SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| x | ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]. |
For the fiscal year ended September 30, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. |
For the transition period from to
Commission File Number: 000-23969
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
First Community Bank 401(k) Savings and
Employee Stock Ownership Plan
| B: | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
Pocahontas Bancorp, Inc.
1700 E. Highland Drive
Jonesboro, Arkansas 72401
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-78607 on Form S-8 of our report dated March 24, 2006, appearing in this Annual Report on Form 11-K of First Community Bank 401(k) Savings and Employee Stock Ownership Plan for the year ended September 30, 2005.
/s/ Deloitte & Touche LLP
Little Rock, Arkansas
March 28, 2006
First Community Bank 401(k) Savings and Employee Stock Ownership Plan
Financial Statements as of September 30, 2005 and 2004, for the Year Ended September 30, 2005, Supplemental Schedules as of and for the Year Ended September 30, 2005, and Report of Independent Registered Public Accounting Firm
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
| NOTE: | The accompanying financial statements have been prepared in part for the purpose of filing with the Department of Labor’s Form 5500. Supplemental schedules required by 29 CFR 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, other than the schedules listed above, are omitted because of the absence of the conditions under which they are required. |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Trustees and Participants
First Community Bank
401(k) Savings and Employee Stock Ownership Plan
We have audited the accompanying statements of net assets available for benefits of the First Community Bank 401(k) Savings and Employee Stock Ownership Plan (the “Plan”) as of September 30, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended September 30, 2005. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at September 30, 2005 and 2004, and the changes in net assets available for benefits for the year ended September 30, 2005, in conformity with accounting principles generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the table of contents, and the supplemental information included on the statements of net assets available for benefits and on the statement of changes in net assets available for benefits, is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules and information are the responsibility of the Plan’s management. Such supplemental schedules and information have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.
/s/ Deloitte & Touche LLP
Little Rock, Arkansas
March 24, 2006
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF SEPTEMBER 30, 2005 AND 2004
| 2005 | 2004 | ||||||||||||||||||
| Supplemental Information | Total | Supplemental Information | Total | ||||||||||||||||
| Allocated | Unallocated | Allocated | Unallocated | ||||||||||||||||
ASSETS | |||||||||||||||||||
CASH AND CASH EQUIVALENTS | $ | 5 | $ | 14 | $ | 19 | $ | 5 | $ | 21,969 | $ | 21,974 | |||||||
SHARES OF POCAHONTAS BANCORP | 7,535,734 | 1,605,253 | 9,140,987 | 9,917,303 | 2,108,235 | 12,025,538 | |||||||||||||
INVESTMENTS—MUTUAL FUNDS | 1,436,652 | 762 | 1,437,414 | 1,253,884 | 4,626 | 1,258,510 | |||||||||||||
INVESTMENTS—OTHER | 5,648 | — | 5,648 | 6,000 | — | 6,000 | |||||||||||||
PARTICIPANT LOANS | 28,248 | — | 28,248 | 36,573 | — | 36,573 | |||||||||||||
OTHER | 977 | — | 977 | — | — | — | |||||||||||||
Total assets | 9,007,264 | 1,606,029 | 10,613,293 | 11,213,765 | 2,134,830 | 13,348,595 | |||||||||||||
LIABILITIES | |||||||||||||||||||
ACCOUNTS PAYABLE—Other | — | — | — | 193 | — | 193 | |||||||||||||
LOAN PAYABLE TO POCAHONTAS BANCORP, INC. | — | 2,056,529 | 2,056,529 | — | 2,091,225 | 2,091,225 | |||||||||||||
Total liabilities | — | 2,056,529 | 2,056,529 | 193 | 2,091,225 | 2,091,418 | |||||||||||||
NET ASSETS AVAILABLE FOR BENEFITS | $ | 9,007,264 | $ | (450,500 | ) | $ | 8,556,764 | $ | 11,213,572 | $ | 43,605 | $ | 11,257,177 | ||||||
See notes to financial statements.
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401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
| 2005 | ||||||||||||
| Supplemental Information | Total | |||||||||||
| Allocated | Unallocated | |||||||||||
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO: | ||||||||||||
Interest | $ | 1,935 | $ | 658 | $ | 2,593 | ||||||
Dividends | 189,022 | 46,844 | 235,866 | |||||||||
Employee contributions | 113,564 | 202 | 113,766 | |||||||||
Employer contributions | — | 600,000 | 600,000 | |||||||||
Allocation of 31,805 shares of Pocahontas Bancorp, Inc. common stock | 397,563 | — | 397,563 | |||||||||
Total additions | 702,084 | 647,704 | 1,349,788 | |||||||||
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO: | ||||||||||||
Net depreciation in fair value of investments | (1,966,900 | ) | (599,871 | ) | (2,566,771 | ) | ||||||
Distributions to participants | (929,308 | ) | (473 | ) | (929,781 | ) | ||||||
Allocation of 31,805 shares of Pocahontas Bancorp, Inc. common stock | — | (397,563 | ) | (397,563 | ) | |||||||
Interest expense | — | (143,897 | ) | (143,897 | ) | |||||||
Administrative expenses | (12,184 | ) | (5 | ) | (12,189 | ) | ||||||
Total deductions | (2,908,392 | ) | (1,141,809 | ) | (4,050,201 | ) | ||||||
NET DECREASE IN NET ASSETS AVAILABLE FOR BENEFITS | (2,206,308 | ) | (494,105 | ) | (2,700,413 | ) | ||||||
NET ASSETS—Beginning of year | 11,213,572 | 43,605 | 11,257,177 | |||||||||
NET ASSETS—End of year | $ | 9,007,264 | $ | (450,500 | ) | $ | 8,556,764 | |||||
See notes to financial statements.
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401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 2005 AND 2004
| 1. | DESCRIPTION OF THE PLAN |
The following brief description of the First Community Bank 401(k) Savings and Employee Stock Ownership Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General—The Plan is a qualified employee stock ownership plan with a salary reduction feature. First Community Bank (formerly known as Pocahontas Federal Savings and Loan Association) (the “Employer”) formed the Plan by combining its existing 401(k) plan, which had been effective since January 1, 1986, and its Employee Stock Ownership Plan (“ESOP”), which had been effective since October 1, 1993. Pocahontas Bancorp, Inc. (the “Company”) accomplished the combination of the existing plans through a combination and restatement, with neither the 401(k) nor the ESOP being the surviving plan, effectively creating a new plan with an effective date of October 1, 1997. The Plan covers substantially all employees of the Employer. The Employer is 100% owned by the Company. It is subject to the provisions of the Employee Retirement Income Security Act of 1974.
Contributions—Each eligible participant may, but shall not be required to, enter into an elective deferral agreement with the Employer under which the participant agrees to reduce his cash compensation by a specified percentage, up to a maximum of 15%, and contribute such amounts to the Plan. The amount of any matching contributions, qualified matching contributions, discretionary contributions, qualifying non-elective contributions, and ESOP contributions for each plan year will be made at the sole discretion of the Board of Directors. For the year ended September 30, 2005 the Company made discretionary contributions of $600,000.
Participation—Employees are generally eligible to participate in the Plan after completing one year of service. Only participants at least 21 years of age, who complete at least 1,000 hours of service during the Plan year, and are employed on the last day of the Plan year are eligible to share in the Employer’s discretionary contribution for the year. An employee may decline to participate in the Plan. For purposes of participation in any election deferral contributions, completion of one hour of service and an open enrollment date is required.
Participant Accounts—Each participant’s account is credited with an allocation of (a) the Employer’s discretionary ESOP contributions, (b) eligible forfeitures of terminated participants’ nonvested accounts, (c) and earnings of the Plan for the year. Allocations are based on participant wages as defined in the Plan agreement. The benefit to which a participant is entitled, subject to vesting, is the benefit that can be provided from the participant’s account.
Participant Loans—Participants may borrow, upon written application, any amount provided that the aggregate amount of all outstanding loans to the participant from the Plan and from any other qualified plan maintained by the Employer, including accrued interest thereon, shall not exceed the lesser of $50,000 or 50% of the participants vested 401(k) account balance. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Loan fund. Loan terms shall not exceed five years, except for the purchase of a primary residence. The loans are collateralized by the balance in
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the participant’s account and bear interest at a rate commensurate with local prevailing rates as determined by the Plan administrator. Principal and interest is paid ratably not less than quarterly through payroll deductions. Participants may not have more than three loans outstanding.
Plan Borrowings—The Plan purchased Company stock using the proceeds of borrowings from the Company. The Plan’s debt is collateralized by the stock. A trustee holds such stock in a suspense account in a trust established under the Plan. As the Plan makes payments of principal and interest, shares are released into a suspense account to be allocated to eligible employees’ accounts at the end of the Plan year, in accordance with the Plan. The lender has no rights against shares once they are allocated under the Plan. Accordingly, the financial statements of the Plan present separately the assets and liabilities and changes therein pertaining to:
| (a) | the accounts of employees with rights in allocated stock (“Allocated”) and |
| (b) | stock not yet allocated to employees (“Unallocated”). |
Vesting—Vesting of accounts is based upon years of service as defined in the Plan agreement. A participant becomes fully vested after five years of credited service.
Payments of Benefits—No distributions from the Plan will be made until a participant retires, dies (in which case, payment shall be made to his or her beneficiary or, if none, his or her legal representatives), becomes disabled or otherwise terminates employment with the Employer. Distributions are made in cash or Company stock, or both.
Voting and Dividend Rights—No participant shall have any voting or dividend rights or other rights of a stockholder prior to the time that shares are allocated to the participant.
Termination of the Plan—The Employer reserves the right to amend or terminate the Plan agreement at any time by action of the Board of Directors. Upon full or partial termination of the Plan, participants’ accounts will become 100% vested and all unallocated shares will be allocated to the accounts of all participants in accordance with the Plan.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Accounting—The financial statements of the Plan are prepared under the accrual method of accounting.
Investment Valuations and Income Recognition—Investments are stated at fair value as determined from quoted market prices. The investment in shares of the Company’s common stock is stated at fair value and is based on the closing price in an active market as of the last trading day of the year.
Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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| 3. | INVESTMENT PROGRAMS |
Upon enrollment, each participant shall direct that his elective contribution be invested in one or more of the 52 investment options. Investment direction may be revised daily by a participant. A participant’s salary deferral percentage may be changed quarterly. All ESOP contributions are invested in Company stock.
| 4. | TAX STATUS |
The Internal Revenue Service has determined and informed the Company by a letter dated December 17, 2002, that the Plan is qualified and the trust established under the Plan is tax-exempt, under the appropriate sections of the Internal Revenue Code (“IRC”). The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, they believe that the Plan is qualified and the related trust is tax-exempt.
| 5. | ADMINISTRATION OF PLAN ASSETS |
The Plan’s assets, which consist principally of Company common stock and mutual funds, are held by the Company’s trustees, First Bankers Trust Company, N.A. and John Hancock, respectively. The Company administers the payment of principal and interest on the loan and makes distributions to participants. During the years ended September 30, 2005 and 2004, Plan expenses were paid either directly by the Company or by the Plan as a reduction of net assets.
Certain administrative functions are performed by officers or employees of the Company. No such officer or employee receives compensation from the Plan.
| 6. | INVESTMENTS |
Included in the September 30 investment portfolios are the following investments representing more than 5% of net assets available for benefits:
2005 | Fair Value | ||
Pocahontas Bancorp, Inc.—common stock—allocated | $ | 7,535,734 | |
Pocahontas Bancorp, Inc.—common stock—unallocated | 1,605,253 | ||
2004 | Fair Value | ||
Pocahontas Bancorp, Inc.—common stock—allocated | $ | 9,917,303 | |
Pocahontas Bancorp, Inc.—common stock—unallocated | 2,108,235 | ||
Net appreciation (depreciation) of the investments of the Plan for the year ended September 30, 2005 is as follows:
Pocahontas Bancorp, Inc. common stock | $ | (2,739,013 | ) | |
Mutual funds | 170,732 | |||
Other investments | 1,510 | |||
Total | $ | (2,566,771 | ) | |
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| 7. | LOAN PAYABLE |
In 2003, the ESOP established a $2.0 million line of credit with the Company that was to be used to purchase additional shares of Company stock. In 2004, the ESOP established a second $2.0 million line of credit with the Company that was to be used to purchase additional shares of Company stock. Both loans were collateralized by the shares that were purchased with the proceeds of the loan. As of September 30, 2004, the ESOP owed $0.3 million on the first line of credit and $1.8 million on the second line of credit.
During October 2004, the ESOP established a third line of credit for $3.1 million with the Company to be used to payoff the outstanding balances of $0.3 million on the first line of credit and the $1.8 million on the second line of credit and purchase up to $1.0 million in additional shares of Company stock on or before December 31, 2005. The loan matures September 30, 2014 and has an interest rate of 6%. The loan is collateralized by shares that were purchased with the proceeds of the loans. As of September 30, 2005, the ESOP had drawn $0.5 million of the $1.0 million available to draw by December 31, 2005 and owed $2.1 million on the line of credit. The $0.5 million drawn in 2005 was used to purchase 30,568 additional shares of Pocahontas Bancorp, Inc. common stock.
* * * * * *
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401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS
(HELD AT END OF YEAR) SEPTEMBER 30, 2005
Current Value | |||
Cash—Interest Bearing | $ | 19 | |
Pocahontas Bancorp, Inc.—common stock-allocated (602,859 shares)* | 7,535,734 | ||
Pocahontas Bancorp, Inc.—common stock-allocated (128,420 shares)* | 1,605,253 | ||
John Hancock—Lifestyle Fund—Conservative Portfolio | 49,885 | ||
John Hancock—Lifestyle Fund—Moderate Portfolio | 129,080 | ||
John Hancock—Lifestyle Fund—Balanced Portfolio | 369,151 | ||
John Hancock—Lifestyle Fund—Growth Portfolio | 284,470 | ||
John Hancock—Lifestyle Fund—Aggressive Portfolio | 60,704 | ||
John Hancock—3-Year Compound | 762 | ||
John Hancock—Money Market Fund | 51,885 | ||
John Hancock—Short-Term Federal Fund | 4,255 | ||
John Hancock—PIMCO Total Return Fund | 3,973 | ||
John Hancock—PIMCO Global Bond | 124 | ||
John Hancock—T. Rowe Price Spectrum Income Fund | 4,739 | ||
John Hancock—Salomon Bros High Yield | 16,791 | ||
John Hancock—America Funds American Balanced Fund | 57,674 | ||
John Hancock—T. Rowe Price Equity Income | 24,668 | ||
John Hancock—Davis New York Venture Fund | 1,768 | ||
John Hancock—Mutual Beacon Fund | 30,707 | ||
John Hancock—Weitz Partners Value Fund | 52,528 | ||
John Hancock—Fidelity Advisor Dividend Growth Fund | 1,352 | ||
John Hancock—Franklin Balance Sheet Investment Fund | 43,597 | ||
John Hancock—Mutual Discovery | 182 | ||
John Hancock—Domini Social Equity Fund | 12,358 | ||
John Hancock—MFS Strategic Value | 1,727 | ||
John Hancock—T. Rowe Price Blue Chip Growth Fund | 10,120 | ||
John Hancock—Excelsior Value and Restructuring Fund | 31,204 | ||
John Hancock—Fidelity Advisor Large Cap Fund | 3 | ||
John Hancock—Prudential Jennison Growth Fund | 3 | ||
John Hancock—Oppenheimer Global Fund | 3,269 | ||
John Hancock—AIM Mid Cap Core Equity Fund | 23,731 | ||
John Hancock—Putnam Global Equity Fund | 24,900 | ||
John Hancock—Templeton Foreign Fund | 11,713 | ||
John Hancock—Templeton Foreign Small Co. | 1,197 | ||
John Hancock—AIM Constellation Fund | 475 | ||
John Hancock—Energy Fund | 11,080 | ||
John Hancock—Smith Barney Aggressive Growth Fund | 38,047 | ||
John Hancock—Legg Mason Growth | 11,651 | ||
John Hancock—Scudder Mid Cap Growth | 1,712 | ||
Total | 10,512,491 | ||
(Continued)
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FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS
(HELD AT END OF YEAR) SEPTEMBER 30, 2005
Current Value | |||
Total (from previous page) | $ | 10,512,491 | |
John Hancock—American Century Vista | 5,913 | ||
John Hancock—Calamos Growth | 2,931 | ||
John Hancock—Franklin Small-Mid Growth | 565 | ||
John Hancock—Oppenheimer Developing Mkt. | 10,294 | ||
John Hancock—T. Rowe Price Science & Technology Fund | 1,815 | ||
Quantitative Value Fund | 1,482 | ||
500 Index Fund | 33,245 | ||
Total Stock market Index Fund | 6 | ||
Quantitative All-Cap Fund | 5,747 | ||
Mid Cap Index Fund | 1,934 | ||
Small Cap Index Fund | 1,029 | ||
Emerging Growth Fund | 968 | ||
Participant loans* | 28,248 | ||
Investments—other | 5,648 | ||
Other* | 977 | ||
TOTAL | $ | 10,613,293 | |
| * | Party-in-interest |
See Report of Independent Registered Public Accounting Firm. | (Concluded | ) |
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401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j—
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
SERIES OF TRANSACTIONS
Identity of Party Involved | Description of Case of a Loan) | Purchase Price | Selling Price | Lease Rental | Expense Incurred With Transaction | Cost of Asset | Current Value of Asset on Transaction Date | Net Gain or Loss | |||||||||||||||
Pocahontas Bancorp, Inc. | Common stock | $ | 677,588 | $ | $ | $ | $ | 677,588 | $ | 677,588 | $ | ||||||||||||
See Report of Independent Registered Public Accounting Firm.
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIRST COMMUNITY BANK | ||||
| 401(k) SAVINGS AND EMPLOYEE | ||||
| STOCK OWNERSHIP PLAN | ||||
| Date: March 28, 2006 | By: | /s/ Dwayne Powell | ||
| Dwayne Powell | ||||
| President and Chief Executive Officer | ||||
