PFSL Pocahontas Bancorp

Pocahontas Bancorp, Inc. (NASDAQ: PFSL) announced earnings for the third quarter of the fiscal year ending September 30, 2006. Net income was $638,713 for the quarter ended June 30, 2006, compared to net income of $838,076 for the quarter ended June 30, 2005. Basic and diluted earnings per share were $0.14 for the quarter ended June 30, 2006 compared to basic earnings per share of $0.19 and diluted earnings per share of $0.18 for the same period last year. Net interest income before provision for loan loss for the quarter ended June 30, 2006 was $3.61 million compared to $4.20 million for the quarter ended June 30, 2005, a decrease of $0.59 million. The decrease was primarily due to a 39 basis point decrease in the net interest rate spread to 2.20% for the quarter ended June 30, 2006 compared to 2.59% for the quarter ended June 30, 2005. Net interest margin was 2.15% for the quarter ended June 30, 2006 compared to 2.53% for the quarter ended June 30, 2005. There was no provision for loan losses for the quarter ended June 30, 2006 or the quarter ended June 30, 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 June 30, 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 decreased $0.58 million to $1.15 million for the quarter ended June 30, 2006 compared to the quarter ended June 30, 2005. The decrease in non-interest income was primarily due to having no gain on sale of securities during the quarter ended June 30, 2006 compared to a $0.56 million gain for the quarter ended June 30, 2005. Total operating expenses were $4.16 million for the quarter ended June 30, 2006, compared to $4.65 million for the quarter ended June 30, 2005. The decrease in total operating expense was primarily due to decreases in compensation, REO and other repossessed assets and in advertising and donations expenses. Net income was $2.13 million for the nine months ended June 30, 2006, compared to net income of $2.39 million for the nine months ended June 30, 2005. Basic and diluted earnings per share were $0.47 for the nine months ended June 30, 2006 compared to basic earnings per share of $0.53 and diluted earnings per share of $0.52 for the same period last year. Net interest income before provision for loan loss for the nine months ended June 30, 2006 was $11.46 million compared to $12.72 million for the nine months ended June 30, 2005, a decrease of $1.26 million. The decrease was primarily due to a 38 basis point decrease in the net interest rate spread to 2.31% for the nine months ended June 30, 2006 compared to 2.69% for the nine months ended June 30, 2005. Net interest margin was 2.26% for the nine months ended June 30, 2006 compared to 2.59% for the nine months ended June 30, 2005. There was a $0.31 million provision for loan losses for the nine months ended June 30, 2006 compared to a $0.13 million provision for loan losses for the nine months ended June 30, 2005. Non-interest income decreased $0.14 million to $3.96 million for the nine months ended June 30, 2006 from $4.10 million for the nine months ended June 30, 2005. The decrease in non-interest income was primarily due to a $0.29 million decrease in gain on the sale of securities and a $0.15 million decrease in gain on the sale of loans during the nine months ended June 30, 2006 compared to the nine months ended June 30, 2005, which was partially offset by a $0.16 million gain on the sale of loan servicing during the nine months ended June 30, 2006, compared to no gain on loan servicing during the same period last year. Total operating expenses were $12.86 million for the nine months ended June 30, 2006, compared to $13.08 million for the nine months ended June 30, 2005. The $0.22 million decrease in total operating expense was primarily due to the decreases in compensation and benefits, and in advertising and donations expenses, which were partially offset by an increase in occupancy and equipment. Total assets decreased 1.1% to $732.94 million at June 30, 2006 from $741.26 million at September 30, 2005. The decrease was primarily the result of a $7.24 million decrease in cash. The yield on average interest earning assets at June 30, 2006 was 5.73% compared to 5.44% at September 30, 2005. Investment balances increased $3.85 million during the nine-month period ended June 30, 2006 due to investment purchases of $34.44 million, which were partially offset by $28.57 million in principal payments, calls and maturities and $2.90 million in investment sales. Total net loans receivable were $429.22 million at June 30, 2006 compared to $429.60 million at September 30, 2005. During the nine-month period ended June 30, 2006, proceeds from the sale of mortgage loans held for sale were $38.32 million, compared to $37.82 million during the nine-month period ended June 30, 2005. Total nonperforming loans decreased 44.9% to $2.17 million at June 30, 2006 from $3.94 million at September 30, 2005. Total deposits increased $20.71 million or 4.0% to $534.75 million at June 30, 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 $23.57 million or 15.9% to $125.08 million at June 30, 2006 compared to $148.65 million at September 30, 2005. Accrued expenses and other liabilities decreased $4.22 million at June 30, 2006 to $2.85 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. Stockholders' equity decreased $0.90 million at June 30, 2006 to $51.47 million from $52.37 million at September 30, 2005. The decrease in stockholders' equity at June 30, 2006 compared to September 30, 2005, was primarily due to the payment of cash dividends and to the change in accumulated other comprehensive loss on securities, which were partially offset by net income for the nine-month period ended June 30, 2006. Accumulated other comprehensive loss on securities increased $1.84 million to $4.36 million at June 30, 2006 compared to $2.52 million at September 30, 2005. The decrease in market value was due primarily to changes in market interest rates and is considered a temporary impairment. Pocahontas Bancorp, Inc. is a unitary thrift holding company that 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 Global 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 ---------------------------------------------------------------------- June 30, September 30, 2006 2005 (Unaudited) ASSETS Cash and due from banks $ 16,172,216 $ 23,411,451 Cash surrender value of life insurance 8,342,739 8,019,097 Securities held-to-maturity, at cost 136,423,194 129,952,373 Securities available-for-sale, at fair value 96,841,074 99,460,045 Trading securities, at fair value - 3,126,044 Loans receivable, net 425,681,760 426,538,047 Loans receivable, held for sale 3,536,780 3,057,985 Accrued interest receivable 4,701,138 4,487,837 Premises and equipment, net 16,137,635 16,716,912 Federal Home Loan Bank stock, at cost 7,154,200 7,962,000 Goodwill 8,847,572 8,847,572 Core deposit premiums, net 4,593,416 5,323,319 Other assets 4,511,923 4,360,885 ------------ ------------ TOTAL ASSETS $732,943,647 $741,263,567 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Deposits $534,754,881 $514,043,734 Federal Home Loan Bank advances 125,076,586 148,645,397 Deferred compensation 1,817,911 2,176,859 Accrued expenses and other liabilities 2,849,582 7,066,640 Trust preferred securities 16,978,258 16,962,683 ------------ ------------ Total liabilities 681,477,218 688,895,313 ------------ ------------ 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 June 30, 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 (4,354,961) (2,517,282) Retained earnings 25,025,488 24,013,522 ------------ ------------ 75,868,973 76,770,798 Treasury stock at cost, 2,960,775 shares, at June 30, 2006 and September 30, 2005 (24,402,544) (24,402,544) Total stockholders' equity 51,466,429 52,368,254 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $732,943,647 $741,263,567 ============ ============ POCAHONTAS BANCORP, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) ---------------------------------------------------------------------- Three Months Ended Nine Months Ended June 30, June 30, 2006 2005 2006 2005 INTEREST INCOME: Loans receivable $ 7,208,684 $ 5,876,659 $21,093,650 $17,191,584 Investment securities 2,607,873 3,181,993 7,944,276 9,369,404 ----------- ----------- ----------- ----------- Total interest income 9,816,557 9,058,652 29,037,926 26,560,988 INTEREST EXPENSE: Deposits 4,442,662 3,122,294 12,277,310 8,852,830 Borrowed funds 1,353,128 1,376,226 4,119,373 3,930,244 Trust preferred securities 408,297 363,597 1,185,020 1,056,870 ----------- ----------- ----------- ----------- Total interest expense 6,204,087 4,862,117 17,581,703 13,839,944 NET INTEREST INCOME 3,612,470 4,196,535 11,456,223 12,721,044 PROVISION FOR LOAN LOSSES - - 310,000 125,000 ----------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,612,470 4,196,535 11,146,223 12,596,044 NON-INTEREST INCOME: Dividends 93,442 89,986 290,580 217,447 Fees and service charges 794,107 808,673 2,374,334 2,372,253 Gain on sale of loans 213,927 258,390 583,804 733,428 Gain/(loss) on sale of loan servicing (34,908) - 159,148 - Gain on sale of securities, net 3,982 564,290 269,941 564,290 Trading gain/(loss), net - (16,227) 337 7,492 Other 79,319 29,001 278,702 208,692 ----------- ----------- ----------- ----------- Total non- interest income 1,149,869 1,734,113 3,956,846 4,103,602 ----------- ----------- ----------- ----------- ON-INTEREST EXPENSE Compensation and benefits 2,329,291 2,508,409 7,151,644 7,269,121 Occupancy and equipment 724,239 645,067 2,223,130 2,079,739 Insurance premiums 102,965 95,559 301,361 271,899 Professional fees 286,281 251,862 870,658 789,116 Data processing 194,856 167,173 561,980 478,796 Advertising and donations 139,147 312,342 429,435 732,870 Office supplies 73,042 140,996 228,612 258,925 REO and other repossessed assets 4,307 132,981 85,410 172,494 Other 307,067 398,483 1,005,814 1,025,174 ----------- ----------- ----------- ----------- Total non- interest expense 4,161,195 4,652,872 12,858,044 13,078,134 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 601,144 1,277,776 2,245,025 3,621,512 INCOME TAXES (37,569) 439,700 119,048 1,236,200 ----------- ----------- ----------- ----------- NET INCOME $ 638,713 $ 838,076 $ 2,125,977 $ 2,385,312 =========== =========== =========== =========== EARNINGS PER SHARE: Basic earnings per share $ 0.14 $ 0.19 $ 0.47 $ 0.53 =========== =========== =========== =========== Diluted earnings per share $ 0.14 $ 0.18 $ 0.47 $ 0.52 =========== =========== =========== =========== *T