EXHIBIT 99.1
FOR IMMEDIATE RELEASE: CONTACT: Dwayne Powell, CEO
870-802-1700
POCAHONTAS BANCORP, INC. ANNOUNCES THIRD QUARTER EARNINGS
Jonesboro, Arkansas, August 12, 2005-- Pocahontas Bancorp, Inc.
(Nasdaq-NMS:PFSL) announced earnings for the third quarter of the fiscal year
ending September 30, 2005. Net income was $0.84 million for the quarter ended
June 30, 2005, compared to net income of $0.93 million for the quarter ended
June 30, 2004, a decrease of $0.09 million or 9.7%. Basic earnings per share
were $0.19 and diluted earnings per share were $0.18 for the quarter ended June
30, 2005 compared to basic earnings per share of $0.21 and diluted earnings per
share of $0.20 for the same period last year.
Net interest income before provision for loan loss for the quarter ended June
30, 2005 was $4.20 million compared to $4.76 million for the quarter ended June
30, 2004, a decrease of $0.56 million or 11.8%. The decrease was primarily due
to a 32 basis point decrease in the net interest rate spread to 2.66% for the
quarter ended June 30, 2005 compared to 2.98% for the quarter ended June 30,
2004.
There was no provision for loan losses for the quarter ended June 30, 2005
compared to $0.65 million for the quarter ended June 30, 2004. 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, 2005 and 2004 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; changing economic and other conditions may
require future adjustments to the allowance for loan losses.
Non-interest income increased $0.44 million or 34.1% to $1.73 million for the
quarter ended June 30, 2005 compared to the quarter ended June 30, 2004. The
increase in non-interest income was primarily due to a $0.22 million increase in
gain on sale of securities for the quarter ended June 30, 2005 compared to the
same period last year and a $0.02 million trading loss on equity securities
during the quarter ended June 30, 2005 compared to a $0.20 million trading loss
for the quarter ended June 30, 2004. A subdued refinancing environment during
the quarter ended June 30, 2005 resulted in lower gain on sale of loans. Gain on
sale of loans decreased to $0.26 million for the quarter ended June 30, 2005
from $0.32 million for the same period a year ago.
Total operating expenses were $4.65 million for the quarter ended June 30, 2005,
compared to $3.99 million for the quarter ended June 30, 2004. The increase in
operating expenses was primarily due to a $0.15 million increase in compensation
expenses and a $0.19 million increase in advertising and donations expense, as
the Company hired an outside advertising firm instead of handling advertising
internally.
Net income was $2.38 million for the nine months ended June 30, 2005, compared
to net income of $3.72 million for the nine months ended June 30, 2004, a
decrease of $1.34 million or 36.0%. Basic earnings per share were $0.53 and
diluted earnings per share were $0.52 for the nine months ended June 30, 2005
compared to basic earnings per share of $0.83 and diluted earnings per share of
$0.81 for the same period last year.
Net interest income before provision for loan loss for the nine months ended
June 30, 2005 was $12.72 million compared to $14.77 million for the nine months
ended June 30, 2004, a decrease of $2.05 million or 13.9%. The decrease was
primarily due to a 29 basis point decrease in the net interest rate spread to
2.76% for the nine months ended June 30, 2005 compared to 3.05% for the nine
months ended June 30, 2004 and a 36 basis point decrease in the net interest
margin to 2.62% for the nine months ended June 30, 2005 from 2.98% for the nine
months ended June 30, 2004.
Provision for loan losses for the nine months ended June 30, 2005 was $0.12
million compared to $1.15 million for the nine months ended June 30, 2004. The
decrease in provision for loan losses for the nine months ended June 30, 2005
was primarily due to a decrease in nonperforming loans compared to the same
period last year. 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 nine months ended June 30, 2005 and 2004
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; changing economic and other
conditions may require future adjustments to the allowance for loan losses.
Non-interest income decreased $0.17 million or 3.9% to $4.10 million for the
nine months ended June 30, 2005 compared to the nine months ended June 30, 2004.
The decrease in non-interest income was primarily due to decreases in net
trading gains, gain on sale of loans and gain on sale of branches, partially
offset by a $0.18 million increase in gain on sale of securities. The trading
gain on equity securities decreased $0.23 million to $0.01 million for the nine
months ended June 30, 2005 compared to the nine months ended June 30, 2004. A
subdued refinancing environment during the nine months ended June 30, 2005
resulted in a decreased number of loans originated and subsequently sold which
resulted in the lower gain on sale of loans. Gain on sale of loans decreased to
$0.73 million for the nine months ended June 30, 2005 from $0.93 million for the
same period a year ago. The nine months ended June 30, 2004 included a $0.14
million one-time gain on the sale of branches.
Total operating expenses were $13.08 million for the nine months ended June 30,
2005, and $12.24 million for the nine months ended June 30, 2004. The increase
in operating expenses was primarily due to a $0.47 million increase in
advertising and donations expense, as the Company hired an outside advertising
firm instead of handling advertising internally; professional fees increased
$0.19 million and compensation expenses increased $0.14 million for the nine
months ended June 30, 2005 compared to the same period a year ago. These
increases were partially offset by a $0.10 million decrease in expenses on REO
and other repossessed assets during the nine months ended June 30, 2005.
Total assets increased $1.36 million or 0.2% to $721.27 million at June 30, 2005
from $719.91 million at September 30, 2004. The increase was primarily the
result of an increase in total net loans of $6.64 million and a $2.32 million
increase in premises and equipment, which were partially offset by a decrease in
investment securities of $6.13 million and a $3.84 million decrease in cash. The
yield on average interest earning assets at June 30, 2005 was 5.47% compared to
5.50% at September 30, 2004.
Investment securities decreased at June 30, 2005 as the result of the sale of
$48.61 million of securities, the call of $0.50 million of securities, principal
payments and maturities of $33.69 million and $0.73 million decrease in market
value, partially offset by investment purchases of $78.03 million.
Total net loans receivable were $390.45 million at June 30, 2005 compared to
$383.81 million at September 30, 2004. During the nine-month period ended June
30, 2005, proceeds from the sale of mortgage loans held for sale were $37.82
million, compared to $49.41 million sold during the nine months ended June 30,
2004. Total nonperforming loans decreased 23.8% to $3.56 million at June 30,
2005 from $4.67 million at September 30, 2004.
Total deposits increased $5.74 million or 1.2% to $496.82 million at June 30,
2005 compared to $491.08 million at September 30, 2004. The increase in deposits
was primarily the result of offering more competitive interest rates on a
diverse product base in our market area. Total Federal Home Loan Bank advances
decreased $5.19 million or 3.4% to $148.71 million at June 30, 2005 compared to
$153.90 million at September 30, 2004.
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.
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
- --------------------------------------------------------------------------------
June 30, September 30,
2005 2004
ASSETS
Cash $ 31,374,129 $ 35,218,491
Cash surrender value of life insurance 7,971,569 7,684,251
Securities held-to-maturity, at cost 133,689,828 86,200,660
Securities available-for-sale, at fair value 107,019,019 160,633,022
Trading securities, at fair value 2,889,507 1,982,365
Loans receivable, net 387,694,987 382,316,096
Loans receivable, held for sale 2,758,854 1,494,200
Accrued interest receivable 4,183,960 4,196,103
Premises and equipment, net 16,077,180 13,762,438
Federal Home Loan Bank stock, at cost 8,955,700 7,925,900
Goodwill 8,847,572 8,847,572
Core deposit premiums 5,566,620 6,296,523
Other assets 4,238,779 3,350,292
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TOTAL ASSETS $ 721,267,704 $ 719,907,913
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 496,822,895 $ 491,078,533
Federal Home Loan Bank advances 148,709,693 153,896,869
Deferred compensation 2,224,188 2,430,094
Accrued expenses and other liabilities 3,958,679 3,059,676
Trust preferred securities 16,957,491 16,941,917
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Total liabilities 668,672,946 667,407,089
STOCKHOLDERS' EQUITY:
Common stock, 76,024 76,024
Additional paid-in capital 57,447,655 57,447,655
Unearned ESOP shares (2,567,788) (2,116,198)
Accumulated other comprehensive loss, net (1,442,861) (717,085)
Retained earnings 23,484,272 22,212,972
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76,997,302 76,903,368
Less Treasury stock, at cost (24,402,544) (24,402,544)
------------- -------------
Total stockholders' equity 52,594,758 52,500,824
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 721,267,704 $ 719,907,913
============= =============
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
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Three Months Ended Nine Months Ended
June 30 June 30
2005 2004 2005 2004
INTEREST INCOME:
Loans receivable $ 5,876,659 $ 5,881,534 $ 17,191,584 $ 18,041,432
Investment securities 3,181,993 2,821,660 9,369,404 9,258,008
------------ ------------ ------------ ------------
Total interest income
9,058,652 8,703,194 26,560,988 27,299,440
INTEREST EXPENSE:
Deposits 3,122,294 2,645,527 8,852,830 9,052,977
Borrowed funds 1,376,226 980,608 3,930,244 2,524,980
Trust preferred securities 363,597 318,636 1,056,870 948,205
------------ ------------ ------------ ------------
Total interest expense 4,862,117 3,944,771 13,839,944 12,526,162
NET INTEREST INCOME 4,196,535 4,758,423 12,721,044 14,773,278
PROVISION FOR LOAN LOSSES - 650,000 125,000 1,150,000
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,196,535 4,108,423 12,596,044 13,623,278
OTHER INCOME:
Fees and service charges 808,673 719,908 2,372,253 2,255,865
Gain on sale of loans 258,390 323,199 733,428 925,620
Gain on sale of securities, net 564,290 343,832 564,290 383,367
Trading gain (losses), net (16,227) (199,031) 7,492 241,421
Gain (loss) on sale of branches - (2,500) - 136,834
Other 118,987 104,512 426,139 326,497
------------ ------------ ------------ ------------
Total other income 1,734,113 1,289,920 4,103,602 4,269,604
------------ ------------ ------------ ------------
OPERATING EXPENSE:
Compensation and benefits 2,508,409 2,359,372 7,269,121 7,130,579
Occupancy and equipment 645,067 642,741 2,079,739 2,094,590
Insurance premiums 95,559 85,398 271,899 248,678
Professional fees 251,862 130,166 789,116 598,872
Data processing 167,173 173,805 478,796 512,507
Advertising and donations 312,342 122,836 732,870 264,877
Office supplies 140,996 58,617 258,925 179,488
REO and other repossessed assets 132,981 91,849 172,494 269,515
Other 398,483 331,026 1,025,174 942,857
------------ ------------ ------------ ------------
Total operating expense 4,652,872 3,995,810 13,078,134 12,241,963
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,277,776 1,402,533 3,621,512 5,650,919
INCOME TAXES 439,700 476,000 1,236,200 1,927,000
------------ ------------ ------------ ------------
NET INCOME 838,076 926,533 2,385,312 3,723,919
(Continued)
POCAHONTAS BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
June 30 June 30
2005 2004 2005 2004
OTHER COMPREHENSIVE INCOME (LOSS),
NET OF TAX:
Unrealized holding gain (loss) on
securities available for-sale
arising during the period $ (969,820) $ (5,238,515) $ 1,098,208 $ (4,344,136)
Reclassification adjustment for gains
included in net income (372,431) (226,929) (372,431) (253,022)
------------ ------------ ------------ ------------
Other comprehensive
income (loss) (1,342,251) (5,465,444) 725,777 (4,597,158)
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME (LOSS) $ (504,175) $ (4,538,911) $ 3,111,089 $ (873,239)
============ ============ ============ ============
EARNINGS PER SHARE:
Basic earnings per share $ 0.19 $ 0.21 $ 0.53 $ 0.83
============ ============ ============ ============
Diluted earnings per share $ 0.18 $ 0.20 $ 0.52 $ 0.81
(Concluded)