UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number 0-28312
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 71-0785261
______________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 West Stephenson
Harrison, Arkansas 72601
______________________________________________________________________________
(Address of principal executive office) (Zip Code)
(870) 741-7641
______________________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of May
13, 2002, there were issued and outstanding 2,901,259 shares of the
Registrant's Common Stock, par value $.01 per share.
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
As of March 31, 2002 (unaudited) and December 31, 2001 1
Consolidated Statements of Income for the three months
ended March 31, 2002 (unaudited) and 2001 (unaudited) 2
Consolidated Statement of Stockholders' Equity for the three
months ended March 31, 2002 (unaudited) 3
Consolidated Statements of Cash Flows for the three months
ended March 31, 2002 (unaudited) and 2001 (unaudited) 4
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Part II. Other Information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except share data)
March 31, December 31,
ASSETS 2002 2001
----------- ------------
(Unaudited)
Cash and cash equivalents $ 83,121 $ 72,326
Investment securities - held to maturity 102,434 100,878
Federal Home Loan Bank stock 4,955 4,918
Loans receivable, net of allowance 472,042 474,494
Accrued interest receivable 4,536 4,420
Real estate acquired in settlement of loans, net 347 455
Office properties and equipment, net 7,562 7,006
Prepaid expenses and other assets 16,141 15,758
------- -------
TOTAL ASSETS $691,138 $680,255
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $568,482 $555,933
Federal Home Loan Bank advances 44,841 47,844
Advance payments by borrowers for
taxes and insurance 1,000 929
Other liabilities 4,938 4,484
------- -------
Total liabilities 619,261 609,190
======= =======
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, 5,000,000 shares
authorized, none issued
Common stock, $.01 par value, 20,000,000 shares
authorized, 5,153,751 shares issued,
3,017,359 and 3,050,959 shares outstanding at
March 31, 2002, and December 31, 2001,
respectively 52 52
Additional paid-in capital 51,562 51,434
Employee stock benefit plans (1,863) (1,967)
Retained earnings-substantially restricted 62,127 60,736
------- -------
111,878 110,255
Treasury stock, at cost, 2,136,392 and
2,102,792 shares at March 31, 2002 and
December 31, 2001, respectively (40,001) (39,190)
-------- --------
Total stockholders' equity 71,877 71,065
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $691,138 $680,255
======= =======
See notes to unaudited consolidated financial statements.
1
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Three Months Ended
March 31,
------------------
2002 2001
-------- --------
INTEREST INCOME:
Loans receivable $ 9,319 $ 10,068
Investment securities 1,613 2,939
Other 272 126
------ -------
Total interest income 11,204 13,133
------ -------
INTEREST EXPENSE:
Deposits 5,313 7,278
Other borrowings 733 1,409
------ -------
Total interest expense 6,046 8,687
------ -------
NET INTEREST INCOME 5,158 4,446
PROVISION FOR LOAN LOSSES 362 9
------ -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,796 4,437
------ -------
NONINTEREST INCOME:
Deposit fee income 547 309
Other 740 366
------ -----
Total noninterest income 1,287 675
------ -----
NONINTEREST EXPENSES:
Salaries and employee benefits 2,097 2,218
Net occupancy expense 295 275
Federal insurance premiums 25 26
Provision for real estate losses 4 7
Data processing 318 257
Postage and supplies 132 140
Other 546 473
------ -----
Total noninterest expenses 3,417 3,396
------ -----
INCOME BEFORE INCOME TAXES 2,666 1,716
INCOME TAX PROVISION 910 573
------ -----
NET INCOME $ 1,756 $ 1,143
====== =====
EARNINGS PER SHARE:
Basic $ 0.61 $ 0.35
====== ======
Diluted $ 0.60 $ 0.35
====== ======
Cash Dividends Declared per share $ 0.12 $ 0.11
====== ======
See notes to unaudited consolidated financial statements.
2
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(In Thousands, except share data)
(Unaudited)
Issued Employee
Common Stock Additional Stock Treasury Stock Total
---------------- Paid-In Benefit Retained ---------------- Stockholders'
Shares Amount Capital Plans Earnings Shares Amount Equity
------ ------ --------- ------- -------- ------ ------ -------------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Balance, December 31, 2001 5,153,751 $52 $51,434 $(1,967) $60,736 2,102,792 $(39,190) $71,065
Net income 1,756 1,756
Release of ESOP shares 138 104 242
Tax effect of stock
compensation plan (13) (13)
Treasury shares reissued due
to exercise of stock options 3 (4,400) 82 85
Purchase of treasury stock, 38,000 (893) (893)
at cost
Dividends paid (365) (365)
--------- ----- ------- -------- ------- --------- --------- -------
Balance, March 31, 2002 5,153,751 $52 $51,562 $(1,863) $62,127 2,136,392 $(40,001) $71,877
========= ===== ======= ======== ======= ========= ========= =======
See notes to unaudited consolidated financial statements.
3
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------
2002 2001
---------- ---------
OPERATING ACTIVITIES:
Net income $1,756 $1,143
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses 362 9
Provision for real estate losses 4 7
Deferred tax benefit (75) (27)
Federal Home Loan Bank stock dividends (37) (70)
Loss on sale of repossessed assets, net 10 3
Originations of loans held for sale (13,940) (8,560)
Proceeds from sales of loans 16,842 6,520
Gain on sale of mortgage loans originated to sell (237) (70)
Depreciation 183 173
Accretion of deferred loan fees, net (218) (103)
Release of ESOP shares 242 204
Bank owned life insurance earnings (216) --
Stock compensation expense -- 178
Changes in operating assets & liabilities:
Accrued interest receivable (116) 1,464
Prepaid expenses & other assets (151) (166)
Other liabilities (1,483) 776
------- -----
Net cash provided by operating activities 2,926 1,481
------- -----
INVESTING ACTIVITIES:
Purchases of investment securities-held to
maturity (15,601) --
Proceeds from maturities/calls of
investment securities-held to maturity 16,045 32,833
Loan originations, net of repayments (355) 4,991
Proceeds from sales of repossessed assets 117 19
Purchases of office properties and equipment (739) (118)
----- -------
Net cash provided (used) by investing activities (533) 37,725
----- -------
(Continued)
4
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------
2002 2001
--------- ---------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 12,507 (1,468)
Advances from FHLB 2,000 1,450
Repayment of advances from FHLB (5,003) (17,954)
Net increase in advance payments
by borrowers for taxes & insurance 71 308
Purchase of treasury stock (893) (3,405)
Reissued treasury stock 85 --
Dividends paid (365) (371)
------- -------
Net cash provided by financing activities 8,402 21,440
------- -------
Net increase in cash and cash equivalents 10,795 17,766
CASH AND CASH EQUIVALENTS:
Beginning of period 72,326 11,564
------ ------
End of period $83,121 $29,330
====== ======
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid for:
Interest $ 6,189 $ 8,665
===== =====
Income taxes $ -- $ --
===== =====
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING ACTIVITIES:
Real estate acquired in settlement of loans $ 153 $ 50
====== ======
Loans to facilitate sales of real estate owned $ 156 $ --
====== ======
Investment securities traded, recorded in
investments, not yet settled in cash $ 2,000 $ --
====== ======
(Concluded)
See Notes to unaudited consolidated financial statements.
5
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation and Principles of Consolidation
First Federal Bancshares of Arkansas, Inc. (the "Corporation") is a unitary
holding company which owns all of the stock of First Federal Bank of Arkansas,
FA (the "Bank"). The Bank provides a broad line of financial products to
individuals and small to medium-sized businesses. The consolidated financial
statements also include the accounts of the Bank's wholly-owned subsidiary,
First Harrison Service Corporation ("FHSC"), whose activities are limited.
The accompanying unaudited consolidated financial statements of the
Corporation have been prepared in accordance with instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
However, such information reflects all adjustments which are, in the opinion
of management, necessary for a fair statement of results for the interim
periods.
The accompanying consolidated financial statements include the accounts of the
Corporation and the Bank. All material intercompany transactions have been
eliminated in consolidation.
The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2002. The unaudited consolidated financial statements and notes
thereto should be read in conjunction with the audited financial statements
and notes thereto for the year ended December 31, 2001, contained in the
Corporation's 2001 Annual Report to Stockholders.
Note 2 - Recently Issued Accounting Standards
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations. This Statement addresses financial accounting and reporting for
business combinations and supercedes APB Opinion No. 16, Business
Combinations, and SFAS No. 38, Accounting for Preacquisition Contingencies of
Purchased Enterprises. All business combinations in the scope of this
Statement are to be accounted for using one method, the purchase method. This
Statement does not change many of the provisions of Opinion 16 and Statement
38 related to the application of the purchase method. The provisions of this
Statement apply to all business combinations initiated after June 30, 2001.
This Statement also applies to all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001, or
later.
In June 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible
Assets. This Statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supercedes APB Opinion No.
17, Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business
6
combination) should be accounted for in financial statements upon their
acquisition. This Statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. The provisions of this Statement are
required to be applied starting with fiscal years beginning after December 15,
2001. This Statement is required to be applied at the beginning of an
entity's fiscal year and to be applied to all goodwill and other intangible
assets recognized in its financial statements at that date. Impairment losses
for goodwill and indefinite-lived intangible assets that arise due to the
initial application of this Statement (resulting from a transitional
impairment test) are to be reported as resulting from a change in accounting
principle. Goodwill and intangible assets acquired after June 30, 2001, will
be subject immediately to the nonamortization and amortization provisions of
this Statement. The Corporation adopted these Statements on January 1, 2002.
Such adoption did not have a material effect on the financial position,
results of operations, or cash flows of the Corporation.
Note 3 - Earnings per Share
The weighted average number of common shares used to calculate earnings per
share for the periods ended March 31, 2002 and 2001 were as follows:
Three months ended
March 31,
-------------------------
2002 2001
--------- ---------
Basic weighted - average shares 2,858,994 3,254,571
Effect of dilutive securities 85,338 9,641
--------- ---------
Diluted weighted - average shares 2,944,332 3,264,212
========= =========
Note 4 - Declaration of Dividends
At their meeting on February 26, 2002, the Board of Directors declared a $.12
(twelve cent) per share cash dividend on the common stock of the Corporation.
The cash dividend was paid on March 26, 2002 to the stockholders of record at
the close of business on March 11, 2002.
Note 5 - Investment Securities
Investment securities consisted of the following (in thousands):
March 31, 2002
--------------------------
Amortized Fair
Cost Value
--------- --------
Held to Maturity
Municipal Securities $ 5,514 $ 5,493
U. S. Government and Agency obligations 96,920 95,583
------- -------
$102,434 $101,076
======= =======
7
Note 6 - Loans Receivable
Loans receivable consisted of the following (in thousands):
March 31, 2002 December 31, 2001
-------------- -----------------
First mortgage loans:
One- to four- family residences $316,431 $330,844
Other properties 58,814 51,282
Construction 25,954 24,842
Less:
Unearned discounts (170) (216)
Undisbursed loan funds (9,795) (10,144)
Deferred loan fees, net (1,923) (2,127)
------- -------
Total first mortgage loans 389,311 394,481
------- -------
Consumer and other loans:
Commercial 24,756 23,451
Automobile 20,692 20,506
Consumer 6,689 7,083
Home equity and second mortgage 26,370 24,933
Savings 1,775 1,464
Other 3,338 3,234
Add-deferred loan costs 260 265
------ ------
Total consumer and other loans 83,880 80,936
------ ------
Allowance for loan losses (1,149) (923)
------- -------
Loans receivable, net $472,042 $474,494
======= =======
Non-accrual loans at March 31, 2002 were $2.6 million. All loans 90 days or
more past due are recorded as non-accrual.
A summary of the activity in the allowance for loan losses is as follows (in
thousands):
Balance at December 31, 2001 $ 923
Provisions for estimated losses 362
Recoveries 21
Losses charged off (157)
-----
Balance at March 31, 2002 $ 1,149
=====
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
At March 31, 2002, the Corporation's assets amounted to $691.1 million
as compared to $680.2 million at December 31, 2001. The $10.9 million or 1.6%
increase was primarily due to an increase of $10.8 million or 14.9% in cash
and cash equivalents primarily due to the temporary investment of excess funds
from ongoing operations. Loan originations for the three month period ended
March 31, 2002 consisted of $31.9 million in one- to four- family residential
loans, $1.0 million in multi-family residential loans, $11.1 million in
commercial loans, $7.0 million in construction loans and $11.9 million in
consumer installment loans, of which $5.8 million consisted of home equity
loans and $3.6 million consisted of automobile loans. At March 31, 2002, the
Bank had outstanding loan commitments of $8.8 million, unused lines of credit
of $9.4 million, and the undisbursed portion of construction loans of $9.8
million. Liabilities increased $10.1 million or 1.7% to $619.3 million at
March 31, 2002 compared to $609.2 million at December 31, 2001. The increase
in liabilities was primarily due to an increase of $12.5 million or 2.3% in
deposits. Stockholders' equity amounted to $71.9 million or 10.4% of total
assets at March 31, 2002 compared to $71.1 million or 10.4% of total assets at
December 31, 2001. Stockholders'equity increased during the three month
period ended March 31, 2002 primarily due to net income in the amount of $1.8
million for the three month period resulting from continued profitable
operations. Such increase was partially offset by the purchase of 38,000
shares of treasury stock totaling $893,000 in connection with the
Corporation's stock repurchase program and to a lesser extent due to the
payment of a quarterly cash dividend in the amount of $365,000.
Non-performing assets, consisting of non-accruing loans and repossessed
assets, amounted to $3.0 million or .43% of total assets at March 31, 2002,
compared to $3.6 million or .53% of total assets at December 31, 2001. The
allowance for loan losses amounted to $1.2 million at March 31, 2002 or 44.8%
of nonperforming loans and 0.2% of total loans.
Results of Operations for the Three Months Ended March 31, 2002 and 2001
General. The Corporation reported net income of $1.8 million during the
three months ended March 31, 2002 compared to net income of $1.1 million for
the same period in 2001. The increase of $613,000 in net income in the 2002
period compared to the same period in 2001 was primarily due to an increase in
net interest income and an increase in noninterest income which was partially
offset by an increase in provision for loan losses and an increase in income
tax expense. Net interest income increased from $4.5 million for the three
months ended March 31, 2001 to $5.2 million for the same period in 2002. Net
interest income is determined by the Corporation's interest rate spread (i.e.,
the difference between the yields earned on its interest-earning assets and
the rates paid on its interest-bearing liabilities) and the relative amounts
of interest-earning assets and interest-bearing liabilities. The
Corporation's interest rate spread and net interest margin increased to 2.96%
and 3.21%, respectively, for the 2002 three month period compared to 2.12% and
2.61%, respectively, for the 2001 three month period. These and other
significant fluctuations in operations are discussed below.
9
Interest Income. Interest income amounted to $11.2 million for the
three months ended March 31, 2002 compared to $13.1 million for the same
period in 2001. The decrease of $1.9 million or 14.7% was primarily due to a
decrease in the average balance and in the average yield earned on investment
securities, and a decrease in the average balance and in the average yield
earned on loans receivable. Such decreases were partially offset by an
increase in the average balance of other interest earning assets, primarily
overnight funds. The average balance and average yield earned on investment
securities declined primarily due to higher-yielding investments being called.
The increase in the average balance of other interest earning assets was due
to the investment of excess funds from the repayment or prepayment of loans
and investments.
Interest Expense. Interest expense decreased $2.6 million or 30.4% to
$6.1 million for the three months ended March 31, 2002 compared to $8.7
million for the same period in 2001. Such decrease was primarily due to a
decrease in the average rate paid on deposits and a decrease in the average
balance of Federal Home Loan Bank of Dallas advances. Such decrease in
interest expense was partially offset by an increase in the average balance of
deposits. The decrease in the average rate paid on deposits was due to a
declining interest rate environment while the decrease in the average balance
of FHLB advances was due to repayments in excess of new advances.
Provision for Loan Losses. Provision for loan losses amounted to
$362,000 for the three months ended March 31, 2002 compared to $9,000 for the
same period in 2001. Provisions for loan losses include charges to reduce
the recorded balance of loans to their estimated fair value. Such provision
and the adequacy of the allowance for loan losses is evaluated quarterly by
management of the Bank based on the Bank's past loan loss experience, known
and inherent risks in the portfolio, adverse situations that may affect the
borrower's ability to repay, the estimated value of any underlying collateral
and current economic conditions. The increase in the 2002 three month period
compared to the same period in 2001 was primarily due to economic conditions
and an increase in commercial and consumer loans which are typically
considered to involve a higher degree of risk than one- to four-family loans.
Noninterest Income. Noninterest income increased $612,000 or 90.7% to
$1.3 million for the three months ended March 31, 2002 compared to $675,000
for the three months ended March 31, 2001. The increase in noninterest income
for the three month comparable periods ended March 31 was primarily due to an
increase of $238,000 or 77.0% from $309,000 to $547,000 in deposit fee income,
an increase of $167,000 from $70,000 to $237,000 in the gain on the sale of
mortgage loans in the secondary mortgage market, an increase of $28,000 from
$17,000 to $45,000 in additional loan fees related to loan sales, and an
increase of $216,000 in earnings from bank owned life insurance purchased in
the second and third quarters of 2001.
Noninterest Expense. Noninterest expenses increased $21,000 or .6%
between the 2002 and 2001 three month periods ended March 31. The increase in
noninterest expenses during the three month period in 2002 compared to the
same period in 2001 was primarily due to an increase in data processing
expenses. Data processing expenses increased $61,000 or 23.7% to $318,000 for
the three months ended March 31, 2002 compared to $257,000 for the same period
in 2001. Such increase was primarily due to growth and additional product and
service offerings. Salaries and employee benefits amounted to $2.1 million
compared to $2.2 million resulting in a decrease of
10
$121,000 or 5.5% for the three month periods ended March 31, 2002 and 2001,
respectively. Such decrease in salaries and employee benefits was primarily
due to a decline of $179,000 in the management recognition and retention plan
expense as a result of the awarded shares being fully vested in May 2001.
Income Taxes. Income taxes amounted to $910,000 and $573,000 for the
three months ended March 31, 2002 and 2001, respectively, resulting in
effective tax rates of 34.1% and 33.4%, respectively.
Liquidity and Capital Resources
The Bank's liquidity, represented by cash and cash equivalents and
eligible investment securities, is a product of its operating, investing and
financing activities. The Bank's primary sources of funds are deposits,
collections on outstanding loans, maturities and calls of investment
securities and other short-term investments and funds provided from
operations. While scheduled loan amortization and maturing investment
securities and short-term investments are relatively predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Bank manages the
pricing of its deposits to maintain a steady deposit balance. In addition,
the Bank invests excess funds in overnight deposits and other short-term
interest-earning assets which provide liquidity to meet lending requirements.
The Bank has generally been able to generate enough cash through the retail
deposit market, its traditional funding source, to offset the cash utilized in
investing activities. As an additional source of funds, the Bank has borrowed
from the FHLB of Dallas. At March 31, 2002, the Bank had outstanding advances
from the FHLB of Dallas of $44.8 million. Such advances were used in the
Bank's normal operating and investing activities.
The Bank is completing its plans for the construction of a new corporate
and full-service branch office in north Harrison. Construction is expected to
start in May 2002 with completion expected in the spring of 2003. Capital
expenditures are estimated to be $6 million with disbursements occurring
throughout the period of construction.
As of March 31, 2002, the Bank's regulatory capital was in excess of all
applicable regulatory requirements. At March 31, 2002, the Bank's tangible,
core and risk-based capital ratios amounted to 9.9%, 9.9% and 17.5%,
respectively compared to applicable requirements of 1.5%, 4.0% and 8.0%,
respectively.
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein
have been prepared in accordance with instructions to Form 10-Q, which require
the measurement of financial position and operating results in terms of
historical dollars, without considering changes in relative purchasing power
over time due to inflation.
11
Unlike most industrial companies, virtually all of the Bank's assets and
liabilities are monetary in nature. As a result, interest rates generally
have a more significant impact on a financial institution's performance than
does the effect of inflation.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and information
relating to the Corporation that are based on the beliefs of management as
well as assumptions made by and information currently available to management.
In addition, in those and other portions of this document, the words
"anticipate," "believe," "estimate," "except," "intend," "should" and similar
expressions, or the negative thereof, as they relate to the Corporation or the
Corporation's management, are intended to identify forward-looking statements.
Such statements reflect the current views of the Corporation with respect to
future looking events and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize
or should underlying assumptions prove incorrect, actual results may vary from
those described herein as anticipated, believed, estimated, expected or
intended. The Corporation does not intend to update these forward-looking
statements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
For a discussion of the Corporation's asset and liability management
policies as well as the potential impact of interest rate changes upon the
market value of the Bank's portfolio equity, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
Corporation's 2001 Annual Report to Stockholders. There has been no material
change in the Corporation's asset and liability position or the market value
of the Bank's portfolio equity since December 31, 2001.
12
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
Part II
Item 1. Legal Proceedings
Neither the Corporation nor the Bank is involved in any
pending legal proceedings other than non-material legal
proceedings occurring in the ordinary course of business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
Date: May 15, 2002 By: /s/Larry J. Brandt
----------------------
Larry J. Brandt
President/CEO
Date: May 15, 2002 By: /s/Sherri Billings
----------------------
Sherri Billings
EVP/CFO
14