PFSL Pocahontas Bancorp

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