U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Exchange Act
For the transition period from ______ to ______
Commission file number: 0-23525
NORTH ARKANSAS BANCSHARES, INC.
-------------------------------
(Exact Name of Small Business Issuer
as Specified in its Charter)
Tennessee 71-0800742
--------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
200 Olivia Drive, Newport, Arkansas 72112
-----------------------------------------
(Address of Principal Executive Offices)
(870) 523-3611
--------------
Registrant's Telephone Number, Including Area Code
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the pre-
ceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
As of May 12, 2000, the issuer had 306,070 shares of Common
Stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
CONTENTS
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition as
of March 31, 2000 (unaudited) and
June 30, 1999. . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three
and Nine Months Ended March 31, 2000 and 1999
(unaudited). . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
Nine Months Ended March 31, 2000 and 1999
(unaudited). . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . .13
Item 2. Changes in Securities and Use of Proceeds. . . . . . .13
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . .13
Item 4. Submissions of Matters to a Vote of Security Holders .13
Item 5. Other Information. . . . . . . . . . . . . . . . . . .13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . .13
SIGNATURES
This Form 10-QSB contains forward-looking statements consisting
of estimates or predictions concerning future operations with
respect to the financial condition, results of operations and
other business of North Arkansas Bancshares, Inc. that are
subject to various factors which could cause actual results to
differ materially from those estimates. Such statements are
based on management's beliefs or interpretations of information
currently available. Factors which could influence the
estimates include changes in the national, regional and local
market conditions, legislative and regulatory conditions and an
adverse interest rate environment.
2
PART I - FINANCIAL INFORMATION
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Financial Condition
March 31, 2000 and June 30, 1999
March 31, June 30,
2000 1999
------------- ----------
(Audited)
Assets
------
Cash and amounts due from banks, includes interest
bearing deposits of $598,458 and $83,814 at
March 31, 2000 and June 30, 1999,
respectively $ 674,938 $ 307,907
Certificates of deposit with other financial
institutions 1,198,000 1,698,000
Investment securities held-to-maturity, at cost 12,992,488 14,042,074
Loans receivable, net 28,187,146 29,539,448
Real estate owned, net 378,560 378,560
Office properties and equipment, net 1,376,698 1,412,301
Accrued interest receivable 306,233 330,729
Other assets 242,359 253,078
----------- -----------
Total assets $45,356,422 $47,962,097
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits $31,911,151 $34,679,628
Federal Home Loan Bank advances 8,375,195 8,089,501
Other liabilities 180,332 249,961
----------- -----------
Total liabilities 40,466,678 43,019,090
----------- -----------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $0.01 par value per share,
3,000,000 shares authorized, no shares issued
or outstanding $ -- $ --
Common stock, $0.01 par value per share, 9,000,000
shares authorized, 309,070 and 333,270 shares
issued and outstanding at March 31, 2000 and June
30, 1999, respectively 3,091 3,333
Unearned MRP shares (10,817) (22,735)
Additional paid-in capital 2,705,797 2,907,754
Retained Earnings - substantially restricted 2,428,665 2,291,647
Loan to employee stock ownership plan (236,992) (236,992)
----------- -----------
Total stockholders' equity 4,889,744 4,943,007
----------- -----------
Total liabilities and stockholders'
equity $45,356,422 $47,962,097
=========== ===========
See accompanying notes to consolidated financial statements.
3
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Operations
For the Three and Nine Months Ended March 31, 2000 and 1999
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- -------------------
2000 1999 2000 1999
----- ------ ------ ------
Interest income:
Loans receivable $541,060 $ 498,818 $1,665,493 $1,538,213
Deposits in other financial
institutions 24,480 68,305 74,476 181,709
Mortgage-backed securities 157,907 166,957 487,569 520,623
Investment securities 51,900 28,980 155,299 87,076
-------- --------- ---------- ----------
Total interest income 775,347 763,060 2,382,837 2,327,621
-------- --------- ---------- ----------
Interest expense:
Deposits 369,905 418,631 1,167,046 1,273,246
Federal Home Loan advances 114,545 91,173 340,550 256,605
-------- --------- ---------- ----------
Total interest expense 484,450 509,804 1,507,596 1,529,851
-------- --------- ---------- ----------
Net interest income 290,897 253,256 875,241 797,770
Provision for loan losses 2,000 2,000 9,920 7,887
-------- --------- ---------- ----------
Net interest income after provision 288,897 251,256 865,321 789,883
Non-interest income - other 41,743 24,544 109,708 142,730
-------- --------- ---------- ----------
Non-interest expenses:
Salaries and employee benefits 127,724 126,102 350,750 349,580
Contribution Expense-ESOP 7,404 7,404 22,212 22,212
Legal and professional fees 34,715 70,247 74,354 100,134
Data processing fees 34,638 31,606 98,228 94,199
Federal insurance expense 7,854 11,374 25,675 27,081
Furniture and equipment expense 12,067 8,151 35,466 24,851
Occupancy expense 19,079 20,443 59,022 61,909
Other 39,274 108,045 115,010 208,175
-------- --------- ---------- ----------
282,755 383,372 780,717 888,141
-------- --------- ---------- ----------
Net income (loss) before income
taxes 47,885 (107,572) 194,312 44,472
Income tax expense 15,894 (36,200) 57,294 15,500
-------- --------- ---------- ----------
Net income (loss) $ 31,991 $ (71,372) $ 137,018 $ 28,972
======== ========= ========== ==========
Earnings per share (Note 3):
Basic and diluted $ 0.11 $ (0.21) $ 0.45 $ 0.09
Weighted average shares outstanding 292,964 339,081 303,386 339,081
See accompanying notes to consolidated financial statements.
4
NORTH ARKANSAS BANCSHARES, INC.
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2000 and 1999
(Unaudited)
Nine Months Ended
March 31,
---------------------
2000 1999
------ ------
Cash flow from operating activities:
Net income $ 137,018 $ 28,972
Adjustments to reconcile net income to
net cash provided by operating activities:
MRP Expense 9,364 11,060
Depreciation and amortization 46,382 48,995
Provision for loan loss 9,920 7,887
Writedown of real estate owned -- 50,000
Gain on sale of building -- (25,221)
Writedown of land -- 54,988
FHLB stock dividends (19,100) (14,815)
Net premium amortization on investments 25,666 24,496
Decrease in interest receivable 24,496 31,407
Decrease in other assets 7,071 144,888
(Decrease) increase in other liabilities (69,629) 61,827
----------- -----------
Net cash provided by operating
activities 171,188 424,484
----------- -----------
Cash flow from investing activities:
Purchase of held to maturity ("HTM") securities -- (8,362,078)
Proceeds from maturities/principal repayments
of HTM securities 1,043,019 5,922,763
Net decrease (increase) in loans receivable 1,342,302 (1,657,772)
Net decrease (increase) in certificates of deposit
with other financial institutions 500,000 (308,000)
Sale of office properties and equipment -- 69,779
Purchase of office properties and equipment (7,050) (5,767)
----------- -----------
Net cash provided (used) in investing
activities 2,878,271 (4,341,075)
----------- -----------
Cash flows from financing activities:
Repurchase of common stock (199,645) (424,679)
Net (decrease) increase in deposits (2,768,477) 392,414
Net increase in Federal Home Loan Bank
advances 285,694 2,468,254
----------- -----------
Net cash provided (used) by financing
activities (2,682,428) 2,435,989
---------- -----------
Net increase (decrease) in cash and amounts due
from banks 367,031 (1,480,602)
Cash and amounts due from banks at beginning of period 307,907 2,094,104
----------- -----------
Cash and amounts due from banks at end of period $ 674,938 $ 613,502
=========== ===========
Supplemental disclosures of cash flow information:
Noncash investing and financing activities:
Transfer from real estate acquired through
foreclosure -- 8,518
Cash paid during the period:
Interest on deposits 1,162,574 1,369,716
Income taxes 29,353 25,925
See accompanying notes to consolidated financial statements.
5
NORTH ARKANSAS BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 1 - NORTH ARKANSAS BANCSHARES, INC.
North Arkansas Bancshares, Inc. (the "Company") was incorporated
under the laws of the State of Tennessee for the purpose of
becoming the holding company of Newport Federal Savings Bank
(the "Bank") in connection with the Bank's conversion from a
federally chartered mutual savings bank to a federally chartered
capital stock savings bank. On November 12, 1997, the Company
commenced a subscription offering of its shares in connection
with the Bank's conversion. The Company's offering and the
Bank's conversion closed on December 18, 1997. A total of
370,300 shares were sold at $10.00 per share.
NOTE 2 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited financial statements (except for the
statement of financial condition at June 30, 1999, which is
audited) have been prepared in accordance with generally
accepted accounting principles for interim financial statements
and with the instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position, results of operations, and cash
flows for the interim periods presented have been included. The
financial statements of the Company are presented on a
consolidated basis with those of the Bank. The account balances
include only the accounts and operations of the Bank prior to
December 18, 1997. The results of operations for the six
months ended December 31, 1999 are not necessarily
indicative of the results expected for the full year.
NOTE 3 - EARNINGS PER SHARE
Earnings per share have been calculated in accordance with
Financial Accounting Standards Board Statement No.128, "Earnings
Per Share," and Statement of Position 93-6, "Employers'
Accounting for Employee Stock Ownership Plans." For purposes of
this computation, the number of shares of common stock purchased
by the employee stock ownership plan (the "ESOP") which have not
been allocated to participant's accounts are not assumed to be
outstanding. As of March 31, 2000, 5,924 of the 29,624 shares
of common stock held by the ESOP had been allocated to
participants' accounts. The weighted average number of shares
used for basic and diluted earnings per share for the three and
nine months ended March 31, 2000 were 292,964 and 303,386
shares, respectively.
NOTE 4 - PLAN OF CONVERSION
On May 29, 1997, the Bank's Board of Directors formally approved
a plan ("Plan") to convert from a federally chartered mutual
savings bank to a federally chartered stock savings bank subject
to approval by the Bank's members and the Office of Thrift
Supervision. The Plan called for the common stock of the Bank
to be purchased by the Company and the common stock of the
Company to be offered to various parties in a subscription
offering at a price based upon an independent appraisal of the
6
Bank. All requisite approvals were obtained and the conversion
and the Company's offering were consummated effective December
18, 1997.
Upon consummation of the conversion, the Bank established a
liquidation account in an amount equal to its retained earnings
as reflected in the latest statement of financial condition used
in the final conversion prospectus. The liquidation account
will be maintained for the benefit of certain depositors of the
Bank who continue to maintain their deposit accounts in the Bank
after conversion. In the event of a complete liquidation of the
Bank, such depositors will be entitled to receive a distribution
from the liquidation account before any liquidation may be made
with respect to the common stock.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND JUNE
30, 1999
The Company's total assets at March 31, 2000 were $45.4
million, a decrease of $2.6 million, or 5.43%, from June 30,
1999's level of $48.0 million. The decrease in assets was due
primarily to a $1.4 million, or 4.58%, decrease in net loans
receivable, a $1.0 million, or 7.48%, decrease in investment
securities classified as held-to-maturity and a $500,000, or
29.45%, decrease in certificates of deposit with other financial
institutions. These decreases were partially offset by a
$367,000, or 119.20%, increase in cash and cash equivalents.
Net loans at March 31, 2000 amounted to $28.1 million, a
decrease of $1.4 million, or 4.58%, from $29.5 million at June
30, 1999. The decrease was attributable to slower than normal
loan originations coupled with several large loan payoffs.
During the nine months ended March 31, 2000, the Bank originated
$4.0 million in new loans consisting of $2.8 million in one-to
four-family mortgage loans and $1.2 million in consumer loans.
The decrease in the investment securities portfolio reflects
maturities and principal repayments on such investments during
the period. The decreased balance of certificates of deposit
with other institutions reflects the Company's decision not to
renew certain certificates upon maturity due to the Company's
higher than normal cash needs as a result of a decrease in
deposits.
Total deposits at March 31, 2000 were $31.9 million, a
decrease of $2.8 million from June 30, 1999's level of $34.7
million. The decrease was primarily attributable to a decrease
in certificate of deposit accounts. Deposits in checking and
other transactional accounts increased during the period.
Federal Home Loan Bank advances at March 31, 2000 totaled $8.3
million, up from $8.1 million at June 30, 1999. Rather than
attempt to match the rates offered on certificates of deposit by
some competitors, the Bank has opted to use FHLB advances as a
source of short term funding. In the current interest rate
environment, these advances are a lower cost source of funds
than certificates of deposit. Total stockholders' equity at
March 31, 2000 amounted to $4.9 million, a decrease of $53,000
or 1.08% from $4.9 million at June 30, 1999. During the three
months ended March 31, 2000, the Company repurchased 24,200
shares in the open market at a total cost of $199,645 which
accounted for the reduction.
8
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH
31, 2000 AND 1999
Net income for the three months ended March 31, 2000 was
$32,000 as compared to a net loss of $71,000 for the three month
period ended March 31, 1999, for an increase of $103,000. The
increase was primarily attributable to a reduction in non-
interest expenses and, to a lesser extent, an increase in net
interest income and non-interest income. For the nine months
ended March 31, 2000, net income amounted to $137,000, an
increase of $108,000 or 372.93% from net income for the nine
months ended March 31, 1999 of $29,000. The increased level of
income for the current period as compared to the nine months
ended March 31, 1999 was primarily due to growth in net interest
income and a reduction in non-interest expense, partially offset
by a decreased level of non-interest income.
Net interest income during the three months ended March 31,
2000 increased by $38,000, or 14.86%, as compared to the same
period in 1999 due mainly to a $49,000 decrease in interest
expense on deposit accounts which was attributable to a decrease
in the average balance of deposits during the period. In recent
months, the Bank has experienced an outflow of certificate of
deposit accounts due to its decision not to attempt to match
certificate rates offered by some competitors. Deposits in
checking and other transactional accounts increased during the
period however. Interest expense on these types of deposit
accounts is lower than with certificate of deposit accounts. In
addition, the Bank has replaced the certificates of deposit with
FHLB advances which can be obtained on a short term basis at a
lower cost than certificates. As a result, interest expense
from FHLB borrowings rose by $23,000, or 25.64%, from $91,000
for the three months ended March 31, 1999 to $115,000 for the
three months ended March 31, 2000. Overall, total interest
expense decreased by $25,000 to $484,000 for the three months
ended March 31, 2000 as compared to $510,000 for the three
months ended March 31, 1999. Total interest income was
comparable for the periods increasing by $12,000 to $775,000 for
the three months ended March 31, 2000 as compared to $763,000
for the three months ended March 31, 1999 with the increase
attributable to an improved yield on the Bank's loan portfolio.
For the nine months ended March 31, 2000, net interest
income amounted to $875,000 as compared to $798,000 for the nine
months ended March 31, 1999 with the $77,000 increase
attributable to the combined effects of an increase in interest
on loans and a reduction in interest expense on deposit
accounts, offset by a decrease in interest income from mortgage-
backed securities and deposits in other financial institutions
due to a decrease in the balance of these types of investments.
Total interest income for the nine months ended March 31, 2000
was $2.4 million, an increase of $55,000 as compared to the same
period in fiscal year 1999. Interest income from loans rose by
$127,000 to $1.7 million for the nine months ended March 31,
2000 up from $1.5 million for the nine months ended March 31,
1999 with the increase attributable to an improved yield on the
Bank's loan portfolio. Total interest expense decreased by
$22,000 in the current period to $1.5 million. Interest on FHLB
advances accounted for a larger percentage of total interest
expense for the nine months ended March 31, 2000 as compared to
the first three quarters of the prior fiscal year due to the
combined effects of a reduction in total deposits and an
increased usage of FHLB advances for short term funding
requirements.
A provision for loan losses is charged to earnings to bring
the total allowance for loan losses to a level considered
appropriate by management based on historical experience, the
volume and type of lending conducted by the Bank, the status of
past due principal and interest payments, general economic
conditions, particularly as such conditions relate to the Bank's
market area and other factors related to the collectibility of
the Bank's loan portfolio. As a result of such analysis,
9
management recorded a $2,000 provision for loan losses during
the three months ended March 31, 2000 and 1999. During the
three months ended March 31, 2000, charge-offs totaled $1,000.
For the nine months ended March 31, 2000, a provision for loan
losses of $10,000 was made as compared to $8,000 for the nine
months ended March 31, 1999. While management believes that the
total allowance for loans losses is adequate, there can be no
assurance that the allowance for loan losses will be adequate to
cover losses on nonperforming assets in the future.
Non-interest income which consists mainly of deposit and
loan fees amounted to $42,000 for the three months ended March
31, 2000 as compared to $25,000 for the three months ended March
31, 1999. The $17,000 increase resulted from increased checking
account fees and safe deposit fees. Non-interest income for the
nine months ended March 31, 2000 amounted to $110,000, a
decrease of $33,000 from the same period in 1999. The 1999
period had included a $25,000 gain on the sale of a piece of
real estate that had formerly been the Bank's main office. No
similar gain was recognized during the 2000 period.
Total non-interest expense for the three months ended March
31, 2000 decreased by $101,000 to $283,000 from $383,000 for the
three months ended March 31, 1999 due primarily to a reduction
in other non-interest expenses and a $36,000 reduction in legal
and professional fees. Other non-interest expenses amounted to
$39,000 for the three months ended March 31, 2000 as compared to
$108,000 for the three months ended March 31, 1999 for a
decrease of $69,000. The third quarter of fiscal year 1999 had
included certain charges related to real estate properties owned
by the Bank. The Bank has a $625,000 participation interest in
a loan secured by a hotel located in Oklahoma. In early 1998,
the lead lender accepted a deed in lieu of foreclosure. At such
time, based on an updated appraisal of the property, the Bank
wrote down its interest to $536,000 and a reserve of $107,000
was established. During the third quarter of fiscal 1999, an
offer to purchase the property was accepted at a price below the
then-carrying value of the property. Such offer subsequently
fell through. However, the Bank believed it appropriate to
reduce its carrying value to the offer price which resulted in a
writedown of $50,000. In addition, during the third quarter of
fiscal 1999, the Bank accepted an offer to purchase a lot the
Bank owned at a price below its then-carrying value. Although
such purchase was ultimately not consummated, the Bank reduced
its carrying value to the offer price to reflect the market
value. Such reduction in value amounted to $55,000. For the
nine months ended March 31, 2000, non-interest expenses totaled
$781,000, as compared to $888,000 for the nine months ended
March 31, 1999, a decrease of $107,000. The decrease was
attributable to the absence of the aforementioned writedowns and
a $26,000 reduction in legal and professional fees.
The Company's income tax expense for the three months ended
March 31, 2000 amounted to $16,000. During the same period in
1999, a net tax benefit of $36,000 was recognized. For the nine
months ended March 31, 2000, a provision for income taxes of
$57,000 was made as compared to $16,000 for the same period in
1999. The increased provisions in the 2000 periods were due to
increased levels of pre-tax income, composition of the income
base, the amount of tax-exempt income and non-deductible
expenses.
10
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
varies from time to time depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and
short-term borrowings. The required ratio at March 31, 2000
was 4%. For the month ended March 31, 2000 the Bank was in
compliance. As a result of the conversion, the Bank's liquidity
has increased due to the additional funds it received.
The Bank's primary sources of funds are deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, funds provided from
operations and advances from the FHLB of Dallas. While
scheduled repayments of loans and mortgage-backed securities and
maturities of investment securities are predictable sources of
funds, deposit flows and loan prepayments are greatly influenced
by the general level of interest rates, economic conditions and
competition. The Bank uses its liquidity resources principally
to fund existing and future loan commitments, to fund maturing
certificates of deposit and demand deposit withdrawals, to
invest in other interest-earning assets, to maintain liquidity,
and to meet operating expenses.
At March 31, 2000, the Bank was in compliance with
all applicable regulatory capital requirements with total core
and tangible capital of $4.3 million (9.43% of adjusted total
assets) and total risk-based capital of $4.4 million (20.98% of
risk-weighted assets).
11
FINANCIAL MODERNIZATION
On November 12, 1999, President Clinton signed into law
legislation which could have a far-reaching impact on the
financial services industry. The Gramm-Leach-Bliley ("G-L-B")
Act authorizes affiliations between banking, securities and
insurance firms and authorizes bank holding companies and
national banks to engage in a variety of new financial
activities. Among the new activities that will be permitted to
bank holding companies are securities and insurance brokerage,
securities underwriting, insurance underwriting and merchant
banking. The Federal Reserve Board, in consultation with the
Department of Treasury, may approve additional financial
activities. National bank subsidiaries will be permitted to
engage in similar financial activities but only on an agency
basis unless they are one of the 50 largest banks in the
country. National bank subsidiaries will be prohibited from
insurance underwriting, real estate development and merchant
banking. The G-L-B Act, however, prohibits future affiliations
between existing unitary savings and loan holding companies,
like the Company, and firms which are engaged in commercial
activities and prohibits the formation of new unitary holding
companies.
The G-L-B Act imposes new requirements on financial
institutions with respect to customer privacy. The G-L-B Act
generally prohibits disclosure of customer information to non-
affiliated third parties unless the customer has been given the
opportunity to object and has not objected to such disclosure.
Financial institutions are further required to disclose their
privacy policies to customers annually. Financial institutions,
however, will be required to comply with state law if it is more
protective of customer privacy than the G-L-B Act. The G-L-B Act
directs the federal banking agencies, the National Credit Union
Administration, the Secretary of the Treasury, the Securities
and Exchange Commission and the Federal Trade Commission, after
consultation with the National Association of Insurance
Commissioners, to promulgate implementing regulations within six
months of enactment. The privacy provisions will become
effective six months thereafter.
The G-L-B Act contains significant revisions to the Federal
Home Loan Bank System. The G-L-B Act imposes new capital
requirements on the Federal Home Loan Banks and authorizes them
to issue two classes of stock with differing dividend rates and
redemption requirements. The G-L-B Act deletes the current
requirement that the Federal Home Loan Banks annually contribute
$300 million to pay interest on certain government obligations
in favor of a 20% of net earnings formula. The G-L-B Act
expands the permissible uses of Federal Home Loan Bank advances
by community financial institutions (under $500 million in
assets) to include funding loans to small businesses, small
farms and small agri-businesses. The G-L-B Act makes membership
in the Federal Home Loan Bank voluntary for federal savings
associations.
The G-L-B Act contains a variety of other provisions
including a prohibition against ATM surcharges unless the
customer has first been provided notice of the imposition and
amount of the fee. The G-L-B Act reduces the frequency of
Community Reinvestment Act examinations for smaller institutions
and imposes certain reporting requirements on depository
institutions that make payments to non-governmental entities in
connection with the Community Reinvestment Act. The G-L-B Act
eliminates the SAIF special reserve and authorizes a federal
savings association that converts to a national or state bank
charter to continue to use the term "federal" in its name and to
retain any interstate branches.
The Company is unable to predict the impact of the G-L-B
Act on its operations at this time. Although the G-L-B Act
reduces the range of companies with which the Company may
affiliate, it may facilitate affiliations with companies in the
financial services industry.
12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 27 Financial Data Schedule (EDGAR only)
(b) Reports on Form 8-K.
On January 6, 2000, the Company filed a Current Report
on Form 8-K announcing the approval to repurchase
shares of common stock.
13
SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
NORTH ARKANSAS BANCSHARES, INC.
Date: May 12, 2000 By: /s/ Brad Snider
--------------------------------
Brad Snider
President, Chief Executive
Officer and Treasurer
(Duly Authorized and Principal
Financial Officer)