EXHIBIT 99
PRESS RELEASE OF POCAHONTAS BANCORP, INC.
FOR IMMEDIATE RELEASE: CONTACT: Dwayne Powell, CEO
870-802-1700
POCAHONTAS BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS
Jonesboro, Arkansas, July 30, 2004, Pocahontas Bancorp, Inc. (Nasdaq-NMS:PFSL)
announced earnings for the third quarter of the fiscal year ending September 30,
2004. Net income was $0.9 million for the quarter ended June 30, 2004, compared
to net income of $1.2 million for the quarter ended June 30, 2003, a decrease of
$0.3 million or 25.0%. Basic earnings per share was $0.21 and diluted earnings
per share was $0.20 compared to basic and diluted earnings per share of $0.26
for the same period last year.
Net interest income before provision for loan loss for the quarter ended June
30, 2004 was $4.8 million compared to $4.4 million for the quarter ended June
30, 2003, an increase of $0.4 million or 9.1%. The increase was primarily due to
a decrease in interest expense of $1.1 million or 22.0% partially offset by a
decrease in interest income of $0.7 million or 7.4%. The Company's net interest
rate spread was 2.98% for the quarter ended June 30, 2004 compared to 2.79% for
the quarter ended June 30, 2003. Net interest margin was 2.92% for the quarter
ended June 30, 2004 compared to 2.71% for the quarter ended June 30, 2003. Both
the yield on average interest earning assets and the cost on average interest
bearing liabilities for the quarter ended June 30, 2004 decreased when compared
to the rates for the same period last year. The decrease in the cost on average
interest bearing liabilities decreased 66 basis points while the yield on
average interest earning assets decreased 47 basis points, resulting in the
increase in net interest income for the quarter ended June 30, 2004.
Provision for loan losses for the quarters ended June 30, 2004 and June 30, 2003
was $0.7 million. Management periodically reviews the credit quality of the loan
portfolio in order to establish a sufficient allowance for losses on loans. The
provision for loan loss for the quarters ended June 30, 2004 and 2003 reflected
management's estimate of the amount of allowance for loan losses required based
on management's current judgments about the credit quality of individual loans
and segments of the loan portfolio; however, changing economic and other
conditions may require future adjustments to the allowance for loan losses.
Non-interest income decreased to $1.3 million for the quarter ended June 30,
2004 compared to $2.4 million for the quarter ended June 30, 2003, a decrease of
$1.1 million or 45.8%. The decrease in non-interest income was due to a $0.3
million decrease in fee income, a $0.4 million decrease in net trading gains
(losses) and a $0.5 million decrease in gain on the sale of loans, partially
offset by a $0.1 million increase in gain on the sale of securities. A subdued
refinancing environment during the quarter ended June 30, 2004 resulted in a
decreased number of loans originated and subsequently sold which resulted in
both lower fee income and a lower gain on sale of loans.
Total operating expenses were $4.0 million for the quarter ended June 30, 2004,
compared to $4.4 million for the quarter ended June 30, 2003, a decrease of $0.4
million or 9.1%. The decrease in operating expense was primarily the result of
management's ongoing efforts to monitor expenses and increase efficiency.
Net income for the nine month period ended June 30, 2004 was $3.7 million,
compared to net income of $3.4 million for the nine month period ended June 30,
2003, an increase of $0.3
1
million or 8.8%. Basic earnings per share was $0.83 and diluted earnings per
share was $0.81 compared to basic earnings per share of $0.79 and diluted
earnings per share of $0.78 for the same period last year.
Net interest income before provision for loan loss for the nine month period
ended June 30, 2004 was $14.8 million compared to $13.2 million for the nine
month period ended June 30, 2003, an increase of $1.6 million or 12.1%. The
increase was primarily due to a decrease in interest expense of $2.0 million or
13.8% which was partially offset by a decrease in interest income of $0.4
million or 1.4%. The Company's net interest rate spread was 3.05% for the
nine-month period ended June 30, 2004 compared to 3.16% for the nine-month
period ended June 30, 2003. Net interest margin was 2.98% for the nine-month
period ended June 30, 2004 compared to 3.05% for the nine-month period ended
June 30, 2003. Although both the yield on average interest earning assets and
the cost on average interest bearing liabilities for the nine month period ended
June 30, 2004 decreased when compared to the rates for the same period last
year, the ratio of interest earning assets to interest earning liabilities
increased to 97.20% for the nine months ended June 30, 2004, compared to 96.88%
for the same period last year, resulting in an increase in net interest income.
Provision for loan losses for the nine-month period ended June 30, 2004 was $1.2
million compared to $1.5 million for the nine-month period ended June 30, 2003,
a decrease of $0.3 million or 20.0%. The provision for loan loss for the nine
month period ended June 30, 2004 and 2003 reflected management's estimate of the
amount of allowance for loan losses required based on management's current
judgments about the credit quality of individual loans and segments of the loan
portfolio; however, changing economic and other conditions may require future
adjustments to the allowance for loan losses.
Non-interest income decreased to $4.2 million for the nine-month period ended
June 30, 2004 compared to $6.7 million for the nine-month period ended June 30,
2003, a decrease of $2.5 million or 37.3%. The decrease in non-interest income
was primarily due to the $0.4 million or 80.0% decrease in the gain on the sale
of branches to $0.1 million for the nine-month period ended June 30, 2004 from
$0.5 million the nine month period ended June 30, 2003 and a decrease of $1.5
million or 61.9% in the gain on sale of loans for the nine month period ended
June 30, 2004 to $0.9 million from $2.4 million for the nine month period ended
June 30, 2003. The $2.4 million gain on sale of loans for the nine months ended
June 30, 2003 included the sale of a loan package that provided $0.6 million of
the gain on sale of loans. In addition, a subdued refinancing environment during
the nine months ended June 30, 2004 resulted in a decreased number of loans
originated and subsequently sold which resulted in both lower fee income and a
lower gain on sale of loans.
Total operating expenses were $12.2 million for the nine-month period ended June
30, 2004, compared to $13.2 million for the nine-month period ended June 30,
2003, a decrease of $1.0 million or 7.6%. Compensation expense decreased by $0.4
million primarily due to the recognition of additional expense in 2003 related
to a deferred compensation agreement entered into with a retiring officer of the
Company during the nine-month period ended June 30, 2003. The $0.2 million or
40.0% decrease in advertising expenses during the nine-month period ended June
30, 2004 was the result of the Company handling the advertising campaign
internally compared to outsourcing to an advertising firm during the nine-month
period ended June 30, 2003. Also, the decrease in operating expense was the
result of management's ongoing efforts to monitor expenses and increase
efficiency.
2
Total assets decreased to $712.9 million at June 30, 2004 from $763.5 million at
September 30, 2003, a decrease of $50.6 million or 6.6%. The decrease was
primarily the result of the sale and call of $88.7 million of securities, and
principal payments and maturities of $57.4 million in securities, which was
partly offset by $112.6 million in securities purchases, resulting in a net
decrease in investment securities of $40.6 million or 13.6%. As interest rates
have risen, the Company's investment portfolio has declined in market value due
to the higher yielding products becoming available, resulting in accumulated
other comprehensive loss of $3.7 million at June 30, 2004 compared to
accumulated other comprehensive income of $899,000 at September 30, 2003. The
yield on average interest earning assets at June 30, 2004 was 5.50% compared to
6.39% at September 30, 2003.
Total loans receivable increased to $390.1 million at June 30, 2004 from $389.0
million at September 30, 2003, an increase of $1.1 million or 0.3%. During the
nine-month period ended June 30, 2004, the Company sold $17.5 million of loans
held for sale, compared to $60.4 million sold during the nine months ended June
30, 2003. Total nonperforming loans increased to $5.9 million at June 30, 2004
from $5.6 million at September 30, 2003, an increase of $0.3 million or 5.4%.
Total deposits decreased to $492.5 million at June 30, 2004 from $586.1 million
at September 30, 2003, a decrease of $93.6 million or 16.0%. Recent efforts to
control cost of funds and manage interest rate risk have caused the Company to
decrease certificate accounts in favor of lower-rate FHLB advances. The decrease
in deposits was also partially the result of the sale of $12.7 million in
deposits associated with the sale of the Company's branch located in Strawberry,
Arkansas.
Total Federal Home Loan Bank advances increased $50.2 million or 49.8% to $150.9
million at June 30, 2004 from $100.7 million at September 30, 2003. The Company
used low-rate advances to offset the decrease in deposits, fund investment
purchases and loan disbursements.
Pocahontas Bancorp, Inc. is a unitary thrift holding company, which owns First
Community Bank, a federally chartered savings and loan. First Community Bank
conducts business from 18 offices located primarily in Northeast Arkansas.
Pocahontas Bancorp's common stock is traded on the NASDAQ National Market under
the symbol PFSL.
3
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
- --------------------------------------------------------------------------------
June 30 September 30,
2004 2003
------------- -------------
ASSETS
Cash $ 12,143,898 $ 22,020,489
Cash surrender value of life insurance 7,636,086 7,340,618
Securities held-to-maturity, at amortized cost 2,508,407 5,403,862
Securities available-for-sale, at fair value 255,838,888 293,569,266
Trading securities, at fair value 1,820,285 1,497,252
Loans receivable, net 389,271,382 385,872,017
Loans receivable held for sale 861,618 3,130,238
Accrued interest receivable 3,772,558 5,161,006
Premises and equipment, net 13,632,128 13,998,751
Federal Home Loan Bank Stock, at cost 7,646,400 5,583,700
Goodwill 8,847,572 8,847,572
Core deposit premiums, net 6,539,824 7,880,406
Other assets 2,417,035 3,182,703
------------- -------------
TOTAL ASSETS $ 712,936,081 $ 763,487,880
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 492,452,360 $ 586,092,147
Federal Home Loan Bank advances 150,857,404 100,693,629
Deferred compensation 2,510,108 2,885,238
Accrued expenses and other liabilties 496,672 3,899,149
Trust preferred securities 16,936,725 16,921,150
------------- -------------
Total liabilities 663,253,269 710,491,313
STOCKHOLDERS' EQUITY:
Common stock 75,177 74,970
Additional paid-in capital 56,707,574 56,533,430
Unearned ESOP Shares (2,058,101) (538,121)
Accumulated other comprehensive income (3,697,819) 899,339
Retained earnings 22,828,181 20,199,149
------------- -------------
73,855,012 77,168,767
Less treasury stock, at cost (24,172,200) (24,172,200)
------------- -------------
Total stockholders' equity 49,682,812 52,996,567
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 712,936,081 $ 763,487,880
============= =============
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POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30 June 30
2004 2003 2004 2003
----------- ----------- ----------- -----------
INTEREST INCOME:
Loans receivable $ 5,881,534 $ 6,407,929 $18,041,432 $20,065,257
Investment securities 2,821,660 2,978,468 9,258,008 7,600,590
----------- ----------- ----------- -----------
Total interest income 8,703,194 9,386,397 27,299,440 27,665,847
INTEREST EXPENSE:
Deposits 2,645,527 4,431,341 9,052,977 12,632,610
Borrowed funds 980,608 260,110 2,524,980 842,701
Trust preferred securities 318,636 318,543 948,205 975,351
----------- ----------- ----------- -----------
Total interest expense 3,944,771 5,009,994 12,526,162 14,450,662
NET INTEREST INCOME 4,758,423 4,376,403 14,773,278 13,215,185
PROVISION FOR LOAN LOSSES 650,000 650,000 1,150,000 1,495,000
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,108,423 3,726,403 13,623,278 11,720,185
OTHER INCOME:
Fees and service charges 719,908 959,644 2,255,865 2,837,070
Gain on sale of loans 323,199 788,204 925,620 2,429,780
Gain on sale of securities, net 343,832 259,168 383,367 264,896
Trading gains (losses), net (199,031) 243,801 241,421 331,201
Gain on sale of branches (2,500) -- 136,834 513,594
Other 104,512 102,556 326,497 324,943
----------- ----------- ----------- -----------
Total other income 1,289,920 2,353,373 4,269,604 6,701,484
----------- ----------- ----------- -----------
OPERATING EXPENSE:
Compensation and benefits 2,359,372 2,466,049 7,130,579 7,474,644
Occupancy and equipment 642,741 664,041 2,094,590 1,917,525
Insurance premiums 85,398 87,483 248,678 238,200
Professional fees 130,166 234,176 598,872 781,922
Data processing 173,805 188,934 512,507 550,269
Advertising and donations 122,836 183,434 264,877 465,132
Office supplies 58,617 92,649 179,488 255,444
REO and other repossessed assets 91,849 150,092 269,515 424,666
Other 331,026 355,002 942,857 1,091,336
----------- ----------- ----------- -----------
Total operating expense 3,995,810 4,421,860 12,241,963 13,199,138
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,402,533 1,657,916 5,650,919 5,222,531
INCOME TAXES 476,000 505,000 1,927,000 1,832,257
----------- ----------- ----------- -----------
NET INCOME $ 926,533 $ 1,152,916 $ 3,723,919 $ 3,390,274
<FN>
(Continued)
</FN>
5
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (UNAUDITED)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30 June 30
2004 2003 2004 2003
----------- ----------- ----------- -----------
OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX:
Unrealized holding gain (loss) on securities
arising during the period $(5,238,515) $ 970,582 $(4,344,136) $ 1,138,409
Reclassification adjustment for (gains) / losses
included in net income $ (226,929) $ (177,051) $ (253,022) $ (174,831)
----------- ----------- ----------- -----------
Other comprehensive income (loss) $(5,465,444) $ 793,531 $(4,597,158) $ 963,578
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME $(4,538,911) $ 1,946,447 $ (873,239) $ 4,353,852
=========== =========== =========== ===========
EARNINGS PER SHARE:
Basic earnings per share $ 0.21 $ 0.26 $ 0.83 $ 0.79
=========== =========== =========== ===========
Diluted earnings per share $ 0.20 $ 0.26 $ 0.81 $ 0.78
=========== =========== =========== ===========
<FN>
(Concluded)
</FN>
6