SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended September 30, 2004
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED].
For the transition period from _______________ to ______________________
Commission File Number: 000-23969
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
First Community Bank 401(k) Savings and Employee Stock Ownership Plan
B: Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Pocahontas Bancorp, Inc.
1700 E. Highland Drive
Jonesboro, Arkansas 72401
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No.
333-78607 of Pocahontas Bancorp, Inc. on Form S-8 of our report dated March 28,
2005 appearing in this Annual Report on Form 11-K of First Community Bank 401(k)
Savings and Employee Stock Ownership Plan for the year ended September 30, 2004.
/s/ Deloitte & Touche LLP
Little Rock, Arkansas
March 29, 2005
First Community Bank 401(k) Savings and Employee Stock Ownership Plan
Statements of Net Assets Available for Benefits As of September 30, 2004 and
2003, Statement of Changes in Net Assets Available for Benefits for the Year
Ended September 30,2004, Supplemental Schedules As of And for the Year Ended
September 30, 2004 and Report of Independent Registered Public Accounting Firm
<page>
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
As of September 30, 2004 and 2003 2
Statement of Changes in Net Assets Available for
Benefits As of September 30, 2004 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 2004: 8
Form 5500, Schedule H, Part IV, Line 4i Schedule
of Assets (Held at End of Year) 9-10
Form 5500, Schedule H, Part IV, Line 4j Schedule
of Reportable Transactions 11
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees and Participants
First Community Bank
401(k) Savings and Employee Stock Ownership Plan
We have audited the accompanying statements of net assets available for benefits
of the First Community Bank 401(k) Savings and Employee Stock Ownership Plan
(the "Plan") as of September 30, 2004 and 2003, and the related statement of
changes in net assets available for benefits for the year ended September 30,
2004. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Plan's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at September 30,
2004 and 2003, and the changes in net assets available for benefits for the year
ended September 30, 2004, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
table of contents, and the supplemental information included on the statements
of net assets available for benefits and on the statement of changes in net
assets available for benefits, is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules and information are the
responsibility of the Plan's management. Such supplemental schedules and
information have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
March 28, 2005
Little Rock, AR
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 2004 AND 2003
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2004 2003
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Supplemental Information Supplemental Information
-------------------------- -------------------------
Allocated Unallocated Total Allocated Unallocated Total
ASSETS
Cash $ 5 $ 21,969 $ 21,974 $ 80,599 $ - $ 80,599
Pocahontas Bancorp, Inc. common stock 9,917,303 2,108,235 12,025,538 7,162,624 555,504 7,718,128
Regions Financial Corporation Stock 6,000 - 6,000 6,227 - 6,227
Mutual funds 1,253,884 4,626 1,258,510 992,623 2,840 995,463
Participant loans 36,573 - 36,573 35,596 - 35,596
----------- ----------- ----------- ----------- ----------- -----------
Total assets 11,213,765 2,134,830 13,348,595 8,277,669 558,344 8,836,013
----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES
ACCOUNTS PAYABLE-Other 193 - 193 - - -
LOAN PAYABLE TO POCAHONTAS
BANCORP, INC. - 2,091,225 2,091,225 - 538,121 538,121
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 193 2,091,225 2,091,418 - 538,121 538,121
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $11,213,572 $ 43,605 $11,257,177 $ 8,277,669 $ 20,223 $ 8,297,892
=========== =========== =========== =========== =========== ===========
See notes to financial statements.
2
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED SEPTEMBER 30, 2004
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2004
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Supplemental Information
------------------------------
Allocated Unallocated Total
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Net appreciation in fair value of investments $ 1,878,453 $ 86,254 $ 1,964,707
Interest 2,300 133 2,433
Dividends 177,331 23,432 200,763
Employee contributions 84,373 - 84,373
Employer contributions - 800,000 800,000
Contributions from others (including rollovers) 106,967 - 106,967
Allocation of 49,451 shares of Pocahontas Bancorp, Inc. common stock 804,073 - 804,073
Realized gain on sale of investments 14,659 - 14,659
----------- ----------- -----------
Total additions 3,068,156 909,819 3,977,975
DEDUCTIONS FROM NET ASSETS ATTRIBUTABLE TO:
Distributions to participants 120,894 - 120,894
Allocation of 49,451 shares of Pocahontas Bancorp, Inc. common stock - 804,073 804,073
Interest expense - 82,364 82,364
Administrative expenses 11,359 - 11,359
----------- ----------- -----------
Total deductions 132,253 886,437 1,018,690
----------- ----------- -----------
NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 2,935,903 23,382 2,959,285
TRANSFER OF ASSETS - - -
NET ASSETS--Beginning of year 8,277,669 20,223 8,297,892
----------- ----------- -----------
NET ASSETS--End of year $11,213,572 $ 43,605 $11,257,177
=========== =========== ===========
See notes to financial statements.
3
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2004 AND 2003
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1. DESCRIPTION OF THE PLAN
The following brief description of the First Community Bank 401(k) Savings
and Employee Stock Ownership Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
General--The Plan is a qualified employee stock ownership plan with a
salary reduction feature. First Community Bank (formerly known as
Pocahontas Federal Savings and Loan Association) (the "Employer") formed
the Plan by combining its existing 401(k) plan, which had been effective
since January 1, 1986, and its Employee Stock Ownership Plan ("ESOP"),
which had been effective since October 1, 1993. Pocahontas Bancorp, Inc.
(the "Company") accomplished the combination of the existing plans through
a combination and restatement, with neither the 401(k) nor the ESOP being
the surviving plan, effectively creating a new plan with an effective date
of October 1, 1997. The Plan covers substantially all employees of the
Employer. The Employer is 100% owned by the Company. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974.
Contributions--Each eligible participant may, but shall not be required
to, enter into an elective deferral agreement with the employer under
which the participant agrees to reduce his cash compensation by a
specified percentage, up to a maximum of 15%, and contribute such amounts
to the Plan. The amount of any matching contributions, qualified matching
contributions, discretionary contributions, qualifying non-elective
contributions, and ESOP contributions for each plan year will be made at
the sole discretion of the Board of Directors.
Participation--Employees are generally eligible to participate in the Plan
after completing one year of service. Only participants at least 21 years
of age, who complete at least 1,000 hours of service during the Plan year,
and are employed on the last day of the Plan year are eligible to share in
the Employer's discretionary contribution for the year. An employee may
decline to participate in the Plan. For purposes of participation in any
election deferral contributions, completion of one hour of service and an
open enrollment date is required.
Participant Accounts--Each participant's account is credited with an
allocation of (a) the Employer's discretionary ESOP contributions, (b)
eligible forfeitures of terminated participants' nonvested accounts, (c)
and earnings of the Plan for the year. Allocations are based on
participant wages as defined in the Plan agreement. The benefit to which a
participant is entitled, subject to vesting, is the benefit that can be
provided from the participant's account.
Participant Loans--Participants may borrow, upon written application, any
amount provided that the aggregate amount of all outstanding loans to the
participant from the Plan and from any other qualified plan maintained by
the employer, including accrued interest thereon, shall not exceed the
lesser of $50,000 or 50% of the participants vested 401(k) account
balance. Loan transactions are treated as a transfer to (from) the
investment fund from (to) the Participant Loan fund. Loan terms shall not
exceed five years, except for the purchase of a primary residence. The
loans are collateralized by the balance in the participant's account and
bear interest at a rate commensurate with local prevailing rates as
4
determined by the Plan administrator. Principal and interest is paid
ratably not less than quarterly through payroll deductions. Participants
may not have more than three loans outstanding.
Plan Borrowings--The Plan purchased Company stock using the proceeds of
borrowings from the Company. The Plan's debt is collateralized by the
stock. A trustee holds such stock in a suspense account in a trust
established under the Plan. As the Plan makes payments of principal and
interest, shares are released into a suspense account to be allocated to
eligible employees' accounts at the end of the Plan year, in accordance
with the Plan. The lender has no rights against shares once they are
allocated under the Plan. Accordingly, the financial statements of the
Plan present separately the assets and liabilities and changes therein
pertaining to:
(a) the accounts of employees with rights in allocated stock
("Allocated") and
(b) stock not yet allocated to employees ("Unallocated").
Vesting--Vesting of accounts is based upon years of service as defined in
the Plan agreement. A participant becomes fully vested after five years of
credited service.
Payments of Benefits--No distributions from the Plan will be made until a
participant retires, dies (in which case, payment shall be made to his or
her beneficiary or, if none, his or her legal representatives), becomes
disabled or otherwise terminates employment with the Employer.
Distributions are made in cash or Company stock, or both.
Voting and Dividend Rights--No participant shall have any voting or
dividend rights or other rights of a stockholder prior to the time that
shares are allocated to the participant.
Termination of the Plan--The Employer reserves the right to amend or
terminate the Plan agreement at any time by action of the Board of
Directors. Upon full or partial termination of the Plan, participants'
accounts will become 100% vested and all unallocated shares will be
allocated to the accounts of all participants in accordance with the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting--The financial statements of the Plan are prepared
under the accrual method of accounting.
Investment Valuations and Income Recognition--Investments are stated at
fair value as determined from quoted market prices. The investment in
shares of the Company's common stock is stated at fair value and is based
on the closing price in an active market as of the last trading day of the
year.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. INVESTMENT PROGRAMS
Upon enrollment, each participant shall direct that his elective
contribution be invested in one or more of the 56 investment options.
Investment direction may be revised daily by a participant. A
participant's salary deferral percentage may be changed quarterly. All
ESOP contributions are invested in Company stock.
5
4. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated March 18, 1998, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections
of the Internal Revenue Code ("IRC"). The Plan has been amended since
receiving the determination letter. However, the Plan administrator and
the Plan's tax counsel believe that the Plan is currently designed and
being operated in compliance with the applicable requirements of the IRC.
Therefore, they believe that the Plan is qualified and the related trust
is tax-exempt.
5. ADMINISTRATION OF PLAN ASSETS
The Plan's assets, which consist principally of Company common stock and
mutual funds, are held by the Company's trustees, First Bankers Trust
Company, N.A. and Manulife Financial, respectively. The Company
administers the payment of principal and interest on the loan and makes
distributions to participants. During the years ended September 30, 2004
and 2003, Plan expenses were paid either directly by the Company or by the
Plan as a reduction of net assets.
Certain administrative functions are performed by officers or employees of
the Company. No such officer or employee receives compensation from the
Plan.
6. INVESTMENTS
Included in the September 30 investment portfolios are the following
investments representing more than 5% of net assets available for
benefits:
2004 Fair Value
Pocahontas Bancorp, Inc.--common stock--allocated $ 9,917,303
Pocahontas Bancorp, Inc.--common stock--unallocated 2,108,235
2003 Fair Value
Pocahontas Bancorp, Inc.--common stock--allocated $ 7,162,624
Pocahontas Bancorp, Inc.--common stock--unallocated 555,504
7. LOAN PAYABLE
In March 2003, the Plan entered into a term loan agreement with the
Company to borrow up to an additional $2 million. During 2004, proceeds of
$270,741 were drawn from such loan. These proceeds were used to purchase
18,800 additional shares of Pocahontas Bancorp, Inc. common stock. The
loan matures December 31, 2012 and has an interest rate of 6%. Proceeds of
the loan are intended to be used to purchase shares of the Company's
common stock. The loan is collateralized by all the unallocated shares of
the Plan. As of September 30, 2004, $291,227 was outstanding related to
such loan.
6
In February 2004, the Plan entered into another term loan agreement with
the Company to borrow up to an additional $2 million. During 2004,
proceeds of $1,999,998 were drawn from such loan. These proceeds were used
to purchase 104,239 additional shares of Pocahontas Bancorp, Inc. common
stock. The loan matures December 31, 2013 and has interest rate of 6%.
Proceeds of the loan are intended to be used to purchase shares of the
Company's common stock. The loan is collateralized by all the unallocated
shares of the Plan. As of September 30, 2004, $1,799,998 was outstanding
related to the loan. During 2004, the Plan used cash of $259,879 to
purchase an additional 15,290 shares of Pocahontas Bancorp, Inc. common
stock.
******
7
SUPPLEMENTAL SCHEDULES
8
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i--SCHEDULE OF ASSETS
(HELD AT END OF YEAR) SEPTEMBER 30, 2004
- -----------------------------------------------------------------------------------------------------------------------
Current
Value
Cash, Interest Bearing $ 21,974
Pocahontas Bancorp, Inc.--common stock-allocated (609,920 shares)* 9,917,303
Pocahontas Bancorp, Inc.--common stock-unallocated (129,658 shares)* 2,108,235
Manulife Lifestyle Fund--Conservative Portfolio 47,725
Manulife Lifestyle Fund--Moderate Portfolio 119,024
Manulife Lifestyle Fund--Balanced Portfolio 316,822
Manulife Lifestyle Fund--Growth Portfolio 245,510
Manulife Lifestyle Fund--Aggressive Portfolio 47,078
Manulife 3-Year Compound 4,626
Manulife Money Market Fund 62,238
MFC Short-Term Federal Fund 3,707
MFC PIMCO Total Return Fund 28,676
MFC Salomon Brothers High Yield 15,647
MFC T. Rowe Price Spectrum Income Fund 3,651
MFC America Funds American Balanced Fund 54,048
MFC T. Rowe Price Equity Income 21,489
MFC Davis New York Venture Fund 1,166
MFC Mutual Beacon Fund 24,765
MFC Weitz Partners Value Fund 48,961
MFC Fidelity Advisor Dividend Growth Fund 1,083
MFC Franklin Balance Sheet Investment Fund 29,083
MFC Domini Social Equity Fund 10,934
MFC MFS Strategic Value 1,372
MFC T. Rowe Price Blue Chip Growth Fund 7,842
MFC Morgan Stanley Institutional Fund Equity Growth 10,022
MFC Excelsior Value and Restructuring Fund 25,248
MFC Fidelity Advisor Large Cap Fund 3
MFC Putnam Global Equity Fund 14,113
MFC Prudential Jennison Growth Fund 631
MFC Oppenheimer Global Fund 2,015
MFC AIM Mid Cap Core Equity Fund 20,931
MFC Templeton Foreign Fund 9,295
MFC Templeton Foreign Small Co. 802
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Total 13,226,019
(Continued)
9
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i--SCHEDULE OF ASSETS
(HELD AT END OF YEAR) SEPTEMBER 30, 2004
- -----------------------------------------------------------------------------------------------------------------------
Current
Value
Total (from previous page) $13,226,019
MFC AIM Constellation Fund 215
MFC Energy Fund 3,559
MFC Smith Barney Aggressive Growth Fund 26,082
MFC Schudder Mid Cap 1,768
MFC AIM Small Cap Growth Fund 1,318
MFC AIM Aggressive Growth Fund 4,389
MFC T. Rowe Price Science & Technology Fund 1,446
MFC Templeton Developing Markets Fund 5,429
Quantitative Mid Cap Fund 786
500 Index Fund 28,548
Total Stock Market Index Fund 5
Quantitative All-Cap fund 4,496
Mid Cap Index Fund 1,235
Emerging Growth Fund 107
Small Cap Index Fund 620
Regions Financial Corporation Stock 6,000
Participant Loans* 36,573
-----------
Total $13,348,595
===========
*Party in interest
See Report of Independent Registered Accounting Firm. (Concluded)
10
FIRST COMMUNITY BANK
401(K) SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j--
SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED SEPTEMBER 30, 2004
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SERIES OF TRANSACTIONS
Description of Current
Asset (Include Expense Value of
Interest Rate and Incurred Cost Asset on Net
Maturity in Purchase Selling Lease With of Transaction Gain
Identity of Party Involved Case of a Loan) Price Price Rental Transaction Asset Date or Loss
Pocahontas Bancorp, Inc. Common stock $2,620,618 $ - $ - $ - $2,620,618 $2,620,618 $ -
11
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST COMMUNITY BANK
401(k) SAVINGS AND EMPLOYEE
STOCK OWNERSHIP PLAN
Date: March 28, 2005 By: /s/ Dwayne Powell
Dwayne Powell
President and Chief Executive Officer