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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K/A

Amendment No. 1



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|x | Amended Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | --------------------------------------------------------------------------------------------

For the Fiscal Year Ended September 30, 2005.

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 #0-23969



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POCAHONTAS BANCORP, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 71-0806097                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|1700 E. Highland, Jonesboro, AR                                |  | 72401                                  
|(Address of Principal Executive Offices)                       |  | Zip Code                               

(870) 802-1700

(Registrants telephone number)



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Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share

(Title of Class)

Name of Each Exchange on which Registered: NASDAQ National Market System



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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 twelve months (or for such shorter period that the Registrant was required to file such reports)
and (2) has been subject to such requirements for the past 90 days.    YES  x.    NO ̈.

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  x

Indicate by check mark whether the Registrant is an accelerated filer (as
defined by the Rule 12b-2 of the Securities Exchange Act of 1934).    YES ̈NO  x

Indicate by check mark whether the Registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x.

As of December 20, 2005, there were
issued and outstanding 4,641,717 shares of the Registrants Common Stock. Such shares were listed on the NASDAQ National Market System.

The aggregate market value of the voting stock held by non-affiliates of the Registrant, computed by reference to the last sale price on December 20, 2005, was $35,405,621. This amount does not include shares held by the Employee Stock
Ownership Plan of First Community Bank (the Registrants subsidiary), by executive officers and directors, and by the Registrant as treasury stock.

DOCUMENTS INCORPORATED BY REFERENCE:



| | 1. | Part II of Form 10-K  Annual Report to Stockholders for the fiscal year ended September 30, 2005.
| | -- | --------------------------------------------------------------------------------------------------



| | 2. | Part III of Form 10-K  Proxy Statement for the 2005 Annual Meeting of Stockholders.
| | -- | ------------------------------------------------------------------------------------



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EXPLANATORY NOTE

The purpose of this Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of Pocahontas Bancorp, Inc. (the Company) for the year ended September 30, 2005 (the Original Form 10-K) is
to restate the Companys consolidated statements of cash flows for the year ended September 30, 2005 to correct amounts related to the purchase of certain investment securities that were purchased, but not yet settled at September 30, 2005 and
for the years ended September 30, 2005, 2004 and 2003, to correct amounts related to the receipt of stock dividends on Federal Home Loan Bank (FHLB) stock, as discussed in Note 26 to the accompanying consolidated financial statements.
There was no change in the net increase in cash resulting from either of these corrections. Further, these changes had no effect on the Companys consolidated statement of income, consolidated statement of financial condition, or consolidated
statement of shareholders equity.

As a result of the restatement, the Company has determined it to be necessary to amend the Original Form 10-K.
This Amendment No. 1 amends and restates in its entirety Part II, Item 8 and Item 9/A, and Part IV, Signatures and Exhibits of the Original Form 10-K. This Amendment No. 1 continues to reflect circumstances as of the date of the filing of the
Original Form 10-K and does not reflect events occurring after the filing of the Original Form 10-K, or modify or update those disclosures in any way, except as required to reflect the effects of the restatement as described in Note 26 to the
accompanying consolidated financial statements.



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POCAHONTAS BANCORP, INC.

TABLE OF CONTENTS



|                                                        |  |         |  |                                                                                                                  |  |     
|------------------------------------------------------- |  | ------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|                                                        |  |         |  |                                                                                                                  |  | Page
|Report of Independent Registered Public Accounting Firm |  | 4      
|                                                        |  |        
|PART II.                                                |  |         |  |                                                                                                                 
|                                                        |  |         | 
|                                                        |  | Item 8. |  | Financial Statements and Supplementary Data                                                                      |  | 5   
|                                                        |  |         |  | Consolidated Statements of Financial Condition at September 30, 2005 and 2004                                    |  | 5   
|                                                        |  |         |  | Consolidated Statements of Income and Comprehensive Income for the Years Ended September 30, 2005, 2004 and 2003 |  | 6   
|                                                        |  |         |  | Consolidated Statements of Changes in Stockholders Equity for the Years Ended September 30, 2005, 2004 and 2003 |  | 8   
|                                                        |  |         |  | Consolidated Statements of Cash Flows (as restated) for the Years Ended September 30, 2005, 2004 and 2003        |  | 9   
|                                                        |  |         |  | Notes to Condensed Consolidated Financial Statements                                                             |  | 11  
|                                                        |  |         | 
|                                                        |  | Item 9. |  | Controls and Procedures                                                                                          |  | 33  
|                                                        |  |        
|PART IV                                                 |  |         |  |                                                                                                                 
|                                                        | 
|Signatures                                              |  | 35     
|                                                        | 
|Exhibits                                                |  | 36     



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Pocahontas Bancorp, Inc.

Jonesboro, Arkansas

We have audited the accompanying
consolidated statements of financial condition of Pocahontas Bancorp, Inc. and subsidiaries (the Company) as of September 30, 2005 and 2004, and the related consolidated statements of income and comprehensive income, stockholders
equity, and cash flows for each of the three years in the period ended September 30, 2005. These financial statements are the responsibility of the Company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 Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits 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 Company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 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30,
2005 and 2004, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2005, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 26, the consolidated statements of cash flows for the years ended September 30, 2005, 2004 and 2003 have been restated.

LOGO

Little Rock, Arkansas

December 22,
2005 (May 19, 2006 as to the

effects of the restatement described in Note 26)



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PART I

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2005 AND 2004



|                                                                                                                                      |  |      |             |   |      |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                      |  | 2005 |             |   | 2004 |  
|ASSETS                                                                                                                                |  |      |             |   |      |   |             |  
|Cash and due from banks:                                                                                                              |  |      |             |   |      |   |             |  
|Interest bearing                                                                                                                      |  | $    | 14,600      |   |      | $ | 18,145      |  
|Noninterest bearing                                                                                                                   |  |      | 23,396,851  |   |      |   | 35,200,346  |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|                                                                                                                                      |  |      | 23,411,451  |   |      |   | 35,218,491  |  
|Cash surrender value of life insurance                                                                                                |  |      | 8,019,097   |   |      |   | 7,684,251   |  
|Securities held-to-maturity, at amortized cost (fair value of $127,755,514 and $85,581,734 in 2005 and 2004, respectively)            |  |      | 129,952,373 |   |      |   | 86,200,660  |  
|Securities available-for-sale, at fair value (amortized cost of $102,343,904 and $160,381,598 in 2005 and 2004, respectively)         |  |      | 99,460,045  |   |      |   | 160,633,022 |  
|Trading securities, at fair value                                                                                                     |  |      | 3,126,044   |   |      |   | 1,982,365   |  
|Loans receivable, net                                                                                                                 |  |      | 426,538,047 |   |      |   | 382,316,096 |  
|Loans receivable held for sale                                                                                                        |  |      | 3,057,985   |   |      |   | 1,494,200   |  
|Accrued interest receivable                                                                                                           |  |      | 4,487,837   |   |      |   | 4,196,103   |  
|Premises and equipment, net                                                                                                           |  |      | 16,716,912  |   |      |   | 13,762,438  |  
|Federal Home Loan Bank stock, at cost                                                                                                 |  |      | 7,962,000   |   |      |   | 7,925,900   |  
|Goodwill                                                                                                                              |  |      | 8,847,572   |   |      |   | 8,847,572   |  
|Core deposit premiums, net                                                                                                            |  |      | 5,323,319   |   |      |   | 6,296,523   |  
|Other assets                                                                                                                          |  |      | 4,360,885   |   |      |   | 3,350,292   |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|TOTAL ASSETS                                                                                                                          |  | $    | 741,263,567 |   |      | $ | 719,907,913 |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                  |  |      |             |   |      |   |             |  
|LIABILITIES:                                                                                                                          |  |      |             |   |      |   |             |  
|Deposits                                                                                                                              |  | $    | 514,043,734 |   |      | $ | 491,078,533 |  
|Federal Home Loan Bank advances                                                                                                       |  |      | 148,645,397 |   |      |   | 153,896,869 |  
|Deferred compensation                                                                                                                 |  |      | 2,176,859   |   |      |   | 2,430,094   |  
|Accrued expenses and other liabilities                                                                                                |  |      | 7,066,640   |   |      |   | 3,059,676   |  
|Trust preferred securities                                                                                                            |  |      | 16,962,683  |   |      |   | 16,941,917  |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|Total liabilities                                                                                                                     |  |      | 688,895,313 |   |      |   | 667,407,089 |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|STOCKHOLDERS EQUITY:                                                                                                                 |  |      |             |   |      |   |             |  
|Common stock, $0.01 par value, 8,000,000 shares authorized; 7,602,492 shares issued and 4,641,717 shares outstanding at 2005 and
2004 |  |      | 76,024      |   |      |   | 76,024      |  
|Additional paid-in capital                                                                                                            |  |      | 57,275,390  |   |      |   | 57,447,655  |  
|Unearned ESOP shares                                                                                                                  |  |      | (2,076,856  | ) |      |   | (2,116,198  | )
|Accumulated other comprehensive loss                                                                                                  |  |      | (2,517,282  | ) |      |   | (717,085    | )
|Retained earnings                                                                                                                     |  |      | 24,013,522  |   |      |   | 22,212,972  |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|                                                                                                                                      |  |      | 76,770,798  |   |      |   | 76,903,368  |  
|Less treasury stock at cost, 2,960,775 shares at 2005 and 2004                                                                        |  |      | (24,402,544 | ) |      |   | (24,402,544 | )
|                                                                                                                                      |  |      |             |   |      |   |             |  
|Total stockholders equity                                                                                                            |  |      | 52,368,254  |   |      |   | 52,500,824  |  
|                                                                                                                                      |  |      |             |   |      |   |             |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                            |  | $    | 741,263,567 |   |      | $ | 719,907,913 |  
|                                                                                                                                      |  |      |             |   |      |   |             |  

See notes to consolidated financial statements.



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POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|                                                     |  |      |            |      |   |            |  |   |           
|---------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ----------
|                                                     |  | 2005 |            | 2004 |   | 2003      
|INTEREST INCOME:                                     |  |      |            |      |   |            |  |   |           
|Loans receivable                                     |  | $    | 23,804,611 |      | $ | 23,997,993 |  | $ | 26,260,122
|Securities:                                          |  |      |            |      |   |            |  |   |           
|Taxable                                              |  |      | 10,772,099 |      |   | 11,767,981 |  |   | 9,973,733 
|Nontaxable                                           |  |      | 1,054,706  |      |   | 314,175    |  |   | 809,797   
|                                                     |  |      |            |      |   |            |  |   |           
|Total interest income                                |  |      | 35,631,416 |      |   | 36,080,149 |  |   | 37,043,652
|                                                     |  |      |           
|INTEREST EXPENSE:                                    |  |      |            |      |   |            |  |   |           
|Deposits                                             |  |      | 12,232,219 |      |   | 11,619,647 |  |   | 16,667,659
|Borrowed funds                                       |  |      | 5,269,259  |      |   | 3,751,246  |  |   | 1,280,614 
|Interest on trust preferred securities               |  |      | 1,440,363  |      |   | 1,286,688  |  |   | 1,292,519 
|                                                     |  |      |            |      |   |            |  |   |           
|Total interest expense                               |  |      | 18,941,841 |      |   | 16,657,581 |  |   | 19,240,792
|                                                     |  |      |            |      |   |            |  |   |           
|NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES |  |      | 16,689,575 |      |   | 19,422,568 |  |   | 17,802,860
|PROVISION FOR LOAN LOSSES                            |  |      | 525,000    |      |   | 3,900,000  |  |   | 2,595,000 
|                                                     |  |      |            |      |   |            |  |   |           
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES  |  |      | 16,164,575 |      |   | 15,522,568 |  |   | 15,207,860
|                                                     |  |      |            |      |   |            |  |   |           
|NON-INTEREST INCOME:                                 |  |      |            |      |   |            |  |   |           
|Fees and service charges                             |  |      | 3,187,079  |      |   | 3,081,843  |  |   | 3,594,981 
|Trading gains, net                                   |  |      | 240,736    |      |   | 398,165    |  |   | 377,741   
|Gain on sales of loans                               |  |      | 1,056,477  |      |   | 1,239,706  |  |   | 3,277,919 
|Gain on sales of securities available for sale, net  |  |      | 565,939    |      |   | 385,866    |  |   | 324,225   
|Gain on sales of branches                            |  |      |           |      |   | 136,834    |  |   | 2,411,734 
|Other                                                |  |      | 625,573    |      |   | 430,103    |  |   | 565,651   
|                                                     |  |      |            |      |   |            |  |   |           
|Total non-interest income, net                       |  |      | 5,675,804  |      |   | 5,672,517  |  |   | 10,552,251
|                                                     |  |      |            |      |   |            |  |   |           
|NON-INTEREST EXPENSES:                               |  |      |            |      |   |            |  |   |           
|Compensation and benefits                            |  |      | 9,342,144  |      |   | 9,539,845  |  |   | 10,443,598
|Occupancy and equipment                              |  |      | 2,779,615  |      |   | 2,723,191  |  |   | 2,653,568 
|Insurance premiums                                   |  |      | 373,886    |      |   | 334,768    |  |   | 328,974   
|Professional fees                                    |  |      | 1,008,483  |      |   | 826,156    |  |   | 1,072,780 
|Data processing                                      |  |      | 668,737    |      |   | 675,485    |  |   | 734,989   
|Advertising and donations                            |  |      | 1,193,756  |      |   | 408,480    |  |   | 600,656   
|Office supplies                                      |  |      | 373,345    |      |   | 234,129    |  |   | 338,524   
|Foreclosed real estate and repossessed assets        |  |      | 210,695    |      |   | 321,249    |  |   | 538,541   
|Other                                                |  |      | 1,554,128  |      |   | 1,211,924  |  |   | 1,367,534 
|                                                     |  |      |            |      |   |            |  |   |           
|Total non-interest expenses                          |  |      | 17,504,789 |      |   | 16,275,227 |  |   | 18,079,164
|                                                     |  |      |            |      |   |            |  |   |           
|INCOME BEFORE INCOME TAXES                           |  |      | 4,335,590  |      |   | 4,919,858  |  |   | 7,680,947 
|INCOME TAX PROVISION                                 |  |      | 1,096,534  |      |   | 1,463,244  |  |   | 2,386,589 
|                                                     |  |      |            |      |   |            |  |   |           
|NET INCOME                                           |  |      | 3,239,056  |      |   | 3,456,614  |  |   | 5,294,358 

(Continued)



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POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                              |  | 2005 |            |   | 2004 |   |            | 2003 | 
|OTHER COMPREHENSIVE INCOME,                                   |  |      |            |   |      |   |            |      |  |   |           |  
|NET OF TAX:                                                   |  |      |            |   |      |   |            |      |  |   |           |  
|Unrealized holding loss on securities arising during the year |  | $    | (1,426,677 | ) |      | $ | (1,361,752 | )    |  | $ | (483,598  | )
|Reclassification adjustment for gains included in net income  |  |      | (373,520   | ) |      |   | (254,672   | )    |  |   | (213,988  | )
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|Other comprehensive loss                                      |  |      | (1,800,197 | ) |      |   | (1,616,424 | )    |  |   | (697,586  | )
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|COMPREHENSIVE INCOME                                          |  | $    | 1,438,859  |   |      | $ | 1,840,190  |      |  | $ | 4,596,772 |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|EARNINGS PER SHARE:                                           |  |      |            |   |      |   |            |      |  |   |           |  
|Basic earnings per share                                      |  | $    | 0.72       |   |      | $ | 0.77       |      |  | $ | 1.22      |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|Diluted earnings per share                                    |  | $    | 0.71       |   |      | $ | 0.75       |      |  | $ | 1.20      |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  
|Dividends per share                                           |  | $    | 0.32       |   |      | $ | 0.32       |      |  | $ | 0.32      |  
|                                                              |  |      |            |   |      |   |            |      |  |   |           |  

(Concluded)

See notes to consolidated financial statements.



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POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|                                                                              |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   |            |  
|----------------------------------------------------------------------------- |  | ------------ |  | ------------------------ | ------ |  | ------------------- | ---------- | - | ----------------- | ------ | ---------- | ------------------------------------------ | ------ | - | ---------------- | - |  | -------------- | ---------- | - | ------------------------ | - | ---------- | - |  | --------- | - |  | - | ----------- | - |  | - | ---------- | -
|                                                                              |  | Common Stock |  | AdditionalPaid-InCapital |        |  | UnearnedESOP Shares |            |   | UnearnedRRPShares |        |            | AccumulatedOtherComprehensiveIncome (Loss) |        |   | RetainedEarnings |   |  | Treasury Stock |            |   | TotalStockholdersEquity |  
|                                                                              |  | Shares       |  | Amount                   |        |  |                     |            |   |                   | Shares |            |                                            | Amount |   |                 
|BALANCE, OCTOBER 1, 2002                                                      |  | 7,492,353    |  | $                        | 74,923 |  | $                   | 56,342,563 |   |                   | $      | (671,130   | )                                          |        | $ | (35,251          | ) |  | $              | 1,596,925  |   |                          | $ | 16,304,221 |   |  | 3,116,058 |   |  | $ | (26,119,636 | ) |  | $ | 47,492,615 |  
|Repayment of ESOP loan and related increase in share value                    |  |              |  |                          |        |  |                     | 160,562    |   |                   |        | 671,130    |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 831,692    |  
|Increase in ESOP shares                                                       |  |              |  |                          |        |  |                     |            |   |                   |        | (538,121   | )                                          |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | (538,121   | )
|Options exercised                                                             |  | 4,713        |  |                          | 47     |  |                     | 30,305     |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 30,352     |  
|RRP shares earned                                                             |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   | 35,251           |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 35,251     |  
|Net change in unrealized gain on available-for-sale securities, net of tax    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | (697,586   | ) |                          |   |            |   |  |           |   |  |   |             |   |  |   | (697,586   | )
|Treasury stock purchased                                                      |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  | 109,760   |   |  |   | (1,214,027  | ) |  |   | (1,214,027 | )
|Treasury stock reissued for acquisition                                       |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  | (278,543  | ) |  |   | 3,161,463   |   |  |   | 3,161,463  |  
|Net income                                                                    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | 5,294,358  |   |  |           |   |  |   |             |   |  |   | 5,294,358  |  
|Dividends                                                                     |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | (1,399,430 | ) |  |           |   |  |   |             |   |  |   | (1,399,430 | )
|                                                                              |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   |            |  
|BALANCE, SEPTEMBER 30, 2003                                                   |  | 7,497,066    |  |                          | 74,970 |  |                     | 56,533,430 |   |                   |        | (538,121   | )                                          |        |   |                 |   |  |                | 899,339    |   |                          |   | 20,199,149 |   |  | 2,947,275 |   |  |   | (24,172,200 | ) |  |   | 52,996,567 |  
|Repayment of ESOP loan and related increase in share value                    |  |              |  |                          |        |  |                     | (9,424     | ) |                   |        | 692,663    |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 683,239    |  
|Purchase of stock for ESOP                                                    |  |              |  |                          |        |  |                     |            |   |                   |        | (2,270,740 | )                                          |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | (2,270,740 | )
|Options exercised                                                             |  | 105,426      |  |                          | 1,054  |  |                     | 923,649    |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 924,703    |  
|Net change in unrealized gain on available-for-sale securities, net of tax    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | (733,399   | ) |                          |   |            |   |  |           |   |  |   |             |   |  |   | (733,399   | )
|Unrealized loss for securities transferred to held-to-maturity                |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | (906,107   | ) |                          |   |            |   |  |           |   |  |   |             |   |  |   | (906,107   | )
|Amortization of unrealized loss on securities transferred to held-to-maturity |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | 23,082     |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 23,082     |  
|Treasury stock purchased                                                      |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  | 13,500    |   |  |   | (230,344    | ) |  |   | (230,344   | )
|Net income                                                                    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | 3,456,614  |   |  |           |   |  |   |             |   |  |   | 3,456,614  |  
|Dividends                                                                     |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | (1,442,791 | ) |  |           |   |  |   |             |   |  |   | (1,442,791 | )
|                                                                              |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   |            |  
|BALANCE, SEPTEMBER 30, 2004                                                   |  | 7,602,492    |  |                          | 76,024 |  |                     | 57,447,655 |   |                   |        | (2,116,198 | )                                          |        |   |                 |   |  |                | (717,085   | ) |                          |   | 22,212,972 |   |  | 2,960,775 |   |  |   | (24,402,544 | ) |  |   | 52,500,824 |  
|Repayment of ESOP loan and related increase in share value                    |  |              |  |                          |        |  |                     | (172,265   | ) |                   |        | 508,252    |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 335,987    |  
|Purchase of stock for ESOP                                                    |  |              |  |                          |        |  |                     |            |   |                   |        | (468,910   | )                                          |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | (468,910   | )
|Net change in unrealized gain on available-for-sale securities, net of tax    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | (2,069,287 | ) |                          |   |            |   |  |           |   |  |   |             |   |  |   | (2,069,287 | )
|Amortization of unrealized loss on securities transferred to held-to-maturity |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                | 269,090    |   |                          |   |            |   |  |           |   |  |   |             |   |  |   | 269,090    |  
|Net income                                                                    |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | 3,239,056  |   |  |           |   |  |   |             |   |  |   | 3,239,056  |  
|Dividends                                                                     |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   | (1,438,506 | ) |  |           |   |  |   |             |   |  |   | (1,438,506 | )
|                                                                              |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   |            |  
|BALANCE, SEPTEMBER 30, 2005                                                   |  | 7,602,492    |  | $                        | 76,024 |  | $                   | 57,275,390 |   |                   | $      | (2,076,856 | )                                          |        | $ |                 |   |  | $              | (2,517,282 | ) |                          | $ | 24,013,522 |   |  | 2,960,775 |   |  | $ | (24,402,544 | ) |  | $ | 52,368,254 |  
|                                                                              |  |              |  |                          |        |  |                     |            |   |                   |        |            |                                            |        |   |                  |   |  |                |            |   |                          |   |            |   |  |           |   |  |   |             |   |  |   |            |  

See notes to consolidated financial statements.



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POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|                                                                                     |  |                            |             |   |      |   |              |      |  |   |              |  
|------------------------------------------------------------------------------------ |  | -------------------------- | ----------- | - | ---- | - | ------------ | ---- |  | - | ------------ | -
|                                                                                     |  | 2005                       |             |   | 2004 |   |              | 2003 | 
|                                                                                     |  | (As restated, see Note 26) |            
|OPERATING ACTIVITIES:                                                                |  |                            |             |   |      |   |              |      |  |   |              |  
|Net income                                                                           |  | $                          | 3,239,056   |   |      | $ | 3,456,614    |      |  | $ | 5,294,358    |  
|Adjustments to reconcile net income to net cash provided by operating activities:    |  |                            |             |   |      |   |              |      |  |   |              |  
|Provision for loan losses                                                            |  |                            | 525,000     |   |      |   | 3,900,000    |      |  |   | 2,595,000    |  
|Depreciation of premises and equipment                                               |  |                            | 1,302,848   |   |      |   | 1,259,864    |      |  |   | 1,174,484    |  
|Deferred income tax provision (benefit)                                              |  |                            | 487,640     |   |      |   | (1,324,590   | )    |  |   | 22,697       |  
|Amortization of deferred loan fees                                                   |  |                            | (67,185     | ) |      |   | (66,577      | )    |  |   | (38,521      | )
|Amortization of premiums and discounts, net                                          |  |                            | 244,153     |   |      |   | 147,083      |      |  |   | (187,207     | )
|Amortization of core deposit premium                                                 |  |                            | 973,204     |   |      |   | 944,696      |      |  |   | 1,095,933    |  
|Adjustment of ESOP shares and release of shares under recognition and retention plan |  |                            | 335,987     |   |      |   | 683,239      |      |  |   | 328,822      |  
|(Increase) decrease in loans held for sale                                           |  |                            | (507,309    | ) |      |   | 2,875,744    |      |  |   | 8,809,284    |  
|Net gains on sales of loans                                                          |  |                            | (1,056,477  | ) |      |   | (1,239,706   | )    |  |   | (3,277,919   | )
|Net gains on sales of investment securities                                          |  |                            | (565,939    | ) |      |   | (385,866     | )    |  |   | (324,225     | )
|Net gains on sales of branches                                                       |  |                            |            |   |      |   | (136,834     | )    |  |   | (2,411,734   | )
|Increase in cash surrender value of life insurance policies                          |  |                            | (334,846    | ) |      |   | (343,633     | )    |  |   | (457,125     | )
|Stock Dividend on FHLB stock                                                         |  |                            | (257,700    | ) |      |   | (113,400     | )    |  |   | (57,700      | )
|Changes in operating assets and liabilities, net of effects of acquired companies:   |  |                            |             |   |      |   |              |      |  |   |              |  
|Trading securities                                                                   |  |                            | (1,143,679  | ) |      |   | (485,113     | )    |  |   | (32,794      | )
|Accrued interest receivable                                                          |  |                            | (291,734    | ) |      |   | 964,903      |      |  |   | (702,104     | )
|Other assets                                                                         |  |                            | (3,308,409  | ) |      |   | (874,352     | )    |  |   | (2,939,565   | )
|Deferred compensation                                                                |  |                            | (253,235    | ) |      |   | (455,144     | )    |  |   | (1,238,315   | )
|Accrued expenses and other liabilities                                               |  |                            | 1,576,964   |   |      |   | (820,105     | )    |  |   | (3,248,320   | )
|                                                                                     |  |                            |             |   |      |   |              |      |  |   |              |  
|Net cash provided by operating activities                                            |  |                            | 898,339     |   |      |   | 7,986,823    |      |  |   | 4,405,049    |  
|                                                                                     |  |                            |            
|INVESTING ACTIVITIES:                                                                |  |                            |             |   |      |   |              |      |  |   |              |  
|Cash acquired from acquisition of Marked Tree Bancshares, Inc.                       |  |                            |            |   |      |   |             |      |  |   | 6,233,485    |  
|Sale of branches to Bank of England, Arkansas                                        |  |                            |            |   |      |   |             |      |  |   | (14,044,395  | )
|Sale of branches to Bank of Brinkley, Arkansas                                       |  |                            |            |   |      |   |             |      |  |   | (32,051,487  | )
|Sale of branches to Bank of Cave City, Arkansas                                      |  |                            |            |   |      |   | (9,697,800   | )    |  |   |             |  
|Purchases of securities                                                              |  |                            | (80,574,357 | ) |      |   | (112,557,349 | )    |  |   | (380,302,319 | )
|Proceeds from sale of securities available-for-sale                                  |  |                            | 49,180,848  |   |      |   | 86,953,100   |      |  |   | 16,850,782   |  
|Proceeds from maturities, calls and principal prepayment of investment securities    |  |                            | 49,787,128  |   |      |   | 76,386,821   |      |  |   | 203,697,624  |  
|Net (increase) decrease in FHLB Bank stock                                           |  |                            | 221,600     |   |      |   | (2,228,800   | )    |  |   | (3,400,500   | )
|(Increase) decrease in loans, net                                                    |  |                            | (44,679,765 | ) |      |   | (277,502     | )    |  |   | 22,004,843   |  
|Proceeds from sale of REO                                                            |  |                            | 1,810,175   |   |      |   | 2,031,355    |      |  |   | 2,335,569    |  
|Proceeds from sale of assets                                                         |  |                            | 13,456      |   |      |   | 7,567        |      |  |   |             |  
|Purchases of premises and equipment                                                  |  |                            | (4,270,778  | ) |      |   | (1,042,267   | )    |  |   | (2,390,775   | )
|                                                                                     |  |                            |             |   |      |   |              |      |  |   |              |  
|Net cash provided (used) by investing activities                                     |  |                            | (28,511,693 | ) |      |   | 39,575,125   |      |  |   | (181,067,173 | )

(Continued)



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POCAHONTAS BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|------------------------------------------------------------------------------------- |  | -------------------------- | -------------- | - | ---- | - | ------------ | ---- |  | - | ------------ | -
|                                                                                      |  | 2005                       |                |   | 2004 |   |              | 2003 | 
|                                                                                      |  | (As restated, see Note 26) |               
|FINANCING ACTIVITIES:                                                                 |  |                            |                |   |      |   |              |      |  |   |              |  
|Net increase (decrease) in deposits other than in acquisitions and branch sales       |  | $                          | 22,965,201     |   |      | $ | (84,548,016  | )    |  | $ | 88,402,458   |  
|Federal Home Loan Bank advances                                                       |  |                            | 1,000,211,000  |   |      |   | 877,684,600  |      |  |   | 339,486,500  |  
|Repayment of Federal Home Loan Bank advances                                          |  |                            | (1,005,462,472 | ) |      |   | (824,481,358 | )    |  |   | (260,929,838 | )
|Exercise of stock options                                                             |  |                            |               |   |      |   | 924,703      |      |  |   | 30,352       |  
|Purchase of treasury shares                                                           |  |                            |               |   |      |   | (230,344     | )    |  |   | (1,214,027   | )
|Purchase of stock for ESOP                                                            |  |                            | (468,909       | ) |      |   | (2,270,740   | )    |  |   |             |  
|Dividends paid                                                                        |  |                            | (1,438,506     | ) |      |   | (1,442,791   | )    |  |   | (1,399,430   | )
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Net cash provided (used) by financing activities                                      |  |                            | 15,806,314     |   |      |   | (34,363,946  | )    |  |   | 164,376,015  |  
|NET INCREASE (DECREASE) IN CASH AND DUE FROM BANKS                                    |  |                            | (11,807,040    | ) |      |   | 13,198,002   |      |  |   | (12,286,109  | )
|CASH AND DUE FROM BANKS, BEGINNING OF YEAR                                            |  |                            | 35,218,491     |   |      |   | 22,020,489   |      |  |   | 34,306,598   |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|CASH AND DUE FROM BANKS, END OF YEAR                                                  |  | $                          | 23,411,451     |   |      | $ | 35,218,491   |      |  | $ | 22,020,489   |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                    |  |                            |                |   |      |   |              |      |  |   |              |  
|Cash paid during the year for:                                                        |  |                            |                |   |      |   |              |      |  |   |              |  
|Interest                                                                              |  | $                          | 18,677,897     |   |      | $ | 16,679,365   |      |  | $ | 19,763,260   |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Income taxes                                                                          |  | $                          | 1,138,685      |   |      | $ | 2,884,070    |      |  | $ | 2,913,636    |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:               |  |                            |                |   |      |   |              |      |  |   |              |  
|Transfers from loans to real estate acquired, or deemed acquired, through foreclosure |  | $                          | 2,184,747      |   |      | $ | 2,706,959    |      |  | $ | 2,119,495    |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Loans originated to finance the sale of real estate acquired through foreclosure      |  | $                          | 821,500        |   |      | $ | 1,149,662    |      |  | $ | 1,532,910    |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Securities purchased not settled                                                      |  | $                          | 2,430,000      |   |      | $ |             |      |  | $ |             |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Reissuance of treasury stock for acquisition                                          |  | $                          |               |   |      | $ |             |      |  | $ | 3,161,463    |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  
|Securities transferred to held-to-maturity                                            |  | $                          |               |   |      | $ | 86,089,901   |      |  | $ |             |  
|                                                                                      |  |                            |                |   |      |   |              |      |  |   |              |  

(Concluded)

See notes to consolidated financial statements.



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POCAHONTAS BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2005, 2004, AND 2003



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Organization and Principles of Consolidation - The accompanying consolidated financial statements include the accounts of Pocahontas Bancorp, Inc. (Bancorp), its wholly owned subsidiary, First Community Bank (the
Bank), as well as the Banks subsidiaries, Southern Mortgage Corporation, P.F. Service, Inc. and Sun Realty, Inc., (collectively referred to as the Company). All significant intercompany transactions have been eliminated
in consolidation. The Bank operates 21 branches in north-eastern Arkansas and Tulsa County Oklahoma, as a federally chartered savings and loan.

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.

Cash and Due From Banks - For the purpose of presentation in the consolidated statements of cash flows, cash
and cash equivalents are defined as those amounts included in the statement of financial condition caption cash and due from banks. This includes cash on hand and amounts due from depository institutions and highly-liquid investments
having a maturity at acquisition of three months or less.

Trading Securities - Equity securities held principally for resale
in the near term are classified as trading securities and recorded at their fair values. Unrealized gains and losses on trading securities are included in other income.

Securities Held-to-Maturity - Bonds, notes, and debentures for which the Company has the positive intent and ability to hold to maturity are reported at cost, adjusted for the amortization of premiums
and the accretion of discounts, which are recognized in income using the level-yield method over the assets remaining lives and adjusted for anticipated prepayments. Should other than a temporary decline in the fair value of a security occur,
the carrying value of such security would be written down to current market value by a charge to operations. As of September 30, 2005, no securities were determined to have other than a temporary decline in fair value below cost. For a debt
security transferred into the held-to-maturity category from the available-for-sale category, the unrealized holding gain or loss at the date of the transfer is included in other comprehensive income and is amortized over the remaining life of the
security as an adjustment of yield in a manner consistent with the amortization of any premium or discount.

Securities
Available-for-Sale - Available-for-sale securities consist of securities that the Company intends to hold for an indefinite period of time and are recorded at fair value. Unrealized holding gains and losses, net of tax, on available-for-sale
securities are reported as accumulated other comprehensive income, a separate component of stockholders equity, until realized. Gains and losses on the sale of available-for-sale securities are determined using the specific-identification
method. Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary would result in a write-down of the individual security to its fair value. The related write-down would be included in
earnings as a realized loss. As of September 30, 2005, no securities were determined to have other than a temporary decline in fair value below cost.

Loans Receivable - Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal adjusted for any
charge offs, the allowance for loan losses, and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

Discounts and premiums on purchased residential real estate loans are amortized to income using the interest method over the remaining period to contractual maturity, adjusted for anticipated prepayments. Discounts
and premiums on purchased consumer loans are recognized over the expected lives of the loans using methods that approximate the interest method. Loan origination fees and certain direct origination costs are capitalized and recognized as an
adjustment of the yield of the related loan.



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The accrual of interest on impaired loans is discontinued when, in managements opinion, the
borrower may be unable to meet contractual principal or interest obligations or where interest or principal is 90 days or more past due. When a loan is placed on nonaccrual status, accrual of interest ceases and, in general, uncollected past due
interest (including interest applicable to prior reporting periods, if any) is reversed and charged against current income. Therefore, interest income is not recognized unless the financial condition or payment record of the borrower warrants the
recognition of interest income. Interest on loans that have been restructured is generally accrued according to the renegotiated terms.

Loans Receivable Held for Sale - Loans receivable, held for sale are carried at the lower of cost or market, which is computed by the aggregate method (unrealized losses are offset by unrealized gains). Gains or losses on loan
sales are recognized at the time of sale and are determined by the difference between net sales proceeds and the unpaid principal balance of loans sold, adjusted for unamortized discount points and fees collected from borrowers, deferred origination
costs and amounts allocated to retained servicing rights.

Allowance for Loan Losses - The allowance for loan losses is a
valuation allowance to provide for incurred but not yet realized losses. The Company reviews its loans for impairment on a quarterly basis. Impairment is determined by assessing the probability that the borrower will not be able to fulfill the
contractual terms of the agreement. If a loan is determined to be impaired, the amount of the impairment is measured based on the present value of expected future cash flows discounted at the loans effective interest rate or by use of the
observable market price of the loan or fair value of collateral if the loan is collateral dependent. Throughout the year management estimates the level of probable losses to determine whether the allowance for loan losses is appropriate considering
the estimated losses existing in the portfolio. Based on these estimates, an amount is charged to the provision for loan losses and credited to the allowance for loan losses in order to adjust the allowance to a level determined by management to be
appropriate relative to losses. The allowance for loan losses is increased by charges to income (provisions) and decreased by charge offs, net of recoveries. Loans are charged off by reducing the loan balance and the allowance in the period in which
the loans are deemed uncollectible in whole or in part.

Managements periodic evaluation of the appropriateness of the allowance is
based on the Company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.

Homogeneous loans are those that are considered to have common characteristics that provide for evaluation on an aggregate or
pool basis. The Company considers the characteristics of (1) one-to-four family residential first mortgage loans; (2) automobile loans; and (3) consumer and home improvement loans to permit consideration of the appropriateness of the
allowance for losses of each group of loans on a pool basis. The primary methodology used to determine the appropriateness of the allowance for losses includes segregating certain specific, poorly performing loans based on their performance
characteristics from the pools of loans as to type and then applying a loss factor to the remaining pool balance based on several factors including classification of the loans as to grade, past loss experience, inherent risks, economic conditions in
the primary market areas and other factors which usually are beyond the control of the Company. Those segregated specific loans are evaluated using the present value of future cash flows, usually determined by estimating the fair value of the
loans collateral reduced by any cost of selling and discounted at the loans effective interest rate if the estimated time to receipt of monies is more than three months.

Non-homogeneous loans are those loans that can be included in a particular loan type, such as commercial loans and multi-family and commercial first
mortgage loans, but which differ in other characteristics to the extent that valuation on a pool basis is not valid. After segregating specific, poorly performing loans and applying the methodology as noted in the preceding paragraph for such
specific loans, the remaining loans are evaluated based on payment experience, known difficulties in the borrowers business or geographic area, loss experience, inherent risks and other factors usually beyond the control of the Company. These loans
are then graded and a factor, based on experience, is applied to estimate the probable loss.

Estimates of the probability of loan losses
involve an exercise of judgment. While it is possible that in the near term the Company may sustain losses which are substantial in relation to the allowance for loan losses, it is the judgment of management that the allowance for loan losses
reflected in the consolidated statements of financial condition is appropriate considering the estimated probable losses in the portfolio.



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Servicing Servicing assets are recognized as separate assets when rights are
acquired through purchase or through sale of financial assets. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of the estimated future net servicing income of
the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest
rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an
individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.

Interest Rate Risk -
The Companys asset base is exposed to risk including the risk resulting from changes in interest rates and changes in the timing of cash flows. The Company monitors the effect of such risks by considering the mismatch of the maturities of its
assets and liabilities in the current interest rate environment and the sensitivity of assets and liabilities to changes in interest rates. The Companys management has considered the effect of significant increases and decreases in interest
rates and believes such changes, if they occurred, would be manageable and would not affect the ability of the Company to hold its assets as planned. However, the Company is exposed to significant market risk in the event of significant and
prolonged interest rate changes.

Foreclosed Real Estate - Real estate properties acquired through, or in lieu of, loan
foreclosure are initially recorded at fair value, less estimated costs to sell, at the date of foreclosure establishing a new cost basis. After foreclosure, valuations are periodically performed by management and the real estate is carried at the
lower of carrying amount or fair value less cost to sell. Revenues and expenses from operations and changes in the valuation allowance are included in non-interest expenses.

Premises and Equipment - Land is carried at cost. Buildings and furniture, fixtures, and equipment are carried at cost, less accumulated
depreciation. Depreciation for financial statement purposes is computed using the straight-line method over the estimated useful lives of the assets ranging from 3 to 40 years.

Core Deposit Premiums - Core deposit premiums paid are being amortized over ten years which approximates the estimated life of the purchased
deposits. The carrying value of core deposit premiums is periodically evaluated to estimate the remaining periods of benefit. If these periods of benefits are determined to be less than the remaining amortizable life, an adjustment to reflect such
shorter life will be made.

Goodwill Goodwill is tested periodically for impairment and written down to fair value as
necessary. As of April 1, 2005 and 2004, the Company performed its annual impairment test and concluded there was no impairment of the carrying value of the Companys goodwill. Absent any impairment indicators, the Company expects to
perform its next impairment test as of April 1, 2006.

Sale of Branches  In fiscal year 2004, the Company sold its
banking offices in Strawberry, Arkansas, to the Bank of Cave City. In fiscal year 2003, the Company sold its banking offices in Brinkley, Arkansas, to the Bank of Brinkley, and sold its banking offices in Carlisle and England, Arkansas, to the Bank
of England.

Income Taxes - Deferred tax assets and liabilities are recorded for temporary differences between the carrying
value and tax bases of assets and liabilities. Such amounts are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws
or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Stock
Compensation  At September 30, 2005, the Company has two stock-based employee compensation plans, which are more fully described in Note 22. The Company applies the provisions of Accounting Principles Board Opinion No. 25
(APB 25) in accounting for its stock option plans as allowed under SFAS No. 123, Accounting for Stock Based Compensation. Under APB 25, because the exercise price of employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recorded. Had compensation cost for these plans been determined at the fair value on the grant dates for awards under those plans consistent with the methods of SFAS No. 123, the
Companys pro forma net income and pro forma earnings per share would have been as follows:



|                           |  |                         |       |      |   |       |  |   |      
|-------------------------- |  | ----------------------- | ----- | ---- | - | ----- |  | - | -----
|                           |  | Year Ended September 30
|                           |  | 2005                    |       | 2004 |   | 2003 
|Net income (in thousands): |  |                         |       |      |   |       |  |   |      
|As reported                |  | $                       | 3,239 |      | $ | 3,457 |  | $ | 5,294
|Pro forma                  |  |                         | 3,239 |      |   | 3,445 |  |   | 5,186
|Earnings per share:        |  |                         |       |      |   |       |  |   |      
|Basic - as reported        |  |                         | 0.72  |      |   | 0.77  |  |   | 1.22 
|Basic - pro forma          |  |                         | 0.72  |      |   | 0.77  |  |   | 1.19 
|Diluted - as reported      |  |                         | 0.71  |      |   | 0.75  |  |   | 1.20 
|Diluted - pro forma        |  |                         | 0.71  |      |   | 0.75  |  |   | 1.17 



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In determining the above pro forma disclosure, the fair value of options granted was estimated on the
date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: expected volatility - 37%, expected life of grant  6.5 years, risk free interest rate 5.25%, and expected dividend rate of 2.5%.

Recently Adopted or Issued Accounting Standards In March 2004 the Emerging Issues Task Force (EITF)
reached a consensus on EITF Issue 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-1). EITF 03-1 indicates that an investor must have the intent and ability to hold an
investment until a forecasted recovery of the fair value up to or beyond the cost of the investment in order to determine that any impairment is temporary. If the investor does not have the intent and ability to hold the investment until a
forecasted recovery, then an other-than-temporary impairment must be recorded. The consensus by the EITF is effective for periods beginning after June 15, 2004. However, the guidance contained in paragraphs 10-20 of EITF 03-1 was delayed by
FASB Staff Position (FSP) EITF Issue 03-1-1, Effective Date of Paragraphs 10-20 of EIFP Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, posted
September 30, 2004.

In November 2005, FSP Statements of Financial Accounting Standards (FAS) 115-1 and FAS 124-1 The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments was issued. The FSP addressed the determination as to when an investment is considered impaired, whether that impairment is other-than-temporary, and the
measurement of an impairment loss. It also included accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. The guidance of the FSP amended FASB Statements No. 115, Accounting for Certain Investments in Debt and Equity Securities, No. 124, Accounting for Certain Investments Held by Non-for-Profit
Organizations, and APB Opinion No 18, The Equity Method of Accounting for Investments in Common Stock. The FSP nullified certain requirements of Issue 03-1 and supersedes EITF Topic No. D-44, Recognition of Other-Than-Temporary
Impairment upon the Planned Sale of a Security Whose Cost Exceeds Fair Value. The FSP gives guidance regarding how to determine whether an investment is impaired, if impaired how to evaluate whether the impairment is other-than-temporary,
and proper accounting and disclosures for the investments. The Guidance is effective for reporting periods beginning after December 15, 2005; earlier application is permitted. The adoption of EITF 03-1 did not have an effect on net income or
stockholders equity.

In December 2004 the FASB issued Statement No. 123 (revised 2004) (FAS 123 (R)), Share-Based
Payments. FAS 123 (R) requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments such as stock options granted to employees. As of October 1, 2005, the Company adopted FAS
123(R) using the modified prospective method. Under this method, the Company is required to record compensation expense (as previous awards continue to vest) for the unvested portion of previously granted awards that remain outstanding at the date
of adoption. As of October 31, 2005, the Companys options were fully vested. Accordingly, the adoption of FAS 123 (R) did not have an affect on the Companys consolidated financial statements.

Reclassifications -Certain 2003 and 2004 amounts have been reclassified to conform to the 2005 presentations.



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|2. | ACQUISITIONS
|-- | ------------

On April 30, 2003, the Company
completed the acquisition of Marked Tree Bancshares (Marked Tree) and its bank subsidiary, Marked Tree Bank, in a stock transaction valued at approximately $3.2 million with the Company issuing 278,543 shares of stock. At April 30,
2003, Marked Tree had total assets of $32.6 million, net loans receivable of $11.8 million, of which $3.5 million were classified as commercial real estate loans and $3.3 million classified as non-real estate loans. A core deposit intangible asset
of $0.4 million and no goodwill was recognized related to the acquisition. The core deposit intangible asset is estimated to have a useful life of 10 years.

The following unaudited pro forma information is being provided for the business acquisitions made during the year ended September 30, 2003, as though the Company made the acquisitions at the beginning of the
year.



|                           |  |                                          |       
|-------------------------- |  | ---------------------------------------- | ------
|                           |  | 2003                                    
|                           |  | (in thousands, exceptearnings per share)
|Net interest income        |  | $                                        | 18,357
|Income before income taxes |  | $                                        | 8,267 
|Net income                 |  | $                                        | 5,715 
|Basic earnings per share   |  | $                                        | 1.32  
|Diluted earnings per share |  | $                                        | 1.29  



|3. | FAIR VALUES OF FINANCIAL INSTRUMENTS
|-- | ------------------------------------

The estimated
fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates
of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

The carrying amounts and estimated fair values of financial instruments at
September 30, 2005 and 2004, were as follows (items which are not financial instruments are not included):



|                                       |  |                 |             |                      |   |                 |  |                      |             |  |   |            
|-------------------------------------- |  | --------------- | ----------- | -------------------- | - | --------------- |  | -------------------- | ----------- |  | - | -----------
|                                       |  | 2005            |             | 2004                
|                                       |  | CarryingAmounts |             | Estimated Fair Value |   | CarryingAmounts |  | Estimated Fair Value
|Financial assets and liabilities:      |  |                 |             |                      |   |                 |  |                      |             |  |   |            
|Cash and due from banks                |  | $               | 23,411,451  |                      | $ | 23,411,451      |  | $                    | 35,218,491  |  | $ | 35,218,491 
|Cash surrender value of life insurance |  |                 | 8,019,097   |                      |   | 8,019,097       |  |                      | 7,684,251   |  |   | 7,684,251  
|Securities held-to-maturity            |  |                 | 129,952,373 |                      |   | 127,755,514     |  |                      | 86,200,660  |  |   | 85,581,734 
|Securities available-for-sale          |  |                 | 99,460,045  |                      |   | 99,460,045      |  |                      | 160,633,022 |  |   | 160,633,021
|Trading securities                     |  |                 | 3,126,044   |                      |   | 3,126,044       |  |                      | 1,982,365   |  |   | 1,982,365  
|Loans receivable, net                  |  |                 | 426,538,047 |                      |   | 423,664,000     |  |                      | 382,316,096 |  |   | 386,252,000
|Loans receivable held for sale         |  |                 | 3,057,985   |                      |   | 3,260,000       |  |                      | 1,494,200   |  |   | 1,510,000  
|Accrued interest receivable            |  |                 | 4,487,837   |                      |   | 4,487,837       |  |                      | 4,196,103   |  |   | 4,196,103  
|Federal Home Loan Bank stock           |  |                 | 7,962,000   |                      |   | 7,962,000       |  |                      | 7,925,900   |  |   | 7,925,900  
|Demand and savings deposits            |  |                 | 246,257,677 |                      |   | 245,604,000     |  |                      | 251,617,795 |  |   | 251,617,795
|Time deposits                          |  |                 | 267,786,057 |                      |   | 267,157,000     |  |                      | 239,460,738 |  |   | 240,712,900
|Federal Home Loan Bank advances        |  |                 | 148,645,397 |                      |   | 147,967,000     |  |                      | 153,896,869 |  |   | 155,438,000

For purposes of the above disclosures of estimated fair value, the following assumptions were
used. The estimated fair value for cash and due from banks, cash surrender value of life insurance, accrued interest receivable, and Federal Home Loan Bank (FHLB) stock is considered to approximate cost. The estimated fair values for
securities are based on quoted market values for the individual securities or for equivalent securities. The fair value for loans is estimated by discounting the future cash flows using the current rates the Company would charge for



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similar such loans at the applicable date. The estimated fair value for demand and savings deposits is
based on the amount for which they could be settled on demand. The estimated fair values for time deposits and FHLB advances are based on estimates of the rate the Company would pay on such deposits and borrowed funds at the applicable date, applied
for the time period until maturity. The estimated fair values for other financial instruments approximate cost and are not considered significant to this presentation. Fair values for the Companys off-balance-sheet instruments, which consist
of lending commitments and standby and commercial letters of credit, are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties credit standing.
Management believes that the fair value of these off-balance-sheet instruments is not significant.



|4. | SECURITIES
|-- | ----------

The amortized cost and estimated fair
values of securities at September 30 are as follows:



|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|---------------------------- |  | -------------- | ----------- | -------------------- | - | --------------------- |  | -------------------- | --------- |  | - | -----------
|                             |  | 2005          
|Held-to-Maturity             |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Estimated Fair Value
|US Government Agencies       |  | $              | 4,000,000   |                      | $ |                      |  | $                    | 74,057    |  | $ | 3,925,943  
|US Government Treasury Notes |  |                | 19,844,509  |                      |   |                      |  |                      | 133,571   |  |   | 19,710,938 
|Mortgage Backed Securities   |  |                | 76,704,653  |                      |   | 9,560                 |  |                      | 2,101,766 |  |   | 74,612,447 
|Municipal bonds              |  |                | 29,403,211  |                      |   | 257,902               |  |                      | 154,927   |  |   | 29,506,186 
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|Total                        |  | $              | 129,952,373 |                      | $ | 267,462               |  | $                    | 2,464,321 |  | $ | 127,755,514
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|                             |  |                |             |                     
|Available-for-sale           |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Estimated Fair Value
|Mortgage backed securities   |  | $              | 101,343,904 |                      | $ |                      |  | $                    | 2,859,874 |  | $ | 98,484,030 
|Mutual fund                  |  |                | 1,000,000   |                      |   |                      |  |                      | 23,985    |  |   | 976,015    
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|Total                        |  | $              | 102,343,904 |                      | $ |                      |  | $                    | 2,883,859 |  | $ | 99,460,045 
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|                             | 
|                             |  | 2004          
|Held-to-Maturity             |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Estimated Fair Value
|US Government Agencies       |  | $              | 3,940,795   |                      | $ |                      |  | $                    | 44,866    |  | $ | 3,895,929  
|Mortgage Backed Securities   |  |                | 59,325,377  |                      |   | 7,558                 |  |                      | 1,127,134 |  |   | 58,205,801 
|Municipal bonds              |  |                | 22,934,488  |                      |   | 614,734               |  |                      | 69,218    |  |   | 23,480,004 
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            
|Total                        |  | $              | 86,200,660  |                      | $ | 622,292               |  | $                    | 1,241,218 |  | $ | 85,581,734 
|                             |  |                |             |                      |   |                       |  |                      |           |  |   |            



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|                           |  |                |             |                      |   |                       |  |                      |         |  |   |            
|-------------------------- |  | -------------- | ----------- | -------------------- | - | --------------------- |  | -------------------- | ------- |  | - | -----------
|Available-for-sale         |  | Amortized Cost |             | GrossUnrealizedGains |   | GrossUnrealizedLosses |  | Estimated Fair Value
|U.S. Government agencies   |  | $              | 500,407     |                      | $ | 1,080                 |  | $                    |        |  | $ | 501,487    
|Mortgage backed securities |  |                | 158,881,191 |                      |   | 925,235               |  |                      | 664,743 |  |   | 159,141,683
|Mutual fund                |  |                | 1,000,000   |                      |   |                      |  |                      | 10,148  |  |   | 989,852    
|                           |  |                |             |                      |   |                       |  |                      |         |  |   |            
|Total                      |  | $              | 160,381,598 |                      | $ | 926,315               |  | $                    | 674,891 |  | $ | 160,633,022
|                           |  |                |             |                      |   |                       |  |                      |         |  |   |            

The amortized cost and estimated fair value of securities at September 30, 2005, by
contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                                 |  |                  |             |                      |   |                |  |                      |             |  |   |           
|-------------------------------- |  | ---------------- | ----------- | -------------------- | - | -------------- |  | -------------------- | ----------- |  | - | ----------
|                                 |  | Held-to-Maturity |             | Available-for-Sale  
|                                 |  | Amortized Cost   |             | Estimated Fair Value |   | Amortized Cost |  | Estimated Fair Value
|Due in one year or less          |  | $                | 801,473     |                      | $ | 800,477        |  | $                    |            |  | $ |          
|Due from one year to five years  |  |                  | 23,472,447  |                      |   | 23,328,700     |  |                      |            |  |   |          
|Due from five years to ten years |  |                  | 8,886,977   |                      |   | 8,962,933      |  |                      |            |  |   |          
|Due after ten years              |  |                  | 20,086,823  |                      |   | 20,050,957     |  |                      |            |  |   |          
|Mortgage backed securities       |  |                  | 76,704,653  |                      |   | 74,612,447     |  |                      | 101,343,904 |  |   | 98,484,030
|Mutual fund                      |  |                  |            |                      |   |               |  |                      | 1,000,000   |  |   | 976,015   
|                                 |  |                  |             |                      |   |                |  |                      |             |  |   |           
|Total                            |  | $                | 129,952,373 |                      | $ | 127,755,514    |  | $                    | 102,343,904 |  | $ | 99,460,045
|                                 |  |                  |             |                      |   |                |  |                      |             |  |   |           

Available-for-sale securities with a carrying value and a fair value of $16,440,711 and
$56,354,134 at September 30, 2005 and 2004, respectively, and held-to-maturity securities with a carrying value of $87,277,527 and a fair value of $85,722,293 at September 30, 2005, and a carrying value of $36,125,480 and a fair value of
$35,650,507 at September 30, 2004, were pledged to collateralize public and trust deposits.

For the years ended September 30,
2005, 2004, and 2003, proceeds from the sales of securities available-for-sale amounted to $49,180,848, $86,953,100, and $16,850,782, respectively. Gross realized gains amounted to $566,790, $845,892, and $327,694, respectively. Gross realized
losses amounted to $851, $460,026, and $3,469, respectively.

The following table presents those investments of the Company with gross
unrealized losses, along with the related fair value, by investment category and length of time in a loss position. These individual securities have been in a continuous unrealized loss position as of September 30, 2005.



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|                                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|------------------------------------ | ------------ | ------------------- | ---------------- |  | ------------------- | ------------ | - | ---------------- | - | ---------- | ------------ | - | ---------------- | - |  | - | ---------- |  | - | ---------- | -
|Security Description                 |              | Less than 12 months |                  |  | 12 months or longer |              |   | Total            |  
|                                     | Market Value |                     | UnrealizedLosses |  |                     | Market Value |   | UnrealizedLosses |   |            | Market Value |   | UnrealizedLosses |  
|Held-to-Maturity                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|U.S. Government agency obligations   |              |                     |                 |  |                     |             |   |                  |   | 3,925,943  |              |   | (74,057          | ) |  |   | 3,925,943  |  |   | (74,057    | )
|U.S. Government Treasury obligations |              |                     | 19,710,938       |  |                     | (133,571     | ) |                  |   |           |              |   |                 |   |  |   | 19,710,938 |  |   | (133,571   | )
|Mortgage-backed securities           |              |                     | 33,713,993       |  |                     | (797,211     | ) |                  |   | 27,044,717 |              |   | (1,304,555       | ) |  |   | 60,758,710 |  |   | (2,101,766 | )
|Municipal Bonds                      |              |                     | 7,294,190        |  |                     | (93,576      | ) |                  |   | 2,545,536  |              |   | (61,351          | ) |  |   | 9,839,726  |  |   | (154,927   | )
|                                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|                                     |              | $                   | 60,719,121       |  | $                   | (1,024,358   | ) |                  | $ | 33,516,196 |              | $ | (1,439,963       | ) |  | $ | 94,235,317 |  | $ | (2,464,321 | )
|                                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|Available-for-Sale                   |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|Mortgage-backed securities           |              |                     | 83,369,654       |  |                     | (2,348,376   | ) |                  |   | 15,114,376 |              |   | (511,498         | ) |  |   | 98,484,030 |  |   | (2,859,874 | )
|Mutual Fund                          |              |                     | 976,015          |  |                     | (23,985      | ) |                  |   |           |              |   |                 |   |  |   | 976,015    |  |   | (23,985    | )
|                                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  
|                                     |              | $                   | 84,345,669       |  | $                   | (2,372,361   | ) |                  | $ | 15,114,376 |              | $ | (511,498         | ) |  | $ | 99,460,045 |  | $ | (2,883,859 | )
|                                     |              |                     |                  |  |                     |              |   |                  |   |            |              |   |                  |   |  |   |            |  |   |            |  

Management of the Company anticipates that the market values of its investments which have
unrealized losses for 12 months or longer at September 30, 2005, will increase to at least the cost of the investment to the Company. The investments with indicated losses above include debt securities whose market values have declined due to
interest rate fluctuations and equity securities whose decline appears to be due to normal market factors including the issuers financial performance. In determining that the investment is not other-than-temporarily impaired the Company
considered reports of financial specialists and the volatility of the investments fair value.

U.S. Government Obligations.The
unrealized losses on the Companys investments in U.S. Treasury obligations and direct obligations of U.S. government agencies were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle
the securities at a price less than the amortized cost of the investment. Because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments
to be other-than-temporarily impaired at September 30, 2005.

Federal Agency Mortgage-Backed Securities. The unrealized losses
on the Companys investment in federal agency mortgage-backed securities were caused by interest rate increases. The Company purchased those investment securities at a premium relative to their face amount, and the contractual cash flows of
those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Companys investment. Because the decline in market value
is attributable to changes in interest rates and because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be
other-than-temporarily impaired at September 30, 2005.

Municipal Bonds. The unrealized losses on the Companys investments
in municipal bonds were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability
and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2005.

Mutual Fund.Management believes that the unrealized loss on the Companys investment in the CRA Mutual Fund was primarily caused by interest
rate increases. The composition of the Fund includes Asset Backed Securities/CMOs, Targeted Mortgage-backed Securities, FNMA, Taxable Municipal Bonds, Money markets, and project loans. Because the company has the ability and intent to hold this
investment until a recovery of fair value, the Company does not consider this investment to be other-than-temporarily impaired at September 30, 2005.



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|5. | LOANS RECEIVABLE
|-- | ----------------

Loans receivable at
September 30 are summarized as follows:



|                          |  |      |             |      |   |            
|------------------------- |  | ---- | ----------- | ---- | - | -----------
|                          |  | 2005 |             | 2004
|Real estate loans:        |  |      |             |      |   |            
|Single-family residential |  | $    | 133,438,043 |      | $ | 126,577,555
|Multifamily residential   |  |      | 8,812,085   |      |   | 2,392,785  
|Agricultural              |  |      | 20,190,397  |      |   | 17,915,364 
|Commercial                |  |      | 135,810,958 |      |   | 135,325,967
|                          |  |      |             |      |   |            
|Total real estate loans   |  |      | 298,251,483 |      |   | 282,211,671
|                          |  |      |             |      |   |            
|Other loans:              |  |      |             |      |   |            
|Savings account loans     |  |      | 6,279,261   |      |   | 5,570,835  
|Commercial business       |  |      | 80,695,014  |      |   | 57,045,618 
|Other                     |  |      | 52,150,010  |      |   | 44,408,877 
|                          |  |      |             |      |   |            
|Total other loans         |  |      | 139,124,285 |      |   | 107,025,330
|                          |  |      |             |      |   |            
|Total loans receivable    |  |      | 437,375,768 |      |   | 389,237,001
|                          |  |     
|Less:                     |  |      |             |      |   |            
|Undisbursed loan proceeds |  |      | 7,456,048   |      |   | 2,942,255  
|Unearned fees, net        |  |      | 172,412     |      |   | 213,150    
|Allowance for loan losses |  |      | 3,209,261   |      |   | 3,765,500  
|                          |  |      |             |      |   |            
|Loans receivable, net     |  | $    | 426,538,047 |      | $ | 382,316,096
|                          |  |      |             |      |   |            

The Company originates adjustable rate mortgage loans to hold for investment. The Company also
originates 15 year, 20 year and 30 year fixed-rate mortgage loans and sells substantially all new originations of such loans to outside investors. Such loans are typically originated for sale. These loans are typically held for sale only a short
time, and were approximately $3.1 million and $1.5 million as of September 30, 2005 and 2004, respectively. Normally the short time between origination and sale does not provide for significant differences between cost and market values.

The Company is not committed to lend additional funds to debtors whose loans have been modified.

The Company grants real estate, commercial, consumer and agricultural real estate loans, primarily in north-eastern Arkansas and Tulsa County Oklahoma.
Substantially all loans are collateralized by real estate or consumer assets.



|6. | ACCRUED INTEREST RECEIVABLE
|-- | ---------------------------

Accrued interest
receivable at September 30 is summarized as follows:



|                 |  |      |           |      |   |          
|---------------- |  | ---- | --------- | ---- | - | ---------
|                 |  | 2005 |           | 2004
|Securities       |  | $    | 1,050,443 |      | $ | 1,125,158
|Loans receivable |  |      | 3,437,394 |      |   | 3,070,945
|                 |  |      |           |      |   |          
|TOTAL            |  | $    | 4,487,837 |      | $ | 4,196,103
|                 |  |      |           |      |   |          



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|7. | ALLOWANCE FOR LOAN AND FORECLOSED REAL ESTATE LOSSES
|-- | ----------------------------------------------------

Activity in the allowance for losses on loans and foreclosed real estate for the years ended September 30, 2005, and 2004 is as follows:



|                                   |  |       |            |   |                       |   |          |  
|---------------------------------- |  | ----- | ---------- | - | --------------------- | - | -------- | -
|                                   |  | Loans |            |   | ForeclosedReal Estate |  
|BALANCE, OCTOBER 1, 2003           |  | $     | 4,067,660  |   |                       | $ | 88,293   |  
|Provision for losses               |  |       | 3,900,000  |   |                       |   | 272,515  |  
|Balance transferred at acquisition |  |       | 0          |   |                       |   |         |  
|Charge-offs                        |  |       | (4,645,193 | ) |                       |   | (317,717 | )
|Recoveries                         |  |       | 443,033    |   |                       |   | 34,264   |  
|                                   |  |       |            |   |                       |   |          |  
|BALANCE, SEPTEMBER 30, 2004        |  |       | 3,765,500  |   |                       |   | 77,355   |  
|Provision for losses               |  |       | 525,000    |   |                       |   | 161,200  |  
|Charge-offs                        |  |       | (2,309,202 | ) |                       |   | (201,244 | )
|Recoveries                         |  |       | 1,227,963  |   |                       |   | 7,000    |  
|                                   |  |       |            |   |                       |   |          |  
|BALANCE, SEPTEMBER 30, 2005        |  | $     | 3,209,261  |   |                       | $ | 44,311   |  
|                                   |  |       |            |   |                       |   |          |  

The following is a summary of information pertaining to impaired and non-accrual loans:



|                                                            |  |                           |       |      |   |      
|----------------------------------------------------------- |  | ------------------------- | ----- | ---- | - | -----
|                                                            |  | September 30,            
|                                                            |  | 2005                      |       | 2004
|                                                            |  | (in thousands)           
|Impaired loans with a valuation allowance                   |  | $                         | 937   |      | $ | 8,426
|Impaired loans without a valuation allowance                |  |                           |      |      |   |     
|                                                            |  |                           |       |      |   |      
|Total Impaired Loans                                        |  | $                         | 937   |      | $ | 8,426
|                                                            |  |                           |       |      |   |      
|Valuation allowance related to impaired loans               |  | $                         | 229   |      | $ | 1,474
|Total non-accrual loans                                     |  | $                         | 3,936 |      | $ | 4,666
|Total loans past-due ninety days or more and still accruing |  | $                         | 161   |      | $ | 68   
|                                                            | 
|                                                            |  | Years Ended September 30,
|                                                            |  | 2005                      |       | 2004
|                                                            |  | (in thousands)           
|Average investment in impaired loans                        |  | $                         | 4,700 |      | $ | 8,562
|                                                            |  |                           |       |      |   |      
|Interest income recognized on impaired loans                |  | $                         | 35    |      | $ | 355  
|                                                            |  |                           |       |      |   |      

Interest income recognized on a cash basis on impaired loans is not significantly different from
interest recognized on impaired loans above. No additional funds are committed to be advanced in connection with impaired loans.



20



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##### Table of Contents

|8. | PREMISES AND EQUIPMENT
|-- | ----------------------

Premises and equipment at
September 30 are summarized as follows:



|                                   |  |      |            |   |      |   |            |  
|---------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                   |  | 2005 |            |   | 2004 |  
|Cost:                              |  |      |            |   |      |   |            |  
|Land                               |  | $    | 3,654,614  |   |      | $ | 3,102,389  |  
|Buildings and improvements         |  |      | 14,186,463 |   |      |   | 11,342,272 |  
|Furniture, fixtures, and equipment |  |      | 5,481,484  |   |      |   | 4,897,854  |  
|                                   |  |      |            |   |      |   |            |  
|                                   |  |      | 23,322,561 |   |      |   | 19,342,515 |  
|Less accumulated depreciation      |  |      | (6,605,649 | ) |      |   | (5,580,077 | )
|                                   |  |      |            |   |      |   |            |  
|TOTAL                              |  | $    | 16,716,912 |   |      | $ | 13,762,438 |  
|                                   |  |      |            |   |      |   |            |  

The Company is obligated under various noncancelable operating leases for premises and
equipment. Rental expense was $122,000, $131,000, and $157,000 for the years ended September 30, 2005, 2004 and 2003, respectively. Most of the leases contain options to extend for periods of 5 years.



|9. | GOODWILL AND CORE DEPOSIT PREMIUMS, NET
|-- | ---------------------------------------

There has
been no change in the $8,847,572 carrying amount of goodwill for the years ended September 30, 2005 and 2004.

As of September 30,
2005 the Company has total core deposit intangible assets of $5,323,319 net of accumulated amortization of approximately $4,266,888. Core deposit intangible assets are estimated to have a useful life of 10 years.

The amortization of core deposit premiums is reported in the interest expense-deposits line item of the Companys consolidated statements
of income and comprehensive income. Total amortization expense for core deposit intangible assets was approximately $973,204, $944,696, and $1,095,933, for the years ended September 30, 2005, 2004, and 2003, respectively. Amortization expense
for the net carrying amount of core deposit intangible assets at September 30, 2005 is estimated to be as follows:



|                              |  |   |          
|----------------------------- |  | - | ---------
|Year ended September 30, 2006 |  | $ | 973,205  
|Year ended September 30, 2007 |  |   | 973,205  
|Year ended September 30, 2008 |  |   | 838,883  
|Year ended September 30, 2009 |  |   | 794,109  
|Year ended September 30, 2010 |  |   | 794,109  
|After September 30, 2010      |  |   | 949,808  
|                              |  |   |          
|Total                         |  | $ | 5,323,319
|                              |  |   |          



|10. | DEPOSITS
|--- | --------

Deposits at September 30 are
summarized as follows:



|                                                                                                                        |  |      |             |      |   |            
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | - | -----------
|                                                                                                                        |  | 2005 |             | 2004
|Checking accounts, including noninterest-bearing deposits of $40,043,005 and $37,932,365 in 2005 and 2004, respectively |  | $    | 200,411,165 |      | $ | 203,471,772
|Passbook savings                                                                                                        |  |      | 45,846,512  |      |   | 48,146,023 
|Certificates of deposit                                                                                                 |  |      | 267,786,057 |      |   | 239,460,738
|                                                                                                                        |  |      |             |      |   |            
|TOTAL                                                                                                                   |  | $    | 514,043,734 |      | $ | 491,078,533
|                                                                                                                        |  |      |             |      |   |            



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The aggregate amount of jumbo certificates of deposit with a minimum denomination of $100,000 was
$115,268,031 and $86,550,476 at September 30, 2005 and 2004, respectively.

At September 30, 2005, scheduled maturities of
certificates of deposit are as follows:



|                                   |  |       |             |  
|---------------------------------- |  | ----- | ----------- | -
|                                   |  | Total |            
|Years ending September 30:         |  |       |             |  
|                                   | 
|2006                               |  | $     | 177,443,418 |  
|2007                               |  |       | 37,617,390  |  
|2008                               |  |       | 27,984,165  |  
|2009                               |  |       | 17,035,251  |  
|2010                               |  |       | 8,360,161   |  
|                                   |  |       |             |  
|Subtotal                           |  | $     | 268,440,385 |  
|Unamortized acquisition adjustment |  |       | (654,328    | )
|                                   |  |       |             |  
|TOTAL                              |  | $     | 267,786,057 |  
|                                   |  |       |             |  

Interest expense on deposits for the years ended September 30, 2005, 2004, and 2003, is
summarized as follows:



|                        |  |      |            |      |   |            |  |   |           
|----------------------- |  | ---- | ---------- | ---- | - | ---------- |  | - | ----------
|                        |  | 2005 |            | 2004 |   | 2003      
|Checking                |  | $    | 3,191,612  |      | $ | 3,529,430  |  | $ | 4,235,136 
|Passbook savings        |  |      | 851,069    |      |   | 585,210    |  |   | 1,832,958 
|Certificates of deposit |  |      | 8,189,538  |      |   | 7,505,007  |  |   | 10,599,565
|                        |  |      |            |      |   |            |  |   |           
|TOTAL                   |  | $    | 12,232,219 |      | $ | 11,619,647 |  | $ | 16,667,659
|                        |  |      |            |      |   |            |  |   |           



|11. | FEDERAL HOME LOAN BANK STOCK AND ADVANCES
|--- | -----------------------------------------

The
Company is required to purchase stock in the FHLB. Such stock may be redeemed at par but is not readily marketable. At September 30, 2005 and 2004, the Company had stock of $7,962,000 and $7,925,900, respectively. Pursuant to collateral
agreements with the FHLB, advances are collateralized by all of the Companys stock in the FHLB and by 75% of qualifying loans with a carrying value at September 30, 2005 and 2004, of approximately $136,739,960 and $166,416,957,
respectively. Advances at September 30, 2005 and 2004, have maturity dates as follows:



|              |  |                     |   |      |        |             |                     |      |   |        |   |            
|------------- |  | ------------------- | - | ---- | ------ | ----------- | ------------------- | ---- | - | ------ | - | -----------
|              |  | 2005                |   | 2004
|              |  | WeightedAverageRate |   |      | Amount |             | WeightedAverageRate |      |   | Amount
|September 30: |  |                     |   |      |        |             |                     |      |   |        |   |            
|2005          |  |                    |   |      | $      |            |                     | 2.38 | % |        | $ | 23,000,000 
|2006          |  | 2.93                | % |      |        | 76,980,000  |                     | 2.69 | % |        |   | 58,980,000 
|2007          |  | 3.31                | % |      |        | 49,500,000  |                     | 3.31 | % |        |   | 49,500,000 
|2008          |  | 3.95                | % |      |        | 10,574,980  |                     | 3.99 | % |        |   | 10,779,661 
|2009          |  | 4.43                | % |      |        | 5,000,000   |                     | 4.43 | % |        |   | 5,000,000  
|2010          |  | 7.03                | % |      |        | 4,000,000   |                     | 7.03 | % |        |   | 4,000,000  
|Thereafter    |  | 6.97                | % |      |        | 2,590,417   |                     | 6.97 | % |        |   | 2,637,208  
|              |  |                     |   |      |        |             |                     |      |   |        |   |            
|TOTAL         |  | 3.36                | % |      | $      | 148,645,397 |                     | 3.18 | % |        | $ | 153,896,869
|              |  |                     |   |      |        |             |                     |      |   |        |   |            

Interest expense on FHLB advances was $4,997,198, $3,657,921, and $1,223,039, for the years ended
September 30, 2005, 2004, and 2003, respectively. Interest rates on all FHLB advances are fixed as of September 30, 2005.



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|12. | TRUST PREFERRED SECURITIES
|--- | --------------------------

On March 28, 2001,
Pocahontas Capital Trust I, a Delaware statutory business trust wholly owned by Pocahontas Bancorp, Inc., sold to qualified buyers in a private placement offering $7.5 million of 10.18% cumulative trust preferred securities. The proceeds were used
to purchase an equal principal amount of 10.18% subordinated debentures of Pocahontas Bancorp, Inc. Pocahontas Bancorp, Inc. has, through various contractual arrangements, fully and unconditionally guaranteed all obligations of Pocahontas Capital
Trust I on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as regulatory Tier 1 capital and are presented in the consolidated statements of financial condition as
liabilities. The sole asset of Pocahontas Capital Trust I is the subordinated debentures issued by Pocahontas Bancorp, Inc. Both the preferred securities of Pocahontas Capital Trust I and the subordinated debentures of Pocahontas Bancorp, Inc. will
mature on June 6, 2031; however, they may be prepaid, prior to maturity at any time on or after June 8, 2011, or earlier upon the occurrence of a special event as defined as certain changes in tax or investment company laws or regulatory
capital requirements.

On November 28, 2001, Pocahontas Capital Trust II, a Delaware statutory business trust wholly owned by
Pocahontas Bancorp, Inc., sold to qualified buyers in a private placement offering $10.0 million of variable rate (LIBOR +3.75%) cumulative trust preferred securities. The coupon resets semi-annually and has a coupon cap of 11.0% until
December 8, 2006. The proceeds were used to purchase an equal principal amount of variable rate (LIBOR +3.75%) subordinated debentures of Pocahontas Bancorp, Inc. Pocahontas Bancorp, Inc. has, through various contractual arrangements, fully and
unconditionally guaranteed all obligations of Pocahontas Capital Trust II on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as regulatory Tier 1 capital and are
presented in the consolidated statements of financial condition as liabilities. The sole asset of Pocahontas Capital Trust II is the subordinated debentures issued by Pocahontas Bancorp, Inc. Both the preferred securities of Pocahontas Capital Trust
II and the subordinated debentures of Pocahontas Bancorp, Inc. will mature on December 8, 2031; however, they may be prepaid, prior to maturity and upon prior approval from the OTS at any time on or after December 8, 2006, or earlier upon
the occurrence of a special event as defined as certain changes in tax or investment company laws or regulatory capital requirements.

For
the year ended September 30, 2005, 2004 and 2003, interest expense incurred on the trust preferred securities totaled $1,440,363, $1,286,688, and $1,292,519, respectively. Such interest is shown under interest expense as a separate line item,
in the consolidated statements of income and comprehensive income.



|13. | DEFERRED COMPENSATION
|--- | ---------------------

The Company has funded and
unfunded deferred compensation agreements with a former executive and non-officer members of the Board of Directors. The plans limit the ability of the executive to compete with the Company and require that the directors continue to serve for a
specified period of time. The amount of expense related to such plans for the years ended September 30, 2005, 2004, and 2003, was approximately $14,000, $13,000, and $48,000, respectively. During the years ended September 30, 2005 and
2004, an additional expense of $1,600 and $3,000, respectively, was incurred relating to separation agreements with officers. As of September 30, 2005 and 2004, approximately $302,000, and $447,000, respectively was payable under the remaining
agreements.

On March 2, 1999, the Company, the Bank, and an executive entered into an Employment Separation Agreement and Release (the
Agreement). The Agreement provides, among other things, for the payment by the Company to the executive of $2,750,000, in installments of not less than $150,000 annually, with the entire unpaid amount due upon the executives death.
The unpaid balance, including accrued interest, was approximately $1,875,000 and $1,983,000 at September 30, 2005 and 2004, respectively.



|14. | RETIREMENT PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN
|--- | -------------------------------------------------

The Company has a defined contribution retirement plan. The plan covers all employees who have accumulated one year with 1,000 hours of service in each year. A flat percentage rate, selected by discretion of the Board of Directors, is
applied to the base salary of each eligible employee. The Company made no contributions to the plan for the years ended September 30, 2005, 2004 and 2003.



23



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##### Table of Contents

The Company established an Employee Stock Ownership Plan (ESOP) on March 31, 1998. In
2003, the ESOP established a $2.0 million line of credit with the Company that was to be used to purchase additional shares of Company stock. In 2004, the ESOP established a second $2.0 million line of credit with the Company that was to be used to
purchase additional shares of Company stock. Both loans were collateralized by the shares that were purchased with the proceeds of the loan; as of September 30, 2004, the ESOP owed $0.3 million on the first line of credit and $1.8 million on
the second line of credit.

During October 2004, the ESOP established a third line of credit for $3.1 million with the Company to be used to
payoff the outstanding balances of $0.3 million on the first line of credit and the $1.8 million on the second line of credit and purchase up to $1.0 million in additional shares of Company stock on or before December 31, 2005. The loan is
collateralized by shares that were purchased with the proceeds of the loans; as of September 30, 2005, the ESOP had drawn $0.5 million of the $1.0 million available to draw by December 31, 2005 and owed $2.1 million on the line of credit.
As the loan is repaid, ESOP shares will be allocated to participants of the ESOP and are available for release to the participants subject to the vesting provisions of the ESOP. The Company contributed $503,605, $717,636, and $799,113, respectively,
to the ESOP in years ended September 30, 2005, 2004, and 2003.

The Company also has a supplemental retirement plan for certain
executive officers. The plan requires that a set amount be deposited into a trust each year until the executive officers reach 60 years of age. The amount of expense related to such plans was approximately $122,000, for each of the years ended
September 30, 2005, 2004, and 2003, respectively.



|15. | INCOME TAXES
|--- | ------------

Bancorp and its subsidiaries file
consolidated federal income tax returns on a fiscal year basis. During the year ended September 30, 1997, new legislation was enacted which provides for the recapture into taxable income of certain amounts previously deducted as additions to
the bad debt reserves for income tax purposes. The Company began changing its method of determining bad debt reserves for tax purposes following the year ended September 30, 1996. The amounts to be recaptured for income tax reporting purposes
are considered by the Company in the determination of the net deferred tax liability.

Income tax provision (benefit) for the years ended
September 30 is summarized as follows:



|         |  |      |           |      |   |            |      |  |   |          
|-------- |  | ---- | --------- | ---- | - | ---------- | ---- |  | - | ---------
|         |  | 2005 |           | 2004 |   |            | 2003
|Current  |  | $    | 608,894   |      | $ | 2,787,834  |      |  | $ | 2,363,892
|Deferred |  |      | 487,640   |      |   | (1,324,590 | )    |  |   | 22,697   
|         |  |      |           |      |   |            |      |  |   |          
|TOTAL    |  | $    | 1,096,534 |      | $ | 1,463,244  |      |  | $ | 2,386,589
|         |  |      |           |      |   |            |      |  |   |          



24



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The net deferred tax amount, which is included in other assets, consisted of the following:



|                                                 |  |      |            |   |      |   |            |  
|------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                 |  | 2005 |            |   | 2004 |  
|Deferred tax assets:                             |  |      |            |   |      |   |            |  
|Deferred compensation                            |  | $    | 869,288    |   |      | $ | 971,848    |  
|Allowance for loan losses                        |  |      | 1,857,974  |   |      |   | 2,662,913  |  
|Unrealized loss on available-for-sale securities |  |      | 980,512    |   |      |   |           |  
|Other                                            |  |      | 17,946     |   |      |   | 31,330     |  
|                                                 |  |      |            |   |      |   |            |  
|Total deferred tax assets                        |  |      | 3,725,720  |   |      |   | 3,666,091  |  
|                                                 |  |     
|Deferred tax liabilities:                        |  |      |            |   |      |   |            |  
|Acquired core deposit intangible                 |  |      | (1,001,136 | ) |      |   | (1,100,531 | )
|Acquired deposit discount                        |  |      | (156,643   | ) |      |   | (410,512   | )
|Acquired loan premium                            |  |      | (21,351    | ) |      |   | (216,824   | )
|Unrealized gain on available-for-sale securities |  |      |           |   |      |   | (85,484    | )
|FHLB stock dividends                             |  |      | (214,572   | ) |      |   | (149,759   | )
|Other                                            |  |      | (470,444   | ) |      |   | (419,762   | )
|                                                 |  |      |            |   |      |   |            |  
|Total deferred tax liabilities                   |  |      | (1,864,146 | ) |      |   | (2,382,872 | )
|                                                 |  |      |            |   |      |   |            |  
|Net deferred tax asset (liability)               |  | $    | 1,861,574  |   |      | $ | 1,283,219  |  
|                                                 |  |      |            |   |      |   |            |  

The income tax provision differed from the amounts computed by applying the federal income tax
rates as a result of the following:



|                                       |  |      |   |  |      |           |   |      |      |   |  |   |           |   |  |      |   |  |   |           |  
|-------------------------------------- |  | ---- | - |  | ---- | --------- | - | ---- | ---- | - |  | - | --------- | - |  | ---- | - |  | - | --------- | -
|                                       |  | 2005 |   |  | 2004 |           |   | 2003 |     
|Expected income tax expense            |  | 34.0 | % |  | $    | 1,496,541 |   |      | 34.0 | % |  | $ | 1,672,752 |   |  | 34.0 | % |  | $ | 2,611,522 |  
|Exempt income                          |  | (8.1 | ) |  |      | (358,600  | ) |      | (6.4 | ) |  |   | (314,175  | ) |  | (3.6 | ) |  |   | (275,331  | )
|Cash surrender value of life insurance |  | (2.4 | ) |  |      | (104,851  | ) |      | (2.2 | ) |  |   | (107,839  | ) |  | (2.0 | ) |  |   | (155,423  | )
|State tax, net of federal benefit      |  | 2.4  |   |  |      | 104,345   |   |      | 3.3  |   |  |   | 161,551   |   |  | 2.3  |   |  |   | 175,673   |  
|Other                                  |  | (0.6 | ) |  |      | (40,901   | ) |      | 1.0  |   |  |   | 50,955    |   |  | 0.4  |   |  |   | 30,148    |  
|                                       |  |      |   |  |      |           |   |      |      |   |  |   |           |   |  |      |   |  |   |           |  
|TOTAL                                  |  | 25.3 | % |  | $    | 1,096,534 |   |      | 29.7 | % |  | $ | 1,463,244 |   |  | 31.1 | % |  | $ | 2,386,589 |  
|                                       |  |      |   |  |      |           |   |      |      |   |  |   |           |   |  |      |   |  |   |           |  

The Company provides for the recognition of a deferred tax asset or liability for the future tax
consequences of differences in carrying amounts and tax bases of assets and liabilities. Specifically exempted from this provision are bad debt reserves for tax purposes of U.S. savings and loan associations in the associations base year, as
defined. Base year reserves total approximately $3,600,000 at September 30, 2005. Consequently, a deferred tax liability of approximately $1,378,000 related to such reserves is not provided for in the statement of financial condition at
September 30, 2005.



|16. | REGULATORY MATTERS
|--- | ------------------

The Bank is subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatoryand possibly additional discretionaryactions by regulators that, if undertaken,
could have a direct material effect on the Companys financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Banks assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require
the Bank to maintain minimum amounts and ratios (set forth in the table below) of tangible and core capital (as defined in the regulations) to adjusted total assets (as defined), and of total capital (as defined) to risk weighted assets (as
defined). Management believes, as of September 30, 2005, that the Bank met all capital adequacy requirements to which it is subject.



25



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##### Table of Contents

As of September 30, 2005 and 2004, the most recent notification from the OTS categorized the Bank as
well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total, tangible, and core capital ratios as set forth in the table below. There are no conditions or
events since that notification that management believes have changed the institutions category.

The Banks actual capital
amounts (in thousands) and ratios are also presented in the table:



|                                         |  |        |        |       |                                       |   |        |                                                                                         |        |  |      |        |  |       |        |  |      
|---------------------------------------- |  | ------ | ------ | ----- | ------------------------------------- | - | ------ | --------------------------------------------------------------------------------------- | ------ |  | ---- | ------ |  | ----- | ------ |  | -----
|                                         |  | Actual |        |       | Required For CapitalAdequacy Purposes |   |        | Required To Be Categorized As Well Capitalized Under Prompt CorrectiveAction Provisions
|                                         |  | Amount |        | Ratio |                                       |   | Amount |                                                                                         | Ratio  |  |      | Amount |  | Ratio
|As of September 30, 2005:                |  |        |        |       |                                       |   |        |                                                                                         |        |  |      |        |  |       |        |  |      
|Tangible capital to tangible assets      |  | $      | 49,414 |       | 6.80                                  | % |        | $                                                                                       | 10,903 |  | 1.50 | %      |  |       | N/A    |  | N/A  
|Core capital to adjusted tangible assets |  |        | 49,414 |       | 6.80                                  |   |        |                                                                                         | 29,074 |  | 4.00 |        |  | $     | 36,343 |  | 5.00 
|Total capital to risk weighted assets    |  |        | 52,623 |       | 11.50                                 |   |        |                                                                                         | 36,595 |  | 8.00 |        |  |       | 45,743 |  | 10.00
|Tier I capital to risk weighted assets   |  |        | 49,414 |       | 10.80                                 |   |        |                                                                                         | 18,297 |  | 4.00 |        |  |       | 27,446 |  | 6.00 
|                                         |  |        |        |       |                                       |  
|As of September 30, 2004:                |  |        |        |       |                                       |   |        |                                                                                         |        |  |      |        |  |       |        |  |      
|Tangible capital to tangible assets      |  | $      | 48,269 |       | 6.88                                  | % |        | $                                                                                       | 10,525 |  | 1.50 | %      |  |       | N/A    |  | N/A  
|Core capital to adjusted tangible assets |  |        | 48,269 |       | 6.88                                  |   |        |                                                                                         | 28,066 |  | 4.00 |        |  | $     | 36,082 |  | 5.00 
|Total capital to risk weighted assets    |  |        | 52,035 |       | 12.59                                 |   |        |                                                                                         | 33,070 |  | 8.00 |        |  |       | 41,337 |  | 10.00
|Tier I capital to risk weighted assets   |  |        | 48,269 |       | 11.68                                 |   |        |                                                                                         | 16,535 |  | 4.00 |        |  |       | 24,802 |  | 6.00 



|17. | RETAINED EARNINGS
|--- | -----------------

The Bank may not declare or pay
cash dividends on its shares of common stock if the effect thereof would cause the Banks stockholders equity to be reduced below applicable regulatory capital maintenance requirements for insured institutions. This requirement
effectively limits the dividend paying ability of the Company in that the Company must maintain an investment in equity of the Bank sufficient to enable the Bank to meet its requirements as noted above. Required capital amounts are shown in Note 16
to the consolidated financial statements. Liquidation account balances are not maintained because of the cost of maintenance and the remote likelihood of complete liquidation. Additionally, the Bank is limited to distributions it may make to Bancorp
without OTS approval if the distribution would cause the total distributions to exceed the Banks net income for the year to date plus the Banks net income (less distributions) for the preceding two years. Bancorp may use assets other
than its investment in the Bank as a source of dividends.



|18. | EARNINGS PER SHARE
|--- | ------------------

The earnings per share amounts
were computed using the weighted average number of shares outstanding during the periods presented. In accordance with Statement of Position No. 93-6, Employers Accounting for Employee Stock Ownership Plans, issued by the American
Institute of Certified Public Accountants, shares owned by the Companys Employee Stock Ownership Plan that have not been committed to be released are not considered to be outstanding for the purpose of computing earnings per share.

The weighted average numbers of shares used in the basic and diluted earnings per share calculation are set out in the table below:



|                                           |  |                         |  |           |  |          
|------------------------------------------ |  | ----------------------- |  | --------- |  | ---------
|                                           |  | Year Ended September 30
|                                           |  | 2005                    |  | 2004      |  | 2003     
|Basic EPS weighted average shares          |  | 4,492,462               |  | 4,470,913 |  | 4,345,113
|Add dilutive effect of unexercised options |  | 78,772                  |  | 126,184   |  | 69,730   
|                                           |  |                         |  |           |  |          
|Dilutive EPS weighted average shares       |  | 4,571,234               |  | 4,597,097 |  | 4,414,843
|                                           |  |                         |  |           |  |          



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|19. | CONTINGENCIES
|--- | -------------

The Company is a defendant in
certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material adverse effect on the
consolidated financial statements of the Company and subsidiaries.



|20. | OFF-BALANCE SHEET ARRANGEMENTS AND COMMITMENTS
|--- | ----------------------------------------------

The
Company, in the normal course of business, makes commitments to buy or sell assets or to incur or fund liabilities. Commitments include, but are not limited to the origination, purchase, or sale of loans, the purchase of investment securities,
fulfillment of commitments under letters-of-credit, extensions of credit on home equity lines of credit and construction loans, and the commitment to fund withdrawals of savings accounts at maturity.

At September 30, 2005, the Companys off-balance sheet arrangements principally included lending commitments, which are described
below. At September 30, 2005, the Company had no interests in non-consolidated special purpose entities. At September 30, 2005, commitments included:

Total approved loan origination commitments outstanding were $13.3 million, with $5.0 million in loans committed to sell.

Rate lock agreements with customers of $5.0 million, all of which have been locked with an investor.

Undisbursed balances of construction loans of $7.5 million.

Total unused lines of credit of $21.1 million.

Outstanding letters of credit of $0.6 million.

Total certificates of deposit scheduled to mature in one year or less of $176.9 million.

Total unfunded commitments to originate loans for sale and the related commitments to sell of $5.0 million meet the definition of a derivative financial
instrument; the related asset and liability are considered immaterial at September 30, 2005.

Based on historical experience,
management believes that a significant portion of maturing deposits will remain with the Company. The Company anticipates that it will continue to have sufficient funds, through repayments, deposits and borrowings, to meet its current commitments.

The Companys exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to
extend credit, standby letters of credit, and financial guarantees written is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does
for on-balance sheet instruments.

Unless noted otherwise, the Company does not require collateral or other security to support such
financial instruments with credit risk.

Commitments to Extend Credit and Financial Guarantees - Commitments to extend credit
are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customers creditworthiness on a case-by-case basis. The amount of
collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on managements credit evaluation of the counterparty.



27



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Standby letters of credit are conditional commitments issued by the Company to guarantee the performance
of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds marketable securities as collateral supporting these
commitments for which collateral is deemed necessary.

The Company has not incurred any losses on its commitments in any of the three years
in the period ended September 30, 2005.



|21. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

In the normal course of
business, the Company has made loans to its directors, officers, and their related business interests. In the opinion of management, related party loans are made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated persons and do not involve more than the normal risk of collectability. The aggregate dollar amount of loans outstanding to directors, officers, and their related business interests
total approximately $13,110,829, and $8,202,890 at September 30, 2005, and 2004, respectively. During the year ended September 30, 2005, total principal additions were $11,565,398 and total principal payments were $6,657,459.

Deposits from related parties held by the Company at September 30, 2005, and 2004, amounted to $4,823,108 and $5,575,546, respectively.



|22. | RESTRICTED STOCK AWARD PROGRAMS AND STOCK OPTION PLANS
|--- | ------------------------------------------------------

1998 Stock Option Plan -

The Companys stockholders adopted the 1998 Stock Option Plan (SOP) on
October 23, 1998. The SOP provides for a committee of the Companys Board of Directors to award any one or a combination of incentive stock options, non-statutory or compensatory stock options, limited rights, dividend equivalent rights
and reload options, representing up to 357,075 shares of the Companys stock. The options will vest in equal amounts over five years beginning one year from the date of grant. Options granted vest immediately in the event of retirement,
disability, or death and are generally exercisable for a three year period following such event. Outstanding stock options expire no later than 10 years from the date of grant. Under the SOP, options have been granted to directors and key employees
of the Company. The exercise price in each case equals the fair market value of the Companys stock at the date of grant. The Company granted 350,000 options on October 23, 1998, which have an exercise price of $9.00 per share, the fair
value of the stock on that date. The weighted average remaining contractual life of the options as of September 30, 2005, is 3.1 years.

Stock Options Assumed in Acquisition -

During the year ended September 30, 2002, the Company completed its
acquisition of North Arkansas Bancshares, Inc. The Company assumed 30,970 in stock options granted to employees and directors of North Arkansas Bancshares, Inc. related to such acquisition. All options granted to non-employee directors shall expire
one year after the non-employee director ceases to maintain continuous service.



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A summary of the activity of the Companys stock option plans is as follows:



|                                          |  |          |   |  |                                |     
|----------------------------------------- |  | -------- | - |  | ------------------------------ | ----
|                                          |  | Shares   |   |  | Weighted AverageExercise Price
|Outstanding at October 01, 2003           |  | 296,257  |   |  | $                              | 8.77
|Granted                                   |  |         |   |  |                                |     
|Exercised                                 |  | (105,426 | ) |  | $                              | 8.77
|Forfeited                                 |  |         |   |  |                                |     
|                                          |  |          |   |  |                                |     
|Outstanding at September 30, 2004         |  | 190,831  |   |  | $                              | 8.77
|                                          |  |          |   |  |                                |     
|Granted                                   |  |         |   |  |                                |     
|Exercised                                 |  |         |   |  |                                |     
|Forfeited                                 |  |         |   |  |                                |     
|                                          |  |          |   |  |                                |     
|Outstanding at September 30, 2005         |  | 190,831  |   |  | $                              | 8.77
|                                          |  |          |   |  |                                |     
|Options exercisable at September 30, 2003 |  | 245,457  |   |  | $                              | 8.73
|                                          |  |          |   |  |                                |     
|Options exercisable at September 30, 2004 |  | 190,831  |   |  | $                              | 8.77
|                                          |  |          |   |  |                                |     
|Options exercisable at September 30, 2005 |  | 190,831  |   |  | $                              | 8.77
|                                          |  |          |   |  |                                |     

1998 Recognition Plan -

The 1998 Recognition and Retention Plan (RRP) provides for a committee of the Companys Board of Directors to award restricted stock to
key officers as well as non-employee directors. The RRP authorizes the Company to grant up to 142,830 shares of the Companys common stock. The Committee granted 142,830 shares to key officers and non-employee directors on October 23,
1998.

Compensation expense was recognized based on the fair market value of the shares on the grant date of $9.00 over the vesting period.
The shares vested equally over a five year period with the first vesting date of January 3, 2000. All expense associated with this plan has been recognized.



|23. | OTHER COMPREHENSIVE INCOME
|--- | --------------------------



|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|------------------------------------------------------------------ |  | ----------------------------- | ---------- | - | ---------- | - | ---------------- |  | - | ---------- | -
|                                                                   |  | Year Ended September 30, 2005 |           
|                                                                   |  | Before TaxAmount              |            |   | TaxBenefit |   | Net-of-TaxAmount | 
|UNREALIZED GAINS (LOSSES) ON SECURITIES:                           |  |                               |            |   |            |   |                  |  |   |            |  
|Unrealized holding gain (loss) on securities arising during period |  | $                             | (2,161,632 | ) |            | $ | 734,955          |  | $ | (1,426,677 | )
|Less reclassification adjustment for gains included in net income  |  |                               | (565,939   | ) |            |   | 192,419          |  |   | (373,520   | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|Other comprehensive income (loss)                                  |  | $                             | (2,727,571 | ) |            | $ | 927,374          |  | $ | (1,800,197 | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  



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|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|------------------------------------------------------------------ |  | ----------------------------- | ---------- | - | ---------- | - | ---------------- |  | - | ---------- | -
|                                                                   |  | Year Ended September 30, 2004 |           
|                                                                   |  | Before TaxAmount              |            |   | TaxBenefit |   | Net-of-TaxAmount | 
|UNREALIZED GAINS (LOSSES) ON SECURITIES:                           |  |                               |            |   |            |   |                  |  |   |            |  
|Unrealized holding gain (loss) on securities arising during period |  | $                             | (2,063,261 | ) |            | $ | 701,509          |  | $ | (1,361,752 | )
|Less reclassification adjustment for gains included in net income  |  |                               | (385,867   | ) |            |   | 131,195          |  |   | (254,672   | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|Other comprehensive income (loss)                                  |  | $                             | (2,449,128 | ) |            | $ | 832,704          |  | $ | (1,616,424 | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|                                                                   | 
|                                                                   |  | Year Ended September 30, 2003 |           
|                                                                   |  | Before TaxAmount              |            |   | TaxBenefit |   | Net-of-TaxAmount | 
|UNREALIZED GAINS (LOSSES) ON SECURITIES:                           |  |                               |            |   |            |   |                  |  |   |            |  
|Unrealized holding gain (loss) on securities arising during period |  | $                             | (732,723   | ) |            | $ | 249,125          |  | $ | (483,598   | )
|Less reclassification adjustment for gains included in net income  |  |                               | (324,225   | ) |            |   | 110,237          |  |   | (213,988   | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  
|Other comprehensive income (loss)                                  |  | $                             | (1,056,948 | ) |            | $ | 359,362          |  | $ | (697,586   | )
|                                                                   |  |                               |            |   |            |   |                  |  |   |            |  



|24. | SUBSEQUENT EVENTS
|--- | -----------------

None.



|25. | PARENT COMPANY ONLY FINANCIAL INFORMATION
|--- | -----------------------------------------

The
following condensed statements of financial condition as of September 30, 2005 and 2004, and condensed statements of income and cash flows for the years ended September 30, 2005 and 2004, for Pocahontas Bancorp, Inc. should be read in
conjunction with the consolidated financial statements and the notes herein.



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POCAHONTAS BANCORP, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2005 AND 2004



|                                           |  |      |            |      |   |           
|------------------------------------------ |  | ---- | ---------- | ---- | - | ----------
|                                           |  | 2005 |            | 2004
|ASSETS                                     |  |      |            |      |   |           
|                                           |  |     
|Deposit in Bank                            |  | $    | 6,297,468  |      | $ | 5,625,122 
|Investment in Bank                         |  |      | 62,061,533 |      |   | 63,528,842
|Loan receivable                            |  |      | 2,056,529  |      |   | 2,091,225 
|Investment securities                      |  |      | 3,126,044  |      |   | 1,982,365 
|Other assets                               |  |      | 1,323,652  |      |   | 764,572   
|                                           |  |      |            |      |   |           
|TOTAL ASSETS                               |  | $    | 74,865,226 |      | $ | 73,992,126
|                                           |  |      |            |      |   |           
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |      |            |      |   |           
|Accrued expenses and other liabilities     |  | $    | 3,659,300  |      | $ | 2,566,450 
|Deferred compensation                      |  |      | 1,874,989  |      |   | 1,982,935 
|Trust preferred securities                 |  |      | 16,962,683 |      |   | 16,941,917
|Stockholders equity                       |  |      | 52,368,254 |      |   | 52,500,824
|                                           |  |      |            |      |   |           
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |  | $    | 74,865,226 |      | $ | 73,992,126
|                                           |  |      |            |      |   |           

CONDENSED STATEMENTS OF INCOME YEARS ENDED SEPTEMBER 30, 2005, 2004 AND 2003



|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------- | ---- |  | - | --------- | -
|                                                                                            |  | 2005 |           | 2004 |   |            | 2003 | 
|INCOME:                                                                                     |  |      |           |      |   |            |      |  |   |           |  
|Dividend from the Bank                                                                      |  | $    | 4,000,000 |      | $ | 5,500,000  |      |  | $ | 1,500,000 |  
|Interest and investment income                                                              |  |      | 497,144   |      |   | 536,154    |      |  |   | 470,367   |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|Total Income                                                                                |  |      | 4,497,144 |      |   | 6,036,154  |      |  |   | 1,970,367 |  
|EXPENSES:                                                                                   |  |      |           |      |   |            |      |  |   |           |  
|Interest expense                                                                            |  |      | 1,568,526 |      |   | 1,335,162  |      |  |   | 1,349,429 |  
|Operating expenses                                                                          |  |      | 748,985   |      |   | 671,960    |      |  |   | 931,202   |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|Total Expenses                                                                              |  |      | 2,317,511 |      |   | 2,007,122  |      |  |   | 2,280,631 |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|EARNINGS (LOSS) BEFORE INCOME TAXES AND EQUITY IN UNDISTRIBUTED EARNINGS OF BANK SUBSIDIARY |  |      | 2,179,633 |      |   | 4,029,032  |      |  |   | (310,264  | )
|INCOME TAX BENEFIT                                                                          |  |      | 726,535   |      |   | 517,437    |      |  |   | 741,403   |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|EARNINGS (LOSS) BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF BANK SUBSIDIARY                  |  |      | 2,906,168 |      |   | 4,546,469  |      |  |   | 431,139   |  
|EQUITY IN UNDISTRIBUTED EARNINGS (DISTRIBUTIONS IN EXCESS OF EARNINGS) OF BANK SUBSIDIARY   |  |      | 332,888   |      |   | (1,089,855 | )    |  |   | 4,863,219 |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  
|NET INCOME                                                                                  |  | $    | 3,239,056 |      | $ | 3,456,614  |      |  | $ | 5,294,358 |  
|                                                                                            |  |      |           |      |   |            |      |  |   |           |  



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POCAHONTAS BANCORP, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2005, 2004 AND 2003



|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | 2005 |            |   | 2004 |   |            | 2003 | 
|OPERATING ACTIVITIES:                                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $    | 3,239,056  |   |      | $ | 3,456,614  |      |  | $ | 5,294,358  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Equity in undistributed earnings of Bank subsidiary                               |  |      | (332,888   | ) |      |   | 1,089,855  |      |  |   | (4,863,219 | )
|ESOP allocation                                                                   |  |      | 335,987    |   |      |   |           |      |  |   | 160,562    |  
|Amortization                                                                      |  |      | 20,766     |   |      |   | 20,767     |      |  |   | 20,767     |  
|Stock compensation                                                                |  |      |           |   |      |   |           |      |  |   | 35,251     |  
|Changes in operating assets and liabilities:                                      |  |      |            |   |      |   |            |      |  |   |            |  
|Investment securities                                                             |  |      | (1,143,679 | ) |      |   | (485,113   | )    |  |   | (32,794    | )
|Loan receivable                                                                   |  |      | 34,696     |   |      |   | (1,553,104 | )    |  |   | 835,080    |  
|Other assets                                                                      |  |      | (559,079   | ) |      |   | 166,505    |      |  |   | 614,662    |  
|Accrued expenses and other liabilities                                            |  |      | 623,938    |   |      |   | (74,045    | )    |  |   | (638,885   | )
|Deferred compensation                                                             |  |      | (107,945   | ) |      |   | (125,737   | )    |  |   | (1,398,990 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |      | 2,110,852  |   |      |   | 2,495,742  |      |  |   | 26,792     |  
|                                                                                  |  |      |           
|INVESTING ACTIVITIES:                                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Cash acquired from acquisition of Marked Tree Bancshares, Inc.                    |  |      |           |   |      |   |           |      |  |   | 7,667      |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by investing activities                                         |  |      |           |   |      |   |           |      |  |   | 7,667      |  
|                                                                                  |  |      |           
|FINANCING ACTIVITIES:                                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Options exercised                                                                 |  |      |           |   |      |   | 924,703    |      |  |   | 30,352     |  
|Dividends paid                                                                    |  |      | (1,438,506 | ) |      |   | (1,442,791 | )    |  |   | (1,399,430 | )
|Purchase of treasury stock                                                        |  |      |           |   |      |   | (230,344   | )    |  |   | (1,214,027 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used by financing activities                                             |  |      | (1,438,506 | ) |      |   | (748,432   | )    |  |   | (2,583,105 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |      | 672,346    |   |      |   | 1,747,310  |      |  |   | (2,548,646 | )
|                                                                                  |  |      |           
|CASH AND CASH EQUIVALENTS:                                                        |  |      |            |   |      |   |            |      |  |   |            |  
|Beginning of year                                                                 |  |      | 5,625,122  |   |      |   | 3,877,812  |      |  |   | 6,426,458  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|End of year                                                                       |  | $    | 6,297,468  |   |      | $ | 5,625,122  |      |  | $ | 3,877,812  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  



|26. | RESTATEMENT OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|--- | --------------------------------------------------------

Subsequent to the issuance of the Companys September 30, 2005 consolidated financial statements, the Company determined that amounts presented in the Companys consolidated statement of cash flows for the year ended
September 30, 2005, reflected an error in the presentation of the Companys investment securities that were purchased, but not yet settled, at September 30, 2005. An error in the presentation of the receipt of stock dividends paid on
FHLB stock has also been corrected for the years ended September 30, 2005, 2004 and 2003. As a result, the accompanying consolidated statement of cash flows for the year ended September 30, 2005 has been restated to present the purchase of
securities not yet settled at September 30, 2005 as a non-cash activity rather than in the investing activities and operating activities sections. The amounts presented in the Companys consolidated statements of cash flows for the years
ended September 30, 2005, 2004 and 2003 also reflect a correction in the presentation of the receipt of stock dividends on FHLB stock as an adjustment to reconcile net income to net cash provided by operating activities rather than investing
activities. These corrections resulted in a decrease in net cash provided by operating activities and a corresponding decrease in cash used in investing activities of $2.7 million, $0.1 million and $0.1 million from those amounts previously
presented in the consolidated statements of cash flows for the years ended September 30, 2005, 2004 and 2003, respectively. There was no change in the net increase in cash resulting from either of these corrections. Further, these changes had
no effect on the Companys consolidated statement of income, consolidated statement of financial condition, or consolidated statement of shareholders equity.



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The effect of the restatement on the Companys consolidated statements of cash flows for the years
ended September 30, 2005, 2004 and 2003 is reflected in the table below:



|                                                                        |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|----------------------------------------------------------------------- |  | --------------------- | ----------- | - | ----------- | - | ----------- | --------------------- |  | - | ------------ | - |  | --------------------- | ------------ | - | ----------- | - | ------------ | - |  | - | ------------ | -
|                                                                        |  | 2005                  |             |   | 2004        |   |             | 2003                  | 
|                                                                        |  | As previouslyreported |             |   | As restated |   |             | As previouslyreported |  |   | As restated  |   |  | As previouslyreported |              |   | As restated |  
|OPERATING ACTIVITIES:                                                   |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|Stock Dividends on FHLB Stock                                           |  | $                     |            |   |             | $ | (257,700    | )                     |  | $ |             |   |  | $                     | (113,400     | ) |             | $ |             |   |  | $ | (57,700      | )
|Changes in operating assets and liabilities:                            |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|Accrued expenses and other liabilities                                  |  |                       | 4,006,964   |   |             |   | 1,576,964   |                       |  |   | (820,105     | ) |  |                       | (820,105     | ) |             |   | (3,248,320   | ) |  |   | (3,248,320   | )
|Net cash provided by operating activities                               |  |                       | 3,586,039   |   |             |   | 898,339     |                       |  |   | 8,100,223    |   |  |                       | 7,986,823    |   |             |   | 4,462,749    |   |  |   | 4,405,049    |  
|                                                                        |  |                       |             |   |             |  
|INVESTING ACTIVITIES:                                                   |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|Purchases of securities                                                 |  |                       | (83,004,357 | ) |             |   | (80,574,357 | )                     |  |   | (112,557,349 | ) |  |                       | (112,557,349 | ) |             |   | (380,302,319 | ) |  |   | (380,302,319 | )
|Net (increase) decrease in FHLB stock                                   |  |                       | (36,100     | ) |             |   | 221,600     |                       |  |   | (113,400     | ) |  |                       |             |   |             |   | (57,700      | ) |  |   |             |  
|Net cash used by investing activities                                   |  |                       | (31,199,393 | ) |             |   | (28,511,693 | )                     |  |   | 9,461,725    |   |  |                       | 9,575,125    |   |             |   | (181,124,873 | ) |  |   | (181,067,173 | )
|                                                                        |  |                       |             |   |             |  
|FINANCING ACTIVITIES:                                                   |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|Net cash provided by financing activities                               |  |                       | 15,806,314  |   |             |   | 15,806,314  |                       |  |   | (34,363,946  | ) |  |                       | (34,363,946  | ) |             |   | 164,376,015  |   |  |   | 164,376,015  |  
|                                                                        |  |                       |             |   |             |  
|NET DECREASE IN CASH                                                    |  |                       | (11,807,040 | ) |             |   | (11,807,040 | )                     |  |   | 13,198,002   |   |  |                       | 13,198,002   |   |             |   | (12,286,109  | ) |  |   | (12,286,109  | )
|                                                                        |  |                       |             |   |             |  
|CASH AT BEGINNING OF PERIOD                                             |  |                       | 35,218,491  |   |             |   | 35,218,491  |                       |  |   | 22,020,489   |   |  |                       | 22,020,489   |   |             |   | 34,306,598   |   |  |   | 34,306,598   |  
|                                                                        |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|                                                                        |  |                       |             |   |             |  
|CASH AT END OF PERIOD                                                   |  | $                     | 23,411,451  |   |             | $ | 23,411,451  |                       |  | $ | 35,218,491   |   |  | $                     | 35,218,491   |   |             | $ | 22,020,489   |   |  | $ | 22,020,489   |  
|                                                                        |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|                                                                        |  |                       |             |   |             |  
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  
|Purchase of securities not yet settled                                  |  | $                     |            |   |             | $ | 2,430,000   |                       |  | $ |             |   |  |                       |             |   |             | $ |             |   |  |   |             |  
|                                                                        |  |                       |             |   |             |   |             |                       |  |   |              |   |  |                       |              |   |             |   |              |   |  |   |              |  

ITEM 9

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SECs rules and forms. In designing and evaluating the
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management is required to apply judgment in evaluating its controls and procedures.

Under the supervision
and with the participation of our management, including the Companys Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the
end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer previously concluded that, as of the end of the period covered by this report, the Companys disclosure controls and
procedures were effective. Subsequent to the date of that evaluation, management considered the restatement of the Companys consolidated financials statements and concluded that the restatement itself was an indicator of a material weakness
related to controls over the preparation and review of its consolidated statement of cash flows. Based on such considerations, the Companys Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2005, the
Companys disclosure controls and procedures were not effective because of the material weakness described below. Specifically, the Company did not maintain effective controls to appropriately classify the presentation of the purchase of
certain investment securities and the receipt of stock dividends on FHLB stock, as discussed in Note 26 to the accompanying consolidated financial statements.

Changes in Internal Controls Over Financial Reporting

In an effort to reduce the possibility of classification errors in the future, the
Company has modified the internal controls over the preparation and review of its consolidated statements of cash flows during the third quarter of 2006. Management has implemented a process to aid in ensuring the correct classification of items
included in the consolidated statements of cash flows, including a detailed statement of cash flows preparation checklist. Accordingly, management believes that this process will accentuate the internal controls already in place and remediate the
material weakness discussed above. There have been no other changes made in the Companys internal controls over financial reporting that occurred during the Companys last fiscal quarter that have materially affected or are reasonably
likely to materially affect the Companys internal control over financial reporting.



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.



|                   |  |                          |  |                             
|------------------ |  | ------------------------ |  | ----------------------------
|                   |  | POCAHONTAS BANCORP, INC.
|                   |  |                         
|Date: May 19, 2006 |  | By:                      |  | /s/ Dwayne Powell           
|                   |  |                          |  | Dwayne Powell, President and
|                   |  |                          |  | Chief Executive Officer     

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|      |  |                                              |  |  |  |       |  |                                                       
|----- |  | -------------------------------------------- |  |  |  | ----- |  | ------------------------------------------------------
|By:   |  | /s/ Dwayne Powell                            |  |  |  | By:   |  | /s/ Terry Davis                                       
|      |  | Dwayne Powell                                |  |  |  |       |  | Terry Davis                                           
|      |  | President, Chief Executive Officer, Director |  |  |  |       |  | Executive Vice President, Chief Financial Officer     
|      |  | (Principal Executive Officer)                |  |  |  |       |  | Treasurer (Principal Financial and Accounting Officer)
|      |  |                                              |  | 
|Date: |  | May 19, 2006                                 |  |  |  | Date: |  | May 19, 2006                                          
|      |  |                                              |  | 
|By:   |  | /s/ Ralph P. Baltz                           |  |  |  | By:   |  | /s/ James Edington                                    
|      |  | Ralph P. Baltz                               |  |  |  |       |  | James Edington                                        
|      |  | Chairman of the Board and Director           |  |  |  |       |  | Director and Secretary                                
|      |  |                                              |  | 
|Date: |  | May 19, 2006                                 |  |  |  | Date: |  | May 19, 2006                                          
|      |  |                                              |  | 
|By:   |  | /s/ A.J. Baltz, Jr.                          |  |  |  | By:   |  | /s/ Marcus Van Camp                                   
|      |  | A.J. Baltz. Jr.                              |  |  |  |       |  | Marcus Van Camp                                       
|      |  | Director                                     |  |  |  |       |  | Director                                              
|      |  |                                              |  | 
|Date: |  | May 19, 2006                                 |  |  |  | Date: |  | May 19, 2006                                          
|      |  |                                              |  | 
|By:   |  | /s/ N. Ray Campbell                          |  |  |  | By:   |  | /s/ Bruce Burrow                                      
|      |  | N. Ray Campbell                              |  |  |  |       |  | Bruce Burrow                                          
|      |  | Director                                     |  |  |  |       |  | Director                                              
|      |  |                                              |  | 
|Date: |  | May 19, 2006                                 |  |  |  | Date: |  | May 19, 2006                                          



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