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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended December 31, 2003

OR

COMMISSION FILE # 0-23969

POCAHONTAS BANCORP, INC.

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 filing requirements for the past 90 days. Yes x No ¨

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.

There were 4,549,791 shares of Common Stock ($0.01 par value) issued and outstanding as of December 31, 2003.

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POCAHONTAS BANCORP, INC.

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

See notes to unaudited condensed consolidated financial statements.

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Continued)

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

(Concluded)

See notes to unaudited condensed consolidated financial statements.

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

See notes to unaudited condensed consolidated financial statements.

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Continued)

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See notes to unaudited condensed consolidated financial statements.

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POCAHONTAS BANCORP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The condensed consolidated statement of financial condition information at September 30, 2003 was derived from the audited balance sheets of Pocahontas Bancorp, Inc. (the “Company”), at September 30, 2003. The condensed consolidated financial statements at and for the three months ended December 31, 2003 and 2002 are unaudited. The accompanying condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation 10 of Regulation S-X. Certain information required for a complete presentation in accordance with generally accepted accounting principles has been omitted. All adjustments that are, in the opinion of management, necessary for a fair presentation of the interim financial statements have been included. The results of operations for the three months ended December 31, 2003, are not necessarily indicative of the results that may be expected for the entire fiscal year or any interim period.

The interim financial information should be read in conjunction with the consolidated financial statements and notes of the Company, including a summary of significant accounting policies followed by the Company, included in the Annual Report for the fiscal year ended September 30, 2003. The accompanying condensed consolidated financial statements include the accounts of the Company, 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., which provide real estate services (collectively referred to as the “Company”). All significant intercompany transactions have been eliminated in consolidation.

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.

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Stock Compensation - The Company applies the provisions of APB 25 in accounting for its stock options plans, as allowed under Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. Accordingly, no compensation cost has been recognized for the options granted to employees or directors with strike prices at or above the market value of the stock. Had compensation cost for these options been determined at 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 for the three months ended December 31, 2003 and 2002, would have been as follows:

In determining the above pro forma disclosure, the fair value of options granted during the year 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 Accounting Standards - In December 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (“FIN 46R”), which replaces FASB Interpretation No. 46. FIN 46R clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. Application of FIN 46R (or FIN 46) is required in financial statements of public entities that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of entities is required in financial statements for periods ending after March 15, 2004.

Under the provisions of FIN 46R, the Company is required to deconsolidate Pocahontas Capital Trust I and II (the “Trusts”), which are business trusts established to facilitate the issuance of the trust preferred securities. The Company adopted FIN 46R as of December 31, 2003. The Company has presented the subordinated debentures payable to the Trusts as a liability in its consolidated financial statements and reclassified the prior period to present the subordinated debentures as a liability. The interest expense has historically been presented as a component of net interest income, such presentation will not change based on the adoption of FIN 46R. The adoption of FIN 46R did not have an effect on net income or stockholder’s equity.

In July 2003, the Board of Governors of the Federal Reserve System issued a supervisory letter instructing bank holding companies to continue to include the trust preferred securities in their Tier I capital for regulatory capital purposes. As of December 31, 2003, assuming the Company was not allowed to include the $16.9 million in trust preferred securities issued by the Trusts in Tier I capital, the Company would still exceed the regulatory required minimum for capital adequacy purposes.

Reclassifications - Certain amounts for the three-month period ended December 31, 2002 have been reclassified to conform to the presentation for the three-month period ended December 31, 2003.

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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:

On November 19, 2003, the Board of Directors declared an $.08 per share quarterly cash dividend for holders of record December 15, 2003. The dividend was paid January 5, 2004.

Stock Option Plan - The Company’s stockholders approved 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 incentive non-qualified or compensatory stock options to purchase up to 357,075 shares of Company common stock. The options vest in equal amounts over five years with the first vesting date on October 23, 1999. Options granted vest immediately in the event of retirement, disability, or death, or following a change in control of the Company. Outstanding stock options can be exercised over a ten-year period. 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. As of December 31, 2003, 254,000 options were outstanding.

NARK Stock Option Plan - In connection with the acquisition of North Arkansas Bancshares, Inc. (NARK) by the Company on June 18, 2002, the outstanding options of the 1998 Stock Option and Incentive Plan (SOIP) of NARK were exchanged for options to purchase stock of the Company. Each outstanding option to purchase a share of NARK stock was exchanged for an option to purchase 1.515 shares of the Company’s stock. The SOIP granted both incentive and non-incentive options to key employees and directors of NARK. All options granted expire one year after the employee or director ceases to maintain continuous service as an employee or director of the Company or an affiliate. The exercise price in each case equals the original exercise price divided by the exchange rate. On June 19, 2002 the exchange resulted in 30,970 outstanding options at an exercise price of $6.44 each. On December 31, 2003, 26,257 options were outstanding.

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On November 20, 2003, the Company entered into an agreement with Bank of Cave City, Arkansas for the Company to sell its branch in Strawberry, Arkansas to the Bank of Cave City. The transaction is expected to be completed during March 2004. The sale of the branch resulted from management’s decision to concentrate on the Bank’s other Arkansas markets. The Strawberry, Arkansas branch office had approximately $11.9 million in deposits as of December 31, 2003.

The Company performed its annual impairment test as of April 1, 2003 and concluded there was no impairment to the book value of the Company’s goodwill. Absent any impairment indicators, the Company will perform its next impairment test as of April 1, 2004.

As of December 31, 2003 the Company had total core deposit premiums of $7,632,549, net of accumulated amortization of $2,679,007. Core deposit premiums are estimated to have a useful life of 10 years.

The Company has no identifiable intangible assets with indefinite useful lives.

Total amortization expense for core deposit premiums was approximately $260,000 for the three-month period ended December 31, 2003. Amortization expense for the net carrying amount of core deposit premiums at December 31, 2003, is estimated to be as follows (in thousands):

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 condensed consolidated financial statements of the Company and its subsidiaries.

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 December 31, 2003, the Company’s off-balance sheet arrangements principally included lending commitments, which are described below. At December 31, 2003, the Company had no interests in non-consolidated special purpose entities. At December 31, 2003, commitments included:

Total approved loan origination commitments outstanding were $7.8 million, including $2.7 million loans committed to sell.

Rate lock agreements with customers of $2.7 million, all of which have been locked with an investor.

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Undisbursed balances of construction loans of $2.8 million.

Total unused lines of credit of $36.9 million.

Outstanding letters of credit of $0.8 million.

Total certificates of deposit scheduled to mature in one year or less of $214.4 million.

Total unfunded commitments to originate loans for sale and the related commitments to sell of $2.7 million meet the definition of a derivative financial instrument; the related asset and liability are considered immaterial at December 31, 2003.

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.

A summary of the activity in the allowance for loan losses is as follows (in thousands):

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 is to be used to purchase additional shares of Company stock. The loan is collateralized by shares that are purchased with the proceeds of the loan; as of December 31, 2003, the ESOP owed $0.8 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.

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INDEPENDENT ACCOUNTANTS’ REPORT

The Board of Directors and Stockholders of

Pocahontas Bancorp, Inc.

Pocahontas, Arkansas

We have reviewed the accompanying condensed consolidated statement of financial condition of Pocahontas Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2003, and the related condensed consolidated statements of income and comprehensive income and of cash flows for the three months ended December 31, 2003 and 2002, and stockholders’ equity for the three-month period ended December 31, 2003. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated statement of financial condition of Pocahontas Bancorp, Inc. and subsidiaries as of September 30, 2003, and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated December 16, 2003, we expressed an unqualified opinion, which includes an explanatory paragraph relating to the adoption of SFAS No. 142, Goodwill and other Intangible Assets on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial condition as of September 30, 2003, is fairly stated, in all material respects, in relation to the consolidated statement of financial condition from which it has been derived.

As discussed in Note 1 to the condensed consolidated financial statement, the Company changed its method of accounting for its trust preferred securities to conform to the Financial Accounting Standards Board Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51, as of December 31, 2003.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects” and similar expressions are intended to identify forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those contemplated by such forward-looking statements. These important factors include, without limitation, the Bank’s continued ability to originate quality loans, fluctuation of interest rates, real estate market conditions in the Bank’s lending areas, general and local economic conditions, the Bank’s continued ability to attract and retain deposits, the Company’s ability to control costs, new accounting pronouncements and changing regulatory requirements.

Critical Accounting Policy - In preparing financial information, management is required to make significant estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the periods shown. The accounting principles followed by the Company and the methods of applying these principles conform with accounting principles generally accepted in the United States and general banking practices. Estimates and assumptions most significant to the Company are related primarily to allowance for loan losses and goodwill and are summarized in the following discussion and the notes to the consolidated financial statements.

The Company has established a systematic method of periodically reviewing the credit quality of the loan portfolio in order to establish a sufficient allowance for losses on loans. The allowance for losses on loans is based on management’s current judgments about the credit quality of individual loans and segments of the loan portfolio. The allowance for losses on loans is established through a provision for loan losses based on management’s evaluation of the risk inherent in the loan portfolio, and considers all known internal and external factors that affect loan collectability as of the reporting date. Such evaluation, which includes a review of all loans on which full collectability may not be reasonably assured, considers among other matters, the estimate net realizable value or the fair value of the underlying collateral, economic conditions, historical loan loss experience, management’s knowledge of inherent risks in the portfolio that are probable and reasonably estimable and other factors that warrant recognition in providing an appropriate loan loss allowance.

The Company’s goodwill (the amount in excess of fair value of acquired net assets) is reviewed at least annually to ensure that there have been no events or circumstances resulting in an impairment of the recorded amount of excess purchase price. Adverse changes in the economic environment, operations of acquired business units, or other factors could result in a decline in projected fair values. If the estimated fair value is less than the carrying amount, a loss would be recognized to reduce the carrying amount to implied fair value.

Management has discussed the development and selection of these critical accounting policies with the Audit Committee of the Board of Directors.

Financial Condition at December 31, 2003, as compared to September 30, 2003.

General. Total assets decreased to $745.9 million at December 31, 2003 from $763.5 million at September 30, 2003, a decrease of $17.6 million or 2.3%. The decrease was primarily the result of the sale of $12.7 million of securities, and principal payments and maturities of $18.4 million in securities, which was only partly offset by $12.4 million in securities purchases, resulting in a net decrease in investment securities of $19.8 million or 6.6%. The yield on average interest earning assets for the three months ended December 31, 2003 was 5.58% compared to 6.05 % for the year ended September 30, 2003.

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Loans receivable, net. Net loans receivable increased to $393.2 million at December 31, 2003 from $385.9 million at September 30, 2003, an increase of $7.3 million or 1.9%. Total nonperforming loans increased to $5.8 million, at December 31, 2003 from $5.6 million at September 30, 2003, an increase of $0.2 million or 3.6%. Of the $5.8 million in nonperforming loans at December 31, 2003, $3.7 million represented loans that were obtained from previous bank acquisitions. The increase in nonperforming loans was not seen by management as attributable to any recognizably distinguishable factor though the Bank has been changing for some time from being a traditional single-family lending institution to diversifying into a larger percentage of its portfolio in commercial loans.

Loans receivable, held for sale. Loans held for sale decreased to $1.0 million at December 31, 2003 from $3.1 million at September 30, 2003, a decrease of $2.1 million or 67.7%. During the quarter ended December 31, 2003, the Company sold $5.6 million of loans, of which $3.1 million were classified held for sale as of September 30, 2003. Management expects to continue to sell loans in the secondary market as necessary to manage interest rate risks. The amount of loans to be sold will vary with loan demand.

Investment Securities. The investment securities portfolio decreased $19.8 million, or 6.6%, to $279.2 million at December 31, 2003, from $299.0 million at September 30, 2003. The decrease was primarily the result of the sale of $12.7 million of securities, and principal payments and maturities of $18.4 million in securities, which was only partly offset by $12.4 million in securities purchases.

Deposits. Historically, deposits have provided the Company with a stable source of relatively low cost funding. The market for deposits is competitive, which has caused the Company to utilize primarily certificate accounts that are more responsive to market interest rates rather than passbook accounts. The Company offers a traditional line of deposit products that currently includes checking, interest-bearing checking, savings, certificates of deposit, commercial checking and money market accounts. Total deposits decreased to $571.4 million at December 31, 2003 from $586.1 million at September 30, 2003, a decrease of $14.7 million or 2.5%. The change in deposits was primarily the result of the disbursement of customer’s Christmas Club savings accounts.

FHLB Advances. The Company also relies upon FHLB advances as a source to fund assets. At December 31, 2003, FHLB advances totaled $98.4 million, a decrease of $2.3 million, or 2.3%, from $100.7 million at September 30, 2003.

Stockholders’ equity. Stockholders’ equity increased $0.1 million or 0.2% to $53.1 million at December 31, 2003, from $53.0 million at September 30, 2003. The increase in stockholders’ equity was primarily due to net income of $1.4 million, a $0.7 million decrease in unrealized gain on securities, dividends of $0.4 million and an increase of $0.3 million in unearned ESOP shares.

Comparison of Results of Operations for the Three Months Ended December 31, 2003 and 2002.

Overview. Net income was $1.4 million for the quarter ended December 31, 2003, compared to net income of $1.2 million for the quarter ended December 31, 2002, an increase of $0.2 million or 16.6%. Basic and diluted earnings per share were $.30 per share for the quarter ended December 31, 2003 compared to basic and diluted earnings per share of $0.28 for the same period last year.

Net interest income. Net interest income for the quarter ended December 31, 2003 was $5.0 million compared to $4.4 million for the quarter ended December 31, 2002, an increase of $0.6 million or 13.6%. The increase was primarily due to an increase in interest income of $0.4 million or 4.5% and a decrease in interest expense of $0.1 million or 2.2%. The Company’s net interest rate spread was 3.02% for the quarter ended December 31, 2003 compared to 3.41% for the quarter ended December 31, 2002. Net interest margin was 2.94% for the quarter ended December 31, 2003 compared to 3.26% for the quarter ended December 31, 2002. The decrease was primarily due to lower yields on average interest earning assets for the quarter ended December 31, 2003 compared to the same period last year, as loans were prepaid and refinanced in the lower market rate environment.

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The table below analyzes net interest income by component and in terms of changes in the volume of interest-earning assets and interest-bearing liabilities and the changes in the related yields and rates for the three-month period ended December 31, 2003, compared to the three-month period ended December 31, 2002.

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Average Balance Sheets (Dollars in Thousands)