Pocahontas Bancorp, Inc. (Nasdaq-NMS:PFSL) announced earnings for
the second quarter of the fiscal year ending September 30, 2006.
Basic and diluted earnings per share were $0.14 for the quarter
ended March 31, 2006 compared to basic earnings per share of $0.10
and diluted earnings per share of $0.09 for the same period last
year. Net income was $0.63 million for the quarter ended March 31,
2006, compared to net income of $0.43 million for the quarter ended
March 31, 2005. Net interest income before provision for loan loss
for the quarter ended March 31, 2006 was $3.89 million compared to
$4.16 million for the quarter ended March 31, 2005, a decrease of
$0.27 million. The decrease was primarily due to a 37 basis point
decrease in the net interest rate spread to 2.33% for the quarter
ended March 31, 2006 compared to 2.70% for the quarter ended March
31, 2005. Net interest margin was 2.29% for the quarter ended March
31, 2006 compared to 2.55% for the quarter ended March 31, 2005.
There was a $0.31 million provision for loan losses for the quarter
ended March 31, 2006 compared to no provision for loan losses for
the quarter ended March 31, 2005. 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 March 31, 2006 and 2005 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 $0.53 million to $1.35 million for the quarter ended
March 31, 2006 compared to the quarter ended March 31, 2005. The
increase in non-interest income was primarily due to a $0.21
million gain on sale of securities during the quarter ended March
31, 2006 compared to no gain for the quarter ended March 31, 2005
and no trading loss on equity securities during the quarter ended
March 31, 2006 compared to a $0.34 million trading loss on equity
securities for the quarter ended March 31, 2005. Total operating
expenses were $4.38 million for the quarter ended March 31, 2006,
compared to $4.33 million for the quarter ended March 31, 2005. The
increase in total operating expense was primarily due to the
increases in REO and other repossessed assets and professional
fees, which were partially offset by a decrease in advertising. Net
income was $1.49 million for the six months ended March 31, 2006,
compared to net income of $1.55 million for the six months ended
March 31, 2005. Basic and diluted earnings per share were $0.33 for
the six months ended March 31, 2006 compared to basic and diluted
earnings per share of $0.34 for the same period last year. Net
interest income before provision for loan loss for the six months
ended March 31, 2006 was $7.84 million compared to $8.53 million
for the six months ended March 31, 2005, a decrease of $0.69
million. The decrease was primarily due to a 37 basis point
decrease in the net interest rate spread to 2.38% for the six
months ended March 31, 2006 compared to 2.75% for the six months
ended March 31, 2005. Net interest margin was 2.32% for the six
months ended March 31, 2006 compared to 2.63% for the six months
ended March 31, 2005. There was a $0.31 million provision for loan
losses for the six months ended March 31, 2006 compared to a $0.13
million provision for loan losses for the six months ended March
31, 2005. 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 six months
ended March 31, 2006 and 2005 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 to $2.81 million for the six months ended March 31, 2006
from $2.37 million for the six months ended March 31, 2005. The
increase in non-interest income was primarily due to a $0.27
million gain on the sale of securities and a $0.19 million gain on
the sale of loan servicing during the six months ended March 31,
2006 compared to no gain on the sale of securities or loan
servicing for the six months ended March 31, 2005. Total operating
expenses were $8.70 million for the six months ended March 31,
2006, compared to $8.43 million for the six months ended March 31,
2005. The increase in total operating expense was primarily due to
the increases in compensation and benefits, occupancy and equipment
and other expenses, which were partially offset by a decrease in
advertising and donations. The Bank had 21 locations at March 31,
2006 compared to 19 locations at March 31, 2005. Both compensation
and benefits and occupancy and equipment expenses increased during
the six-month period ended March 31, 2006 compared to the same
period last year as a result of the increase in branch locations.
Total assets decreased 0.5% to $737.67 million at March 31, 2006
from $741.26 million at September 30, 2005. The decrease was
primarily the result of a $5.67 million decrease in total net loans
and an $8.71 million decrease in cash, which were partially offset
by an increase in investment securities of $14.15 million. The
yield on average interest earning assets at March 31, 2006 was
5.69% compared to 5.44% at September 30, 2005. Investment balances
increased $14.15 million during the six-month period ended March
31, 2006 due primarily to investment purchases of $34.44 million,
which were partially offset by $19.08 million in principal
payments, calls and maturities and $2.90 million in investment
sales. Total net loans receivable were $423.93 million at March 31,
2006 compared to $429.60 million at September 30, 2005. During the
six-month period ended March 31, 2006, proceeds from the sale of
mortgage loans held for sale were $22.25 million, compared to
$24.20 million during the six-month period ended March 31, 2005.
Total nonperforming loans decreased 39.1% to $2.40 million at March
31, 2006 from $3.94 million at September 30, 2005. Total deposits
increased $14.16 million or 2.8% to $528.20 million at March 31,
2006 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 $13.17 million or 8.9% to $135.48 million
at March 31, 2006 compared to $148.65 million at September 30,
2005. Accrued expenses and other liabilities decreased $3.84
million at March 31, 2006 to $3.23 million from $7.07 million at
September 30, 2005. The decrease in accrued expenses and other
liabilities was primarily due to a $2.4 million liability for
investment securities that were committed prior to September 30,
2005 but had a settlement date after the fiscal year end.
Stockholder's equity decreased $0.66 million at March 31, 2006 to
$51.71 million from $52.37 million at September 30, 2005. The
decrease in stockholders' equity at March 31, 2006, compared to
September 30, 2005, was primarily due to the change in accumulated
other comprehensive loss on securities and dividends declared,
which were partially offset by net income for the six-month period
ended March 31, 2006. Accumulated other comprehensive loss on
securities decreased $1.33 million to $3.84 million at March 31,
2006 compared to $2.52 million at September 30, 2005, the decrease
in market value was due entirely to changes in market interest
rates and is considered a temporary impairment. 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. Except for the historical information
contained in this press release, the matters discussed may be
deemed to be forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995, that involve
risks and uncertainties, including changes in economic conditions
in the Company's market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the
Company's market area, competition, and other risks detailed from
time to time in the Company's SEC reports. Actual strategies and
results in future periods may differ materially from those
currently expected. These forward-looking statements represent the
Company's judgment as of the date of this release. The Company
disclaims, however, any intent or obligation to update these
forward-looking statements. -0- *T POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED) March 31, September 30, 2006 2005 ASSETS Cash $
14,705,765 $ 23,411,451 Cash surrender value of life insurance
8,257,371 8,019,097 Securities held-to-maturity, at cost
140,492,855 129,952,373 Securities available-for-sale, at fair
value 103,070,552 99,460,045 Trading securities, at fair value -
3,126,044 Loans receivable, net 421,224,923 426,538,047 Loans
receivable, held for sale 2,705,477 3,057,985 Accrued interest
receivable 4,502,958 4,487,837 Premises and equipment, net
16,400,256 16,716,912 Federal Home Loan Bank stock, at cost
8,130,000 7,962,000 Goodwill 8,847,572 8,847,572 Core deposit
premiums, net 4,836,717 5,323,319 Other assets 4,499,540 4,360,885
------------ ------------ TOTAL ASSETS $737,673,986 $741,263,567
============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES: Deposits $528,199,424 $514,043,734 Federal Home Loan
Bank advances 135,483,858 148,645,397 Deferred compensation
2,084,390 2,176,859 Accrued expenses and other liabilities
3,224,612 7,066,640 Trust preferred securities 16,973,066
16,962,683 ------------ ------------ Total liabilities 685,965,350
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 March 31, 2006
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 (3,845,378) (2,517,282)
Retained earnings 24,758,112 24,013,522 ------------ ------------
76,111,180 76,770,798 Treasury stock at cost, 2,960,775 shares, at
March 31, 2006 and September 30, 2005 (24,402,544) (24,402,544)
------------ ------------ Total stockholders' equity 51,708,636
52,368,254 ------------ ------------ TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $737,673,986 $741,263,567 ============
============ *T -0- *T POCAHONTAS BANCORP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED) Three Months Ended Six Months Ended March 31 March 31
2006 2005 2006 2005 INTEREST INCOME: Loans receivable $6,983,801
$5,522,801 $13,884,967 $11,314,925 Investment securities 2,786,064
3,201,417 5,336,402 6,187,410 ---------- ---------- -----------
----------- Total interest income 9,769,865 8,724,218 19,221,369
17,502,335 INTEREST EXPENSE: Deposits 4,005,888 2,934,733 7,834,648
5,730,537 Borrowed funds 1,472,168 1,280,508 2,766,246 2,554,017
Trust preferred securities 401,375 351,875 776,722 693,273
---------- ---------- ----------- ----------- Total interest
expense 5,879,431 4,567,116 11,377,616 8,977,827 NET INTEREST
INCOME 3,890,434 4,157,102 7,843,753 8,524,508 PROVISION FOR LOAN
LOSSES 310,000 - 310,000 125,000 ---------- ---------- -----------
----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
3,580,434 4,157,102 7,533,753 8,399,508 NON-INTEREST INCOME:
Dividends 99,438 65,593 197,139 127,461 Fees and service charges
766,498 769,876 1,580,226 1,563,580 Gain on sale of loans 168,243
201,608 369,877 475,038 Gain on sale of loan servicing (25,698) -
194,056 - Gain on sale of securities, net 211,936 - 265,959 -
Trading gain/(loss), net - (338,408) 337 23,720 Other 131,625
120,032 199,383 179,691 ---------- ---------- -----------
----------- Total other income 1,352,042 818,701 2,806,977
2,369,490 ---------- ---------- ----------- ----------- OPERATING
EXPENSE: Compensation and benefits 2,378,834 2,391,062 4,822,353
4,760,712 Occupancy and equipment 762,698 766,139 1,498,892
1,434,672 Insurance premiums 89,323 85,882 198,396 176,341
Professional fees 333,018 280,496 584,377 537,253 Data processing
183,134 163,410 367,124 311,622 Advertising and donations 150,790
253,783 290,288 420,528 Office supplies 82,402 65,175 155,570
117,929 REO and other repossessed assets 57,431 11,977 81,102
39,512 Other 341,681 307,421 698,747 626,692 ---------- ----------
----------- ----------- Total operating expense 4,379,311 4,325,345
8,696,849 8,425,261 ---------- ---------- ----------- -----------
INCOME BEFORE INCOME TAXES 553,165 650,458 1,643,881 2,343,737
INCOME TAXES (77,500) 220,600 156,617 796,500 ---------- ----------
----------- ----------- NET INCOME $ 630,665 $ 429,858 $ 1,487,264
$ 1,547,237 *T -0- *T POCAHONTAS BANCORP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED) Three Months Ended Six Months Ended March 31 March 31
2006 2005 2006 2005 OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized holding gain (loss) on securities available-for- sale
arising during the period $ (970,848) $(2,423,551) $(1,152,563)
$(2,068,028) Reclassification adjustment for gains included in net
income (139,877) - (175,533) - ----------- ----------- -----------
----------- Other comprehensive income (loss) (1,110,725)
(2,423,551) (1,328,096) (2,068,028) ----------- -----------
----------- ----------- COMPREHENSIVE INCOME (LOSS) $ (480,060)
$(1,993,693) $ 159,168 $ (520,791) =========== ===========
=========== =========== EARNINGS PER SHARE: Basic earnings per
share $ 0.14 $ 0.10 $ 0.33 $ 0.34 =========== ===========
=========== =========== Diluted earnings per share $ 0.14 $ 0.09 $
0.33 $ 0.34 =========== =========== =========== =========== *T
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