Filed by Pocahontas Bancorp, Inc.
(Commission File No. 0-23969) pursuant to Rule 425 of the Securities
Act of 1933
Pocahontas Bancorp, Inc.
1700 East Highland Drive
Jonesboro, Arkansas 72403
FOR IMMEDIATE RELEASE
CONTACTS:
Dwayne Powell Brad Snider
President and Chief Executive Officer President and Chief Executive Officer
Pocahontas Bancorp, Inc. North Arkansas Bancshares, Inc.
TEL: (870) 802-5934 TEL: (870) 523-3611
POCAHONTAS BANCORP, INC. TO ACQUIRE NORTH ARKANSAS BANCSHARES, INC. IN A MERGER
VALUED AT APPROXIMATELY $4.4 MILLION
Jonesboro and Newport, Arkansas. November 20, 2001. Pocahontas Bancorp,
Inc. (Nasdaq NMS: PFSL) ("Pocahontas Bancorp"), the holding company for First
Community Bank, and North Arkansas Bancshares, Inc. ("North Arkansas
Bancshares"), the holding company for Newport Federal Savings Bank ("Newport
Federal"), announced today that they have entered into a definitive agreement
under which Pocahontas Bancorp would acquire North Arkansas Bancshares in a
merger valued at $15.00 per share, or approximately $4.4 million in total. The
Board of Directors of each company has unanimously approved the transaction. Due
diligence has been completed.
Dwayne Powell, President and Chief Executive Officer of Pocahontas
Bancorp, stated, "We are very pleased to announce the acquisition of North
Arkansas Bancshares and the expansion of the First Community Bank franchise in
the Newport, Arkansas area. We intend to continue to focus on community
banking." Upon completion of the transaction, Pocahontas Bancorp will have
approximately $515.0 million in assets and will have a total of 21 offices in
Northeast Arkansas.
Brad Snider, President and Chief Executive Officer of North Arkansas
Bancshares, stated, "We look forward to becoming a part of the Pocahontas
Bancorp organization. Our customers as well as our shareholders will benefit
from this new relationship with a bank that has always had our respect and
shared our outlook."
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Mr. Snider, who will remain in Newport, will serve as a director and an
executive with First Community Bank. Customers of Newport Federal should
anticipate no change in the type and style of community banking services they
have become accustomed to, and should benefit from an expanded menu of banking
services.
The transaction, which is expected to be completed in the second
calendar quarter of 2002, is subject to approval by North Arkansas Bancshares
shareholders and applicable regulatory authorities.
Pocahontas Bancorp estimates that the cost savings opportunities between
the companies equals 33% of North Arkansas Bancshares' annualized operating
expenses, or approximately $335,000 pre-tax, including the elimination of
employee benefit plans and other duplicate expenses.
In addressing the financial aspects of the transaction, Mr. Powell
continued, "The acquisition of North Arkansas Bancshares will increase our
capital position and strengthen our market presence in Jackson County. In
addition, we anticipate the transaction will provide for enhanced growth
opportunities in Jackson County that will add to earnings going forward. The
transaction is estimated to initially have a neutral impact on earnings per
share. We have been conservative in our financial assumptions and believe that
these expectations are very realistic."
Under the terms of the agreement, each share of North Arkansas
Bancshares common stock will be converted into the right to receive that number
of shares of Pocahontas Bancorp common stock equal to the number obtained by
dividing $15.00 by the average of the closing bid price of Pocahontas Bancorp
common stock on the NASDAQ National Market System for the fifteen consecutive
trading days ending on the fifth business day before the closing date. If the
average closing bid price of Pocahontas Bancorp common stock is less than $7.00,
Pocahontas Bancorp has the right to terminate the merger; if the average closing
bid price for Pocahontas Bancorp common stock is greater than $11.00, North
Arkansas Bancshares has the right to terminate the merger. The $15.00 per share
deal price represents 88.3% of North Arkansas Bancshares's tangible book value
per share at September 30, 2001 and 28.8 times North Arkansas Bancshares'
earnings per share for the twelve months ended September 30, 2001.
As part of the transaction, Pocahontas Bancorp was granted the option to
purchase, under certain conditions, up to 19.9% of the outstanding common stock
of North Arkansas Bancshares.
Pocahontas Bancorp is the holding company for First Community Bank, a
federal savings bank. First Community Bank is headquartered in Jonesboro,
Arkansas, and operates 20 full-service banking offices in Northeast Arkansas. At
September 30, 2001, Pocahontas Bancorp had total assets of $484.0 million, total
deposits of $349.0 million and stockholders' equity of $44.0 million.
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North Arkansas Bancshares is the holding company for Newport Federal, a
federal savings bank. Newport Federal is headquartered in Newport, Arkansas, and
operates one full-service banking office. At September 30, 2001, North Arkansas
Bancshares had total assets of $40.3 million, total deposits of $29.6 million
and stockholders' equity of $5.0 million.
This news release contains certain forward-looking statements about the
proposed merger of Pocahontas Bancorp and North Arkansas Bancshares. These
statements include statements regarding the anticipated closing date of the
transaction, anticipated cost savings, and anticipated future results.
Forward-looking statements can be identified by the fact that they include words
like "believe," "expect," "anticipate," "estimate," and "intend" or future or
conditional verbs such as "will," "would," "should," "could," or "may." Certain
factors that could cause actual results to differ materially from expected
include delays in completing the merger, difficulties in achieving cost savings
from the merger or in achieving such cost savings within the expected time
frame, difficulties in integrating Pocahontas Bancorp and North Arkansas
Bancshares, increased competitive pressures, changes in the interest rate
environment, changes in general economic conditions, legislative and regulatory
changes that adversely affect the businesses in which Pocahontas Bancorp and
North Arkansas Bancshares are engaged, changes in the securities markets, and
other factors disclosed by Pocahontas Bancorp and North Arkansas Bancshares in
their periodic filings with the SEC.
Investors are urged to read the registration statement regarding the
merger transaction referred to in this press release, when it becomes available,
because it will contain important information. The registration statement will
be filed with the Securities and Exchange Commission by Pocahontas Bancorp.
Investors may obtain a free copy of the registration statement (when it is
available) and other documents filed by Pocahontas Bancorp with the Commission
at the Commission's website at www.sec.gov. The registration statement may also
be obtained for free from Pocahontas Bancorp by directing a request to:
Pocahontas Bancorp, Inc., 1700 East Highland Drive, Jonesboro, Arkansas 72403,
Attention: Dwayne Powell, President and Chief Executive Officer; Telephone:
870-802-5934.
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