PFSL Pocahontas Bancorp

Pocahontas Bancorp, Inc. (Nasdaq-NMS:PFSL) announced earnings for the first quarter of the fiscal year ending September 30, 2006. Net income was $0.86 million for the quarter ended December 31, 2005, compared to net income of $1.12 million for the quarter ended December 31, 2004. Basic and diluted earnings per share were $0.19 for the quarter ended December 31, 2005 compared to basic earnings per share of $0.25 and diluted earnings per share of $0.24 for the same period last year. Net interest income before provision for loan loss for the quarter ended December 31, 2005 was $3.95 million compared to $4.37 million for the quarter ended December 31, 2004, a decrease of $0.42 million. The decrease was primarily due to a 44 basis point decrease in the net interest rate spread to 2.43% for the quarter ended December 31, 2005 compared to 2.87% for the quarter ended December 31, 2004. Net interest margin was 2.35% for the quarter ended December 31, 2005 compared to 2.72% for the quarter ended December 31, 2004. There was no provision for loan losses for the quarter ended December 31, 2005 compared to $0.13 million for the quarter ended December 31, 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 December 31, 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 $0.10 million to $1.46 million for the quarter ended December 31, 2005 compared to the quarter ended December 31, 2004. The decrease in non-interest income was primarily due to a nominal trading gain on equity securities during the quarter ended December 31, 2005 compared to a $0.36 million trading gain on equity securities for the quarter ended December 31, 2004 and a $0.07 million decrease in the gain on sale of loans to $0.20 million for the quarter ended December 31, 2005 from $0.27 million for the quarter ended December 31, 2004, partially offset by a $0.22 million gain on the sale of loan servicing for the quarter ended December 31, 2005. Total operating expenses were $4.32 million for the quarter ended December 31, 2005, compared to $4.10 million for the quarter ended December 31, 2004. The increase in total operating expense was primarily due to the increases in compensation and benefits, and occupancy and equipment. The Company's savings and loan subsidiary operated 21 locations at December 31, 2005 compared to 19 locations at December 31, 2004. Both compensation and benefits and occupancy and equipment expenses increased during the three-month period ended December 31, 2005 compared to the same period last year due to the increase in branch locations. Total assets increased 1.4% to $751.53 million at December 31, 2005 from $741.26 million at September 30, 2005. The increase was primarily the result of an increase in investment securities of $25.56 million and a $2.73 million increase in cash, which were partially offset by a decrease in total net loans of $14.76 million. The yield on average interest earning assets at December 31, 2005 was 5.62% compared to 5.44% at September 30, 2005. Investment balances increased $25.56 million during the quarter ended December 31, 2005 due primarily to $34.44 million in securities purchased, which was partly offset by $10.42 million in principal paydowns and maturities and the sale and call of $1.66 million in securities. Total net loans receivable were $414.84 million at December 31, 2005 compared to $429.60 million at September 30, 2005. During the three-month period ended December 31, 2005, proceeds from the sale of mortgage loans held for sale were $11.94 million, compared to $15.11 million sold during the three-month period ended December 31, 2004. Total nonperforming loans decreased 6.3% to $3.69 million at December 31, 2005 from $3.94 million at September 30, 2005. Total deposits increased $19.60 million or 3.8% to $533.64 million at December 31, 2005 compared to $514.04 million at September 30, 2005. The increase was mainly due to the Company refocusing its efforts on attracting certificate accounts by offering more competitive interest rates and terms on those accounts. Total Federal Home Loan Bank advances decreased $6.07 million or 4.1% to $142.58 million at December 31, 2005 compared to $148.65 million at September 30, 2005. 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 21 offices located primarily in Northeast Arkansas and Tulsa County, Oklahoma. 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) December 31, September 30, 2005 2005 ASSETS Cash $ 26,144,377 $ 23,411,451 Cash surrender value of life insurance 8,098,936 8,019,097 Securities held-to-maturity, at cost 144,282,884 129,952,373 Securities available-for-sale, at fair value 110,683,625 99,460,045 Trading securities, at fair value - 3,126,044 Loans receivable, net 412,113,533 426,538,047 Loans receivable, held for sale 2,726,168 3,057,985 Accrued interest receivable 4,501,314 4,487,837 Premises and equipment, net 16,595,320 16,716,912 Federal Home Loan Bank stock, at cost 8,041,800 7,962,000 Goodwill 8,847,572 8,847,572 Core deposit premiums, net 5,080,018 5,323,319 Other assets 4,410,900 4,360,885 ------------- ------------- TOTAL ASSETS $751,526,447 $741,263,567 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits $533,639,492 $514,043,734 Federal Home Loan Bank advances 142,580,123 148,645,397 Deferred compensation 2,120,850 2,176,859 Accrued expenses and other liabilities 3,658,074 7,066,640 Trust preferred securities 16,967,875 16,962,683 ------------- ------------- Total liabilities 698,966,414 688,895,313 ------------- ------------- STOCKHOLDERS' EQUITY: Common stock, $0.01 par value, 8,000,000 shares authorized; 7,602,492 shares issued and 4,641,717 shares outstanding at December 31, 2005 and September 30, 2005 76,024 76,024 Additional paid-in capital 57,275,390 57,275,390 Unearned ESOP shares (2,152,968) (2,076,856) Accumulated other comprehensive loss, net (2,734,653) (2,517,282) Retained earnings 24,498,784 24,013,522 ------------- ------------- 76,962,577 76,770,798 Treasury stock at cost, 2,960,775 shares, at December 31, 2005 and September 30, 2005 (24,402,544) (24,402,544) Total stockholders' equity 52,560,033 52,368,254 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $751,526,447 $741,263,567 ============= ============= POCAHONTAS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended December 31 2005 2004 INTEREST INCOME: Loans receivable $6,901,166 $5,792,124 Investment securities 2,550,338 2,985,994 ---------- ---------- Total interest income 9,451,504 8,778,118 INTEREST EXPENSE: Deposits 3,828,760 2,795,804 Borrowed funds 1,294,078 1,273,509 Trust preferred securities 375,347 341,398 ---------- ---------- Total interest expense 5,498,185 4,410,711 NET INTEREST INCOME 3,953,319 4,367,407 PROVISION FOR LOAN LOSSES - 125,000 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,953,319 4,242,407 NON-INTEREST INCOME: Dividends 97,701 61,868 Fees and service charges 813,728 793,704 Gain on sale of loans 201,634 273,429 Gain on sale of loan servicing 219,754 - Gain on sale of securities, net 54,023 - Trading gain, net 337 362,128 Other 67,758 59,659 ---------- ---------- Total other income 1,454,935 1,550,788 ---------- ---------- OPERATING EXPENSE: Compensation and benefits 2,443,520 2,369,650 Occupancy and equipment 736,194 668,533 Insurance premiums 109,074 90,459 Professional fees 251,359 256,757 Data processing 183,990 148,212 Advertising and donations 139,497 166,744 Office supplies 73,167 52,755 REO and other repossessed assets 23,671 27,535 Other 357,066 319,272 ---------- ---------- Total operating expense 4,317,538 4,099,917 ---------- ---------- INCOME BEFORE INCOME TAXES 1,090,716 1,693,278 INCOME TAXES 234,117 575,900 ---------- ---------- NET INCOME $ 856,599 $1,117,378 POCAHONTAS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended December 31 2005 2004 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: Unrealized holding gain (loss) on securities available for-sale arising during the period $ (181,716) $ 355,523 Reclassification adjustment for gains included in net income (35,655) - ---------- ---------- Other comprehensive income (loss) (217,371) 355,523 ---------- ---------- COMPREHENSIVE INCOME $ 639,228 $1,472,901 ========== ========== EARNINGS PER SHARE: Basic earnings per share $0.19 $0.25 ========== ========== Diluted earnings per share $0.19 $0.24 ========== ========== *T