PFSL Pocahontas Bancorp

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