Note 21 - Regulatory Matters

12 Months Ended

Dec. 31, 2014

Disclosure Text Block [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

21. REGULATORY MATTERS

The Company and the Banks are subject to various regulatory capital requirements administered by the federal and state banking agencies. The Office of the Comptroller of the Currency (“OCC”) is the primary regulator for First Federal Bank (“First Federal”), First National Bank (“First National”) and Heritage Bank. The Federal Reserve Bank is the primary regulator for the Company. Failure to meet minimum capital requirements can result in certain mandatory—and possible additional discretionary—actions by regulators that, if undertaken, could have a direct and material effect on the Company’s or the Banks’ financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific capital guidelines that involve quantitative measures of the Company’s and the Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Banks’ 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 Company and the Banks to maintain minimum amounts and ratios (set forth in the following table) of tangible capital (as defined) to tangible assets (as defined) and core capital (as defined) to adjusted tangible assets (as defined), and of total risk-based capital (as defined) to risk-weighted assets (as defined). Tier 1 (core) capital includes common stockholders’ equity and qualifying preferred stock less certain other deductions. Total capital includes Tier 1 capital plus the allowance for loan and lease losses, subject to limitations.

As of the most recent notification from regulatory authorities, the Company and the Banks were all categorized as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum total risk-based, tier 1 risk-based, and tier 1 (core) ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed any of the Banks’ categorizations.

The actual and required capital amounts (in thousands) and ratios of the Company (Consolidated) and First Federal, First National and Heritage Bank as of December 31, 2014 are presented in the following table:

											To be Categorized
											as Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tangible Capital to Tangible Assets
First Federal	$	54,215		9.21	%	$	8,825		1.50	%		N/A		N/A
Tier 1 Capital to Average Assets
Consolidated	$	122,537		8.29	%	$	59,146		4.00	%		N/A		N/A
First Federal (1)		54,215		9.21	%		23,534		4.00	%	$	29,417		5.00	%
First National		56,245		9.40	%		17,951		3.00	%		29,919		5.00	%
Heritage Bank		29,086		9.76	%		11,925		4.00	%		14,906		5.00	%
Total Capital to Risk-Weighted Assets
Consolidated	$	136,197		12.11	%	$	90,002		8.00	%		N/A		N/A
First Federal		60,226		12.68	%		37,984		8.00	%	$	47,480		10.00	%
First National		57,100		13.34	%		34,234		8.00	%		42,792		10.00	%
Heritage Bank		29,786		13.67	%		17,432		8.00	%		21,790		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated	$	122,537		10.89	%	$	45,001		4.00	%		N/A		N/A
First Federal		54,215		11.42	%		N/A		N/A		$	28,488		6.00	%
First National		56,245		13.14	%		17,117		4.00	%		25,675		6.00	%
Heritage Bank		29,086		13.35	%		8,716		4.00	%		13,074		6.00	%

(1) In the case of First Federal, the ratio is calculated based on adjusted assets at period end.

First Federal’s actual and required capital amounts (in thousands) and ratios as of December 31, 2013, are presented in the following table:

											To be Categorized
											as Well
											Capitalized Under					Required Per
						For Capital					Prompt Corrective					Agreement With
	Actual					Adequacy Purposes					Action Provisions					the OCC (1)
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013, :
Tangible Capital to Tangible Assets	$	70,853		12.90	%	$	8,240		1.50	%		N/A		N/A			N/A		N/A
Core Capital to Adjusted Tangible Assets		70,853		12.90	%		21,972		4.00	%	$	27,465		5.00	%	$	43,944		8.00	%
Total Capital to Risk-Weighted Assets		76,036		18.68	%		32,570		8.00	%		40,713		10.00	%		48,855		12.00	%
Tier I Capital to Risk-Weighted Assets		70,853		17.40	%		N/A		N/A			24,428		6.00	%		N/A		N/A

(1) First Federal’s Bank Order, effective through January 15, 2013, required the bank to maintain a Tier 1 (core) capital ratio of at least 8% and a total risk-based capital ratio of at least 12%. After such date and through February 21, 2014, First Federal agreed with the OCC to maintain a minimum Tier 1 (core) capital ratio of at least 8% of adjusted total assets and a total risk-based capital ratio of at least 12% of risk-weighted assets. The required amounts presented reflect these ratios.

Private Placement. In connection with the merger with FNSC, on June 13, 2014 the Company sold 2,531,645 shares of Company common stock at a price per share equal to $7.90 in a private placement (the “Private Placement”) to its principal stockholder Bear State Financial Holdings, LLC and certain of its members in their individual capacity (the “Investors”) (including Richard N. Massey, the Company’s Chairman of the Board and Principal Executive Officer, and Scott T. Ford, a director of the Company). Additionally, the Company issued warrants (the “Investor Warrants”) to purchase 177,215 shares of common stock on the same terms as in the Private Placement to the Investors in exchange for their respective commitments to backstop the Private Placement. The pricing of the Private Placement and Investor Warrants was equal to the closing stock price for the Company’s common stock on June 28, 2013, which was the last business day prior to the execution of the merger agreement with FNSC. This price was also used to determine the number of shares issued to FNSC stockholders in the merger.

Authorized Shares. On March 21, 2014, the stockholders of the Company approved a proposal to amend the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 30,000,000 to 100,000,000. Effective June 3, 2014, the Company filed Amended and Restated Articles of Incorporation (the “Amended Articles”) with the Secretary of State of the State of Arkansas. The Amended Articles increased the number of authorized shares from 30,000,000 to 100,000,000.

Dividends. The Company may not declare or pay cash dividends on its shares of common stock if the effect thereof would cause the Company’s stockholders’ equity to be reduced below applicable regulatory capital maintenance requirements for insured institutions or below the special liquidation account established by the Company in connection with First Federal’s conversion from the mutual holding company structure on May 3, 1996. In addition, federal regulations, as currently applied to the Banks, impose limitations upon payment of capital distributions to the Company. No dividends were available for distribution at December 31, 2014, without prior regulatory approval.

The principal source of the Company’s revenues is dividends from the Bank. Our ability to pay dividends to our stockholders depends to a large extent upon the dividends we receive from the Bank.

On October 22, 2014, the Company’s Board of Directors declared an 11% stock dividend per common share payable on December 15, 2014, to stockholders of record at the close of business on December 1, 2014. stockholders received 1 additional share of Company common stock for every 9 shares owned. They also received the cash equivalent of any fractional shares to which they were entitled, since no fractional shares were issued.

Repurchase Program. During 2014, the Company repurchased 500 shares of its common stock under a share repurchase program that was approved by the board of directors on February 19, 2014. This share repurchase program permitted the Company to repurchase up to $1 million of its own common stock during the period between February 19, 2014 and February 19, 2015. This repurchase program expired pursuant to its terms on February 19, 2015 with $995,485 of unused capacity. On March 13, 2015, the board of directors approved a new share repurchase program whereby the Company is permitted to repurchase up to $1 million of its common stock. The 2015 repurchase program will expire March 13, 2016 and can be renewed annually by the board of directors.