of
$0.21 and diluted earnings per share of $0.20 for the same period
last year. Net interest income before provision for loan loss for
the quarter ended June 30, 2005 was $4.20 million compared to $4.76
million for the quarter ended June 30, 2004, a decrease of $0.56
million or 11.8%. The decrease was primarily due to a 32 basis
point decrease in the net interest rate spread to 2.66% for the
quarter ended June 30, 2005 compared to 2.98% for the quarter ended
June 30, 2004. There was no provision for loan losses for the
quarter ended June 30, 2005 compared to $0.65 million for the
quarter ended June 30, 2004. Management periodically reviews the
credit quality of the loan portfolio in order to establish a
sufficient allowance for losses on loans. The provision for loan
loss for the quarters ended June 30, 2005 and 2004 reflected
management's estimate of the amount of allowance for loan losses
required based on management's current judgments about the credit
quality of individual loans and segments of the loan portfolio;
changing economic and other conditions may require future
adjustments to the allowance for loan losses. Non-interest income
increased $0.44 million or 34.1% to $1.73 million for the quarter
ended June 30, 2005 compared to the quarter ended June 30, 2004.
The increase in non-interest income was primarily due to a $0.22
million increase in gain on sale of securities for the quarter
ended June 30, 2005 compared to the same period last year and a
$0.02 million trading loss on equity securities during the quarter
ended June 30, 2005 compared to a $0.20 million trading loss for
the quarter ended June 30, 2004. A subdued refinancing environment
during the quarter ended June 30, 2005 resulted in lower gain on
sale of loans. Gain on sale of loans decreased to $0.26 million for
the quarter ended June 30, 2005 from $0.32 million for the same
period a year ago. Total operating expenses were $4.65 million for
the quarter ended June 30, 2005, compared to $3.99 million for the
quarter ended June 30, 2004. The increase in operating expenses was
primarily due to a $0.15 million increase in compensation expenses
and a $0.19 million increase in advertising and donations expense,
as the Company hired an outside advertising firm instead of
handling advertising internally. Net income was $2.38 million for
the nine months ended June 30, 2005, compared to net income of
$3.72 million for the nine months ended June 30, 2004, a decrease
of $1.34 million or 36.0%. Basic earnings per share were $0.53 and
diluted earnings per share were $0.52 for the nine months ended
June 30, 2005 compared to basic earnings per share of $0.83 and
diluted earnings per share of $0.81 for the same period last year.
Net interest income before provision for loan loss for the nine
months ended June 30, 2005 was $12.72 million compared to $14.77
million for the nine months ended June 30, 2004, a decrease of
$2.05 million or 13.9%. The decrease was primarily due to a 29
basis point decrease in the net interest rate spread to 2.76% for
the nine months ended June 30, 2005 compared to 3.05% for the nine
months ended June 30, 2004 and a 36 basis point decrease in the net
interest margin to 2.62% for the nine months ended June 30, 2005
from 2.98% for the nine months ended June 30, 2004. Provision for
loan losses for the nine months ended June 30, 2005 was $0.12
million compared to $1.15 million for the nine months ended June
30, 2004. The decrease in provision for loan losses for the nine
months ended June 30, 2005 was primarily due to a decrease in
nonperforming loans compared to the same period last year.
Management periodically reviews the credit quality of the loan
portfolio in order to establish a sufficient allowance for losses
on loans. The provision for loan loss for the nine months ended
June 30, 2005 and 2004 reflected management's estimate of the
amount of allowance for loan losses required based on management's
current judgments about the credit quality of individual loans and
segments of the loan portfolio; changing economic and other
conditions may require future adjustments to the allowance for loan
losses. Non-interest income decreased $0.17 million or 3.9% to
$4.10 million for the nine months ended June 30, 2005 compared to
the nine months ended June 30, 2004. The decrease in non-interest
income was primarily due to decreases in net trading gains, gain on
sale of loans and gain on sale of branches, partially offset by a
$0.18 million increase in gain on sale of securities. The trading
gain on equity securities decreased $0.23 million to $0.01 million
for the nine months ended June 30, 2005 compared to the nine months
ended June 30, 2004. A subdued refinancing environment during the
nine months ended June 30, 2005 resulted in a decreased number of
loans originated and subsequently sold which resulted in the lower
gain on sale of loans. Gain on sale of loans decreased to $0.73
million for the nine months ended June 30, 2005 from $0.93 million
for the same period a year ago. The nine months ended June 30, 2004
included a $0.14 million one-time gain on the sale of branches.
Total operating expenses were $13.08 million for the nine months
ended June 30, 2005, and $12.24 million for the nine months ended
June 30, 2004. The increase in operating expenses was primarily due
to a $0.47 million increase in advertising and donations expense,
as the Company hired an outside advertising firm instead of
handling advertising internally; professional fees increased $0.19
million and compensation expenses increased $0.14 million for the
nine months ended June 30, 2005 compared to the same period a year
ago. These increases were partially offset by a $0.10 million
decrease in expenses on REO and other repossessed assets during the
nine months ended June 30, 2005. Total assets increased $1.36
million or 0.2% to $721.27 million at June 30, 2005 from $719.91
million at September 30, 2004. The increase was primarily the
result of an increase in total net loans of $6.64 million and a
$2.32 million increase in premises and equipment, which were
partially offset by a decrease in investment securities of $6.13
million and a $3.84 million decrease in cash. The yield on average
interest earning assets at June 30, 2005 was 5.47% compared to
5.50% at September 30, 2004. Investment securities decreased at
June 30, 2005 as the result of the sale of $48.61 million of
securities, the call of $0.50 million of securities, principal
payments and maturities of $33.69 million and $0.73 million
decrease in market value, partially offset by investment purchases
of $78.03 million. Total net loans receivable were $390.45 million
at June 30, 2005 compared to $383.81 million at September 30, 2004.
During the nine-month period ended June 30, 2005, proceeds from the
sale of mortgage loans held for sale were $37.82 million, compared
to $49.41 million sold during the nine months ended June 30, 2004.
Total nonperforming loans decreased 23.8% to $3.56 million at June
30, 2005 from $4.67 million at September 30, 2004. Total deposits
increased $5.74 million or 1.2% to $496.82 million at June 30, 2005
compared to $491.08 million at September 30, 2004. The increase in
deposits was primarily the result of offering more competitive
interest rates on a diverse product base in our market area. Total
Federal Home Loan Bank advances decreased $5.19 million or 3.4% to
$148.71 million at June 30, 2005 compared to $153.90 million at
September 30, 2004. Pocahontas Bancorp, Inc. is a unitary thrift
holding company, which owns First Community Bank, a federally
chartered savings and loan. First Community Bank conducts business
from 18 offices located primarily in Northeast Arkansas. Pocahontas
Bancorp's common stock is traded on the NASDAQ National Market
under the symbol PFSL. -0- *T POCAHONTAS BANCORP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
----------------------------------------------------------------------
June 30, September 30, 2005 2004 ------------- ------------- ASSETS
Cash $ 31,374,129 $ 35,218,491 Cash surrender value of life
insurance 7,971,569 7,684,251 Securities held-to-maturity, at cost
133,689,828 86,200,660 Securities available-for-sale, at fair value
107,019,019 160,633,022 Trading securities, at fair value 2,889,507
1,982,365 Loans receivable, net 387,694,987 382,316,096 Loans
receivable, held for sale 2,758,854 1,494,200 Accrued interest
receivable 4,183,960 4,196,103 Premises and equipment, net
16,077,180 13,762,438 Federal Home Loan Bank stock, at cost
8,955,700 7,925,900 Goodwill 8,847,572 8,847,572 Core deposit
premiums 5,566,620 6,296,523 Other assets 4,238,779 3,350,292
------------- ------------- TOTAL ASSETS $721,267,704 $719,907,913
============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES: Deposits $496,822,895 $491,078,533 Federal Home Loan
Bank advances 148,709,693 153,896,869 Deferred compensation
2,224,188 2,430,094 Accrued expenses and other liabilities
3,958,679 3,059,676 Trust preferred securities 16,957,491
16,941,917 ------------- ------------- Total liabilities
668,672,946 667,407,089 STOCKHOLDERS' EQUITY: Common stock, 76,024
76,024 Additional paid-in capital 57,447,655 57,447,655 Unearned
ESOP shares (2,567,788) (2,116,198) Accumulated other comprehensive
loss, net (1,442,861) (717,085) Retained earnings 23,484,272
22,212,972 ------------- ------------- 76,997,302 76,903,368 Less
Treasury stock, at cost (24,402,544) (24,402,544) -------------
------------- Total stockholders' equity 52,594,758 52,500,824
------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $721,267,704 $719,907,913 ============= =============
POCAHONTAS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended June 30 June 30
---------------------- ------------------------ 2005 2004 2005 2004
---------- ---------- ----------- ----------- INTEREST INCOME:
Loans receivable $5,876,659 $5,881,534 $17,191,584 $18,041,432
Investment securities 3,181,993 2,821,660 9,369,404 9,258,008
---------- ---------- ----------- ----------- Total interest income
9,058,652 8,703,194 26,560,988 27,299,440 INTEREST EXPENSE:
Deposits 3,122,294 2,645,527 8,852,830 9,052,977 Borrowed funds
1,376,226 980,608 3,930,244 2,524,980 Trust preferred securities
363,597 318,636 1,056,870 948,205 ---------- ---------- -----------
----------- Total interest expense 4,862,117 3,944,771 13,839,944
12,526,162 NET INTEREST INCOME 4,196,535 4,758,423 12,721,044
14,773,278 PROVISION FOR LOAN LOSSES - 650,000 125,000 1,150,000
---------- ---------- ----------- ----------- NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES 4,196,535 4,108,423 12,596,044
13,623,278 OTHER INCOME: Fees and service charges 808,673 719,908
2,372,253 2,255,865 Gain on sale of loans 258,390 323,199 733,428
925,620 Gain on sale of securities, net 564,290 343,832 564,290
383,367 Trading gain (losses), net (16,227) (199,031) 7,492 241,421
Gain (loss) on sale of branches - (2,500) - 136,834 Other 118,987
104,512 426,139 326,497 ---------- ---------- -----------
----------- Total other income 1,734,113 1,289,920 4,103,602
4,269,604 ---------- ---------- ----------- ----------- OPERATING
EXPENSE: Compensation and benefits 2,508,409 2,359,372 7,269,121
7,130,579 Occupancy and equipment 645,067 642,741 2,079,739
2,094,590 Insurance premiums 95,559 85,398 271,899 248,678
Professional fees 251,862 130,166 789,116 598,872 Data processing
167,173 173,805 478,796 512,507 Advertising and donations 312,342
122,836 732,870 264,877 Office supplies 140,996 58,617 258,925
179,488 REO and other repossessed assets 132,981 91,849 172,494
269,515 Other 398,483 331,026 1,025,174 942,857 ----------
---------- ----------- ----------- Total operating expense
4,652,872 3,995,810 13,078,134 12,241,963 ---------- ----------
----------- ----------- INCOME BEFORE INCOME TAXES 1,277,776
1,402,533 3,621,512 5,650,919 INCOME TAXES 439,700 476,000
1,236,200 1,927,000 ---------- ---------- ----------- -----------
NET INCOME $ 838,076 $ 926,533 $ 2,385,312 $ 3,723,919 POCAHONTAS
BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended June 30 June 30
------------------------ ----------------------- 2005 2004 2005
2004 ----------- ----------- ---------- ----------- OTHER
COMPREHENSIVE INCOME (LOSS), NET OF TAX: Unrealized holding gain
(loss) on securities available for- sale arising during the period
$ (969,820) $(5,238,515) $1,098,208 $(4,344,136) Reclassification
adjustment for gains included in net income (372,431) (226,929)
(372,431) (253,022) ----------- ----------- ---------- -----------
Other comprehensive income (loss) (1,342,251) (5,465,444) 725,777
(4,597,158) ----------- ----------- ---------- -----------
COMPREHENSIVE INCOME (LOSS) $ (504,175) $(4,538,911) $3,111,089 $
(873,239) =========== =========== ========== =========== EARNINGS
PER SHARE: Basic earnings per share $ 0.19 $ 0.21 $ 0.53 $ 0.83
=========== =========== ========== =========== Diluted earnings per
share $ 0.18 $ 0.20 $ 0.52 $ 0.81 =========== ===========
========== =========== *T
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