SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
POCAHONTAS BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
JANUARY 8, 2002
________________________________________________________________________________
[POCAHONTAS BANCORP, INC. LOGO]
January 7, 2002
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Pocahontas Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the
Company's main office, 1700 East Highland Drive, Jonesboro, Arkansas, at 1:00
p.m. (Arkansas time) on February 6, 2002.
The business to be conducted at the Annual Meeting includes (i) the election of
three directors to the Board of Directors of the Company; and (ii) the
ratification of the appointment of Deloitte & Touche, LLP as auditors for the
Company for the fiscal year ending September 30, 2002.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. The Board of Directors unanimously recommends a vote "FOR" each
matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Sincerely,
/s/ Dwayne Powell
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Dwayne Powell
President and Chief Executive Officer
POCAHONTAS BANCORP, INC.
1700 East Highland Drive
Jonesboro, Arkansas 72403
(870) 802-5900
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 6, 2002
Notice is hereby given that the Annual Meeting of Stockholders of
Pocahontas Bancorp, Inc. (the "Company") will be held at the Company's main
office, 1700 East Highland Drive, Jonesboro, Arkansas, on February 6, 2002 at
1:00 p.m. Arkansas time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors to the Board of Directors of the
Company;
2. The ratification of the appointment of Deloitte & Touche, LLP as
auditors for the Company for the fiscal year ending September 30,
2002; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on December 14, 2001
are the stockholders entitled to vote at the Meeting, and any adjournments
thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY
TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH THE SECRETARY
OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER
DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE HIS OR HER PROXY AND
VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOU ARE A
STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE
MEETING.
By Order of the Board of Directors
/s/ James A. Edington
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James A. Edington
Secretary
Jonesboro, Arkansas
January 7, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
POCAHONTAS BANCORP, INC.
1700 East Highland Drive
Jonesboro, Arkansas 72403
(870) 802-5900
ANNUAL MEETING OF STOCKHOLDERS
February 6, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Pocahontas Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of Pocahontas
Bancorp, Inc. (the "Meeting"), which will be held at the Company's main office,
1700 East Highland Drive, Jonesboro, Arkansas, on February 6, 2002, at 1:00
p.m., Arkansas Time, and all adjournments of the Meeting. The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are first
being mailed to stockholders on or about January 7, 2002.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon.
Please sign and return your proxy to the Company in order for your vote to b e
counted. Proxies which are signed, but contain no instructions for voting, will
be voted "FOR" the proposals set forth in this Proxy Statement for consideration
at the Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, James A. Edington, at the address of the Company shown
above, or by delivering a duly executed proxy bearing a later date. The presence
at the Meeting of any stockholder who has given a proxy shall not revoke such
proxy unless the stockholder delivers his or her ballot in person at the Meeting
or delivers a written revocation to the Secretary of the Company prior to the
voting of such proxy.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. Proxies may also be solicited personally or by mail,
telephone or telegraph by the Company's directors, officers and employees,
without additional compensation therefor. The Company will also request persons,
firms and corporations holding shares in their names, or in the names of their
nominees which are beneficially owned by others, to send proxy materials to and
to obtain proxies from such beneficial owners, and will reimburse such holders
for their reasonable expenses in doing so.
VOTING SECURITIES AND METHOD OF COUNTING VOTES
Holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock") as of the close of business on December 14, 2001 (the
"Record Date"), are entitled to one vote for each share then held. As of the
Record Date, there were 4,468,860 shares issued and outstanding. The presence in
person or by proxy of a majority of the outstanding shares of Common Stock
entitled to vote is necessary to constitute a quorum at the Meeting. Abstentions
and broker non-votes are counted for purposes of determining a quorum. In the
event there are not sufficient votes for a quorum, or to approve or ratify any
matter being presented at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.
Under Delaware law and the Company's Certificate of Incorporation and
Bylaws, directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which the authority to vote for the
nominees being proposed is withheld. That means that the three persons who
receive the greatest number of votes of the holders of Common Stock represented
in person or by proxy at the Meeting will be elected directors of the Company.
Under Delaware law and the Company's Certificate of Incorporation and Bylaws,
the affirmative vote of holders of a majority of the total votes present at the
Meeting in person or by proxy is required to ratify the appointment of Deloitte
& Touche, LLP as the Company's auditors. Abstentions and broker non-votes will
not be counted as votes in favor of the proposal to ratify the appointment of
Deloitte & Touche, LLP as the Company's auditors.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary or desirable to implement the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock in
excess of the Limit supply information to the Company to enable the Board of
Directors to implement and apply the Limit.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons and groups who beneficially own in excess of 5% of the Common Stock
are required to file certain reports with the Securities and Exchange Commission
(the "SEC") regarding such ownership pursuant to the Securities Exchange Act of
1934 (the "Exchange Act").
The following table sets forth, as of the Record Date, the shares of Common
Stock beneficially owned by the Company's directors and executive officers as a
group, as well as each person who was the beneficial owner of more than 5% of
the outstanding shares of Common Stock as of the Record Date.
Amount of Shares
Owned and Nature Percent of Shares
of Beneficial of Common Stock
Holder Ownership (1) Outstanding (4)
All Directors and Executive Officers
as a Group (7 persons) 919,465 20.6%
First Community Bank
401(k) Savings and Employee Stock
Ownership Plan (2)(3)
1700 East Highland Drive
Jonesboro, Arkansas 72403 405,029 9.1
Tontine Financial Partners, L.P.
Tontine Partners, L.P.
Tontine Management, L.L.C.
Jeffrey L. Gendell
200 Park Avenue, Suite 3900
New York, New York 10166 350,300 7.8
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(1) Based solely upon the filings made pursuant to the Exchange Act and
information furnished by the respective persons. In accordance with Rule
13d-3 under the Exchange Act, a person is deemed to be the beneficial owner
for purposes of this table, of any shares of Common Stock if he has sole or
shared voting or investment power with respect to such shares, or has a
right to acquire beneficial ownership at any time within 60 days from the
date as to which beneficial ownership is being determined. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Includes all shares held directly as well as shares owned by
spouses and minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or shared
voting or investment power.
(2) Under the First Community Bank 401(k) Savings and Employee Stock Ownership
Plan (the "ESOP"), shares allocated to participants' accounts are voted in
accordance with the participants' directions. Unallocated shares held by
the ESOP are voted by the ESOP Trustee in the manner calculated to most
accurately reflect the instructions it has received from the participants
regarding the allocated shares. As of the Record Date, 367,717 shares of
Common Stock were allocated under the ESOP.
(3) Excludes 43,274 shares of Common Stock or 8.5% of the shares of Common
Stock outstanding, owned by the ESOP for the benefit of the named executive
officers of the Company.
(4) Total Common Stock outstanding includes shares that may be acquired
pursuant to presently exercisable options.
2
PROPOSAL I--ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven members. There
currently is one vacancy on the Board of Directors. The Company's bylaws provide
that approximately one-third of the Directors are to be elected annually.
Directors of the Company are generally elected to serve for a three-year period
or until their respective successors shall have been elected and shall qualify.
Three directors will be elected at the Meeting. The Board of Directors has
nominated to serve as directors James A. Edington (for a term of three years),
Robert Rainwater (for a term of three years) and A.J. Baltz (for a term of two
years). If elected at the Meeting, each director will serve for the respective
period specified and until his successor shall have been elected and shall
qualify.
The table below sets forth certain information regarding members of the
Company's Board of Directors, including the terms of office of Board members. It
is intended that the proxies solicited on behalf of the Board of Directors
(other than proxies in which the vote is withheld as to a nominee) will be voted
at the Meeting for the election of the nominees identified below. The proxies
solicited on behalf of the Board of Directors cannot be voted for a greater
number of persons than the three named nominees. If a nominee is unable to
serve, the shares represented by all such proxies will be voted for the election
of such substitute as the Board of Directors may recommend. At this time, the
Board of Directors knows of no reason why the nominees might be unable to serve,
if elected. There are no arrangements or understanding between the nominees and
any other person pursuant to which such nominees were selected.
Shares of
Common Stock
Positions Beneficially
Held in the Served Current Term Owned on Percent
Name (1) Age (4) Company Since (2) to Expire Record Date (3) of Class
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NOMINEES
A.J. Baltz 74 Director 2001 2002 190,952 4.3%
Robert Rainwater 66 Director 1981 2002 42,524 *
James A. Edington 51 Director 1994 2002 229,611 5.1
DIRECTORS CONTINUING IN OFFICE
Ralph P. Baltz 54 Chairman 1986 2003 193,094 4.3
Marcus Van Camp 53 Director 1990 2003 42,352 *
N. Ray Campbell 51 Director 1992 2003 54,299 1.2
Dwayne Powell 37 President, Chief 2000 2004 166,633 3.7
Executive Officer
and Director
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(1) The mailing address for each person listed is 1700 East Highland Drive,
Jonesboro, Arkansas 72401. Each of the persons listed is also a director of
Pocahontas Federal Savings and Loan Association (the "Bank"), the Company's
wholly owned subsidiary.
(2) Reflects initial appointment to the Board of Directors of the Company's
mutual predecessor for directors who have served since earlier than 1994.
(3) See definition of "beneficial ownership" in the table "Security Ownership
of Certain Beneficial Owners and Management."
(4) As of December 15, 2001.
* Does not exceed 1%.
Board of Directors
James A. Edington was President and Chief Executive Officer of the Company
and the Bank from April 1999 to September 2001. Prior to that he served the Bank
and the Company as Executive Vice President. He has been the Bank's compliance
officer, security officer, secretary and treasurer. Mr. Edington has been
employed in executive roles with the Bank since 1983 and currently serves as a
Credit Analyst with the Bank.
3
Ralph P. Baltz has been Chairman of the Board of the Bank since January
1997 and of the Company since its formation. Mr. Baltz is a general contractor
and residential developer and is the President and owner/operator of Tri-County
Sand and Gravel, Inc. Mr. Baltz is a cousin of a A.J. Baltz, a director of the
Bank and the Company.
Marcus Van Camp is the Superintendent of Schools at Pocahontas Public
Schools, and has been employed by such schools for 25 years.
N. Ray Campbell is the owner and operator of Big Valley Trailer
Manufacturing. Prior to this, Mr. Campbell was the Plant Manager of Waterloo
Industries, an industrial firm located in Pocahontas, Arkansas.
Robert Rainwater is semi-retired. Prior to his retirement, Mr. Rainwater
was the owner of Sexton Pharmacy in Walnut Ridge, Arkansas.
Dwayne Powell, CPA, was appointed President and Chief Executive Officer of
the Company and the Bank in September 2001. Prior to this appointment, Mr.
Powell had served as Chief Financial Officer of the Bank since October 1996 and
of the Company since its formation. Prior to that, Mr. Powell was an Audit
Manager for Deloitte & Touche LLP, primarily serving financial institution
clients.
A.J. Baltz is the owner of Baltz Feed Store in Pocahontas, Arkansas. Mr.
Baltz also owns and leases commercial properties in the Pocahontas area. Mr.
Baltz is a cousin of Ralph P. Baltz, Chairman of the Board of the Bank and the
Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than 10% of the Common Stock, to file reports of ownership and changes
in ownership with the Securities and Exchange Commission ("SEC"). Officers,
directors and greater than 10% stockholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they filed. The
Company knows of no person who owns 10% or more of the Common Stock. Based
solely on the review of the copies of such forms furnished to the Company, or
written representations from its officers and directors, the Company believes
that with respect to the year ended September 30, 2001, the Company's officers
and directors satisfied the reporting requirements promulgated under Section
16(a) of the 1934 Act.
Meetings and Committees of the Board of Directors
The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the fiscal year
ended September 30, 2001 the Board of Directors held 12 regular and two special
meetings. During the fiscal year ended September 30, 2001 no director attended
fewer than 75 percent of the total meetings of the Board of Directors and
committees on which such director served.
The Audit Committee of the Company consists of all the non-employee
Directors of the Board of Directors. The Audit Committee met four times during
the fiscal year ended September 30, 2001. The Audit Committee normally meets on
a quarterly basis. The Audit Committee of the Board of Directors of the Company
serves as the representative of the Board for general oversight of the Company's
financial accounting and reporting process, systems of internal controls
regarding finance, accounting and legal compliance and monitoring the
independence and performance of the Company's independent auditors and internal
auditing department. The Company's management has primary responsibility for
preparing the Company's financial statements and the Company's financial
reporting process. The Company's independent accountants are responsible for
expressing an opinion on the conformity of the Company's financial statements to
generally accepted accounting principles.
The Nominating Committee consists of Directors Robert Rainwater, Marcus Van
Camp and James A. Edington, and meets annually to present officer and Director
candidates to the Company. The Nominating Committee met once during the fiscal
year ended September 30, 2001.
The Compensation and Benefits Committee consists of all of the non-employee
Directors of the Board of Directors. The committee met once during the fiscal
year ended September 30, 2001. The committee meets to review the performance of
officers and employees and determines compensation and benefits programs and
adjustments.
4
The Dividend Committee consists of the entire Board of Directors. The
Dividend Committee meets at least quarterly to recommend the amount and type of
dividend to be paid by the Company. The Dividend Committee met four times during
the fiscal year ended September 30, 2001.
Directors' Compensation
The Company's directors received no separate fees during the fiscal year
ended September 30, 2001. However, each director of the Company currently serves
as a director of the Bank. During the fiscal year ended September 30, 2001,
members of the Board of Directors of the Bank each received fees of $1,750 per
month. In addition, the Chairman of the Board received an additional $625 per
month during the fiscal year ended September 30, 2001. No additional
compensation or fees are received for serving as directors of the Bank.
Executive Compensation
The following table sets forth for the years ended September 30, 2001, 2000
and 1999, certain information as to the total remuneration paid by the Company
to the Chief Executive Officer (the "Named Executive Officer"). No other
executive officer received salary and bonuses exceeding $100,000 in the year
ended September 30, 2001.
Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
------------------------------------ ----------------------------------
Year Other Restricted Options/ All
Name and Ended Annual Com- Stock SARS LTIP Other
Principal Position Sept. 30, Salary (1) Bonus pensation Awards (3) (#) Payouts Compensation (2)
- ---------------------- --------- ---------- ------ ------------ ----------- -------- --------- ----------------
Dwayne Powell . . . . . 2001 $169,250 $ -- $ -- $ -- -- -- $34,667
President and Chief 2000 153,500 -- -- -- -- -- 27,668
Executive Officer 1999 150,175 -- -- 321,354 80,000 -- 29,387
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(1) Includes Board of Director and committee fees.
(2) Consists of payments made pursuant to the Bank's Profit Sharing Plan. See
"--Executive Compensation." Also includes the Bank's contributions or
allocations (but not earnings) pursuant to the Bank's ESOP.
(3) Represents awards made pursuant to the Company's Recognition and Retention
Plan for Employees, which awards vest in five equal annual installments
commencing on January 3, 2000. Dividends on such shares accrue and are paid
to the recipient when the shares are granted. The value of such shares was
determined by multiplying the number of shares awarded by the price at
which the shares of common stock were sold.
(4) Mr. Powell was appointed President and Chief Executive Officer in September
2001 upon the retirement of James A. Edington.
Compensation Committee Interlocks. During the fiscal year ended September
30, 2001, the Company had no "interlocking" relationships in which (i) any
executive officer is a member of the board of directors of another entity, one
of whose executive officers is a member of the Company's Board of Directors, or
(ii) any executive officer is a member of the compensation committee of another
entity, one of whose executive officers is a member of the Company's Board of
Directors.
Employment Agreements . The Bank has entered into an employment agreement
with Dwayne Powell, its President and Chief Executive Officer. The employment
agreement provides for a term of three years. Commencing on the first
anniversary date and continuing on each anniversary date thereafter, the Board
of Directors may extend the agreement for an additional year such that the
remaining term shall be up to three years unless written notice of nonrenewal is
given by the Board of Directors after conducting a performance evaluation. The
agreement provides that the base salary of the executive will be reviewed
annually. In addition to the base salary, the agreement provides that the
executive is to receive all benefits provided to permanent full time employees
of the Bank, including among other things, disability pay, participation in
stock benefit plans and other fringe benefits applicable to executive personnel.
The agreement permits the Bank to terminate the executive's employment for cause
at any time. In the event the Bank chooses to terminate the executive's
employment for reasons other than for cause, or upon the termination of the
executive's employment for reasons other than a change in control, as defined,
or in the event of the executive's resignation from the Bank upon (i) failure to
be reelected to his current office, (ii) a material change in his functions,
duties or responsibilities, (iii) relocation of his principal place of
employment, (iv) the liquidation or dissolution of the Bank or the Company, or
(v) a breach of the agreement by the Bank, the executive, or in the event of
death, his beneficiaries, would be entitled to receive an amount equal to the
greater of the remaining payments, including base salary, bonuses and other
payments due under the remaining term of the agreement or three times the
average of the executive's base salary, including bonuses and other cash
compensation paid, and the amount of any benefits received pursuant to any
employee benefit plans maintained by the Bank.
5
If termination, voluntary or involuntary, follows a change in control of
the Bank, as defined in the agreement, the executive or, in the event of his
death, his beneficiaries, would be entitled to a payment equal to the greater of
(i) the payments due under the remaining term of the agreement or (ii) 2.99
times his average annual compensation over the five years preceding termination.
The Bank would also continue the executive's life, health, and disability
coverage for the remaining unexpired term of the agreement to the extent allowed
by the plan or policies maintained by the Bank from time to time.
The employment agreement provides that for a period of one year following
termination, the executive agrees not to compete with the Bank in any city, town
or county in which the Bank maintains an office or has filed an application to
establish an office.
Upon the retirement in September 2001 of James A. Edington as President and
Chief Executive Officer of the Company and of the Bank, Mr. Edington's
employment agreement was terminated. In consideration for such termination, Mr.
Edington received a cash payment of $1.6 million, payable in monthly
installments. Mr. Edington also released the Bank and the Company from all
further benefits accruals or contributions under his Supplemental Executive
Retirement Plan (discussed below), provided that contributions previously made
and transferred to his grantor trust are his sole property.
1994 Stock Option Plan for Outside Directors. The Bank adopted the 1994
Stock Option Plan for Outside Directors of the Bank (the "1994 Directors' Plan")
in April 1994, and such plan was subsequently approved by the Bank's
stockholders. At that time, non-statutory stock options to purchase 20,643
shares were granted to the outside directors of the Bank. The 1994 Directors'
Plan reserved 4,274 options for future grant. Any person who became a
non-employee director subsequent to the effective date of the 1994 Directors'
Plan was entitled to receive options for 1,424 shares of Bank common stock to
the extent options were available. Options granted in 1994 vested ratably at 20%
per year commencing on the first September 30th after the effective date of the
1994 Directors' Plan. The exercise price of the options was equal to the fair
market value of the shares of Bank Common Stock underlying such option at the
time the option was granted, or $10.00 per share of Bank Common Stock for
options granted in conjunction with the Bank's initial stock offering. All
options granted under the 1994 Directors' Plan were exercisable from time to
time in whole or in part, and expire upon the earlier of ten years following the
date of grant or three years following the date the optionee ceases to be a
director. No options were granted under the 1994 Directors' Plan during the
fiscal year ended September 30, 2001. On March 31, 1998, each share of Common
Stock of the Bank, including shares underlying the options granted in the 1994
Directors' Plan, was converted (the "Conversion") into 4.0245 shares of Common
Stock of the Company as part of the mutual-to-stock conversion of Pocahontas
Federal Mutual Holding Company.
Pocahontas Bancorp, Inc. Stock Option Plan. In October 1998, the Company
adopted the Pocahontas Bancorp, Inc. Stock Option Plan (the "Stock Option Plan")
for directors, officers and employees of the Bank and its affiliates and such
plan was subsequently approved by the Company's stockholders. The Stock Option
Plan is administered by a committee of non-employee directors. The Stock Option
Plan authorizes the grant of incentive stock options within the meaning of
Section 422 of the Code, "non-statutory stock options" which do not qualify as
incentive stock options, certain "limited rights" exercisable only upon a change
in control of the Company or the Bank, "dividend equivalent rights" payable only
upon declaration of an extraordinary dividend and "reload options", which
provide an option to acquire shares of Common Stock equivalent to the shares
used to pay for an option or deducted from a distribution to satisfy income tax
withholding.
On the effective date of the Stock Option Plan, incentive stock options for
277,075 shares of Company Common Stock were granted to employees and officers
and non-statutory stock options for 80,000 shares were granted to outside
directors. No shares were reserved for future grant. Options granted in 1998
vest ratably at 20% per year commencing on October 23, 1999. The exercise price
of the options is equal to the fair market value of the shares of Company Common
Stock underlying such options on the date of grant. Incentive stock options
granted under the Stock Option Plan are exercisable in whole or in part and
expire upon the earlier of ten years following the date of grant or three years
following the date the optionee ceases to be an officer or employee.
Non-statutory options expire upon the earlier of ten years and one day following
the date of grant or three years following the date the optionee ceases to be a
director. In January 2000, the stockholders of the Company approved an amendment
to the Stock Option Plan providing for accelerated vesting of awards upon a
change in control of the Company or upon retirement, as defined in such plan.
Pocahontas Bancorp, Inc. Recognition and Retention Plan. In October 1998,
the Company adopted the Pocahontas Bancorp, Inc. Recognition and Retention Plan
(the "Recognition and Retention Plan"), which was subsequently approved by the
Company's stockholders. At the time of implementation of this plan, 142,830
shares of Company Common Stock were awarded to officers, directors and employees
of the Company.
6
A Committee of the Board of Directors of the Company composed of two or
more non-employee directors of the Company administers the Recognition and
Retention Plan. Awards were granted in the form of shares of Company Common
Stock that were restricted by the terms of the Recognition and Retention Plan
("Restricted Stock"). Restricted Stock is nontransferable and nonassignable.
Participants in the Recognition and Retention Plan become vested in shares of
Company Common Stock covered by an award and all restrictions lapse at a rate of
20% per year commencing on January 3, 2000. Awards become fully vested (i.e.,
all restrictions lapse) upon termination of employment or cessation of service
due to death or disability; in January 2000, the stockholders of the Company
approved an amendment to the Recognition and Retention Plan providing for full
vesting of awards upon a change in control of the Company or upon retirement, as
defined in such plan. Upon termination of employment for any other reason,
unvested shares of Restricted Stock are forfeited. The holders of the Restricted
Stock have the right to vote such shares during the restricted period and
receive the cash and stock dividends with respect to the Restricted Stock when
declared and paid. The holders may not sell, assign, transfer, pledge or
otherwise encumber any of the Restricted Stock during the restricted period.
Director Plan. The Bank maintains a non-tax qualified Director Plan that
provides directors who serve on the Board of Directors until the age of 60 or,
in some cases, 65, with an annual benefit equal to a predetermined amount
ranging between $29,316 and $35,640 following the directors' termination of
service due to retirement, death, or after a change in control. Benefits are
payable monthly to the director, or in the case of his death, to his
beneficiary, over a period of twenty years. The Director Plan provides for a
$15,000 "burial benefit," which is designated for the payment of burial and/or
funeral expenses. In the event of a director's disability, the director will be
entitled to a disability benefit equal to the annuitized present value of his
accrued benefit payable monthly for twenty years. In addition, upon the
director's death following disability, the director's beneficiary will receive
an additional lump sum benefit equal to up to $600,000, reduced by all prior
contributions made to the Director Plan on behalf of the director.
The Bank and the Director Plan participants have each established an
irrevocable trust in connection with the Director Plan. These trusts will be
funded with contributions from the Bank for the purpose of providing the
benefits promised under the terms of the Director Plan. The assets of the trusts
established by the participants will be beneficially owned by the Director Plan
participants, who will recognize income as contributions are made to the trust.
Earnings on the trusts' assets are taxable to the participants. The trustee of
the trusts may invest the trusts' assets in the Company Common Stock and may
purchase life insurance on the lives of the participants with assets of the
trusts.
Director Emeritus Plan. The Bank currently has two former directors who
have been appointed "Directors Emeritus." Upon reaching age 70 with 10 years of
continuous service as a director, each current Director Emeritus was, upon
retirement from the Board of Directors, appointed a "Director Emeritus" in
exchange for performing consulting services for the Board of Directors. Under
the current plan, in consideration of his services, a Director Emeritus will
receive an annual fee of $18,000 for a ten year period (the "benefit period")
following the director's designation as a Director Emeritus. The Director
Emeritus Plan provides for survivor benefits payable to a designated beneficiary
in an amount equal to the annual fee for the remainder of the ten year period,
plus a $10,000 "burial benefit," which is designated for the payment of burial
and/or funeral expenses.
1994 Incentive Stock Option Plan. In April 1994, the Bank adopted the 1994
Incentive Stock Option Plan (the "Incentive Option Plan") for officers and
employees of the Bank and its affiliates, and such plan was subsequently
approved by the Bank's stockholders. The Incentive Option Plan is administered
by a committee of non-employee directors. The Incentive Option Plan authorizes
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"), "non-statutory options," which do
not qualify as incentive stock options, and certain "limited rights" exercisable
only upon a change in control of the Bank.
Incentive stock options (with limited rights) for 200,553 shares of Bank
Common Stock were granted to employees and officers contemporaneously with the
completion of the Bank's initial stock offering in April 1994 at an exercise
price of $10.00. At September 30, 2001 all stock options in the plan had been
exercised.
The following table sets forth certain information regarding the shares
acquired upon the exercise of options outstanding under the Company's stock
option plans, and the value realized during fiscal year 2001 by the Named
Executive Officer of the Company at September 30, 2001.
7
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Unexercised Value of Unexercised In-
Shares Options at The-Money Options at
Name Acquired Value Fiscal Year-End Fiscal Year-End
upon Realized -------------------------------------------------------
Exercise Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------
Dwayne Powell -- -- 48,000/32,000 $--/--
- ------------------------------------------------------------------------------------------------
401(k) Savings and Employee Stock Ownership Plan. The Bank merged its
Employee Stock Ownership Plan ("ESOP") and Profit Sharing Plan to form the
401(k) Savings and Employee Stock Ownership Plan (the "KSOP"), effective October
1, 1997, to enable participants to invest in Bank Common Stock with the pre-tax
deferral of their salary ("Elective Deferrals"). The KSOP is a tax-qualified
plan subject to the requirements of the Employee Retirement Income Security Act
of 1974 ("ERISA") and the Code. Employees with a year of service with the Bank
during which they worked at least 1,000 hours and who have attained age 21 are
eligible to participate in any ESOP, matching or discretionary contributions
under the plan. Any employee with one hour of service may participate in making
any Elective Deferrals.
The ESOP portion of the KSOP provides the plan with the ability to borrow
money for the purpose of purchasing Bank Common Stock. As part of the
Conversion, the ESOP portion of the KSOP borrowed funds from the Company and
used those funds to purchase a number of shares equal to 8% of the Common Stock
issued in the Conversion. Collateral for the loan was the Common Stock purchased
by the KSOP. Shares purchased with the ESOP loan are held in a suspense account
for allocation among participants' accounts as the loan is repaid. As the ESOP
loan is repaid from contributions the Bank makes to the ESOP portion of the
KSOP, shares are released from the suspense account in an amount proportional to
the repayment of the KSOP loan. The released shares are allocated among the ESOP
accounts of participants who have a 1000 hours of service for the current plan
year and are employed on the last day of the plan year, on the basis of
compensation in the year of allocation, up to an annual adjusted maximum level
of compensation. As part of the Conversion on March 31, 1998, each share of
common stock of the Bank, including shares in the KSOP, was converted into
4.0245 shares of Common Stock of the Company.
Participants may elect to defer up to 15% of their salary into the KSOP
("Elective Deferrals") . The Bank may, in its discretion, make discretionary
("Discretionary Contributions") and/or matching contributions ("Matching
Contributions") to the KSOP. Benefits in the ESOP, Discretionary Contributions
and Matching Contributions generally will become 100% vested after five years of
credited service. Employees are 100% vested in the Elective Deferral accounts
and rollover accounts at all times under the plan. Participants will be credited
for years of service with the Bank prior to the effective date of the plan.
Forfeitures of Matching and Discretionary Contributions will be used to reduce
such contributions in succeeding plan years; forfeitures of ESOP Contributions
are reallocated among remaining participating employees in the same proportion
as contributions. Benefits may be payable upon death, retirement, early
retirement, disability, or separation from service in a lump sum or, at the
election of the participant, in installments not to exceed five years. The
Bank's contributions to the KSOP are discretionary, subject to the ESOP loan
terms and tax law limits, so benefits payable under the KSOP cannot be
estimated.
The KSOP provides for loans to employees not to exceed 50% of their vested
Discretionary Contribution, Elective Deferral, Matching Contribution or Rollover
Account balances, or $50,000. Withdrawals are permitted only to the extent of
hardship (e.g., medical expenses), to purchase a primary residence, for limited
education expenses or any other condition or event as determined by the
Commissioner of the Internal Revenue Service from the vested portion of the
Discretionary Contribution, Elective Deferral, Matching Contribution or Rollover
Accounts.
A committee was appointed by the Board of Directors of the Bank to
administer the KSOP (the "KSOP Committee"). The KSOP Committee instructs the
trustee regarding investment of funds contributed to the KSOP. The KSOP trustee
is required to vote all allocated shares held in the KSOP in accordance with the
instructions of the participants; unallocated shares shall be voted in a manner
calculated to reflect most accurately the instructions the KSOP trustee has
received from participants regarding the allocated stock. If no shares have been
allocated, KSOP participants will be deemed to have one share of stock allocated
to his account for the sole purpose of providing the
8
trustee with voting instructions. Under ERISA, the Secretary of Labor is
authorized to bring an action against the KSOP trustee for the failure of the
KSOP trustee to comply with its fiduciary responsibilities. Such a suit could
seek to enjoin the KSOP trustee from violating its fiduciary responsibilities
and could result in the imposition of civil penalties or criminal penalties if
the breach is found to be willful.
Supplemental Executive Retirement Plan. The Bank has implemented a
non-qualified Supplemental Executive Retirement Plan ("SERP") to provide a
select group of management and highly compensated employees with additional
benefits following termination of employment due to retirement, death, after a
change in control or involuntary termination. The contribution made to the SERP
is intended to provide an actuarially determined annual benefit of $147,143 for
James A. Edington, and $214,286 for Dwayne Powell, payable monthly for 20 years.
In the event of the employee's disability, the employee will be entitled to a
disability benefit equal to the annuitized present value of his accrued benefit
payable monthly for twenty years. In addition, upon the employee's death
following disability, the employee's beneficiary will receive an additional lump
sum death benefit equal to $2.7 million and $2.6 million in the case of Messrs.
Edington and Powell, respectively, reduced by all prior contributions made to
the SERP on behalf of the participant. The SERPs also provide for a $15,000
"burial benefit," which is designated for the payment of burial and/or funeral
expenses.
The Bank and the SERP participants have each established an irrevocable
trust in connection with each SERP. These trusts will be funded with
contributions from the Bank for the purpose of providing the benefits promised
under the terms of the SERP. The assets of the trusts will be beneficially owned
by the SERP participants, who will recognize income as contributions are made to
the trusts. Earnings on the trust's assets are taxable to the participant. The
trustee of the trust may invest the trust's assets in the Company Common Stock
and may purchase life insurance on the life of the participant with assets of
the trust.
In fiscal 2001, the Company and the Bank entered into agreements with
directors Campbell, Van Camp and Rainwater providing for a cash payment to them
equal to the present value of the remaining contributions required to be made by
the Bank on behalf of such directors to their respective SERPs. In consideration
for this payment, the directors agreed that no further benefits accruals or
contributions would be made under such SERPs. Also in fiscal 2001, the Company
and the Bank entered into an agreement with director Ralph P. Baltz that reduced
the payout to his SERP on a change in control of the Bank or the Company to the
remaining annual contributions due to his SERP. Finally, in fiscal 2001, the
Company and the Bank entered into an agreement with director Dwayne Powell that
reduced the payouts due Mr. Powell in the event of a change in control of the
Company or the Bank to $2.35 million, less all prior contributions made to Mr.
Powell's SERP.
Audit Committee Report
Each member of the Audit Committee is "independent" as defined in the
listing standards of the National Association of Securities Dealers, Inc. The
Company's Board of Directors has adopted a written charter for the Audit
Committee, which is attached to this Proxy Statement as Appendix A.
In accordance with rules recently established by the SEC, the Audit
Committee has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing responsibilities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended September
30, 2001;
o Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61,Communications
with Audit Committees, as amended; and
o Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with
the independent auditors the independent auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2001 for filing with the Securities and Exchange
Commission.
9
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates this information by reference.
This report shall not otherwise be deemed filed under such acts.
This report has been provided by the Audit Committee:
Ralph P. Baltz
Marcus Van Camp
N. Ray Campbell
Robert Rainwater
A.J. Baltz
Report of the Compensation and Benefits Committee on Executive Compensation
Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to its Chief Executive Officer and other executive officers. The Compensation
and Benefits Committee annually reviews the performance of senior management and
approves changes to base compensation, bonuses and benefits for senior
management. It is intended that the executive compensation program will enable
the Company and the Bank to attract, develop and retain strong executive
officers who are capable of maximizing the Company's performance for the benefit
of the stockholders. The Committee has adopted a compensation strategy that
seeks to provide competitive compensation strongly aligned with the financial
performance of the Company and the Bank.
In evaluating changes to compensation, the Committee informally contacts
management of a number of peer institutions to ascertain compensation levels at
such institutions. While the Committee weighs a variety of different factors in
its deliberations, it has emphasized and will continue to emphasize earnings,
profitability and return on average assets as factors in setting the
compensation of the Chief Executive Officer. Other non-quantitative factors
considered by the Committee in fiscal 2001 included general management oversight
of the Company and the Bank, the quality of communications with the Board of
Directors, and productivity of employees. Finally, the Committee considered the
standing of the Bank with customers and the community, as evidenced by the level
of customer/community complaints and compliments. While each of the quantitative
and non-quantitative factors described was considered by the Committee, such
factors were not assigned a specific weighting in evaluating the performance of
the Chief Executive Officer.
After evaluating the foregoing factors, the Committee made no change to the
base salary of the Chief Executive Officer for fiscal year 2001.
This report has been provided by the Compensation and Benefits Committee.
A.J. Baltz Marcus Van Camp
Robert Rainwater N. Ray Campbell
Ralph P. Baltz
10
Stock Performance Graph
The Common Stock of the Company has traded only since March 31, 1998.
Following the close of trading on March 31, 1998, each share of common stock of
the Bank was converted into 4.0245 shares of Common Stock in connection with the
Conversion. The graph compares the cumulative total return including dividends
for the period ended on September 30, 2001, for the following: (a) the common
stock of the Bank (the predecessor of the Company) beginning with September 30,
1996, (b) stocks included in the Nasdaq Composite Index, beginning with the
close of trading on September 30, 1996, and (c) stocks included in the SNL
Thrift Index, beginning with the close of trading on September 30, 1996.
[GRAPHIC - CHART - PLOTTED POINTS LISTED BELOW]
Period Ended
Index 9/30/96 9/30/97 9/30/98 9/30/99 9/30/00 9/30/01
Pocahontas Bancorp Inc. 100.00 135.99 291.72 210.58 269.46 291.91
NASDAQ - Total U.S. 100.00 118.68 139.44 227.82 302.47 123.64
SNL Thrift Index 100.00 120.78 155.78 148.39 180.51 243.81
11
Certain Transactions
The Bank has followed a policy of granting consumer loans and loans secured
by one- to four-family real estate to officers, directors and employees. Loans
to directors and executive officers are made in the ordinary course of business
and on the same terms and conditions as those of comparable transactions with
the general public prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
All loans by the Bank to its directors and executive officers are subject
to OTS regulations restricting loan and other transactions with affiliated
persons of the Bank. Federal law generally requires that all loans to directors
and executive officers be made on terms and conditions comparable to those for
similar transactions with non-affiliates, subject to limited exceptions.
However, recent regulations now permit executive officers and directors to
receive the same terms on loans through plans that are widely available to other
employees, as long as the director or executive officer is not given
preferential treatment compared to the other participating employees. Loans to
all directors, executive officers, and their associates totaled $14,234,000 at
September 30, 2001, which was 31.9% of the Company's stockholders' equity at
that date. There were no loans outstanding to any director, executive officer or
their affiliates at preferential rates or terms during the three years ended
September 30, 2001. All loans to directors and officers were performing in
accordance with their terms at September 30, 2001.
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has approved the engagement of
Deloitte & Touche, LLP to be the Company's auditors for the 2002 fiscal year,
subject to the ratification of the engagement by the Company's stockholders. At
the Meeting, stockholders will consider and vote on the ratification of the
engagement of Deloitte & Touche, LLP, for the Company's fiscal year ending
September 30, 2002. A representative of Deloitte & Touche, LLP, is expected to
attend the Meeting to respond to appropriate questions and to make a statement
if he so desires.
In order to ratify the selection of Deloitte & Touche, LLP, as the auditors
for the 2002 fiscal year, the proposal must receive at least a majority of the
votes cast, either in person or by proxy, in favor of such ratification. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF DELOITTE &
TOUCHE, LLP, AS AUDITORS FOR THE 2002 FISCAL YEAR.
Set forth below is certain information concerning aggregate fees billed for
professional services rendered by Deloitte & Touche, LLP during fiscal year
2001.
Audit Fees $ 103,400
Financial Information Systems
Design and Implementation Fees $ --
All Other Fees $ 30,802
The Audit Committee has considered whether the provision of non-audit
services, which relate primarily to tax services rendered, is compatible with
maintaining Deloitte & Touche, LLP's independence. The Audit Committee concluded
that performing such services does not affect Deloitte & Touche, LLP's
independence in performing its function as auditor of the Company.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting has to be received at the Company's executive office, 1700 East
Highland Drive, Jonesboro, Arkansas 72403, no later than September 11, 2002. Any
such proposals shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
ADVANCE NOTICE OF BUSINESS TO BE BROUGHT BEFORE AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors to be brought before an
annual meeting. In order for a stockholder to properly bring business before
12
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than ninety (90)
days before the date fixed for such meeting; provided, however, that in the
event that less than one hundred (100) days notice or prior public disclosure of
the date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
The date on which the next annual meeting of stockholders is expected to be
held is January 22, 2003. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before this annual meeting
of stockholders must be given to the Company no later than October 25, 2002. If
notice is received after October 23, 2002, it will be considered untimely, and
the Company will not be required to present the matter at the stockholders'
meeting.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act as directed by a majority of the Board of
Directors except for matters related to the conduct of the Meeting, as to which
they shall act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30,
2001, AND A COPY OF THE COMPANY'S 2001 ANNUAL REPORT TO STOCKHOLDERS WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN OR
TELEPHONIC REQUEST TO JAMES A. EDINGTON, SECRETARY, POCAHONTAS BANCORP, INC.,
1700 EAST HIGHLAND DRIVE, JONESBORO, ARKANSAS 72403, OR CALL 870-802-5900.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ James A. Edington
---------------------
James A. Edington
Secretary
Jonesboro, Arkansas
January 7, 2002
13
APPENDIX A
Pocahontas Bancorp, Inc. Audit Committee Charter
Organization
There shall be a Committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of a minimum of three members
and be comprised of directors who are independent of the management of the
Company and are free of any relationships that in the opinion of the Board of
Directors, would interfere with their exercise of independent judgment as a
committee member. Determination of independence will be governed by the
NASD/AMEX listing standards requiring all members of the Audit Committee to be
independent and will be disclosed in the Company's annual proxy statement.
Members of the Audit Committee shall have a working familiarity with accounting
and related financial management practices.
Statement of Policy
The Audit Committee shall provide assistance to the Corporate Directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to (a) corporate accounting, reporting practices
of the Company, and the quality and integrity of the financial reports of the
Company, (b) determining that Management has established and maintained
processes to assure compliance by the Company with all applicable laws,
regulations, and Company policy. In so doing, it is the responsibility of the
Audit Committee to maintain free and open means of communication between the
Directors, independent auditors, the internal auditors, and the financial
management of the Company. The independent auditor and the internal auditor will
be accountable to the Board of Directors and the Audit Committee. The Committee
will meet four (4) times per year or more frequently as circumstances require.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the Company and its
subsidiaries.
o Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized, and at the conclusion thereof review such
audit, including any comments or recommendations of the independent
auditors to include Management's response. Additionally, discuss the
matters outlined in SAS No. 61, Communication with Audit Committees, with
the independent auditors and discuss Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees. Based on the review
and discussions with the independent auditors, the Committee will recommend
to the Board of Directors whether the audited financial statements be
included in the Company's annual report on 10-K. The Committee will report
the aforementioned items in a report to be included in the Company's annual
proxy statement.
o Review the internal audit function of the Company including the
independence and authority of its reporting obligations, the proposed audit
plan for the coming year, and the coordination of such plan with the
independent auditors. Receive prior to each meeting, a summary of findings
from completed internal audits and a progress report on the proposed
internal audit plan, with explanations for any deviations from the original
plan.
o Review with the independent auditor, the Company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the Company, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the Committee
periodically should review Company policy statements to determine their
adherence to the code of conduct.
o Review the financial statements contained in the annual report to
shareholders and SEC filings (Form 10Q and Form 10K) with Management and
the independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial statements to be
presented to the shareholders and regulatory authorities. Any changes in
accounting principles should be reviewed.
o Review all regulatory examination reports and Management's response for
adequacy of corrective action taken.
o Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the Audit Committee without members of Management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the Company's financial, accounting,
and auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.
o Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting, with the Board of
Directors.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
Annual Review
The Committee will review and reassess the adequacy of the Audit Committee
Charter on an annual basis.
REVOCABLE PROXY
POCAHONTAS BANCORP, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
February 6, 2002
The undersigned hereby appoints the official proxy committee consisting of
those members of the Board of Directors not nominated below, with full powers of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders ("Annual Meeting") to be held at the
Company's main office, 1700 East Highland Drive, Jonesboro, Arkansas on February
6, 2002 at 1:00 p.m., Arkansas Time. The official proxy committee is authorized
to cast all votes to which the undersigned is entitled as follows:
--------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
1. The election as Directors of all nominees listed below to 9 9 serve for the
term of office set forth opposite their respective names
WITH-
FOR HOLD
[_] [_]
A. J. Baltz (2 years)
Robert Rainwater (3 years)
James A. Edington (3 years)
INSTRUCTION: To withhold your vote for one or more nominees, write the name of
the nominee(s) on the line(s) below.
- --------------------------------------------------------------------------------
2. The ratification of Deloitte & Touche, LLP as the Company's independent
auditor for the fiscal year ending September 30, 2002.
FOR AGAINST ABSTAIN
[_] [_] [_]
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [_]
The Board of Directors recommends a vote "FOR" each of the listed
proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
- - Detach above card, sign, date and mail in postage-prepaid envelope provided. -
POCAHONTAS BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set forth on the
Notice of Annual Meeting of Stockholders, or by the filing of a later proxy
prior to a vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Annual Meeting, a proxy statement dated
January 7, 2002, and audited financial statements.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title.
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
IF YOUR ADDRESS HAS CHANGED,
PLEASE CORRECT THE ADDRESS IN
THE SPACE PROVIDED BELOW AND
RETURN THIS PORTION WITH THE
PROXY IN THE ENVELOPE PROVIDED.
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