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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period ended June 30, 2004

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 4,570,504 shares of Common Stock ($0.01 par value) issued and outstanding as of June 30, 2004.

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POCAHONTAS BANCORP, INC.

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Item 1

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 (LOSS) (UNAUDITED)

(Continued)

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POCAHONTAS BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND

COMPREHENSIVE INCOME (LOSS) (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)

(Concluded)

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 sheet of Pocahontas Bancorp, Inc. (the “Company”), at September 30, 2003. The condensed consolidated financial statements at and for the three and nine months ended June 30, 2004 and 2003 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 and nine months ended June 30, 2004, 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 and nine months ended June 30, 2004 and 2003, 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 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 during the quarter ended 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 stockholders’ 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 June 30, 2004, 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.

Management of the Company is considering the impact of Emerging Issues Task Force (“EITF”) Issue 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (“EITF 03-1”). The EITF has concluded that 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

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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. Management has determined that the impact of EITF 03-1 is not material at June 30, 2004, but is continuing to evaluate the possible future impact on the Company’s consolidated financial statements.

Reclassifications – Certain amounts for the three-month and nine-month periods ended June 30, 2003 have been reclassified to conform to the presentation for the three-month and nine-month periods ended June 30, 2004.

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 May 19, 2004, the Board of Directors declared an $.08 per share quarterly cash dividend for holders of record June 15, 2004. The dividend was paid July 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 June 30, 2004, 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

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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 June 30, 2004, 21,544 options were outstanding.

In March 2004, the Company completed the transaction to sell its branch in Strawberry, Arkansas to the Bank of Cave City. 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 $10.5 million in deposits when sold and resulted in a gain of $0.1 million.

The Company performed its annual impairment test as of April 1, 2004 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, 2005.

As of June 30, 2004 the Company had total core deposit premiums of $6,539,824, net of accumulated amortization of $3,050,382. Core deposit premiums decreased approximately $639,000 during the nine-month period ended June 30, 2004 relating to the sale of the Company’s branch office in Strawberry, Arkansas. 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 $701,000 for the nine-month period ended June 30, 2004. Amortization expense for the net carrying amount of core deposit premiums at June 30, 2004, 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.

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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 was used by the ESOP to purchase additional shares of Company stock on or before December 31, 2003. The loan is collateralized by shares that are purchased with the proceeds of the loan; as of June 30, 2004, the ESOP owed $0.7 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.

During the quarter ended March 31, 2004, the ESOP established a second $2.0 million line of credit with the Company to be used to purchase additional shares of Company stock on or before December 31, 2004. The loan is collateralized by shares that are purchased with the proceeds of the loan; as of June 30, 2004, the ESOP owed $1.2 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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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 June 30, 2004, and the related condensed consolidated statements of income and comprehensive income (loss) for the three months and nine months ended June 30, 2004 and 2003, and of cash flows and stockholders’ equity for the nine-month period ended June 30, 2004. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures 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 of the Public Company Accounting Oversight Board (United States) 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 the standards of the Public Company Accounting Oversight Board (United States), 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 statements, 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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ITEM 2

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.

Overview - Pocahontas Bancorp, Inc. (the “Company”) is a savings and loan holding company headquartered in Jonesboro, Arkansas. The Company operates its wholly owned subsidiary, First Community Bank (the “Bank”).

First Community Bank is a community-oriented federally chartered savings and loan association regulated by the Office of Thrift Supervision. The Bank has a total of 18 locations concentrated in the Northeast Arkansas counties of Craighead, Clay, Green, Jackson, Lawrence, Poinsett, Randolph and Sharp. The Bank is the seventh largest financial institution headquartered in Arkansas, based on total assets as of March 31, 2004.

The Company’s primary business consists of acting as a financial intermediary by attracting deposits from the general public and using such funds, together with borrowings and other funds, to originate loans and invest in securities. Mortgage loans consist primarily of single family residential and commercial real estate located in the Company’s primary market areas. In addition to mortgage loans the Company uses funds to originate construction, consumer and commercial business loans and to purchase investment securities.

The Company is moving forward with many strategic initiatives this fiscal year. We currently have two new branch locations under construction in Jonesboro and Paragould that are scheduled to open this winter.

Third Quarter Highlights - Net income was $0.9 million for the quarter ended June 30, 2004, compared to net income of $1.2 million for the quarter ended June 30, 2003, a decrease of $0.3 million or 25.0%. Basic earnings per share was $0.21 and diluted earnings per share was $0.20 compared to basic and diluted earnings per share of $0.26 for the same period last year.

The decrease in net income for the quarter ended June 30, 2004 was primarily due to the decrease in non- interest income. A subdued refinancing environment during the quarter ended June 30, 2004 resulted in a decreased number of loans originated and subsequently sold which resulted in both lower fee income and a lower gain on sale of loans. Gain on sale of loans decreased $0.5 million or 62.5% and fees and service charges decreased $0.3 million or 30.0% for the quarter ended June 30, 2004 when compared to the same period last year. A net trading loss of $0.2 million in the value of the Company’s trading securities for the quarter ended June 30, 2004 compared to the $0.2 million increase in value for the same period last year, accounted for a $0.4 million decrease in non interest income. Net interest income before provision for loan loss for the quarter ended June 30, 2004 was $4.8 million compared to $4.4 million for the quarter ended June 30, 2003, an increase of $0.4 million or 9.1%. The Company’s net interest rate spread was 2.98% for the quarter ended June 30, 2004 compared to 2.79% for the quarter ended June 30, 2003. Net interest margin was 2.92% for the quarter ended June 30, 2004 compared to 2.71% for the quarter ended June 30, 2003. Both the yield on average interest earning assets and the cost on average interest bearing liabilities for the quarter ended June 30, 2004 decreased when compared to the rates for the same period last year. However, the decrease in the cost of average interest bearing liabilities decreased 66 basis points while the yield on average interest earning assets decreased 47 basis points, resulting in the increase in net interest income for the quarter ended June 30, 2004.

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Net income for the nine month period ended June 30, 2004 was $3.7 million, compared to net income of $3.4 million for the nine month period ended June 30, 2003, an increase of $0.3 million or 9.9%. Basic earnings per share was $0.83 and diluted earnings per share was $0.81 compared to basic earnings per share of $0.79 and diluted earnings per share of $0.78 for the same period last year.

The increase in net income for the nine months ended June 30, 2004 was primarily due to the increase in net interest income and decrease in operating expenses. Net interest income before provision for loan loss for the nine month period ended June 30, 2004 was $14.8 million compared to $13.2 million for the nine month period ended June 30, 2003, an increase of $1.6 million or 11.8%. The increase in net interest income was mainly due to an increase in the average balance of interest-earning assets of $84.2 million, or 14.6%, which more than offset the lower yields earned on such assets. By contrast, the increase in total interest bearing liabilities of $84.7 million, or 14.2%, was more than offset by the decreased cost of such liabilities in the lower market interest rate environment. The Company’s net interest rate spread was 3.05% for the nine month period ended June 30, 2004 compared to 3.16% for the nine month period ended June 30, 2003. Net interest margin was 2.98% for the nine month period ended June 30, 2004 compared to 3.05% for the nine month period ended June 30, 2003. Both the yield on average interest earning assets and the cost on average interest bearing liabilities for the nine month period ended June 30, 2004 decreased when compared to the rates for the same period last year.

Critical Accounting Policies - 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. Different assumptions used in evaluating the adequacy of the allowance could result in material changes in the Company’s consolidated financial condition and results of operations. The Company’s policies and methodology for determining the allowance involve a high degree and complexity and require subjective judgments about uncertain matters.

The Company’s goodwill (the amount paid 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.

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Balance Sheet Analysis and Comparison of Results of Operations for the Nine Months Ended June 30, 2004 and 2003

The following table shows the variance in dollars and percent change between the Consolidated Statements of Financial Condition at June 30, 2004 from September 30, 2003:

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The following table shows the variance in dollars and percent change between the Consolidated Statements of Income for the nine months ended June 30, 2004 and 2003: