FIRST FEDERAL BANCSHARES OF ARKANSAS INC S-1 Filing by FFBH-Agreements

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                                   As filed with the Securities and Exchange Commission on April 6, 2011
                                                                                                                       Registration No. 333-




                                    UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                                                              Washington, D.C. 20549


                                                                 FORM S-1
                                                REGISTRATION STATEMENT
                                             UNDER THE SECURITIES ACT OF 1933

                FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
                                                 (Exact name of registrant as specified in charter)

                       Texas                                             6035                                       71-0785261
  (State or other jurisdiction of incorporation or            (Primary Standard Industrial                       (I.R.S. Employer
                    organization)                                   Code Number)                                Identification No.)

                                           1401 Highway 62-65 North, Harrison, Arkansas 72601
                                                                  (870) 741-7641
                                    (Address, including zip code, and telephone number, including area code,
                                                    of registrant’s principal executive offices)

                                                               Larry J. Brandt
                                                   President and Chief Executive Officer
                                                         1401 Highway 62-65 North
                                                         Harrison, Arkansas 72601
                                                                (870) 741-7641
                                (Name, address, including zip code, and telephone number, including area code,
                                                             of agent for service)

                                                     Please send copies of all communications to:

                        Kevin M. Houlihan                                                                Chris Pledger
                         Patton Boggs LLP                                                               Daniel L. Heard
                        2550 M Street, NW                                                               Kutak Rock LLP
                       Washington, D.C. 20037                                                     124 West Capitol Avenue
                          (202) 457-6000                                                                  Suite 2000
                                                                                                 Little Rock, Arkansas 72201
                                                                                                        (501) 975-3000

       Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement
becomes effective.

         If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. 

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. 
         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration statement for the same offering. 

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.

         Large accelerated filer                                                                   Accelerated filer 

         Non-accelerated filer  (Do not check if a smaller reporting company)              Smaller reporting company 




                                                        Calculation of Registration Fee
                                                                                                       Proposed Maximum              Amount of
               Title of Each Class of                    Amount To Be          Maximum Offering        Aggregate Offering            Registration
             Securities to be Registered                  Registered            Price Per Share             Price(2)                   Fee(1)
Common Stock, par value $0.01 per share,
  underlying Subscription Rights                          2,908,071                 $3.00                $8,724,213 (3)              $1,012.88



(1)      This Registration Statement relates to the shares of common stock deliverable upon the exercise of the non-transferable subscription
      rights pursuant to the rights offering, and the amount of shares to be registered takes into account the effect of the 1-for-5 reverse stock
      split of the common stock referenced in this Registration Statement. This Registration Statement also covers any additional shares of
      common stock of the Registrant that may become issuable due to adjustments for changes resulting from stock dividends, stock splits,
      recapitalizations, mergers, reorganizations, combinations or exchanges or other similar events.

(2)     Estimated pursuant to Rule 457(o) solely for purposes of calculating the registration fee.

(3)     Represents the gross proceeds from the assumed exercise of all non-transferable subscription rights to be issued.

         The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may determine.
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                                                               Explanatory Note

         The preliminary prospectus contained in this Registration Statement concerns an offering of rights (the “ Rights Offering ”) to
purchase shares of common stock, $0.01 par value per share (the “ Common Stock ”) of First Federal Bancshares of Arkansas, Inc. (the “
Company ”). The Rights Offering is being conducted as part of the Company’s recapitalization plan (the “ Recapitalization Plan ”), which is
more fully described in the Company’s Current Report on Form 8-K (the “ Form 8-K ”) filed with the Securities and Exchange Commission
(the “ SEC ”) on January 28, 2011, as well as the Company’s Annual Report on Form 10-K (the “ Form 10-K ”) for the fiscal year ended
December 31, 2010 filed with the SEC on March 16, 2011, and the definitive proxy statement for the Company’s planned Special Meeting of
Stockholders (together with the Form 8-K and Form 10-K, the “ SEC Filings ”), which was filed with the SEC on March 30, 2011.

         On January 27, 2011, the Company and First Federal Bank (the “ Bank ”), the Company’s wholly-owned subsidiary, entered into an
Investment Agreement (the “ Investment Agreement ”) with Bear State Financial Holdings, LLC (“ Bear State ”). The Investment Agreement,
a copy of which was filed as an Exhibit to the Form 8-K, sets forth the terms and conditions of the Company’s Recapitalization Plan, which
consists of the following:

               the Company will amend its Articles of Incorporation to effect a 1-for-5 reverse split (the “ Reverse Split ”) of the Company’s
            issued and outstanding shares of Common Stock;

               Bear State will purchase from the United States Department of the Treasury (the “ Treasury ”) for $6 million aggregate
            consideration, the Company’s 16,500 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“ Series A Preferred
            Stock ”), including any accrued but unpaid dividends thereon, and related warrant dated March 6, 2009 to purchase 321,847 shares
            of the Company’s Common Stock at an exercise price of $7.69 per share (the “ TARP Warrant ”), both of which were previously
            issued to the Treasury through the Troubled Asset Relief Program — Capital Purchase Program;

              the Company will sell to Bear State (i) 15,425,262 post-Reverse Split shares (the “ First Closing Shares ”) of the Company’s
            Common Stock at $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, and (ii) a warrant (the “ Investor
            Warrant ”) to purchase 2 million post-Reverse Split shares of our Common Stock at an exercise price of $3.00 per share (or $0.60
            per share pre-Reverse Split) (the effectiveness of the Reverse Split, the issuance of the First Closing Shares, and the delivery of the
            Investor Warrant is referred to together as the “ First Closing ”);

              Bear State will pay the Company aggregate consideration of approximately $46.3 million for the First Closing Shares and
            Investor Warrant, consisting of (i) $40.3 million in cash, and (ii) Bear State’s surrendering to the Company the Series A Preferred
            Stock and TARP Warrant for a $6 million credit against the purchase price of the First Closing Shares;

               as promptly as practical following the First Closing, the Company intends to commence the Rights Offering, pursuant to which
            stockholders who hold shares of our Common Stock on the record date for the Rights Offering, which as of the date of the filing of
            this Registration Statement is March 23, 2011, will receive the right to purchase three (3) post-Reverse Split shares of the
            Company’s Common Stock for each one (1) post-Reverse Split share held by such stockholder at $3.00 per share (or $0.60 per
            share pre-Reverse Split); and

               on the closing date of the Rights Offering, the Company will sell to Bear State any unsold shares of the Company’s Common
            Stock offered in the Rights Offering (the “ Second Closing ”), subject to the satisfaction of the conditions to the Second Closing as
            set forth in the Investment Agreement, at a purchase price of $3.00 per share (or $0.60 per share pre-Reverse Split) in a private
            placement, subject to an overall limitation on Bear State’s ownership of 94.90% of our outstanding Common Stock.

         Because the consummation of the Recapitalization Plan is contingent upon receipt by the Company of certain requisite approvals,
including stockholder and regulatory approval, as further described in the SEC Filings, the preliminary prospectus assumes that such approvals
have been obtained. Further, because the Rights Offering is contingent upon and is planned to occur following the effectiveness of the
Reverse Split and the issuance of the First Closing Shares, unless otherwise indicated, the disclosure in the preliminary prospectus is
presented as if the Reverse Split and the issuance of the First Closing Shares have occurred. You should carefully read and consider the
impact of the Reverse Split and the impact of the transactions contemplated by the Recapitalization Plan described in the preliminary
prospectus. Depending upon the date on which all requisite approvals for the Recapitalization Plan have been received, the Company may
be required to change the record date of the Rights Offering to comply with applicable law.
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell securities and is not soliciting an offer to buy
these securities in any state or other jurisdiction where the offer or sale is not permitted.

                                            SUBJECT TO COMPLETION, DATED APRIL 6, 2011

PRELIMINARY PROSPECTUS




                                                Up to 2,908,071 Shares of Common Stock
                          Issuable upon the Exercise of Non-Transferable Subscription Rights at $3.00 per share




          We are distributing, at no charge, to holders of our common stock, $0.01 par value per share (the “ Common Stock ”),
non-transferable subscription rights (“ Rights ”) to purchase up to 2,908,071 shares of Common Stock at a price of $3.00 per share in this
Rights offering (the “ Rights Offering ”), which could result in net proceeds of approximately $8.5 million. You will receive one (1) Right for
each share of our Common Stock, as adjusted to take into account the 1-for-5 reverse stock split that occurred on [  ] [  ], 2011 (the “ Reverse
Split ”), held by you of record as of 5:00 p.m., Eastern Time, on March 23, 2011 (the “ Record Date ”).

        Each Right will entitle you to purchase three (3) shares of Common Stock at a subscription price of $3.00 per share (or $0.60
per share pre-Reverse Split) (the “ Basic Subscription Right ”).

         If you timely and fully exercise your Basic Subscription Right with respect to all of the Rights you hold and other Rights holders do
not exercise their Basic Subscription Right in full, you will have an oversubscription privilege to subscribe for a portion of shares of Common
Stock offered in the Rights Offering, subject to availability and allocation, that were not purchased by other Rights holders. There is no
minimum subscription amount required for the consummation of the Rights Offering. However, your ability to purchase Common Stock in the
Rights Offering is subject to an overall beneficial ownership limitation of 4.9% of our outstanding Common Stock, after giving effect to your
participation in the Rights Offering and taking into account the holdings of you and your affiliates.

         We and First Federal Bank, our wholly-owned subsidiary, have entered into an Investment Agreement (the “ Investment Agreement ”)
with Bear State Financial Holdings, LLC (“ Bear State ”) pursuant to which Bear State has committed to backstop the Rights Offering by
purchasing from us in a private placement, at a price of $3.00 per share (or $0.60 per share pre-Reverse Split), any shares not purchased by the
Rights holders. This commitment is subject to the terms and conditions of the Investment Agreement and an overall limitation on Bear State’s
ownership of 94.90% of our outstanding Common Stock. Please see “Questions and Answers Relating to the Offering—Why are we
conducting the Rights Offering?”

         The Rights Offering will expire at 5:00 p.m., Eastern Time, [  ] [  ] , 2011 (“ Expiration Date ”). Any Right not exercised at or
before that time will expire without any payment to the holders thereof. We do not intend to extend the Expiration Date. You should carefully
consider whether to exercise your Rights prior to the expiration of the Rights Offering. All exercises of Rights are irrevocable. Neither our
Board of Directors nor Bear State is making a recommendation regarding any exercise of your Rights.
         We may in our sole discretion cancel the Rights Offering at any time for any reason. If we cancel the Rights Offering, the
subscription agent will return all subscription payments it has received in connection with the Rights Offering without interest or penalty.

         This Rights Offering is being made directly by us. We are not using an underwriter or selling agent. We have engaged Registrar and
Transfer Company to serve as the subscription agent for the Rights Offering. The subscription agent will hold in escrow the funds we receive
from subscribers until we complete or cancel the Rights Offering.

          Shares of our Common Stock are traded on the NASDAQ Global Market under the symbol “FFBH.” On [  ] [  ], 2011, the closing
sale price for our Common Stock was $[  ] per share. The shares of Common Stock issued in the Rights Offering will also be listed on the
NASDAQ Global Market under the same symbol. The Rights are
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not transferable and will not be listed on the NASDAQ Global Market or any other stock exchange or trading market.

        Investing in our Common Stock involves risks. You should read the “Risk Factors” section beginning on page 23 of this
prospectus and in the documents incorporated by reference into this prospectus before investing in our Common Stock.

         As a result of the terms of the Rights Offering, stockholders who do not fully exercise their Rights will own, upon completion
of the Rights Offering, a smaller proportional interest in the Company than otherwise would be the case had they fully exercised their
Rights. See “Risk Factors — If you do not exercise your Rights, your percentage ownership will be diluted” for more information.

         Neither the Securities and Exchange Commission (the “ SEC ”) nor any state securities commission or other regulatory body
has approved or disapproved of the Rights or the shares of Common Stock underlying the Rights or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

        The Rights and the shares of our Common Stock are not deposit accounts and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency.

                                                                                                            Per Share              Total(*)
Subscription Price                                                                                     $                3.00   $     8,724,213
Estimated Expenses                                                                                                             $       178,513
Proceeds, before expenses, to First Federal Bancshares of Arkansas, Inc.                               $                3.00   $     8,724,213



(*) Assumes the issuance of Rights to purchase 2,908,071 shares of Common Stock in the Rights Offering. Shares of Common Stock relating
to those Rights will either be issued to purchasers in the Rights Offering or in a private placement to Bear State who is backstopping the Rights
Offering, subject to an overall limitation on Bear State’s ownership of 94.9% of our outstanding Common Stock. It is anticipated that delivery
of the Rights Offering shares will be made on or about [  ] [  ], 2011.

                                                 The date of this prospectus is [  ] [  ], 2011.
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ABOUT THIS PROSPECTUS                                                                                                                            1

CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS                                                                                            2

QUESTIONS AND ANSWERS RELATED TO THIS RIGHTS OFFERING                                                                                            5

PROSPECTUS SUMMARY                                                                                                                              14

SELECTED CONSOLIDATED FINANCIAL DATA                                                                                                            21

RISK FACTORS                                                                                                                                    23

PLAN OF DISTRIBUTION                                                                                                                            36

USE OF PROCEEDS                                                                                                                                 36

CAPITALIZATION AND PRO FORMA FINANCIAL INFORMATION                                                                                              38

MARKET FOR COMMON STOCK AND DIVIDEND POLICY                                                                                                     42

DESCRIPTION OF CAPITAL STOCK                                                                                                                    43

TERMS OF OFFERING                                                                                                                               46

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES                                                                                                    54

LEGAL MATTERS                                                                                                                                   57

EXPERTS                                                                                                                                         57

WHERE YOU CAN FIND ADDITIONAL INFORMATION                                                                                                       58

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE                                                                                               58

                                                        ABOUT THIS PROSPECTUS

          You should rely only on the information contained or incorporated by reference in this prospectus or any free writing prospectus
prepared by us. We have not authorized any other person to provide you with different or additional information contained or incorporated by
reference. If anyone provides you with different or additional information, you should not rely on it. We are not making an offer to sell our
securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus, in
any free writing prospectus and in the documents incorporated herein by reference is accurate only as of their respective dates. Our business,
financial condition, liquidity, results of operations and prospects may have changed since those dates.

         Unless otherwise stated in this prospectus or the context otherwise requires, references to “we,” “us,” “our,” “First Federal,” the
“Company,” or the “Corporation” refer to First Federal Bancshares of Arkansas, Inc. and its consolidated subsidiaries, including First Federal
Bank, or the “Bank,” which is a federal stock savings and loan association and our sole banking subsidiary.

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                            CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS

          This prospectus and the documents incorporated by reference into this prospectus contain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “ Securities Act ”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”). We intend such forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements in these provisions. All statements other than statements of historical fact are “forward-looking statements” for
purposes of federal and state securities laws, including, but not limited to, statements about anticipated future operating and financial
performance, financial position and liquidity, business prospects, strategic alternatives, business strategies, regulatory and competitive outlook,
investment and expenditure plans, capital and financing needs and availability, acquisition and divestiture opportunities, plans and objectives of
management for future operations, consummation of the Rights Offering and other similar forecasts and statements of expectation and
statements of assumptions underlying any of the foregoing. Words such as “will likely continue,” “anticipates,” “believes,” “could,”
“estimates,” “expects,” “intends,” “may,” “seeks,” “should,” “will,” and variations of these words and similar expressions are intended to
identify these forward-looking statements.

         Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the regulatory
environment, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated
by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither
statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not limited to, the following:

               any effects of the recent change of control of the Company in which Bear State acquired a majority ownership of our voting
             power, including changes in management, strategic direction, business plan or operations;

                inability to maintain the higher minimum capital ratios that the Company and the Bank are required to maintain pursuant to
             the Cease and Desist Orders issued by the Office of Thrift Supervision (“ OTS ”) on April 12, 2010. The order between the
             Company and the OTS is referred to in this prospectus as the “ Company Order ” and the order between the Bank and the OTS is
             referred to in this prospectus as the “ Bank Order .” Collectively, the Company Order and Bank Order are referred to in this
             prospectus as the “ Orders ”;

                the effect of other requirements of the Orders and any further regulatory actions;

                management’s ability to effectively execute our business plan and complete the Company’s recapitalization plans;

                inability to receive dividends from the Bank and to satisfy obligations as they become due;

               costs and effects of legal and regulatory developments, including the resolution of legal proceedings or regulatory or other
             governmental inquiries, and the results of regulatory examinations or reviews;

                changes in capital classification;

                the impact of current economic conditions and our results of operations on our ability to borrow additional funds to meet our
             liquidity needs;

                local, regional, national and international economic conditions and events and the impact they may have on us and our
             customers;

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               changes in the economy affecting real estate values;

               inability to attract and retain deposits;

               changes in the level of non-performing assets and charge-offs;

               changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and
            accounting requirements;

               changes in the financial performance and/or condition of the Bank’s borrowers;

               effect of additional provision for loan and real estate owned losses;

               long-term negative trends in our market capitalization;

               continued listing of our Common Stock on the NASDAQ Global Market;

               the availability and terms of capital;

              effects of any changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal
            Reserve Board;

               inflation, interest rates, cost of funds, securities market and monetary fluctuations;

               political instability;

               acts of war or terrorism, natural disasters such as earthquakes, tornadoes or fires, or the effects of pandemic flu;

               the timely development of competitive new products and services and the acceptance of these products and services by new
            and existing customers;

               changes in consumer spending, borrowings and savings habits;

               technological changes;

               changes in our organization, management, compensation and benefit plans;

               competitive pressures from other financial institutions;

               inability to maintain or increase market share and control expenses;

               impact of reputational risk on such matters as business generation and retention, funding and liquidity;

               continued volatility in the credit and equity markets and its effect on the general economy;

              changes in financial services policies, laws and regulations, including laws, regulations and policies concerning taxes,
            banking, securities and insurance, and the application thereof by regulatory bodies;

               effects of final rules amending Regulation E that prohibit financial institutions from charging consumer fees for paying
            overdrafts on ATM and one-time debit card transactions, unless the consumer consents or opts-in to the overdraft service for
            those types of transactions;

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               effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public
             Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters;

                in connection with the participation in the Rights Offering by participants (and other account holders) in the First Federal
             Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust (the “ 401(k) Plan ”), a failure to obtain an
             exemption from the U.S. Department of Labor (the “ DOL ”), on a retroactive basis, effective to the commencement of the Rights
             Offering, such that the acquisition, holding and exercise of the Rights by the 401(k) Plan would not constitute a prohibited
             transaction under the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and Section 4975 of the
             Internal Revenue Code of 1986, as amended (the “ Code ”);

                other factors described from time to time in our filings with the SEC; and

                our success at managing the risks involved in the foregoing items.

          Forward-looking statements speak only as of the date they are made, and we do not undertake to update forward-looking statements to
reflect circumstances or events that occur after the date the forward-looking statements are made, whether as a result of new information, future
developments or otherwise, except as may be required by law. In light of these risks, uncertainties and assumptions, the forward-looking
statements discussed in this prospectus and the documents incorporated by reference might not occur, and you should not put undue reliance on
any forward-looking statements.

         Some of these and other factors are discussed in this prospectus under the caption “Risk Factors” and elsewhere in this prospectus and
the documents incorporated by reference. The development of any or all of these factors could have an adverse impact on our financial
position and our results of operations.

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                               QUESTIONS AND ANSWERS RELATED TO THIS RIGHTS OFFERING

         The following are examples of what we anticipate will be common questions about the Rights Offering. The following questions and
answers do not contain all of the information that may be important to you and may not address all of the questions that you may have about
the Rights Offering. This prospectus and the documents incorporated by reference into this prospectus contain more detailed descriptions of
the terms and conditions of the Rights Offering and provide additional information about us and our business, including potential risks related
to the Rights Offering, the shares of Common Stock offered hereby and our business.

What is the Rights Offering?

          We are distributing, at no charge, to holders of our Common Stock as of 5:00 p.m. Eastern Time, on March 23, 2011 (the “ Record
Date ” and, such holders, as adjusted to take into account the Reverse Split (defined below), the “ Legacy Stockholders ”), non-transferable
subscription rights (the “ Rights ”) to purchase shares of our Common Stock at a price of $3.00 per share (the “ Rights Offering ”), or $0.60 per
share without taking into account the 1-for-5 reverse stock split which occurred on [  ][  ] , 2011 prior to mailing this prospectus to the
Legacy Stockholders (the “ Reverse Split ”). Each Right entitles a Legacy Stockholder to a basic subscription right (the “ Basic Subscription
Right ”) and an oversubscription privilege (the “ Oversubscription Privilege ”). The Basic Subscription Right entitles a Legacy Stockholder to
purchase three (3) post-Reverse Split shares of our Common Stock for each one (1) post-Reverse Split share of our Common Stock held by
such Legacy Stockholder on the Record Date. For example, if a Legacy Stockholder owns five (5) shares of our Common Stock as of the
Record Date, then after giving effect to the Reverse Split, such Legacy Stockholder would own one (1) post-Reverse Split share of our
Common Stock. The Basic Subscription Right would then entitle such Legacy Stockholder to purchase three (3) post-Reverse Split shares of
our Common Stock for the one (1) post-Reverse Split share of our Common Stock held by such Legacy Stockholder. The Oversubscription
Privilege will permit Legacy Stockholders who validly and fully exercise their Basic Subscription Rights to subscribe for post-Reverse Split
shares of our Common Stock that are not purchased by other Legacy Stockholders under their Basic Subscription Rights. If the Legacy
Stockholder owns less than five (5) shares of our Common Stock as of the Record Date, then after giving effect to the Reverse Split, such
Legacy Stockholder would receive cash in lieu of fractional shares of our Common Stock and would not be entitled to a Right. Legacy
Stockholders may only exercise the Basic Subscription Right and the Oversubscription Privilege for whole shares. In the event, however, that
fractional shares of Common Stock result from the application of the Oversubscription Allocation Formula, which is discussed under “—What
is the Oversubscription Privilege?” below, then such fractional shares will be eliminated by rounding down to the nearest whole share, with the
total exercise price being adjusted accordingly. Any excess subscription payments received by the subscription agent will be returned, without
interest or penalty, as soon as practicable.

          Your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limitation of 4.9% of our
outstanding Common Stock, after giving effect to your participation in the Rights Offering and taking into account the holdings of you and
your affiliates.

Why are we conducting the Rights Offering?

          The economic downturn in our market areas and resulting decline in real estate values have had a material adverse effect on our
financial condition and results of operations, as well as the results of operations of the Bank, our wholly-owned subsidiary. These material
adverse effects include reductions in our capital levels and the capital levels of the Bank as a result of our losses in 2010 and 2009 primarily
due to expenses related to our nonperforming assets, particularly elevated loan charge-offs and increases in the provision for loan losses and
real estate owned expenses. Furthermore, as described below in “Prospectus Summary—Regulatory Enforcement Action”, we are subject to
the Company Order and the Bank is subject to the Bank Order, issued by the OTS, our and the Bank’s primary regulator, requiring us to take
steps to improve our and the Bank’s financial condition and results of operations, including increasing our and the Bank’s capital levels. Due
to these challenges, we have been pursuing strategic alternatives to raise capital and strengthen our balance sheet. Our Board of Directors has
worked closely with management and our advisors to evaluate potential alternatives for raising additional capital, including possibly

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selling Common Stock in public or private offerings, disposing of branches or related assets, and considering other strategic alternatives.

         On January 27, 2011, the Company and the Bank entered into an Investment Agreement (the “ Investment Agreement ”) with Bear
State Financial Holdings, LLC (“ Bear State ”), pursuant to which the Company agreed, among other things, to commence the Rights Offering
following the effectiveness of the Reverse Split and the sale to Bear State of our Common Stock and a warrant to purchase shares of our
Common Stock as contemplated by the Investment Agreement (the “ Bear State Investment ”).

         We are conducting the Rights Offering because we are required to do so under the terms of the Investment Agreement. The purpose
of the Rights Offering is to give our Legacy Stockholders the opportunity to purchase shares of our Common Stock at the same price Bear State
is purchasing our Common Stock in connection with the Bear State Investment and thereby participate in the Company’s recapitalization plan
(the “ Recapitalization Plan ”).

Am I required to exercise the Rights I receive in the Rights Offering?

         No. You may exercise any number of your Rights, or you may choose not to exercise any of your Rights. However, if you choose
not to exercise your Basic Subscription Right or you exercise less than your full Basic Subscription Right and other stockholders fully exercise
their Basic Subscription Right or exercise a greater proportion of their Basic Subscription Right than you exercise, the percentage of our
Common Stock owned by these other stockholders will increase relative to your ownership percentage, and your voting and other rights in the
Company will likewise be diluted. You may not sell, transfer, or assign your Rights.

What is the Basic Subscription Right?

          Each Right consists of a Basic Subscription Right and an Oversubscription Privilege. Each Basic Subscription Right gives a Legacy
Stockholder the opportunity to purchase three (3) new post-Reverse Split shares of our Common Stock at a post-Reverse Split subscription
price of $3.00 per share (or $0.60 per share pre-Reverse Split) for each one (1) share of our Common Stock held by such Legacy
Stockholder. You may exercise some or all of your Basic Subscription Rights, or you may choose not to exercise any Basic Subscription
Rights at all. You may not sell, transfer, or assign your Basic Subscription Rights.

         If you hold shares of Common Stock in your name, the number of shares you may purchase pursuant to your Rights is indicated on the
enclosed Rights certificate. If you hold your shares in the name of a broker, dealer, custodian bank or other nominee who uses the services of
the Depository Trust Company (“ DTC ”), you will not receive a Rights certificate. Instead, DTC will credit one Right to your nominee record
holder for each share of our Common Stock that you beneficially own as of the Record Date. If you are not contacted by your nominee, you
should contact your nominee as soon as possible.

What is the Oversubscription Privilege?

         If you timely and fully exercise your Basic Subscription Rights, you may also choose to exercise your Oversubscription Privilege by
purchasing a portion of any whole shares that other Legacy Stockholders do not purchase through their Basic Subscription Rights. You should
indicate on your Rights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many
additional shares you would like to purchase pursuant to your Oversubscription Privilege.

         We will seek to honor the requests made under the Oversubscription Privilege in full, subject to a maximum of 2,908,071 shares of
Common Stock being offered in the Rights Offering and the limitations described below under “— Are there any limits on the number of
shares I may purchase in the Rights Offering?”

         If oversubscription requests exceed the number of shares available, however, we will allocate the available shares pro rata among the
Rights holders exercising the Oversubscription Privilege in proportion to the number of shares of our Common Stock each of those Rights
holders owned on the Record Date, relative to the number of

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shares of Common Stock owned on the Record Date by all Rights holders exercising the Oversubscription Privilege. We refer to this pro rata
allocation formula as the “ Oversubscription Allocation Formula .” If the application of the Oversubscription Allocation Formula results in
any Rights holder receiving a greater number of shares than the Rights holder subscribed for pursuant to the exercise of the Oversubscription
Privilege, then such Rights holder will be allocated only that number of shares of Common Stock for which the holder oversubscribed, and the
remaining shares will be allocated among all other Rights holders exercising the Oversubscription Privilege on the same pro rata basis
described above. Additionally, if the application of the Oversubscription Allocation Formula would result in any Rights holder exceeding,
together with its affiliates, beneficial ownership of 4.9% or more of our outstanding Common Stock, then such Rights holder will be allocated
only that number of shares that would result in the Rights holder acquiring the maximum number of shares permissible based on such
beneficial ownership limitation, and the remaining shares will be allocated among all other Rights holders exercising their Oversubscription
Privilege on the same pro rata basis described above. The proration process will be repeated until all shares of Common Stock available in
the Rights Offering have been allocated.

        Registrar and Transfer Company, our subscription agent for the Rights Offering, will determine the oversubscription allocation based
on the Oversubscription Allocation Formula described above.

         The Oversubscription Privilege may only be exercised for whole shares. In the event, however, that fractional shares of Common
Stock result from the application of the Oversubscription Allocation Formula to oversubscription requests, then such fractional shares will be
eliminated by rounding down to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription
payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable.

          Because we will not know the total number of available shares and how available shares will be allocated before the Rights Offering
expires, in order for the exercise of your entire Oversubscription Privilege to be valid, you should deliver to the subscription agent payment in
an amount equal to the aggregate subscription price of the entire number of shares that you have requested to purchase pursuant to your
Oversubscription Privilege, along with payment for the exercise of your Basic Subscription Rights and all Rights certificates, or forms provided
by your nominee if your shares are held in the name of a nominee, and other subscription documents, prior to the expiration of the Rights
Offering, even if you ultimately are not allocated the full amount of your oversubscription request. To the extent the aggregate subscription
price of the actual number of shares allocated to you pursuant to the Oversubscription Privilege is less than the amount you actually paid, the
excess subscription payment will be returned to you as soon as practicable, without interest or penalty, following the expiration of the Rights
Offering.

Are there any limits on the number of shares I may purchase in the Rights Offering?

         Purchases by any Rights holder in the Rights Offering will be limited in that no Rights holder may beneficially own more than 4.9%
of our outstanding shares of Common Stock after giving effect to their participation in the Rights Offering and the holdings of their affiliates.

Will fractional shares be issued in the Rights Offering?

         No. Legacy Stockholders may only exercise the Basic Subscription Right and the Oversubscription Privilege for whole shares. In
the event, however, that fractional shares of Common Stock result from the application of the Oversubscription Allocation Formula to
oversubscription requests, then such fractional shares will be eliminated by rounding down to the nearest whole share, with the total exercise
price being adjusted accordingly. Any excess subscription payments received by the subscription agent will be returned, without interest or
penalty, as soon as practicable.

How was the subscription price per share determined?

        The price per share of the shares offered in the Rights Offering is the same as the price paid by Bear State for the 15,425,262
post-Reverse Split shares of our Common Stock it acquired on [  ][  ] , 2011 in the private placement conducted pursuant to the Investment
Agreement and is the same price Bear State has agreed to pay

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pursuant to its commitment to backstop the Rights Offering in a private placement pursuant to the Investment Agreement. See “Prospectus
Summary—Recapitalization Plan” and “—Is there a backstop purchaser?” We established the subscription price at $3.00 per share (or $0.60
per share pre-Reverse Split) in order to permit the Legacy Stockholders to participate in our Recapitalization Plan at the same price paid by
Bear State pursuant to the Investment Agreement.

         The subscription price does not necessarily bear any relationship to any other established criteria for value. You should not consider
the subscription price as an indication of value of the Company or our Common Stock. You should not assume or expect that, after the Rights
Offering, our Common Stock will trade at or above the subscription price in any given time period. The market price of our Common Stock
may decline during or after the Rights Offering, and you may not be able to sell the underlying shares of Common Stock purchased during the
Rights Offering at a price equal to or greater than the subscription price. You should make your own assessment of our business and financial
condition, our prospects for the future, and the terms of the Rights Offering.

May I transfer my Rights?

         No. You may not sell, transfer or assign your Rights to anyone. Rights will not be listed for trading on the NASDAQ Global Market
or any other stock exchange or market. A Rights certificate, or forms provided by your nominee if your shares are held in the name of a
nominee, may be completed only by the stockholder who receives the certificate or such forms.

How soon must I act to exercise my Rights?

         If you received a Rights certificate and elect to exercise any or all of your Rights, the subscription agent must receive your properly
completed and duly executed Rights certificate, all other required subscription documents and full subscription payment, including final
clearance of any uncertified check, before the Rights Offering expires at 5:00 p.m., Eastern Time, on [  ][  ], 2011 (“ Expiration Date ”). If
you hold your shares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish an earlier deadline before
the expiration of the Rights Offering by which time you must provide the nominee with your instructions to exercise your Rights. We do not
intend to extend the expiration of the Rights Offering.

         Although we will make reasonable attempts to provide this prospectus to our stockholders to whom Rights are distributed, the Rights
Offering and all Rights will expire on the Expiration Date, whether or not we have been able to locate all such stockholders.

May I participate in the Rights Offering if I sell my shares of Common Stock after the Record Date?

          The Record Date for the Rights Offering is March 23, 2011. If you owned shares of Common Stock as of 5:00 p.m., Eastern Time, on
the Record Date you may participate in the Rights Offering and will receive Rights. If you sell all of the shares of Common Stock that you
held at 5:00 p.m., Eastern Time, on the Record Date subsequent to that time, you will remain eligible to participate in the Rights Offering and
will receive Rights based upon the shares of Common Stock that you held as of 5:00 p.m., Eastern Time, on the Record Date.

Are we requiring a minimum overall subscription from existing stockholders to complete the Rights Offering?

         No. We are not requiring an overall minimum subscription to complete the Rights Offering. However, Bear State has committed to
backstop the Rights Offering, by purchasing from us in a private placement, at the subscription price, any shares of Common Stock not
purchased by the Legacy Stockholders, subject to the satisfaction of the conditions set forth in the Investment Agreement and an overall
limitation on Bear State’s ownership of 94.90% of our outstanding Common Stock.

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Has the Board of Directors or Bear State made a recommendation to stockholders regarding the Rights Offering?

          No. Neither our Board of Directors nor Bear State is making a recommendation regarding any exercise of your Rights. Rights
holders who exercise Rights will incur investment risk on new money invested. The stock market and, in particular, the market for financial
institution stocks, has experienced significant volatility over the past few years. As a result, the market price for our Common Stock may be
volatile. In addition, the trading volume in our Common Stock may fluctuate more than usual and cause significant price variations to
occur. Accordingly, shares of Common Stock that an investor purchases in the Rights Offering may trade at a price lower than the
subscription price. The trading price of our Common Stock will depend on many factors, which may change from time to time, including,
without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities,
and other factors. Volatility in the market price of our Common Stock may prevent you from being able to sell the shares when you want or at
prices you find attractive. You should make your decision based on your assessment of our business and financial condition, our prospects for
the future, the terms of the Rights Offering and the information contained in, or incorporated by reference into, this prospectus. You should
carefully consider the risks, among other things, described under the heading “Risk Factors” beginning on page 23 of this prospectus and in the
documents incorporated by reference into this prospectus.

Will our directors and executive officers participate in the Rights Offering?

        To the extent they held shares of Common Stock as of the Record Date, our directors and officers are entitled to participate in the
Rights Offering on the same terms and conditions applicable to all Rights holders.

How do I exercise my Rights if I own shares in my name?

          If you hold shares of Common Stock in your name and you wish to participate in the Rights Offering, you must deliver a properly
completed and duly executed Rights certificate and all other required subscription documents, together with payment of the full subscription
price, to the subscription agent before 5:00 p.m., Eastern Time, on the Expiration Date. If you send an uncertified check, payment will not be
deemed to have been delivered to the subscription agent until the check has cleared. In certain cases, you may be required to provide signature
guarantees.

         Please follow the delivery instructions on the Rights certificate. Do not deliver documents to the Company. You are solely
responsible for completing delivery to the subscription agent of your Rights certificate, all other required subscription documents and
subscription payment. You should allow sufficient time for delivery of your subscription materials to the subscription agent so that the
subscription agent receives them by 5:00 p.m., Eastern Time, on the Expiration Date. See “—To whom should I send my forms and
payment?” below.

         If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested is
not specified in the forms, the payment received will be applied to exercise your Rights to the fullest extent possible based on the amount of the
payment received, subject to the availability of shares and allocation procedure with respect to the Oversubscription Privilege and the
elimination of fractional shares.

What should I do if I want to participate in the Rights Offering but my shares are held in the name of a broker, dealer, custodian bank
or other nominee?

         If you hold your shares of Common Stock through a broker, dealer, custodian bank or other nominee, then your nominee is the record
holder of the shares you own and the associated Rights. Your nominee must exercise the Rights on your behalf as the beneficial owner for the
shares of Common Stock you wish to purchase pursuant to the Rights Offering.

        We will ask your nominee to notify you of the Rights Offering. If you are not contacted by your nominee, you should contact your
nominee as soon as possible. Please follow the instructions of your nominee, which will

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include completing and returning to the nominee the form titled “Beneficial Owner Election Form.” You should receive this form from your
nominee along with other materials concerning the Rights Offering.

         Your nominee may establish a deadline for the return of subscription materials to the nominee before the Expiration Date of the Rights
Offering.

What should I do if I want to participate in the Rights Offering, but my Rights are held in my account in the 401(k) Plan?

          If you held shares of our Common Stock in your 401(k) Plan account as of the Record Date, you may exercise the Rights with respect
to those shares of Common Stock to the same extent as other holders of our Common Stock as of the Record Date by electing what amount (if
any) of your subscription rights you would like to exercise by properly completing a special election form, called the “First Federal Bancshares
of Arkansas Inc. Employees’ Savings and Profit Sharing Plan & Trust Non-Transferable Subscription Rights Election Form” (“ 401(k) Plan
Participant Election Form ”) that is provided to you. You must return your properly completed 401(k) Plan Participant Election Form to the
Company as prescribed in the instructions accompanying the 401(k) Plan Participant Election Form. Your 401(k) Plan Participant Election
Form must be received by the Company by 5:00 p.m., Eastern Time on [  ] [  ], 2011 (the “ 401(k) Deadline ”), which is 5 business days prior
to the Expiration Date. If your 401(k) Plan Participant Election Form is not received by the 401(k) Deadline, your election to exercise your
Rights that are held in your 401(k) Plan account will not be effective. The 401(k) Deadline is a special deadline that applies to participants (and
other account holders) in the 401(k) Plan (notwithstanding the Expiration Date set forth in this prospectus for Rights holders generally) and
solely with respect to the shares of our Common Stock held through the 401(k) Plan as of the Record Date. Any Rights credited to your
401(k) Plan account will expire unless they are properly exercised by the 401(k) Deadline. If you elect to exercise some or all of the Rights in
your 401(k) Plan account, you must also ensure that you indicated on your 401(k) Plan Participant Election Form a sufficient amount of your
current investments to be liquidated in full satisfaction of your subscription payment.

      Also note that, notwithstanding any election that you make regarding the exercise of your Rights held by your 401(k) Plan
account, no Rights held by the 401(k) Plan will be exercised if the per share public trading price of our Common Stock is not greater
than or equal to the subscription price on [  ] [  ] , 2011. For additional information, see “The Rights Offering—Special
Instructions for Participants in Our 401(k) Plan.”

What form of payment is required to purchase shares of the Company’s Common Stock through the Rights Offering?

        If you hold shares of Common Stock in your name and wish to participate in the Rights Offering, as described in the instructions
accompanying the Rights certificate, payments submitted to the subscription agent must be made in U.S. currency, by one of the following two
methods:

              by an uncertified check drawn upon a U.S. bank payable to “Registrar and Transfer Company as rights agent for First Federal
             Bancshares of Arkansas, Inc.,” or

               by wire transfer of immediately available funds at the following account: ABA No. 031-201-467, further credit to Account
             No. 200-001-814-9168 at Wachovia Bank, N.A., Avondale, Pennsylvania, with an account name of “Registrar and Transfer
             Company as rights agent for First Federal Bancshares of Arkansas, Inc.” Any wire transfer should clearly indicate the identity of
             the subscriber who is paying the Subscription Price by wire transfer.

         Payments will be deemed to have been received upon (i) clearance of any uncertified check, or (ii) receipt of collected funds in the
account designated above. If paying by uncertified check, please note that the funds paid thereby may take five or more business days to
clear. Accordingly, Rights holders who wish to pay the subscription price by means of uncertified check are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such payment is received and clears by such date.

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        If you hold your shares in the name of a broker, dealer, custodian bank or other nominee, separate payment instructions may
apply. Please contact your nominee, if applicable, for further payment instructions.

When will I receive my new shares?

          If you purchase shares of Common Stock through the Rights Offering, we will issue those shares to you in book-entry, or
uncertificated, form as soon as practicable after the completion of the Rights Offering. If you are a registered holder of Common Stock, we
will mail to you a direct registration account statement detailing the number of shares of Common Stock that you have purchased in the Rights
Offering. If you are a beneficial owner of shares that are registered in the name of a broker or other nominee, you should receive from your
broker or other nominee confirmation of your purchase of shares of Common Stock in the Rights Offering. Stock certificates will not be
issued for shares of our Common Stock purchased in the Rights Offering, except, however, if you are a registered holder, you may request a
stock certificate once you receive your direct registration account statement.

After I exercise my subscription rights, can I change my mind?

         No. Except as explained below with respect to the 401(k) Plan, all exercises of Rights are irrevocable (unless we are required by law
to permit revocation), even if you later learn information that you consider to be unfavorable to the exercise of your Rights. You should not
exercise your Rights unless you are certain that you wish to purchase shares of our Common Stock in the Rights Offering.

        In the case of the 401(k) Plan, notwithstanding any election forms received from participants (and other account holders) in the
401(k) Plan regarding the exercise of their Rights with respect to shares of Common Stock held through the 401(k) Plan, no Rights held by the
401(k) Plan will be exercised if the per share public trading price of our Common Stock is not greater than or equal to the subscription price on
[  ] [  ], 2011. For additional information, see “The Rights Offering—Special Instructions for Participants in Our 401(k) Plan.”

Is there a backstop purchaser?

         Yes. Pursuant to its commitment in the Investment Agreement to backstop the Rights Offering, Bear State is the backstop purchaser.

How does the backstop commitment work?

         Bear State has agreed to purchase from us, at a purchase price of $3.00 per share (or $0.60 per share pre-Reverse Split), all of the
unsold shares of Common Stock offered pursuant to the Rights Offering in a private placement. This commitment is subject to the terms and
conditions of the Investment Agreement and an overall limitation on Bear State’s ownership of 94.90% of our outstanding Common Stock.

Why is there a backstop purchaser?

          We obtained the backstop commitment from Bear State to ensure that, subject to the conditions of the Investment Agreement, all
shares are either distributed in the Rights Offering or purchased subsequent to the Rights Offering in a private placement at the same purchase
price at which the Rights were exercisable. Through this arrangement, assuming the conditions to Bear State’s backstop commitment are met,
we have a very high degree of certainty that we will raise net proceeds of approximately $8.5 million through the Rights Offering and the
backstop commitment.

What effects will the Rights Offering have on our outstanding shares of Common Stock?

         As a result of the Rights Offering, up to an additional 2,908,071 post-Reverse Split shares of Common Stock may be issued and
outstanding after the closing of the Rights Offering, including purchases by Bear State pursuant to its commitment in the Investment
Agreement to backstop the Rights Offering in a private placement, and

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therefore the ownership and voting interests of the Legacy Stockholders that do not fully exercise their Basic Subscription Rights will be
diluted.

          As of the Record Date, we had 4,846,785 pre-Reverse Split shares of Common Stock issued and outstanding. After giving effect to
the Reverse Split, total issued and outstanding shares of Common Stock decreased from 4,846,785 to 969,357. After giving effect to the
issuance of the First Closing Shares, total issued and outstanding shares of Common Stock increased from 969,357 to 16,394,619. After giving
effect to the 2,908,071 shares to be issued in the Rights Offering and to Bear State as the backstop purchaser in a private placement, if any, total
issued and outstanding shares of Common Stock would increase from 16,394,619 to 19,302,690.

         In addition, if the subscription price of the shares is less than the market price of our Common Stock, it will likely reduce the market
price per share of shares you already hold.

How much will the Company receive from the Rights Offering and how will such proceeds be used?

         We estimate that the net proceeds to us from the Rights Offering (assuming the full exercise of Rights or purchases by Bear State
pursuant to their commitment in the Investment Agreement to backstop the Rights Offering in a private placement), after deducting estimated
offering expenses, will be approximately $8.5 million. We intend to use the net proceeds from the Rights Offering to make capital
contributions to the Bank and for other general corporate purposes.

Are there risks in exercising my Rights?

         Yes. The exercise of your Rights involves risks. Exercising your Rights involves the purchase of additional shares of Common
Stock and you should consider this investment as carefully as you would consider any other investment. Among other things, you should
carefully consider the risks described under the heading “Risk Factors” beginning on page 23 of this prospectus and in the documents
incorporated by reference into this prospectus.

If my exercise of Rights is not valid, will my subscription payment be refunded to me?

         Yes. The subscription agent will hold all funds it receives in a segregated bank account until completion of the Rights Offering. If
your exercise of Rights is deemed not to be valid, all subscription payments received by the subscription agent will be returned as soon as
practicable following the expiration of the Rights Offering, without interest or penalty. If you own shares through a nominee, it may take
longer for you to receive your subscription payment because the subscription agent will return payments through the record holder of your
shares.

What fees or charges apply if I purchase shares in the Rights Offering?

         We are not charging any fee or sales commission to issue Rights to you or to issue shares to you if you exercise your Rights. If you
exercise your Rights through a broker, dealer, custodian bank or other nominee, you are responsible for paying any fees your record holder may
charge you.

What are the U.S. federal income tax consequences of exercising my Rights?

         For U.S. federal income tax purposes, a holder should not recognize income or loss in connection with the receipt or exercise of
Rights in the Rights Offering. You should consult your tax advisor as to your particular tax consequences resulting from the Rights
Offering. For a detailed discussion, see “Certain U.S. Federal Income Tax Consequences.”

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To whom should I send my forms and payment?

        If your shares are held in the name of a broker, dealer, custodian bank or other nominee, then you should deliver your Beneficial
Owner Election Form, all other required subscription documents and subscription payment pursuant to the instructions provided by your
nominee. If you are the record holder, then you should send your Rights certificate, all other required subscription documents and subscription
payment by mail, hand delivery or overnight courier to:

                                                       Registrar and Transfer Company
                                                   10 Commerce Drive Cranford, NJ 07016
                                                      Attn. Reorg/Exchange Department

                                                     Telephone Number for Confirmation:
                                                          (800) 368-5948 (toll free)

                                                      Telephone Number for Information:
                                                           (800) 368-5948 (toll free)

                                                        Email Address for Information:
                                                               info@rtco.com

         You and, if applicable, your nominee are solely responsible for completing delivery to the subscription agent of your Rights certificate
or Beneficial Owner Election Form, as applicable, as well as all other required subscription documents and subscription payment. You should
allow sufficient time for delivery of your subscription materials to the subscription agent and clearance of payment before the
expiration of the Rights Offering. If you hold your shares of Common Stock through a broker, dealer, custodian bank or other nominee, your
nominee may establish an earlier deadline before the Expiration Date of the Rights Offering.

Whom should I contact if I have other questions?

         If you have any questions regarding the Rights Offering, completion of the Rights certificate or any other subscription documents or
submitting payment in the Rights Offering, please contact the subscription agent’s Investor Relations Department at the number or email
above.

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                                                         PROSPECTUS SUMMARY

          This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus and may not
contain all the information that you need to consider in making your investment decision. You should carefully read this entire prospectus, as
well as the information incorporated herein by reference, before deciding whether to invest in our Common Stock. You should carefully
consider the risks, among other things, described under the heading “Risk Factors” in this prospectus and in the documents incorporated by
reference into this prospectus to determine whether an investment in our Common Stock is appropriate for you .

General

          First Federal Bancshares of Arkansas, Inc. First Federal Bancshares of Arkansas, Inc. (the “Company”) is a Texas corporation
organized in January 1996 by First Federal Bank (the “Bank”) for the purpose of becoming a unitary holding company of the Bank. The
significant asset of the Company is the capital stock of the Bank. The business and management of the Company consists of the business and
management of the Bank. The Company does not presently own or lease any property, but instead uses the premises, equipment and furniture
of the Bank. At the present time, the Company does not employ any persons other than officers of the Bank, and the Company utilizes the
support staff of the Bank from time to time. Additional employees will be hired as appropriate to the extent the Company expands or changes
its business in the future. At December 31, 2010, the Company had $600.0 million in total assets, $563.9 million in total liabilities and $36.1
million in stockholders’ equity.

          The Company’s executive office is located at the home office of the Bank at 1401 Highway 62-65 North, Harrison, Arkansas 72601,
and its telephone number is (870) 741-7641.

         First Federal Bank. The Bank is a federally chartered stock savings and loan association formed in 1934. The Bank conducts
business from its main office and seventeen full service branch offices, all of which are located in a six county area in Northcentral and
Northwest Arkansas comprised of Benton, Marion, Washington, Carroll, Baxter and Boone counties. The Bank’s deposits are insured by the
Deposit Insurance Fund (“ DIF ”), which is administered by the Federal Deposit Insurance Corporation (“ FDIC ”), to the maximum extent
permitted by law.

         The Bank is a community-oriented financial institution offering a wide range of retail and business deposit accounts, including
noninterest bearing and interest bearing checking, savings and money market accounts, certificates of deposit, and individual retirement
accounts. Loan products offered by the Bank include residential real estate, consumer, construction, lines of credit, commercial real estate and
commercial non-real estate. However, the Bank’s lending activities are currently restricted by regulatory orders. See “— Regulatory
Enforcement Actions ” below. Other financial services include investment products offered through UVEST Financial Services; automated
teller machines; 24-hour telephone banking; internet banking, including account access, bill payment, e-statements and online loan
applications; Bounce Protection TM overdraft service; debit cards; and safe deposit boxes.

         The Bank is subject to examination and comprehensive regulation by the OTS, which is the Bank’s chartering authority and primary
regulator. The Bank is also regulated by the FDIC, the administrator of the DIF. The Bank is also subject to certain reserve requirements
established by the Board of Governors of the Federal Reserve System and is a member of the Federal Home Loan Bank (“ FHLB ”) of Dallas,
which is one of the 12 regional banks comprising the FHLB System.

          Regulatory Enforcement Actions. The OTS is the primary federal regulator of the Bank. As a result of the financial losses in 2009
and the increase in nonperforming assets and based on a regulatory examination of the Company and the Bank in the Fall of 2009, on April 12,
2010, the Company and the Bank each consented to a Cease and Desist Order issued by the Office of Thrift Supervision (“ OTS ”). The order
between the Company and the OTS is referred to in this prospectus as the “Company Order” and the order between the Bank and the OTS is
referred to in this prospectus as the “Bank Order.” Collectively, the Company Order and Bank Order are referred to in this prospectus as the
“Orders.” The Orders became effective on April 14, 2010. Each of the Orders will remain in effect until terminated, modified or suspended
by the OTS. Also, the Orders impose certain operations restrictions on the Company and, to a greater extent, the Bank, including lending and
dividend restrictions. The Orders also

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require the Company and the Bank to take certain actions, including the submission to the OTS of capital plans and business plans to, among
other things, preserve and enhance the capital of the Company and the Bank and strengthen and improve the consolidated Company’s
operations, earnings and profitability. The Bank Order specifically requires the Bank to achieve and maintain, by December 31, 2010, a Tier 1
(Core) Capital Ratio of at least 8% and a Total Risk-Based Capital Ratio of at least 12%. The Bank did not achieve these required levels by
December 31, 2010, but after giving effect to the First Closing (see “Recapitalization Plan” below), the Bank did achieve these required levels
by [  ][  ], 2011. Copies of the stipulations and the Orders are included as Exhibits 10.7 to 10.10 to the Company’s 2009 Annual Report on
Form 10-K filed with the SEC on April 15, 2010 and are incorporated into this prospectus by reference. The descriptions of the Orders set
forth in this prospectus do not purport to be complete, and are qualified by reference to the full text of the Orders.

         The Company and the Bank have taken such actions as necessary to comply with the provisions of the Orders which are currently
effective and are continuing to work toward compliance with the provisions of the Orders with future compliance dates. Any material failure
by the Company and the Bank to comply with the provisions of the Orders could result in further enforcement actions by the OTS. While the
Company and the Bank intend to take such actions as may be necessary to comply with the requirements of the Orders, there can be no
assurance that the Company or the Bank will be able to comply fully with the Orders, or that efforts to comply with the Orders will not have
adverse effects on the operations and financial condition of the Company or the Bank. See “Risk Factors,” beginning on page 23 of this
prospectus and in the documents incorporated by references into this prospectus.

Recent Developments

          Results of the Special Meeting of the Stockholders. On [  ] [  ], 2011, at the Special Meeting of the Stockholders the Company’s
stockholders approved, among other things, (i) an amendment to our Articles of Incorporation, as amended (“ Articles of Incorporation ”), to
effect the Reverse Split and (ii) the issuance to Bear State of (A) 15,425,262 post-Reverse Split shares (the “ First Closing Shares ”) of the
Company’s Common Stock at $3.00 per share (or $0.60 per share pre-Reverse Split) in a private placement, (B) a warrant (the “ Investor
Warrant ”) to purchase 2 million post-Reverse Split shares of our Common Stock at an exercise price of $3.00 per share (or $0.60 per share
pre-Reverse Split) in a private placement, and (C) any unsold shares offered in the Rights Offering at a purchase price of $3.00 per share (or
$0.60 per share pre-Reverse Split) in a private placement, subject to an overall limitation on Bear State’s ownership of 94.90% of our Common
Stock.

         Purchase of TARP Preferred Stock and TARP Warrant from Treasury. On [  ] [  ], 2011, pursuant to the terms of the
Investment Agreement, Bear State purchased from the United States Department of Treasury (“ Treasury ”) for $6 million aggregate
consideration, the Company’s 16,500 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“ Series A Preferred Stock ”),
including any accrued but unpaid dividends thereon, and related warrant dated March 6, 2009 to purchase 321,847 shares of the Company’s
Common Stock at an exercise price of $7.69 per share (the “ TARP Warrant ”), both of which were previously issued to the Treasury by the
Company through the Troubled Asset Relief Program — Capital Purchase Program.

        Changes to the Company’s Board of Directors. On [  ] [  ], 2011, in connection with the First Closing (discussed below) and as
contemplated under the terms of the Investment Agreement, the Company increased the size of the Board of Directors from five (5) to seven
(7) members. Effective [  ] [  ], 2011, the following members of the Company’s Board of Directors resigned: [  ] and [  ]. On [  ] [  ],
2011, immediately following the First Closing, the Company appointed [  ], [  ], [  ], and [  ] to its Board of Directors. The foregoing new
members of the Board of Directors were designated by Bear State pursuant to the terms of the Investment Agreement.

         Consummation of the First Closing. On [  ] [  ], 2011, the Company amended its Articles of Incorporation to effect the Reverse
Split and sold to Bear State (i) the First Closing Shares and (ii) the Investor Warrant (the effectiveness of the Reverse Split, the issuance of the
First Closing Shares and the delivery of the Investor Warrant are referred to in this prospectus as the “ First Closing ”) in exchange for
aggregate consideration paid by Bear State to the Company of approximately $46.3 million, consisting of (x) $40.3 million in cash, and (y) the
surrender by

                                                                         15
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Bear State to the Company of the Series A Preferred Stock and TARP Warrant for a $6 million credit against the purchase price of the First
Closing Shares.

          After giving effect to the Bear State Investment in the Company and the aspects of the Recapitalization Plan that have occurred as of
the date of this prospectus, Bear State owns approximately 94.70% of the Company’s Common Stock (after taking into account the exercise of
the Investor Warrant), and, following the expiration of the Rights Offering, could own as much as 94.90% of the Company’s Common Stock
(after taking into account the overall limitation on Bear State’s ownership and the exercise of the Investor Warrant and assuming no current
stockholders subscribe to the Rights Offering). If the Rights Offering is fully subscribed by Legacy Stockholders, Bear State would own
approximately 81.80% of the Company’s Common Stock (after taking into account the exercise of the Investor Warrant). As a result, the
Company’s current stockholders would own between approximately 5.10% and 18.20% of the Company’s Common Stock following the Bear
State Investment in the Company and the Rights Offering.

                                                                      16
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                                              The Rights Offering

Issuer                       First Federal Bancshares of Arkansas, Inc.

Securities Offered           We are distributing at no charge to record holders of our Common Stock as of 5:00 p.m.,
                             Eastern Time, on the record date of March 23, 2011, one (1) non-transferable Right for each
                             share of Common Stock then held on record (after taking into account the Reverse Split). For
                             each Right that you own, you will have a Basic Subscription Right to buy from us three
                             (3) shares of our Common Stock at a subscription price of $3.00 per share of Common Stock
                             (or $0.60 per share pre-Reverse Split) and an Oversubscription Privilege.

Subscription Price           $3.00 per share of Common Stock (or $0.60 per share pre-Reverse Split). To be effective, any
                             payment related to the exercise of a Right must clear prior to the Expiration Date.

Right                        Each Right consists of a Basic Subscription Right and an Oversubscription Privilege.

Basic Subscription Right     For each whole Right that you own, you will have a subscription right to buy from us three
                             (3) shares of our Common Stock at the subscription price. You may exercise your Basic
                             Subscription Right for some or all of the shares of Common Stock available for purchase
                             under such Right, or you may choose not to exercise any portion of your Basic Subscription
                             Right.

Oversubscription Privilege   Pursuant to the Oversubscription Privilege, if you timely and fully exercise your Basic
                             Subscription Right, you may also subscribe for a portion of the shares of Common Stock
                             offered in the Rights Offering that the other Rights holders do not purchase pursuant to their
                             Basic Subscription Rights, subject to availability and allocation of such shares, and provided
                             that no Rights holder may thereby acquire, together with its affiliates, beneficial ownership of
                             4.9% or more of the shares of our outstanding Common Stock.

                             If oversubscription requests exceed the number of shares available, we will allocate the
                             available shares pro rata among the Rights holders exercising the Oversubscription Privilege
                             in proportion to the number of shares of our Common Stock a Rights holder owned on the
                             Record Date relative to the aggregate number of shares of our Common Stock owned on the
                             Record Date by all Rights holders exercising their Oversubscription Privilege. For additional
                             details regarding the pro rata allocation process, see “Questions and Answers Relating to the
                             Rights Offering — What is the Oversubscription Privilege?”

                             If you properly exercise your Oversubscription Privilege for a number of shares that exceeds
                             the number of shares allocated to you, any excess subscription payments received by the
                             subscription agent will be returned to you as soon as practicable, without interest or penalty,
                             following the expiration of the Rights Offering. There is no minimum subscription amount
                             required for consummation of the Rights Offering. However, your ability to purchase
                             Common Stock in the Rights Offering is subject to an overall beneficial ownership limit of
                             4.9% of our outstanding shares of Common Stock, after giving effect to your participation in
                             the Rights

                                                   17
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                                  Offering and taking into account the holdings of your affiliates.

No Fractional Shares              Legacy Stockholders may only exercise the Basic Subscription Right and Oversubscription
                                  Privilege for whole shares.

                                  In the event, however, that fractional shares of Common Stock result from the application of
                                  the Oversubscription Allocation Formula to oversubscription requests, then such fractional
                                  shares will be eliminated by rounding down to the nearest whole share, with the total exercise
                                  price being adjusted accordingly. Any excess subscription payments received by the
                                  subscription agent will be returned, without interest or penalty, as soon as practicable.

Record Date                       March 23, 2011.

Expiration Date                   The Rights will expire at 5:00 p.m., Eastern Time, on [  ][  ], 2011. We do not intend to
                                  extend the expiration of the Rights Offering.

Use of Proceeds                   The total proceeds to us from the Rights Offering will depend on the number of Rights that are
                                  exercised. If we issue all 2,908,071 shares available, either in the Rights Offering or to Bear
                                  State, pursuant to its commitment in the Investment Agreement to backstop the Rights
                                  Offering in private placement, the total proceeds to us, after deducting estimated offering
                                  expenses, will be approximately $8.5 million. We intend to first contribute a significant
                                  portion of the net proceeds from the Rights Offering in the form of capital to the Bank, which
                                  will use such amounts to bolster its regulatory capital in compliance with the Bank Order,
                                  address its classified assets and then for general corporate purposes.

Procedure for Exercising Rights   To exercise your Rights, you must take the following steps:

                                  If you are a registered holder of Common Stock, you must deliver payment and a properly
                                  completed Rights certificate to the subscription agent before [  ] [  ], 2011, at 5:00 p.m.,
                                  Eastern Time.

                                  If you are a beneficial owner of shares that are registered in the name of a broker, dealer,
                                  custodian bank or other nominee, your nominee will contact you. You will not receive a
                                  Rights certificate from the Company. Your broker, dealer, custodian bank or other nominee
                                  must exercise your subscription rights on your behalf and deliver all documents and payments
                                  to the subscription agent before [  ] [  ], 2011, at 5:00 p.m., Eastern Time. Please follow the
                                  instructions of your nominee, who may require that you meet an earlier deadline for the
                                  delivery of your subscription forms and payment to the nominee.

                                  If you hold shares in a 401(k) Plan account, you must deliver a properly completed 401(k)
                                  Plan Participant Election Form to the Company before 5:00 p.m., Eastern Time, on [  ] [  ],
                                  2011.

No Revocation                     All exercises of Rights are irrevocable, even if you later learn information that you consider to
                                  be unfavorable to the exercise of your Rights. You should not exercise your Rights unless you
                                  are certain that you wish to purchase additional shares of Common Stock at a subscription
                                  price of $3.00 per share (or $0.60 per share pre-Reverse Split). However,

                                                        18
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                                             notwithstanding any election forms received from participants (and other account holders) in
                                             the 401(k) Plan regarding the exercise of their Rights held by (or through) the 401(k) Plan, no
                                             Rights held by the 401(k) Plan will be exercised if the per share public trading price of our
                                             Common Stock is not greater than or equal to the subscription price on [  ] [  ], 2011. For
                                             additional information, see “The Rights Offering—Special Instructions for Participants in Our
                                             401(k) Plan.”

No Board Recommendation                      Neither our Board of Directors nor Bear State is making any recommendation regarding any
                                             exercise of your Rights. You should make your decision based on your own assessment of our
                                             business and the terms of the Rights Offering. For a discussion of some of the risks involved
                                             in investing in our Common Stock, see “Risk Factors” beginning on page 23 as well as the
                                             other information contained or incorporated by reference in this prospectus.

Issuance of Common Stock                     If you purchase shares of Common Stock through the Rights Offering, we will issue those
                                             shares to you in book-entry, or uncertificated, form as soon as practicable after the completion
                                             of the Rights Offering. If you are a registered holder of Common Stock, we will mail to you a
                                             direct registration account statement detailing the number of shares of Common Stock that
                                             you have purchased in the Rights Offering. If you are a beneficial owner of shares that are
                                             registered in the name of a broker or other nominee, you should receive from your broker or
                                             other nominee confirmation of your purchase of shares of Common Stock in the Rights
                                             Offering. Stock certificates will not be issued for shares of our Common Stock purchased in
                                             the Rights Offering, except, however, if you are a registered holder, you may request a stock
                                             certificate once you receive your direct registration account statement.

No Transfer or Sale of Rights                The Rights may not be sold, transferred or assigned and will not be listed for trading on the
                                             NASDAQ Global Market or any other stock exchange or trading market.

Market and trading symbol for the Common     Our Common Stock is listed on the NASDAQ Global Market under the symbol “FFBH.”
Stock                                        Shares of our Common Stock issued in connection with the Rights Offering will also be listed
                                             on the NASDAQ Global Market under the same symbol.

Federal Income Tax Consequences              The receipt and exercise of Rights should not be taxable for U.S. federal income tax purposes.
                                             You should consult your tax advisor as to your particular tax consequences resulting from the
                                             Rights Offering. See “Certain Material U.S. Federal Income Tax Considerations.”

Subscription Agent                           Registrar and Transfer Company

Shares Outstanding After Completion of the   As of the Record Date, we had 4,846,785 pre-Reverse Split shares of Common Stock
Rights Offering                              outstanding. After giving effect to the Reverse Stock Split, which occurred on [  ][  ], 2011,
                                             total issued and outstanding shares of Common Stock decreased from 4,846,785 to 969,357.

                                             After giving effect to the issuance of the First Closing Shares, which occurred on [  ][  ],
                                             2011, total issued and outstanding shares of Common

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                                    Stock increased from 969,357 to 16,394,619.

                                    After giving effect to the 2,908,071 shares to be issued in the Rights Offering and to Bear
                                    State as the backstop purchaser, in a private placement, if any, total issued and outstanding
                                    shares of Common Stock would increase from 16,394,619 to 19,302,690.

                                    On [  ][  ], 2011 the Reverse Split became effective, which was prior to mailing this
                                    prospectus to stockholders. The number of shares offered and the subscription price in the
                                    Rights Offering have been adjusted to account for the Reverse Split. Shares purchased in the
                                    Rights Offering will not be subject to any further adjustments by reason of the Reverse Split.

Backstop Commitment in Investment   We have entered into an Investment Agreement with Bear State, pursuant to which Bear State
Agreement                           has agreed to backstop the Rights Offering by purchasing from us in a private placement, at a
                                    price of $3.00 per share (or $0.60 per share pre-Reverse Split), any shares not purchased by
                                    the Rights holders, subject an overall limitation on Bear State’s ownership of 94.90% of our
                                    Common Stock. If all the conditions to the Investment Agreement are met, the backstop
                                    commitment will ensure that we raise net proceeds of approximately $8.5 million through the
                                    Rights Offering and the commitment under the Investment Agreement to backstop the Rights
                                    Offering in a private placement. See “Questions and Answers Relating to the Offering—How
                                    does the backstop commitment work?”

Risk Factors                        Investing in our Common Stock involves risks. You should carefully consider the information
                                    under “Risk Factors” beginning on page 23 as well as the other information contained or
                                    incorporated by reference in this prospectus before making a decision to invest in our
                                    Common Stock

                                                          20
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                                            SELECTED CONSOLIDATED FINANCIAL DATA

         The following tables present our selected consolidated financial data as of or for the period ended December 31, 2010 and as of or for
each of the five years ended December 31, 2010. Financial data as of or for each of the five years ended December 31, 2010 is derived from
our audited consolidated financial statements. You should read this table together with the historical consolidated financial information
contained in our consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2010, which has been filed with the SEC
and are incorporated by reference in this prospectus.

                                                                                                   At or For the
                                                                                              Year Ended December 31,
                                                           2010                      2009                2008                2007              2006
                                                                                       (In Thousands, Except Per Share Data)
Selected Financial Condition Data:
  Total assets                                        $     600,046              $   731,070       $     795,172       $     791,978       $    852,475
  Cash and cash equivalents                                  36,407                   22,149               9,367              27,387             35,518
  Investment securities—held to maturity                         —                   135,531             136,412              95,590             60,746
  Investment securities—available for sale at fair
     value                                                   83,106                       —                   —                   —                 —
  Loans receivable, net                                     385,845                  482,554             568,123             601,256           693,095
  Allowance for loan losses                                  31,084                   32,908               6,441               5,162             2,572
  Real estate owned, net                                     44,706                   35,155              22,385               8,120             3,858
  Deposits                                                  541,800                  624,624             618,003             630,414           652,265
  Other borrowings                                           18,193                   59,546              92,212              82,087           120,305
  Stockholders’ equity                                $      36,120              $    43,300       $      73,117       $      73,663       $    75,573

Selected Operating Data:
  Interest income                                     $      29,820              $     36,043      $       43,947      $      50,426       $     54,119
  Interest expense                                            9,838                    15,255              22,102             28,184             27,576
  Net interest income                                        19,982                    20,788              21,845             22,242             26,543
  Provision for loan losses                                   6,959                    44,365               5,710              4,028              1,482
  Net interest income (loss) after provision for
     loan losses                                             13,023                   (23,577 )            16,135             18,214             25,061
  Noninterest income                                           9,459                    8,117               9,417              7,769              8,222
  Noninterest expense                                        26,991                    29,890              23,468             22,995             22,521
  Income (loss) before income taxes                          (4,509 )                 (45,350 )             2,084              2,988             10,762
  Income tax provision (benefit)                                (474 )                    148                (423 )              345              3,379
     Net income (loss)                                $       (4,035 )           $    (45,498 )    $        2,507      $       2,643       $      7,383


Earnings (Loss) per share of Common Stock:
    Basic                                             $           (1.02 )        $       (9.54 )   $          0.52     $            0.54   $          1.48
    Diluted                                           $           (1.02 )        $       (9.54 )   $          0.52     $            0.54   $          1.44

Cash Dividends Declared per Share of
  Common Stock                                        $              —           $        0.03     $          0.64     $            0.64   $          0.58

                                                                            21
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                                                                                                 At or For the
                                                                                            Year Ended December 31,
                                                               2010               2009                2008              2007               2006


Selected Operating Ratios(1):
  Return on average assets                                         (0.60 )%           (5.84 )%            0.31 %               0.32 %             0.85 %
  Return on average equity                                         (9.43 )           (57.33 )             3.38                 3.52               9.40
  Average equity to average assets                                  6.34              10.19               9.24                 9.21               9.04
  Interest rate spread(2)                                           3.37               2.98               2.99                 2.92               3.19
  Net interest margin(2)                                            3.31               2.99               3.01                 2.98               3.29
  Net interest income after provision for loan
     losses to noninterest expense                                 48.25             (78.88 )            68.75              79.21            111.28
  Noninterest expense to average assets                             4.00               3.84               2.92               2.82              2.59
  Average interest earning assets to average
     interest bearing liabilities                                  96.37             100.40             100.49            101.68             102.92
  Operating efficiency(3)                                          91.68             103.41              75.07             76.62              64.78

  Asset Quality Ratios(4):

  Nonaccrual loans to total assets                                  8.22               5.86               2.83                 3.84               2.16
  Nonperforming assets to total assets(5)                          15.68              10.67               6.77                 5.17               2.69
  General allowance for loan losses to classified
    loans(6)                                                       22.00              28.17              12.12                 7.45               9.42
  General allowance for loan losses to total loans                  5.68               4.97               0.61                 0.35               0.27

  Capital Ratios(7):
  Tangible capital to adjusted total assets                         6.36                 5.75             8.89               9.22              8.76
  Core capital to adjusted total assets                             6.36                 5.75             8.89               9.22              8.76
  Risk-based capital to risk-weighted assets                       10.72                 9.97            13.35              13.20             11.94

  Other Data:
  Dividend payout ratio(8)                                       Note (9 )          Note (9 )           123.74 %          117.71 %            39.26 %
  Full service offices at end of period                              18                 20                  20                18                 18



  (1)      Ratios are based on average daily balances.
  (2)      Interest rate spread represents the difference between the weighted average yield on average interest earning assets and the weighted
        average cost of average interest bearing liabilities, and net interest margin represents net interest income as a percent of average interest
        earning assets.
  (3)      Noninterest expense to net interest income plus noninterest income.
  (4)      Asset quality ratios are end of period ratios.
  (5)      Nonperforming assets consist of nonperforming loans, net of specific valuation allowances, and real estate owned. Nonperforming
        loans consist of nonaccrual loans, net of specific valuation allowances and accruing loans 90 days or more past due.
  (6)      Classified loans consist of loans graded substandard, doubtful or loss, net of specific valuation allowances.
  (7)      Capital ratios are end of period ratios for First Federal Bank.
  (8)      Dividend payout ratio is the total Common Stock dividends declared divided by net income available to common stockholders.
  (9)      Dividend payout ratio is not meaningful for 2009 due to the Company’s net loss in that year. No dividends were paid in 2010.

                                                                             22
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                                                                RISK FACTORS

          An investment in our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully read
and consider the risk factors described below as well as the other information included or incorporated by reference in this prospectus. Any of
these risks, if they actually occur, could materially and adversely affect our business, financial condition, liquidity, results of operations and
prospects, as well as the market price and liquidity of our Common Stock. Additional risks and uncertainties not currently known to us or that
we currently deem to be immaterial may also materially and adversely affect us. In any such case, you could lose all or a portion of your
original investment.

General Risks

Our or the Bank’s failure to comply with applicable regulatory requirements and regulatory enforcement actions could result in further
restrictions and enforcement actions.

         The Bank is subject to supervision and regulation by the OTS and FDIC. As a federally chartered stock savings and loan association,
the Bank’s good standing with its regulators is of fundamental importance to the continuation of its business and the business of the
Company. On April 12, 2010, the Company and the Bank both consented to the Orders issued by the OTS. The Orders require the Company
and the Bank to, among other things, file with the OTS an updated business plan and capital plan and submit to the OTS, on a quarterly basis
with respect to the business plan and monthly with respect to the capital plan, variance reports related to the plans. The Bank Order also
substantially restricts the Bank’s lending activities. We have incurred and expect to continue to incur significant additional regulatory
compliance expense in connection with the Orders, and we will incur ongoing expenses attributable to compliance with the terms of the
Orders. In addition, the OTS must approve any deviation from our business plan, which could limit our ability to make any changes to our
business, which could negatively impact the scope and flexibility of our business activities.

         The Company and the Bank may be unable to comply fully with the Orders, and efforts to comply with the Orders may have adverse
effects on the operations and financial condition of the Company or the Bank. Any material failure to comply with the provisions of the
Orders could result in further restrictions and enforcement actions by the OTS, which could impair our ability to operate in the normal course
of business and, thereby, adversely affect our results of operation.

The current economic environment poses significant challenges for us and could continue to adversely affect our financial condition and
results of operations.

          The Company is operating in a challenging and uncertain economic environment, including generally uncertain national and local
conditions. Financial institutions continue to be affected by sharp declines in the real estate market and constrained financial
markets. Dramatic declines in the housing market over the past several years, with falling home prices and increasing foreclosures and
unemployment, have resulted in significant write-downs of asset values by the Bank and other financial institutions. Continued declines in real
estate values, home sales volumes, and financial stress on borrowers as a result of the uncertain economic environment could continue to have
an adverse effect on the Bank’s borrowers or their customers, which could adversely affect the Company’s financial condition and results of
operations. A worsening of these conditions would likely exacerbate the adverse effects on the Company and others in the financial services
industry. For example, further deterioration in local economic conditions in the Company’s markets could drive losses beyond that which is
provided for in its allowance for loan losses or could require further writedowns in the Bank’s real estate owned properties. The Company
may also face the following risks in connection with these events:

              Economic conditions in the markets in which we operate that negatively affect housing prices and the job market have resulted,
             and may continue to result, in deterioration in credit quality of the Bank’s loan portfolio, and such deterioration in credit quality
             has had, and could continue to have, a negative impact on the Company’s business and financial condition.

                                                                        23
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              Market developments may affect consumer confidence levels and may cause adverse changes in payment patterns, causing
             increases in delinquencies and default rates on loans and other credit facilities.

              The processes the Company uses to estimate the allowance for loan losses may no longer be reliable because they rely on
             complex judgments, including forecasts of economic conditions, which may no longer be capable of accurate estimation.

              The Bank’s ability to assess the creditworthiness of its customers may be impaired if the processes and approaches it uses to
             select, manage, and underwrite its customers become less predictive of future charge-offs.

              The Company has faced and expects to continue to face increased regulation of its industry, and compliance with such
             regulation has increased and may continue to increase its costs, limit its ability to pursue business opportunities, and increase
             compliance challenges.

          As these conditions or similar ones continue to exist or worsen, the Company could experience continuing or increased adverse effects
on its financial condition and results of operations.

We have a high percentage of nonperforming loans and classified assets relative to our total assets. If our allowance for loan losses is not
sufficient to cover our actual loan losses, our results of operations will be adversely affected.

          At December 31, 2010, our net nonperforming loans totaled $49.4 million, representing 12.1% of total loans and 8.2% of total
assets. At December 31, 2010, real estate owned totaled $44.7 million or 7.45% of total assets. As a result, the Company’s total
nonperforming assets amounted to $94.1 million or 15.68% of total assets at December 31, 2010. Further, assets classified by management as
substandard, including nonperforming loans and real estate owned, totaled $149.7 million, representing 24.90% of total assets. At
December 31, 2010, our allowance for loan losses was $31.1 million, consisting of $23.1 million of general loan loss allowances and $8.0
million of specific valuation allowances. The general valuation allowance represents 46.8% of nonperforming loans. In the event our loan
customers do not repay their loans according to their terms and the collateral securing the payment of these loans is insufficient to pay any
remaining loan balance, we may experience significant loan losses, which could have a material adverse effect on our financial condition and
results of operations.

         Management maintains an allowance for loan losses based upon, among other things:

               historical experience;

               repayment capacity of borrowers;

               an evaluation of local, regional and national economic conditions;

               regular reviews of delinquencies and loan portfolio quality;

               collateral evaluations;

               current trends regarding the volume and severity of problem loans;

               the existence and effect of concentrations of credit; and

               results of regulatory examinations.

         Based on these factors, management makes various assumptions and judgments about the ultimate collectability of the respective loan
portfolios. The determination of the appropriate level of the allowance for loan losses inherently involves a high degree of subjectivity and our
management must make significant estimates of

                                                                         24
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current credit risks and future trends, all of which may undergo material changes. In addition, our Board of Directors and the OTS periodically
review our allowance for loan losses and may require an increase in the provision for possible loan losses or the recognition of further loan
charge-offs. The OTS’ judgments may differ from those of our management. In connection with the OTS examination in the third quarter of
2010, the Company provided an additional $5.6 million to the allowance for loan losses for the quarter ended September 30, 2010. Another
OTS/FDIC examination began in January 2011. While we believe that the allowance for loan losses is adequate to cover current losses, we
may determine that we need to increase our allowance for loan losses or regulators may require an increase in our allowance. Either of these
occurrences could materially and adversely affect our financial condition and results of operations. In the event the proceeds from the First
Closing are not available for any reason, we would not have any capital available to invest in the Bank and any further increases to our
allowance for loan losses and operating losses would negatively impact our capital levels and make it more difficult to achieve the capital
levels set forth in the Bank Order.

Liquidity needs could adversely affect our results of operations and financial condition.

          The Bank’s primary sources of funds are deposits, sales, calls or maturities of securities, and loan repayments. While scheduled loan
repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to
repay loans can be adversely affected by a number of factors outside of our control, including changes in economic conditions, adverse trends
or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather,
natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by
competitors, general interest rate levels, returns available to customers on alternative investments, financial condition or regulatory status of the
Bank, actions by the OTS and general economic conditions. Accordingly, we may be required from time to time to rely on secondary sources
of liquidity to meet withdrawal demands or otherwise fund operations. Those sources may include Federal Home Loan Bank advances,
repurchase agreements and the Federal Reserve discount window. Currently, however, the Bank may only borrow from the Federal Home
Loan Bank on a short-term basis and the Federal Reserve discount window is available only when no other sources of liquidity are available.

         Our financial flexibility will be constrained if we continue to incur losses and are unable to maintain our access to funding or if
adequate financing is not available at acceptable interest rates. We may seek additional debt in the future. Additional borrowings, if sought,
may not be available to us or, if available, may not be available on reasonable terms. If additional financing sources are unavailable, or are not
available on reasonable terms, our financial condition, results of operations and future prospects could be materially adversely
affected. Finally, if we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not
increase proportionately to cover our costs. In addition, we may be required to slow or discontinue capital expenditures or make other
investments or liquidate assets should those sources not be adequate.

A significant portion of our loan portfolio is related to commercial real estate, construction, commercial business and consumer lending
activities and certain of our loans are secured by vacant or unimproved land. Uncertainties related to these lending activities may
negatively impact these loans and could adversely impact our business.

          As of December 31, 2010, approximately 27% of our loans were related to commercial real estate and construction projects.
Commercial real estate and construction lending generally is considered to involve a higher degree of risk than single-family residential lending
due to a variety of factors, including generally larger loan balances, the dependency on successful completion or operation of the project for
repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term
and, instead, provide for a balloon payment at stated maturity. Our loan portfolio also includes commercial business loans to small- to
medium-sized businesses, which generally are secured by various equipment, machinery and other corporate assets, and a variety of consumer
loans, including automobile loans, deposit account secured loans and unsecured loans. Although commercial business loans and consumer
loans generally have shorter terms and higher interest rates than mortgage loans, they generally involve more risk than mortgage loans because
of the nature of, or in certain cases the absence of, the collateral which secures such loans. In addition, a portion of our loan portfolio is
secured by vacant or unimproved land. Loans secured by vacant or unimproved land are generally more risky than loans secured by improved
one- to four- family residential property. Since vacant or unimproved land is generally

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held by the borrower for investment purposes or future use, payments on loans secured by vacant or unimproved land will typically rank lower
in priority to the borrower than a loan the borrower may have on their primary residence or business. These loans are susceptible to adverse
conditions in the real estate market and local economy. Uncertainties related to these lending activities could result in higher delinquencies
and greater charge-offs in future periods, which could adversely affect our financial condition or results of operations.

The use of our net operating loss carryforwards will be limited going forward as a result of the Bear State Investment.

         Pursuant to Section 382 of the United States Internal Revenue Code of 1986, as amended (the “ Code ”), annual use of our net
operating loss (“ NOL ”) carryforwards may be limited in the event of certain defined “ownership changes.” A corporation that undergoes an
“ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. Section 382 imposes
an annual limitation on the amount of post-ownership change taxable income a corporation may offset with pre-ownership change NOL
carryforwards and certain recognized built-in losses. The Bear State Investment as described in the Investment Agreement will constitute an
“ownership change.”

          At December 31, 2010, the Bank had a $13.3 million federal NOL carryforward. As a result of the Bear State Investment, the Bank’s
ability to utilize its NOL carryforward to offset future taxable income will be significantly impacted. Since the amount of the Section 382
limitation will depend in large part on our market capitalization at the time of the consummation of the Bear State Investment, it is impossible
to determine the exact amount of the Section 382 limitation as of the date of this prospectus.

We have had losses in recent periods and may be unable to return to profitability in the near future which would adversely affect our stock
price.

          We incurred net losses available to common stockholders of $4.9 million and $46.2 million in 2010 and 2009, respectively. Our
ability to return to profitability will depend on whether we are able to implement our business plan and reduce credit losses in the future, which
will depend, in part, on whether economic conditions in our markets improve. We may be unsuccessful in executing our business plan.
Further, even if we successfully implement our business plan, we may be unable to curtail our losses now or in the future. If we continue to
incur significant operating losses, our stock price may decline.

Future FDIC insurance premiums or special assessments may adversely impact our earnings.

          The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Under the FDIC’s risk-based
assessment system, insured institutions are assessed in accordance with one of four risk categories based on supervisory evaluations, regulatory
capital levels and certain other factors, with less risky institutions paying lower assessments. An institution’s assessment rate depends upon the
category to which it is assigned, and certain adjustments specified by FDIC regulations.

          On May 22, 2009, the FDIC adopted a final rule levying a five basis point special assessment on each insured depository institution’s
assets minus Tier 1 capital as of June 30, 2009. We recorded an expense of approximately $350,000 during the quarter ended June 30, 2009 to
reflect the special assessment. In addition, the FDIC increased the general assessment rate and, therefore, our FDIC general insurance
premium expense increased compared to prior periods.

          The FDIC also has adopted a rule pursuant to which all insured depository institutions were required to prepay their estimated
assessments for the fourth quarter of 2009, and for all of 2010, 2011 and 2012. This pre-payment was due on December 30, 2009. Under the
rule, the assessment rate for the fourth quarter of 2009 and for 2010 is based on each institution’s total base assessment rate for the third quarter
of 2009, modified to assume that the assessment rate in effect on September 30, 2009 had been in effect for the entire third quarter, and the
assessment rate for 2011 and 2012 would be equal to the modified third quarter assessment rate plus an additional 3 basis points. In addition,
each institution’s base assessment rate for each period is calculated using its third quarter assessment base, adjusted quarterly for an estimated
5% annual growth rate in the assessment base through the end

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of 2012. The Bank received an exemption from this prepayment requirement due to its potential impact on the Bank’s liquidity position but
will pay each quarterly assessment as it becomes due.

          Recent insured institution failures, as well as deterioration in banking and economic conditions, have significantly increased the loss
provisions of the FDIC, resulting in a decline in the designated reserve ratio to historical lows. The FDIC expects a higher rate of insured
institution failures in the next few years compared to recent years. Therefore, the reserve ratio may continue to decline. These developments
have caused the premiums assessed on us by the FDIC to increase and materially increase FDIC insurance expense. Our FDIC insurance
expense totaled $1.9 million, $1.7 million and $374,000, respectively, in 2010, 2009 and 2008. The increased assessment rates discussed
above, together with any further increases in assessment rates or additional special assessments, may negatively impact future earnings.

         On February 7, 2011, the FDIC finalized the rule to redefine the deposit insurance assessment base as required by the Dodd-Frank
Act. The base is defined as average consolidated total assets for the assessment period less average tangible equity capital with potential
adjustments for unsecured debt, brokered deposits and depository institution debts. The FDIC also adopted a new rate schedule and suspended
dividends indefinitely. In lieu of dividends, the FDIC adopted progressively lower assessment rate schedules that will take effect when the
reserve ratio exceeds 1.15 percent, 2 percent and 2.5 percent. All changes and revised rates go into effect April 1, 2011. Based on the new
assessment base and rate schedule, the Bank expects its FDIC insurance premiums to decline in 2011 compared to 2010.

We are heavily regulated, and that regulation could limit or restrict our activities and adversely affect our financial condition.

          We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various
federal and state agencies, including the OTS and the FDIC. Our compliance with these regulations is costly and may restrict some of our
activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates and locations of offices. The
regulators’ interpretation and application of relevant regulations are beyond our control and may change rapidly and unpredictably. Banking
regulations are primarily intended to protect depositors. The regulations to which we are subject may not always be in the best interest of
investors.

          In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the
regulation of the financial services industry. Over the past several years, the U.S. financial regulators responding to directives of the Obama
Administration and Congress have intervened on an unprecedented scale. New legislative proposals continue to be introduced in the U.S.
Congress that could further substantially increase regulation of the financial services industry and impose restrictions on the operations and
general ability of firms within the industry to conduct business consistent with historical practices, including with respect to compensation,
interest rates and the effect of bankruptcy proceedings on consumer real property mortgages. Further, federal and state regulatory agencies
may adopt changes to their regulations and/or change the manner in which existing regulations are applied. We cannot predict the substance or
effect of pending or future legislation or regulation or the application of laws and regulation to us. Compliance with current and potential
regulation and scrutiny may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our
regulatory capital and limit our ability to pursue business opportunities in an efficient manner by requiring us to expend significant time, effort
and resources to ensure compliance. Additionally, evolving regulations concerning executive compensation may impose limitations on us that
affect our ability to compete successfully for executive and management talent.

         In addition, given the current economic and financial environment, our regulators may elect to alter standards or the interpretation of
the standards used to measure regulatory compliance or to determine the adequacy of liquidity, certain risk management or other operational
practices for financial services companies in a manner that impacts our ability to implement our strategy and could affect us in substantial and
unpredictable ways and could have an adverse effect on our business, financial condition and results of operations. Furthermore, the
regulatory agencies have extremely broad discretion in their interpretation of the regulations and laws and their interpretation of the quality of
our loan portfolio, securities portfolio and other assets. If any regulatory agency’s assessment of

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the quality of our assets differs from our assessment, we may be required to take additional charges that would have the effect of materially
reducing our earnings, capital ratios and stock price.

          The U.S. Congress passed the Dodd-Frank Act on July 21, 2010, which includes sweeping changes in the banking regulatory
environment. The Dodd-Frank Act will change our primary regulator and may, among other things, restrict or increase the regulation of
certain of our business activities and increase the cost of doing business. While many of the provisions in the Dodd-Frank Act are aimed at
financial institutions significantly larger than us, and some will affect only institutions with different charters than us or institutions that engage
in activities in which we do not engage, it will likely increase our regulatory compliance burden and may have other adverse effects on us,
including increasing the costs associated with our regulatory examinations and compliance measures. We are closely monitoring all relevant
sections of the Dodd-Frank Act to ensure continued compliance with laws and regulations. While the ultimate effect of the Dodd-Frank Act on
us cannot be determined yet, the law is likely to result in increased compliance costs and fees paid to regulators, along with possible restrictions
on our operations.

         Further, the U.S. Congress and state legislatures and federal and state regulatory authorities continually review banking laws,
regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including interpretation and
implementation of statutes, regulation or policies, including the Dodd-Frank Act, could affect us in substantial and unpredictable ways,
including limiting the types of financial services and products we may offer or increasing the ability of non-banks to offer competing financial
services and products. While we cannot predict the regulatory changes that may be borne out of the current economic crisis, and we cannot
predict whether we will become subject to increased regulatory scrutiny by any of these regulatory agencies, any regulatory changes or scrutiny
could increase or decrease the cost of doing business, limit or expand our permissible activities, or affect the competitive balance among banks,
credit unions, savings and loan associations and other institutions. We cannot predict whether additional legislation will be enacted and, if
enacted, the effect that it, or any regulations, would have on our business, financial condition or results of operations.

We could be materially and adversely affected if we or any of our officers or directors fail to comply with bank and other laws and
regulations.

          The Company and the Bank are subject to extensive regulation by U.S. federal and state regulatory agencies and face risks associated
with investigations and proceedings by regulatory agencies, including those that we may believe to be immaterial. Like any corporation, we
are also subject to risk arising from potential employee misconduct, including non-compliance with our policies. Any interventions by
authorities may result in adverse judgments, settlements, fines, penalties, injunctions, suspension or expulsion of our officers or directors from
the banking industry or other relief. In addition to the monetary consequences, these measures could, for example, impact our ability to engage
in, or impose limitations on, certain of our businesses. The number of these investigations and proceedings, as well as the amount of penalties
and fines sought, has increased substantially in recent years with regard to many firms in the industry. Significant regulatory action against us
or our officers or directors could materially and adversely affect our business, financial condition or results of operations or cause us significant
reputational harm, which could seriously harm our business.

Changes in interest rates could have a material adverse effect on our operations.

          The operations of financial institutions such as the Bank are dependent to a large extent on net interest income, which is the difference
between the interest income earned on interest earning assets such as loans and investment securities and the interest expense paid on interest
bearing liabilities such as deposits and borrowings. Approximately 47% of our loans were variable rate loans as of December 31, 2010, which
means that our interest income will generally decrease in lower interest rate environments and rise in higher interest rate environments.
Changes in the general level of interest rates can affect our net interest income by affecting the difference between the weighted average yield
earned on our interest earning assets and the weighted average rate paid on our interest bearing liabilities, or interest rate spread, and the
average life of our interest earning assets and interest bearing liabilities. Changes in interest rates also can affect our ability to originate loans;
the value of our interest earning assets; our ability to obtain and retain deposits in competition with other available investment alternatives; and
the ability of our borrowers to repay adjustable or variable rate loans. Interest rates are highly sensitive to many factors, including
governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. In
particular, the Company had $83.1 million of investment securities at December 31,

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2010, all of which were classified as available for sale. At December 31, 2010, the investment securities portfolio had a net unrealized loss of
$2.3 million. A significant and prolonged increase in interest rates will have a material adverse effect on the fair value of our investment
securities portfolio and, accordingly, our stockholders’ equity. Our results of operations may be adversely affected during any period of
changes in interest rates due to a number of factors which can have a material adverse impact on the Bank’s interest rate risk position. Such
factors include among other items, call features and interest rate caps and floors on various assets and liabilities, prepayments, the current
interest rates on assets and liabilities to be repriced in each period, and the relative changes in interest rates on different types of assets and
liabilities.

We may incur increased employee benefit costs which could have a material adverse effect on our financial condition and results of
operations.

          The Bank is a participant in the multiemployer Pentegra Defined Benefit Plan (the “ Defined Benefit Plan ”). The Defined Benefit
Plan is non-contributory and covers all qualified employees. Since the Defined Benefit Plan is a multiemployer plan, contributions of
participating employers are commingled and invested on a pooled basis without allocation to specific employers or employees. On April 30,
2010, the Board of Directors of the Bank elected to freeze the Defined Benefit Plan effective July 1, 2010, eliminating all future benefit
accruals for participants in the Defined Benefit Plan and closing the Defined Benefit Plan to new participants as of that date. After July 1,
2010, the Bank will continue to incur costs consisting of administration and Pension Benefit Guaranty Corporation insurance expenses as well
as amortization charges based on the funding level of the Defined Benefit Plan. The level of amortization charges is determined by the
Defined Benefit Plan’s funding shortfall, which is determined by comparing Defined Benefit Plan liabilities to Defined Benefit Plan
assets. Based on the level of interest rates and Defined Benefit Plan assets, the funding shortfall increased, resulting in increased amortization
charges effective July 1, 2010. Future pension funding requirements, and the timing of funding payments, may be subject to changes in
legislation. Further amortization charges could have a material adverse effect on our financial condition and results of operations.

We face strong competition that may adversely affect our profitability.

         We are subject to vigorous competition in all aspects and areas of our business from banks and other financial institutions, including
savings and loan associations, savings banks, finance companies, credit unions and other providers of financial services, such as money market
mutual funds, brokerage firms, consumer finance companies and insurance companies. We also compete with non-financial institutions,
including retail stores that maintain their own credit programs and governmental agencies that make available low cost or guaranteed loans to
certain borrowers. Many of our competitors are larger financial institutions with substantially greater resources, lending limits and larger
branch systems. These competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and
services as well as better pricing for those products and services than we can. Competition from both bank and non-bank organizations will
continue. Our inability to compete successfully could adversely affect our profitability, which, in turn, could have a material adverse effect on
our financial condition and results of operation.

Our ability to successfully compete may be reduced if we are unable to make technological advances.

          The banking industry is experiencing rapid changes in technology. In addition to improving customer services, effective use of
technology increases efficiency and enables financial institutions to reduce costs. As a result, our future success will depend in part on our
ability to address our customers’ needs by using technology. We may be unable to effectively develop new technology-driven products and
services and may be unsuccessful in marketing these products to our customers. Many of our competitors have greater resources than we have
to invest in technology. Any failure to keep pace with technological change affecting the financial services industry could have a material
adverse impact on our business and, in turn, our financial condition and results of operation.

We are subject to security and operational risks relating to our use of technology that could damage our reputation and our business.

         Security breaches in our internet banking activities could expose us to possible liability and damage our reputation. Any compromise
of our security also could deter customers from using our internet banking services

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that involve the transmission of confidential information. We rely on standard internet security systems to provide the security and
authentication necessary to effect secure transmission of data. These precautions may not protect our systems from compromises or breaches
of our security measures that could result in damage to our reputation and our business. Additionally, we outsource our data processing to a
third party. If our third party provider encounters difficulties or if we have difficulty in communicating with such third party, it could
significantly affect our ability to adequately process and account for customer transactions, which could significantly affect our business
operations. The Bank has never incurred a material security breach nor encountered any significant down time with our outsourced partners.
The occurrence of any failures, interruptions or security breaches of our systems could damage our reputation, result in loss of customer
business, subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could have a
material adverse effect on our financial condition and results of operation.

Risks Related to Ownership of Our Common Stock

The trading volume of our Common Stock is lower than that of other financial services companies and the market price of our Common
Stock may fluctuate significantly, which can make it difficult to sell shares of our Common Stock at times, volumes and prices attractive to
our stockholders.

         Our Common Stock is listed on the NASDAQ Global Market under the symbol “FFBH.” The average daily trading volume for shares
of our Common Stock is lower than larger financial institutions. There is no guarantee that an active trading market for our Common Stock
will develop or be sustained after the Rights Offering. Trading volume may also remain low as a result of the Bear State’s acquisition of a
majority stake in the Company. Because the trading volume of our Common Stock is lower, and thus has substantially less liquidity than the
average trading market for many other publicly traded companies, sales of our Common Stock may place significant downward pressure on the
market price of our Common Stock. In addition, market value of thinly traded stocks can be more volatile than stocks trading in an active
public market.

        The market price of our Common Stock has been volatile in the past and may fluctuate significantly as a result of a variety of factors,
many of which are beyond our control. These factors include, in addition to those described in “Cautionary Statement About Forward Looking
Statements”:

               actual or anticipated quarterly or annual fluctuations in our operating results, cash flows and financial condition;

                changes in earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by
             rating agencies with respect to us or other financial institutions;

               speculation in the press or investment community generally or relating to our reputation or the financial services industry;

               strategic actions by us or our competitors, such as acquisitions, restructurings, dispositions or financings;

               fluctuations in the stock price and operating results of our competitors;

               future issuances or re-sales of our equity or equity-related securities, or the perception that they may occur;

               proposed or adopted regulatory changes or developments;

               anticipated or pending investigations, proceedings, or litigation or accounting matters that involve or affect us;

               domestic and international economic factors unrelated to our performance; and

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         
              general market conditions and, in particular, developments related to market conditions for the financial services industry.

          In addition, in recent years, the stock markets in general have experienced extreme price and volume fluctuations, and market prices
for the stock of many companies, including those in the financial services sector, have experienced wide price fluctuations that have not
necessarily been related to operating performance. This is due, in part, to investors’ shifting perceptions of the effect of changes and potential
changes in the economy on various industry sectors. This volatility has had a significant effect on the market price of securities issued by
many companies, including for reasons unrelated to their performance or prospects. These broad market fluctuations may adversely affect the
market price of our Common Stock, notwithstanding our actual or anticipated operating results, cash flows and financial condition. We expect
that the market price of our Common Stock will continue to fluctuate due to many factors, including prevailing interest rates, other economic
conditions, our operating performance and investor perceptions of the outlook for us specifically and the banking industry in general.

         As a result of the lower trading volume of our Common Stock and its susceptibility to market price volatility, our stockholders may
not be able to resell their shares at times, volumes or prices they find attractive.

As a result of the First Closing, Bear State holds a controlling interest in our Common Stock and may have interests that differ from the
interests of our other stockholders.

         Bear State currently owns approximately [  ]% of our Common Stock (after taking into account the exercise of the Investor Warrant
and assuming the Rights Offering is fully subscribed) and has designated four of seven representatives on our Board of Directors. As a result,
Bear State will be able to determine our corporate and management policies and determine the outcome of any corporate transaction or other
matter submitted to our stockholders for approval. Such transactions may include mergers and acquisitions, sales of all or some of the
Company’s assets or purchases of assets, and other significant corporate transactions. Bear State also has sufficient voting power to amend our
organizational documents.

         The interests of Bear State may differ from those of our other stockholders, and it may take actions that advance its interests to the
detriment of our other stockholders. Additionally, Bear State is in the business of making investments in or acquiring financial institutions and
may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Bear State may also pursue, for its
own account, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be
available to us.

        This concentration of ownership could also have the effect of delaying, deferring or preventing a change in our control or impeding a
merger or consolidation, takeover or other business combination that could be favorable to the other holders of our Common Stock, and the
market price of our Common Stock may be adversely affected by the absence or reduction of a takeover premium in the trading price.

As a controlled company, we are exempt from certain NASDAQ corporate governance requirements, and holders of our Common Stock
may not have all the protections that these rules are intended to provide.

          Our Common Stock is currently listed on the NASDAQ Global Market. NASDAQ generally requires a majority of directors to be
independent and requires independent director oversight over the nominating and executive compensation functions. However, under
NASDAQ’s rules, if an individual or another entity owns more than 50% of the voting power for the election of directors of a listed company,
that company is considered a “controlled company” and exempt from rules relating to independence of the board of directors and the
compensation and nominating committees. We are a controlled company because Bear State owns more than 50% of our voting power for the
election of directors. Accordingly, we are exempt from certain corporate governance requirements, and holders of our Common Stock may not
have all the protections that these rules are intended to provide.

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There is a risk that we may be unable to continue our compliance with NASDAQ’s listing requirements which could adversely affect the
market liquidity of our Common Stock.

          Our Common Stock is listed on the NASDAQ Global Market. As a NASDAQ Global Market listed company, we are required to
comply with the continued listing requirements of the NASDAQ Marketplace Rules to maintain our listing status. Further, pursuant to the
terms of the Investment Agreement, we are obligated to take all steps necessary to prevent our Common Stock from being delisted from the
NASDAQ Global Market. In order to maintain our listing status, we must satisfy minimum financial and other requirements including,
without limitation, maintaining at least 750,000 shares held by non-affiliate stockholders of the Company (“ Publicly Held Shares
”). Additionally, we are required to maintain a market value of Publicly Held Shares of at least $5 million and the failure to do so for 30
consecutive business days would be a violation of the listing standard. As result of the effectiveness of the Reverse Split, our Publicly Held
Shares and the market value of such shares fell below the requisite thresholds. While we anticipate that the issuance of additional Publicly
Held Shares in the Rights Offering will cure the foregoing deficiencies there can be no assurance that the Rights Offering will result in the
intended benefits described above, that our Publicly Held Shares and that the market price of our Publicly Held Shares will increase following
the Rights Offering or that the market price of our Publicly Held Shares will not decrease in the future. In addition, there can be no assurance
that the Company will otherwise be able to comply with other applicable listing requirements in order to maintain its listing on the NASDAQ
Global Market. Failing to maintain our Common Stock’s listing on the NASDAQ Global Market could adversely affect the market liquidity of
our Common Stock, our ability to comply with the terms of the Investment Agreement, and the value of your investment. We intend to
actively monitor the number and market value of our Publicly Held Shares and will consider available options to resolve the deficiency and
regain compliance with the NASDAQ requirements in the event the Rights Offering does not achieve such result.

We are prohibited from paying dividends or repurchasing Common Stock and may not be able to resume such activities even if permitted
by our regulators.

         Under the Company Order, we may not pay dividends on our Common Stock or repurchase shares of our Common Stock without the
prior written non-objection of the OTS. We cannot determine at this time if or when we would be able to pay dividends or repurchase shares
of our Common Stock even if we are allowed to do so by our regulators. Any future payment of any dividends on both our Common Stock
and any preferred stock and any repurchases of our Common Stock, will be dependent upon, among other things, our regulatory capital
requirements, our financial condition, liquidity, results of operations, and cash flow, tax considerations, statutory, regulatory and contractual
prohibition and other limitations, and general economic conditions.

Your shares of Common Stock will not be an insured deposit and are subject to substantial investment risk.

          Your investment in our Common Stock will not be a savings or deposit account or other obligation of the Bank and will not be insured
or guaranteed by the FDIC or any other governmental agency. Investment in our Common Stock is inherently risky for the reasons described
in this “Risk Factors” section, elsewhere in this prospectus and in the documents incorporated by reference and is subject to the same market
forces that affect the market price of common stock of any company. As a result, you may lose some or all of your investment.

Anti-takeover provisions could negatively impact our stockholders.

          Provisions of Texas law and provisions of our amended articles of incorporation and bylaws, including (i) the Texas business
combination statute being applicable to our business combinations, (ii) business combinations with affiliated shareholders requiring the
affirmative vote of at least 80% of the voting power of our then outstanding capital stock and the affirmative vote of at least a majority of the
voting power of our then outstanding capital stock, excluding shares held by affiliated shareholders, (iii) our ability to issue preferred stock
without stockholders approval, (iv) the classification of our Board of Directors, and (v) the removal of directors for cause with at least a
majority of the voting power of our then outstanding capital stock, may have an anti-takeover effect and may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider in his or her best interest, including those attempts that might result in a premium
over the market price for the Common Stock.

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Risks Related to the Rights Offering

The subscription price determined for the Rights Offering is not necessarily an indication of the fair value of our Common Stock.

         The price of the shares offered in the Rights Offering was set to equal the price paid by Bear State in the First Closing. This price is
not necessarily related to our book value, tangible book value, multiple of earnings or any other established criteria of fair value and may or
may not be considered the fair value of our Common Stock to be offered in the Rights Offering. After the completion of the Rights Offering,
our Common Stock may trade at prices below the subscription price, and you may not be able to sell your shares at a price equal to or greater
than the subscription price or at all.

The market price of our Common Stock may decline during the Rights Offering to a price less than the subscription price.

         The market price of our Common Stock may decline during the Rights Offering to a price less than the subscription price. If that
occurs, the subscription rights given to stockholders in the Rights Offering will be “underwater,” meaning that shares available in the Rights
Offering will cost more to buy than shares of our Common Stock available at prevailing market rates. The subscription price will not be
changed in response to fluctuations in the market price of our Common Stock.

If you exercise your Rights, you commit to purchasing the shares of Common Stock at the designated subscription price and you may not
revoke or change your exercise of your Rights even if the public trading market price of such shares decreases below the subscription price
or you learn information about us that you consider unfavorable.

          Your exercise of Rights to purchase shares of our Common Stock is irrevocable, unless we are required by law to permit such
revocation. If you exercise your Rights and, afterwards, the market price of our Common Stock decreases below the subscription price, you
will have committed to buying shares of our Common Stock at a price above the prevailing market price and could have an immediate
unrealized loss. However, notwithstanding any election forms received from participants (and other account holders) in the 401(k) Plan
regarding the exercise of their Rights held by (or through) the 401(k) Plan, no Rights held by (or through) the 401(k) Plan will be exercised if
the per share public trading price of our Common Stock is not greater than or equal to the subscription price on [  ][  ], 2011. For additional
information, see “The Rights Offering—Special Instructions for Participants in Our 401(k) Plan.” Our Common Stock is currently listed for
trading on the NASDAQ Global Market under the ticker symbol “FFBH,” and the last reported price of our Common Stock on the NASDAQ
Global Market on [  ][  ], 2011 was $[  ] per share.

If you do not exercise your Rights, your percentage ownership will be diluted.

         We will issue up to 2,908,071 shares of Common Stock in the Rights Offering, or in a private placement to Bear State pursuant to its
commitment in the Investment Agreement to backstop the Rights Offering. If you choose not to exercise your Basic Subscription Rights prior
to the expiration of the Rights Offering, or you exercise less than all of your rights and other stockholder fully exercise their rights or a greater
proportion of their rights than you exercise, your percentage ownership in our Common Stock will be diluted relative to stockholders who
exercise their Rights and Bear State.

If you do not act promptly and follow the subscription instructions, your exercise of Rights will be rejected.

          If you desire to purchase shares in the Rights Offering, you must act promptly to ensure that the subscription agent actually receives
all required forms and payments, and that all payments clear, before the expiration of the Rights Offering at 5:00 p.m., Eastern Time, on the
Expiration Date. If you are a beneficial owner of shares, you must act promptly to ensure that your broker, dealer, custodian bank or other
nominee acts for you and that the subscription agent receives all required forms and payments before the Rights Offering expires. We are not
responsible if your nominee fails to ensure that the subscription agent receives all required forms and payments

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before the Rights Offering expires. If you fail to complete and sign the required subscription forms, send an incorrect payment amount or a
payment does not clear prior to the Expiration Date, or otherwise fail to follow the subscription procedures that apply to the exercise of your
Rights before the Rights Offering expires, the subscription agent will reject your subscription or accept it only to the extent of the payment
received. Neither we nor our subscription agent undertakes any responsibility or action to contact you concerning an incomplete or incorrect
subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine
whether a subscription exercise properly complies with the subscription procedures.

          If you desire to purchase shares in the Rights Offering through your Rights that are held in your 401(k) Plan account, you must elect
what amount (if any) of your Rights held in such account that you would like to exercise by properly completing the special election form,
called the “First Federal Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust Non-Transferable Subscription
Rights Election Form” provided to you by the Company. You must return your properly completed 401(k) Plan Participant Election Form to
the Company as prescribed in the instructions accompanying the 401(k) Plan Participant Election Form. Your 401(k) Plan Participant Election
Form must be received by the 401(k) Deadline, which is 5:00 p.m., Eastern Time on [  ] [  ], 2011, and which is 5 business days prior to the
Expiration Date. If your 401(k) Plan Participant Election Form is not received by the 401(k) Deadline, your election to exercise your Rights
that are held in your 401(k) Plan account will not be effective. The 401(k) Deadline is a special deadline that applies to participants (and other
account holders) in the 401(k) Plan (notwithstanding the Expiration Date set forth in this prospectus for Rights holders generally) and solely
with respect to the shares of our Common Stock held through the 401(k) Plan as of the Record Date. Any Rights credited to your 401(k) Plan
account will expire unless they are properly exercised by the 401(k) Deadline. If you elect to exercise some or all of the Rights in your
401(k) Plan account, you must also ensure that you indicated on your 401(k) Plan Participant Election Form a sufficient amount of your current
investments to be liquidated in full satisfaction of your subscription payment.

      Also note that, notwithstanding any election that you make regarding the exercise of the Rights held by your 401(k) Plan account, your
Rights will not be exercised with respect to shares held through the 401(k) Plan if the per share public trading price of our Common Stock is
not greater than or equal to the subscription price on [  ][  ], 2011. For additional information, see “The Rights Offering—Special Instructions
for Participants in Our 401(k) Plan.”

Our 401(k) Plan, which is receiving Rights, is not permitted to acquire, hold or dispose of subscription rights absent an exemption from the
DOL.

         The 401(k) Plan is receiving Rights with respect to the shares of Common Stock held by the 401(k) Plan on behalf of the participants
(and other account holders) as of the Record Date even though 401(k) plans and other plans subject to ERISA, such as ours, are not permitted
under ERISA or Section 4975 of the Code to acquire, hold or dispose of Rights absent an exemption from the DOL. We are submitting a
request to the DOL that an exemption be granted on a retroactive basis, effective to the commencement of the Rights Offering, with respect to
the acquisition, holding and exercise of the Rights by the 401(k) Plan and its participants (and other account holders); however, the DOL may
deny our exemption application. If our exemption request is denied by the DOL, the DOL may require us to take appropriate remedial action
and the IRS and DOL could impose certain taxes and penalties on us.

You will not be able to sell the shares of Common Stock you buy in the Rights Offering until the shares you elect to purchase are issued to
you.

         If you purchase shares in the Rights Offering by submitting the required forms and payment, we will mail you a direct registration
account statement or, upon request, a stock certificate as soon as practicable following the consummation of the Rights Offering. If your
shares are held by a broker, dealer, custodian bank or other nominee and you purchase shares, your account with your nominee will be credited
by your nominee. Until the shares of Common Stock you elect to purchase are issued to you by delivery of a direct registration account
statement or by a credit to your account by your nominee, as applicable, you may not be able to sell your shares even though the shares of
Common Stock issued in the Rights Offering will be listed for trading on the NASDAQ Global Market. The stock price may decline between
the time you decide to sell your shares and the time you are actually able to

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sell your shares to a price less than the subscription price, and you may not be able to sell your shares at a price equal to or greater than the
subscription price or at all.

This Rights Offering may cause the market price of our Common Stock to decrease.

         Depending upon the trading price of our Common Stock at the time of commencement of the Rights Offering, together with the
number of shares of Common Stock we will issue in connection with the Rights Offering (including those that could be issued to Bear State
pursuant to its backstop commitment), the Rights Offering may cause the price of our Common Stock to decrease, and it may continue to
decrease following expiration of the Rights Offering. If the holders of our Common Stock purchased in the Rights Offering choose to sell
some or all of those shares, the resulting sales could further depress the market price of our Common Stock.

The future price of our Common Stock may be less than the $3.00 post-Reverse Split per share subscription price in the Rights Offering,
and you may not be able to sell your shares at a price equal to or greater than the subscription price or at all.

         If you exercise your Rights to purchase shares of Common Stock in the Rights Offering, you may not be able to sell them later at or
above the $3.00 post-Reverse Split per share subscription price in the Rights Offering. The actual market price of our Common Stock could be
subject to wide fluctuations in response to numerous factors, some of which are beyond our control.

Because our Board of Directors and management will have broad discretion over the use of the net proceeds from the Rights Offering, you
may not agree with how we use the proceeds, and we may not invest the proceeds successfully or apply the proceeds effectively.

          While we currently anticipate that we will use a significant portion of the net proceeds of the Rights Offering to make capital
contributions to the Bank and for other general corporate purposes, our Board of Directors and our management may allocate the proceeds as it
deems appropriate. In addition, market factors may require our management to allocate portions of the proceeds for other
purposes. Accordingly, you will be relying on the judgment of our Board of Directors and our management with regard to the use of the
proceeds of the Rights Offering, and you will not have the opportunity, as part of your investment decision, to influence how the proceeds are
being used. If we invest the proceeds pending application of the funds, it is possible that the proceeds will be invested in a way that does not
yield a favorable, or any, return for us. Our failure to apply these funds effectively could adversely affect our business by reducing our return
on equity and inhibiting our abilities to expand or raise additional capital in the future.

The Rights are not transferable and there is no market for the Rights.

         You may not sell, give away or otherwise transfer your Rights. The Rights are only transferable by operation of law. Because the
Rights are non-transferable, there is no market or other means for you to directly realize any value associated with the Rights. The exercise of
the Rights is the only possible means to realize any potential value from your Rights.

We may cancel the Rights Offering at any time prior to the expiration of the Rights Offering, and neither we nor the subscription agent will
have any obligation to you except to return your subscription payments, without interest or penalty.

         We may, with the written agreement of Bear State, decide not to continue with the Rights Offering or cancel the Rights Offering prior
to the expiration of the Rights Offering. If the Rights Offering is cancelled, all subscription payments received by the subscription agent from
you will be returned to you, without interest or penalty, as soon as practicable.

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If Legacy Stockholders choose not to exercise their Rights in the Rights Offering, and if Bear State’s purchase of the unsold shares offered
in the Rights Offering (the “Second Closing”) does not occur, we may not accomplish our goal of raising gross proceeds of approximately
$8.7 million through the Rights Offering and Bear State’s backstop commitment.

         The Investment Agreement provides for certain additional conditions in order for the Second Closing and Bear State’s backstop
commitment to be effected, including: (i) the Rights Offering must have been consummated; (ii) the Company must have received (or shall
have received concurrently with the Second Closing) proceeds in the aggregate amount of not less than $55,000,000 from the Bear State
Investment and the Rights Offering; (iii) there shall have been no law or regulation or any governmental decree or order prohibiting the Second
Closing or restricting Bear State from owning or voting any shares of Common Stock; and (iv) the Company shall have satisfied certain
financial and performance metrics set forth in the Investment Agreement. If these conditions are not met, Bear State will not be obligated to
purchase any shares of our Common Stock through the backstop commitment and the Second Closing will not occur.

         The Second Closing will not occur until after the Rights Offering is completed. If the conditions to consummate the Second Closing
are not satisfied, and holders of our Common Stock do not exercise their Rights in the Rights Offering, we may not accomplish our goal of
raising gross proceeds of approximately $8.7 million through the Rights Offering and Bear State’s backstop commitment, and this aspect of the
Company’s Recapitalization Plan will fail.

                                                          PLAN OF DISTRIBUTION

        On or about [  ][  ], 2011, we will distribute at no cost the Rights to our stockholders of record as of 5:00 p.m., Eastern Time, on
March 23, 2011. If you wish to exercise your Rights, you must timely comply with the exercise procedures described in “Terms of the
Offering—Method of Exercising Rights.”

        We have agreed to pay the subscription agent customary fees plus certain expenses in connection with the Rights Offering. We have
not employed any brokers, dealers or underwriters in connection with the solicitation of exercise of Rights. Except as described in this section,
we are not paying any other commissions, underwriting fees or discounts in connection with the Rights Offering.

        If you are the record holder, we will mail you a direct registration account statement as soon as practicable following the closing of the
Rights Offering. After you receive the direct registration account statement, you may request a stock certificate representing the shares of our
Common Stock purchased by you in the Rights Offering. If your shares are held by a broker, dealer, custodian bank or other nominee and you
purchase shares in the Rights Offering, your account with your nominee will be credited by your nominee. Shares of our Common Stock issued
in connection with the Rights Offering will be listed on the NASDAQ Global Market under “FFBH”.

        Some of our employees may solicit responses from you as a holder of Rights, but we will not pay our employees any commissions or
compensation for these services other than their normal employment compensation. We estimate that our total expenses in connection with the
Rights Offering will be $[  ].

         If you have any questions, you should contact the subscription agent as provided in “Terms of the Offering—Subscription Agent.”

                                                             USE OF PROCEEDS

          Assuming the sale of 2,908,071 shares at $3.00 per share (or $0.60 per share pre-Reverse Split), through the Rights Offering or to
Bear State pursuant to their commitment in the Investment Agreement to backstop the Rights Offering in a private placement, we estimate that
the net proceeds from the sale of our Common Stock in this offering, after deducting the subscription agent’s fees and estimated expenses, will
be approximately $8.5 million.

         We are conducting the Rights Offering because we are required to do so under the terms of the Investment Agreement. See
“Prospectus Summary—Recapitalization Plan” above. The purpose of the Rights Offering is to give our Legacy Stockholders the opportunity
to purchase shares of our Common Stock at the same price Bear State

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is purchasing our Common Stock in connection with the Bear State Investment and thereby participate in the Company’s Recapitalization
Plan. We intend to contribute a significant portion of the net proceeds, approximately $8.5 million, from the Rights Offering to the Bank as a
capital contribution. The Bank will use the proceeds to bolster its regulatory capital in compliance with the Bank Order and to address its
classified assets. The balance of the net proceeds from the Rights Offering will be used by the Company for general corporate purposes.

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                                 CAPITALIZATION AND PRO FORMA FINANCIAL INFORMATION

         The following tables contain certain financial information as of December 31, 2010 and for the year ended December 31, 2010:

               on an actual basis; and

               on a pro forma, as adjusted, basis to give effect to the Recapitalization Plan (which includes the Reverse Split; the First
             Closing, which includes the issuance of the First Closing Shares and the Investor Warrant, and the redemption of our Series A
             Preferred Stock and the TARP Warrant; and the Rights Offering).

         These tables should be read together with our historical consolidated financial statements and Management’s Discussion and Analysis,
which appears in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, which is incorporated herein by
reference.

                                           FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
                                                Pro Forma Statement of Financial Condition

                                                                                       As of December 31, 2010
                                                                                 (In thousands, except per share data)
                                                                      Adjustments
                                                                      from Reverse                                    Adjustments
                                                      As                Split and                                     from Rights
                                                   Reported          First Closing (1)             Subtotal            Offering (1)      Pro Forma (1)
ASSETS

Cash and cash equivalents                      $      36,407     $               39,903 (2)     $      76,310      $           8,545 (2) $      84,855
Investment securities available for sale              83,106                         —                 83,106                     —             83,106
Federal Home Loan Bank stock                           1,257                         —                  1,257                     —              1,257
Loans receivable net of allowance of
  $31,084                                            381,343                         —               381,343                      —           381,343
Loans held for sale                                    4,502                         —                 4,502                      —             4,502
Accrued interest receivable                            2,545                         —                 2,545                      —             2,545
Real estate owned, net                                44,706                         —                44,706                      —            44,706
Office properties and equipment, net                  22,237                         —                22,237                      —            22,237
Cash surrender value of life insurance                21,444                         —                21,444                      —            21,444
Prepaid expenses and other assets                      2,499                       (348 )(2)           2,151                      —             2,151

TOTAL ASSETS                                   $     600,046     $               39,555         $    639,601       $           8,545    $     648,146


LIABILITIES AND STOCKHOLDERS’
  EQUITY

LIABILITIES
Deposits                                       $     541,800     $                    —         $    541,800       $              —     $     541,800
Other borrowings                                      18,193                          —               18,193                      —            18,193
Advance payments by borrowers for taxes
  and insurance                                          726                         —                   726                      —               726
Other liabilities                                      3,207                       (950 )(3)           2,257                      —             2,257
  Total liabilities                                  563,926                       (950 )            562,976                      —           562,976

STOCKHOLDERS’ EQUITY
Preferred stock                                $      16,261                    (16,261 )       $          —       $              —     $           —
Common Stock                                              48                        116                   164                     29               193
Additional paid-in capital — Common
  Stock                                               26,796                     52,781                79,577                  8,516            88,093
Additional paid-in capital — Investor
  Warrant                                                 —                       2,800 (4)             2,800                     —              2,800
Other comprehensive loss                              (2,320 )                       —                 (2,320 )                   —             (2,320 )
Retained earnings (deficit)                           (4,665 )                    1,069                (3,596 )                   —             (3,596 )
  Total stockholders’ equity                 36,120               40,505       76,625              8,545              85,170

TOTAL LIABILITIES AND
  STOCKHOLDERS’ EQUITY                   $   600,046     $        39,555   $   639,601    $         8,545     $      648,146


Book value per common share (5)          $      4.10                 —     $      4.67    $            —      $            4.41

Tangible common equity to total assets          3.31 %                          11.98 %                                   13.14 %

                                                                                         (Footnotes on following page.)

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(1)      The following table illustrates the impact of each of the proposed transactions on the statement of financial condition as of
         December 31, 2010, as reported ($ in thousands):

                                                                                                                                      APIC           APIC        Retained
                                    Common Shares                                         Other           Preferred      Common      Common         Investor     Earnings
                                      Outstanding      Cash          Other Assets       Liabilities         Stock          Stock      Stock         Warrant      (Deficit)
Beginning amounts                   $      4,846,785 $ 36,407    $            2,499   $         3,207    $    16,261     $       48 $ 26,796       $       —   $     (4,665 )
Reverse Split                             (3,877,428 )      —                     —                —              —            (38 )       38              —             —
First Closing Shares and Investor
   Warrant                               15,425,262       40,276                                (950 )       (16,261 )           154        53,464     2,800          1,069
Cash transaction costs                                      (373 )            (348 )                              —               —           (721 )                     —
                                         16,394,619       76,310             2,151             2,257              —              164        79,577     2,800         (3,596 )
Rights Offering                           2,908,071        8,724                —                 —                               29         8,695        —              —
Cash transaction costs                           —          (179 )              —                 —               —               —           (179 )      —              —
                                    $    19,302,690   $   84,855 $           2,151 $           2,257     $        —      $       193    $   88,093 $   2,800   $     (3,596 )


(2)      Cash proceeds assumes $40.3 million of cash received, before deducting transaction costs, from the issuance and sale of the First
         Closing Shares to Bear State and $8.7 million of cash received, before deducting transaction costs, from the Rights Offering. Estimated
         transaction costs for the First Closing Shares and the Rights Offering are $721,000 and $179,000, respectively, of which $348,000 of
         transaction costs had already been paid in cash through December 31, 2010 and is reflected as a component of Other Assets above.
(3)      Represents $930,000 of accrued preferred stock dividends and $20,000 of accrued interest on the unpaid preferred stock dividends.
(4)      The Investor Warrant was valued for financial reporting purposes using the Black-Scholes option pricing model. The estimated option
         value per share of $1.40 was based on the following assumptions: stock price and exercise price $3.00, term 3 years, dividend yield of
         zero, risk free rate of 1.50% and volatility of 70%.
(5)      Book value per common share is calculated based on common shares outstanding as noted in the table above, which do not include the
         2 million shares of our Common Stock issuable upon the exercise of the Investor Warrant.

        The following tables illustrate the potential dilutive effect and impact on stockholders’ equity of the Reverse Split, the Bear State
Investment and the Rights Offering:

                                                                                               Percent of                                                 Percent of
                                                                                               Beneficial                                                 Beneficial
                                                                                            Ownership Prior                     Percent of             Ownership After
                                                                                              to the First                      Beneficial             the First Closing
                                                                       Number of             Closing and                     Ownership After              and Rights
                                                                       Shares (1)           Rights Offering                  the First Closing             Offering
Shares of Common Stock issued and outstanding as of
  December 31, 2010                                                        969,357               100%                             5.3%                      4.6%

Shares of Common Stock issued to Bear State in the
  First Closing (2)                                                     17,425,262                 0%                            94.7%                     81.8%

Shares of Common Stock issuable in conjunction with
  Rights Offering (3)                                                    2,908,071                 0%                               —                      13.6%

Total                                                                   21,302,690               100%                             100%                      100%



(1)      Shares are reflected post-Reverse Split.
(2)      Includes the Investor Warrant of 2 million shares.
(3)      This table assumes the Rights Offering is fully subscribed by Legacy Stockholders. If no Legacy Stockholders purchase Common Stock
         in the Rights Offering, Bear State could own as much as 94.9% of the Common Stock. As a result, our current stockholders would own
         between 5.1% and 18.2% of our Common Stock following the Bear State Investment and the Rights Offering.

                                                                                 39
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         The following table sets forth the pro forma regulatory capital ratios for the Bank following the Recapitalization Plan and assumes an
infusion of $47.3 million to the Bank from the Company. It is assumed that $39.3 million is infused to the Bank after the First Closing Shares
are issued and $8 million is infused to the Bank following the Rights Offering. For risk-weighted asset purposes, the cash infusion into the
Bank was assumed to be 50% risk-weighted.

                                                                                                                    Pro Forma as of
                                                                          Pro Forma as of                         December 31, 2010
                                                                         December 31, 2010                         Assuming Infusion
                                                                         Assuming Infusion                    of $47.3 million of Proceeds
First Federal Bank                     December 31, 2010            of $39.3 million of Proceeds           from the First Closing and Rights
Regulatory Capital Ratios                   Actual                     from the First Closing                           Offering


    Tier 1 Leverage Ratio                   6.36 %                          12.10 %                                    13.18 %
    Tier 1 Risk Based Ratio                 9.42 %                          18.19 %                                    19.88 %
    Total Risk Based Ratio                 10.72 %                          19.44 %                                    21.12 %

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                                         FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
                                                 Pro Forma Statement of Operations

                                                                                 For the year ended December 31, 2010
                                                                            (Dollars in thousands, except per share amounts)
                                                                       Adjustments
                                                                       from Reverse                                    Adjustments
                                                                         Split and                                     from Rights
                                                   As Reported         First Closing               Subtotal              Offering            Pro Forma


Interest income                                $        29,820     $                —         $        29,820      $             —       $        29,820
Interest expense                                         9,838                      —                   9,838                    —                 9,838
Net interest income                                     19,982                      —                  19,982                    —                19,982
Provision for loan losses                                6,959                      —                   6,959                    —                 6,959
Net interest income after provision for loan
   losses                                               13,023                      —                  13,023                    —                13,023
Gain on sales and calls of investment
   securities                                            1,163                      —                   1,163                    —                 1,163
Noninterest income                                       8,296                      —                   8,296                    —                 8,296
Noninterest expense                                     26,991                     (20 )(1)            26,971                    —                26,971
Income (loss) before income taxes                       (4,509 )                    20                 (4,489 )                  —                (4,489 )
Income tax provision (benefit)                            (474 )                    — (2)                (474 )                  —                  (474 )
Net income (loss)                                       (4,035 )                    20                 (4,015 )                  —                (4,015 )
Preferred stock dividend and discount
   accretion                                                891                (11,391 )(3)           (10,500 )                  —               (10,500 )
Net income (loss) available to common
   shareholders                                $         (4,926 ) $             11,411        $         6,485      $                 —   $         6,485


Earnings (loss) per common share:
  Basic                                        $          (1.02 ) $               1.42        $           0.40     $            (.06 ) $            0.34
  Diluted                                      $          (1.02 ) $               1.37        $           0.35     $            (.05 ) $            0.30


Weighted average shares outstanding:
 Basic (4)                                           4,846,785           11,547,834               16,394,619             2,908,071            19,302,690
  Diluted (5)                                        4,846,785           13,547,834               18,394,619             2,908,071            21,302,690



(1)    Reflects the reversal of accrued but unpaid dividends on Series A Preferred Stock.
(2)    No tax effect of the transactions was assumed due to the Company’s $13.3 million net operating loss carryforward at December 31,
       2010.
(3)    Reflects the gain on redemption of our Series A Preferred Stock, reversal of accrued but unpaid dividends on Series A Preferred Stock
       recognized during 2010 of $825,000, and reversal of Series A Preferred Stock discount accretion of $66,000 recognized during 2010.
(4)    Basic weighted average shares outstanding were adjusted for the impact of the Reverse Split of 3,877,428 shares, the First Closing
       Shares of 15,425,262, and the Rights Offering of 2,908,071 shares.
(5)    Diluted weighted average shares outstanding includes the Investor Warrant for 2,000,000 shares.

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                                      MARKET FOR COMMON STOCK AND DIVIDEND POLICY

Stock Price and Cash Dividend Information

         The following table sets forth the high and low sale market prices of our Common Stock as listed on the NASDAQ Global Market, as
well as cash dividends paid for the quarterly periods presented.

                                                                                                                        Per Share
                                                                                     Market Price*                        Cash
                                                                              High                    Low               Dividend*
         December 31, 2010 :
           Fourth quarter                                               $    1.95              $     0.94          $        —
           Third quarter                                                     2.30                    1.64                   —
           Second quarter                                                    3.90                    2.60                   —
           First quarter                                                     3.89                    2.29                   —

         December 31, 2009 :
           Fourth quarter                                               $    4.10              $     2.17          $        —
           Third quarter                                                     4.69                    3.16                 0.01
           Second quarter                                                    4.95                    3.77                 0.01
           First quarter                                                     8.25                    3.40                 0.01

     On [  ][  ], 2011, following the effectiveness of the Reverse Split, the last reported sales price of our Common Stock on the
NASDAQ Global Market was $[  ].



         * Reflects market prices and dividends prior to effectiveness of the Reverse Split.

Number of Stockholders and Shares Outstanding

          As of [  ][  ], 2011, there were approximately [  ] stockholders of record and [  ] post-Reverse Split shares of Common Stock
entitled to vote and receive dividends and considered outstanding for financial reporting purposes. The number of stockholders of record does
include the number of persons or entities who hold their stock in nominee or “street” name.

Dividend Policy

         Pursuant to the Company Order, our Board of Directors may not declare or pay any dividends or capital distributions on our Common
Stock or repurchase such shares without the prior written non-objection of the OTS. Even if authorized by the OTS, we have no current plans
to resume dividend payments on our Common Stock. Any future payment of any dividends on both our Common Stock and any preferred
stock, will be dependent upon, among other things, our regulatory capital requirements, our financial condition, liquidity, results of operations,
and cash flow, tax considerations, statutory, regulatory and contractual prohibition and other limitations, and general economic conditions.

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                                                   DESCRIPTION OF CAPITAL STOCK

General

         Our authorized capital stock consists of (i) 30,000,000 shares of Common Stock, $0.01 par value per share, and (ii) 5,000,000 shares
of preferred stock, no par value per share.

        As of [  ] [  ], 2011, after giving effect to the Reverse Split and the First Closing, we had issued and outstanding (i) approximately
16,394,619 shares of our Common Stock, and (ii) no shares of preferred stock.

Transfer Agent and Registrar

          The transfer agent and registrar for our Common Stock is Registrar and Transfer Company.

Common Stock

         The following is a brief description of our Common Stock. This summary does not purport to be complete in all respects. This
description is subject to and qualified in its entirety by reference to our amended articles of incorporation and bylaws, copies of which have
been filed with the SEC and are also available upon request from us.

          Our Common Stock is listed on the NASDAQ Global Market.

          Each holder of our Common Stock is entitled to one vote for each share held on all matters with respect to which the holders of our
Common Stock are entitled to vote. A quorum for a meeting of stockholders consists of stockholder representing, in person or by proxy, a
majority of our outstanding capital stock, entitled to be cast by the holders of shares of capital stock on that matter at such meeting. With
respect to any matter other than the election and removal of directors, the ability to call a special meeting and certain mergers or business
combinations, the votes of a majority in interest of those present at any properly called meeting or adjourned meeting of stockholders at which
a quorum is present is required to transact business. Directors are elected by a plurality of votes cast by the shares of our Common Stock
entitled to vote in the election of directors at a meeting at which a quorum is present. A director may be removed from office only with cause
by an affirmative vote of not less than a majority of the votes eligible to be cast by stockholders at a duly constituted meeting of stockholders
called expressly for such purpose. Special meetings of stockholders may be called by the holders of not less than 50 percent of all votes entitled
to be cast on any issue proposed to be considered at such special meeting. See “—Anti-Takeover Provisions” below regarding stockholder
votes for certain mergers and business combinations.

         Holders of our Common Stock are not entitled to cumulative voting in the election of directors. Our Common Stock has no
preemptive sinking fund or conversion rights and is not subject to redemption. In the event of our liquidation, dissolution or winding up or
after payment of all creditors, the holders of our Common Stock (subject to the prior rights of the holders of any outstanding preferred stock)
will be entitled to receive pro rata any assets distributable to holders of Common Stock based on the number of shares held by them.

          Holders of our shares of Common Stock have no preemptive rights that entitle them to purchase their pro rata share of any offering of
shares of any class or series and, therefore, our stockholders may not be permitted to invest in future issuances of our Common Stock and as a
result will be diluted.

         Pursuant to the Company Order, our Board of Directors may not declare or pay any dividends or capital distributions on our Common
Stock or repurchase such shares without the prior written non-objection of the OTS. Even if authorized by the OTS, we have no current plans
to resume dividend payments on our Common Stock. Any future payment of any dividends on both our Common Stock and any preferred
stock, will be dependent upon, among other things, our regulatory capital requirements, our financial condition, liquidity, results of operations,
and cash flow, tax considerations, statutory, regulatory and contractual prohibition and other limitations, and general economic conditions .

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        If our Board of Directors is permitted and elects to declare a dividend, the holders of shares of our Common Stock are entitled to such
dividends as our Board of Directors, in its discretion, may declare out of assets lawfully available. However, the payment of dividends on our
Common Stock would be subject to any prior rights of the holders of any preferred stock.

Preferred Stock

         Pursuant to our amended articles of incorporation, we have authority to issue up to 5,000,000 shares of preferred stock, no par value
per share. Our amended articles of incorporation authorize our Board of Directors to, at any time and without stockholder approval, issue one
or more new series of such preferred stock, with such terms as determined by our Board of Directors in accordance with our amended articles
of incorporation. After giving effect to the First Closing, we do not have any series of preferred stock issued or outstanding.

Anti-Takeover Provisions

         The provisions of Texas law and our amended articles of incorporation that we summarize below may have an anti-takeover effect and
may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in his or her best interest, including those
attempts that might result in a premium over the market price for the Common Stock.

          Business Combination under Texas Law . Texas law provides that, subject to certain exceptions, a Texas corporation such as us may
not engage in certain business combinations, including mergers, consolidations and asset sales, with a person, or an affiliate or associate of
such person, who is an “affiliated stockholder” (generally defined as the holder of 20% or more of the corporation’s voting shares) for a period
of three years from the date such person became an “affiliated stockholder” unless: (1) the business combination or purchase or acquisition of
shares made by the “affiliated stockholder” was approved by the board of directors of the corporation before the “affiliated stockholder”
became an “affiliated stockholder” or (2) the business combination was approved by the affirmative vote of the holders of at least two-thirds of
the outstanding voting shares of the corporation not beneficially owned by the “affiliated stockholder,” or an affiliate or associate of the
“affiliated stockholder,” at a meeting of stockholders called for that purpose (and not by written consent), not less than six months after the
“affiliated stockholder” became an “affiliated stockholder.” This law may have the effect of inhibiting a non-negotiated merger or other
business combination involving us, even if such event would be beneficial to our stockholders.

          Business Combination under Our Amended Articles of Incorporation . Our amended articles of incorporation specifies that, in
addition to certain other transactions, any merger or business combination of us or any of our subsidiaries with a “related person” requires the
affirmative vote of (i) holders of at least eighty percent (80%) of the shares of our then-outstanding shares of capital stock entitled to vote in the
election of directors, and (ii) the affirmative vote of at least a majority of the shares of our then-outstanding shares of capital stock entitled to
vote in the election of directors, excluding those shares held by the “related person.” A “related person” is defined under our amended articles
of incorporation as any person who or which is:

               the beneficial owner, directly or indirectly, of more than 10% of the shares of our then-outstanding shares of capital stock
             entitled to vote in the election of directors;

                an affiliate of the Company and who or which at any time within the two-year period immediately prior to the date of any such
             business combination was the beneficial owner, directly or indirectly, of 10% or more of the shares of our then-outstanding shares
             of capital stock entitled to vote in the election of directors; or

               an assignee of or has otherwise succeeded to any shares of our capital stock entitled to resale which were at any time within the
             two-year period immediately prior to the date of any such business combination beneficially owned by any such stockholder, if
             such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public
             offering within the meaning of the Securities Act.

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        These super majority voting provisions and other conditions would not have to be met if our Board of Directors approved the business
combination with the “related person” at times and by votes specified in the amended articles of incorporation.

          Blank Check Preferred Stock. Our Board of Directors can at any time, under our amended articles of incorporation and without
stockholder approval, issue one or more new series of preferred stock. In some cases, the issuance of preferred stock could discourage or make
more difficult attempts to take control of us through a merger, tender offer, proxy context or otherwise. Preferred stock with special voting
rights or other features issued to persons favoring our management could stop a takeover by preventing the person trying to take control of us
from acquiring enough voting shares to take control.

         Classification of the Board of Directors and Removal of Directors. Our amended articles of incorporation currently provide that our
Board of Directors is divided into three classes, as nearly identical in number as the then total number of directors constituting the entire Board
of Directors permits, with one class elected annually to serve for a term of three years. Our amended articles of incorporation currently
provide that, subject to the rights of any holders of any preferred stock, any director may be removed from office, but only for cause and only
by the affirmative vote of not less than a majority of the votes eligible to be cast by stockholders at a duly constituted meeting of stockholders
called expressly for such purpose. The classification of our Board of Directors and the limitation on removal of directors may have the effect
of making it more difficult for stockholders to change the composition of our Board of Directors even if a change in the composition of the
Board of Directors were viewed as beneficial to us. The classification of our Board of Directors and the limitation on removal of directors may
also discourage a takeover of us because a stockholder with a majority interest in First Federal may have to wait for at least two consecutive
annual meetings of stockholders to elect a majority of the members of our Board of Directors.

Restrictions on Ownership

         Federal law generally provides that no person or company, acting directly or indirectly or through or in concert with one or more other
persons, may acquire control (as defined in OTS regulations) of a savings and loan holding company, such as the Company, without the prior
approval of the OTS.

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                                                            TERMS OF OFFERING

         The following describes the Rights Offering in general and assumes, unless specifically provided otherwise, that you are a record
holder of shares of our Common Stock on the Record Date. If you hold your shares of Common Stock through a broker, dealer, custodian
bank or other nominee, please also refer to “—Notice to Brokers and Nominees” below. If you hold shares through your 401(k) Plan account,
please refer to “—Special Instructions for Participants in Our 401(k) Plan” below.

The Subscription Rights

          We are distributing, at no charge, to holders of our Common Stock as of the Record Date, non-transferable Rights to purchase up to an
aggregate of 2,908,071 post-Reverse Split shares of Common Stock at a price of $3.00 per share (or $0.60 per share pre-Reverse Split) in the
Rights Offering. Each Right consists of a Basic Subscription Right and an Oversubscription Privilege. You will receive one Right for each
share of Common Stock held by you of record as of 5:00 p.m., Eastern Time, on the Record Date, as adjusted to take into account the Reverse
Split. For example, if you own five (5) shares of our Common Stock as of the Record Date, then after giving effect to the Reverse Split, you
would own one (1) post-Reverse Split share of our Common Stock. The Basic Subscription Right would then entitle you to purchase three
(3) post-Reverse Split shares of our Common Stock for the one (1) post-Reverse Split share of our Common Stock held by you. If you own
less than five (5) shares of our Common Stock as of the Record Date, then after giving effect to the Reverse Split, you would receive cash in
lieu of fractional shares of our Common Stock and would not be entitled to a Right. The Oversubscription Privilege will permit you, if you
validly and fully exercise your Basic Subscription Rights, to subscribe for post-Reverse Split whole shares of our Common Stock that are not
purchased by other Legacy Stockholders under their Basic Subscription Rights. In the event, however, that fractional shares of Common Stock
result from the application of the Oversubscription Allocation Formula to oversubscription requests, then such fractional shares will be
eliminated by rounding down to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription
payments received by the subscription agent will be returned, without interest or penalty, as soon as practicable.

          Your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limitation of 4.9% of our
outstanding Common Stock, after giving effect to your participation in the Rights Offering and taking into account the holdings of your
affiliates. The aggregate number of shares purchased in the Rights Offering may not exceed 2,908,071 shares of Common Stock.

Basic Subscription Right

         The Basic Subscription Right gives you the right to purchase three (3) new shares of Common Stock at a subscription price of $3.00
per share (or $0.60 per share pre-Reverse Split). You may exercise all or a portion of your Rights or you may choose not to exercise any of
your Rights. You may not sell, transfer or assign your Rights. If you do not timely and fully exercise your Basic Subscription Rights with
respect to all the Rights you hold, you will not be entitled to exercise your Oversubscription Privilege to purchase any additional shares of
Common Stock offered in the Rights Offering.

Oversubscription Privilege

         If you timely and fully exercise your Basic Subscription Rights with respect to all the Rights you hold, you may also choose to
exercise your Oversubscription Privilege to purchase a portion of any shares of Common Stock offered in the Rights Offering that other
stockholders do not purchase by exercising their Basic Subscription Rights.

         If sufficient shares are available for offer pursuant to the Rights Offering, we will seek to honor the oversubscription requests in full,
subject to the beneficial ownership limitation of 4.9% of our outstanding Common Stock. If oversubscription requests exceed the number of
shares available, we will apply the Oversubscription Allocation Formula pursuant to which we will allocate the available shares pro rata among
Rights holders exercising their Oversubscription Privilege based upon the number of shares of our Common Stock a Rights holder held on the
Record Date as compared to the aggregate number of shares of our Common Stock owned on the Record Date by all Rights holders who
exercise their Oversubscription Privilege. If the application of the Oversubscription Allocation

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Formula results in any Rights holder receiving a greater number of shares than the Rights holder subscribed for pursuant to the exercise of the
Oversubscription Privilege, then such Rights holder will be allocated only that number of shares of Common Stock for which the holder
oversubscribed, and the remaining shares will be allocated among all other Rights holders exercising the Oversubscription Privilege on the
same pro rata basis described above. Additionally, if the application of the Oversubscription Allocation Formula would result in any Rights
holder exceeding, together with its affiliates, beneficial ownership of 4.9% or more of our outstanding Common Stock, then such Rights holder
will be allocated only that number of shares that would result in the Rights holder acquiring the maximum number of shares permissible based
on such limitation, and the remaining shares will be allocated among all other Rights holders exercising their Oversubscription Privilege on the
same pro rata basis described above. The proration process will be repeated until all available shares have been allocated. Registrar and
Transfer Company, our subscription agent for this Rights Offering, will determine the oversubscription allocation based on the method
described above.

         To properly exercise your Oversubscription Privilege, you must deliver the Rights certificate and the subscription payment related to
your Oversubscription Privilege before the Rights Offering expires. Because we will not know the total number of available shares and how
available shares will be allocated before the Rights Offering expires, in order for the exercise of your entire Oversubscription Privilege to be
valid, you should deliver to the subscription agent payment in an amount equal to the aggregate subscription price for the entire number of
shares that you have requested to purchase pursuant to your Oversubscription Privilege, along with payment for the exercise of your Basic
Subscription Rights and all Rights certificates and other subscription documents, prior to the expiration of the Rights Offering, even if you
ultimately are not allocated the full amount of your oversubscription request.

         We can provide no assurances that you will actually be permitted to purchase in full the number of shares you elect to purchase
through the exercise of your Oversubscription Privilege. We will not be able to satisfy any requests for shares pursuant to the
Oversubscription Privilege if all Rights holders timely and fully exercise their Basic Subscription Rights with respect to all the Rights they
hold, and we will only honor an Oversubscription Privilege to the extent sufficient shares are available following the exercise of Basic
Subscription Rights, subject to the pro rata allocation described above.

         To the extent the aggregate subscription price of the actual number of shares allocated to you pursuant to the Oversubscription
Privilege is less than the amount you actually paid to the subscription agent, the excess subscription payments will be returned to you by the
subscription agent as soon as practicable, without interest or penalty, following the closing of this Rights Offering.

         To the extent the amount you actually paid in connection with the exercise of the Oversubscription Privilege is less than the aggregate
subscription price of the shares allocated to you pursuant to the Oversubscription Privilege, you will receive only the number of shares for
which you actually paid.

Delivery of Common Stock

         If you are a registered holder of Common Stock, we will mail to you a direct registration account statement detailing the number of
shares of Common Stock that you have purchased in the Rights Offering as soon as practicable following the closing of the Rights
Offering. Following receipt of your direct registration account statement, you may request a stock certificate representing the shares of
Common Stock that you purchased in the Rights Offering. If you are a beneficial owner of shares that are registered in the name of a broker or
other nominee, you should receive from your broker or other nominee confirmation of your purchase of shares of Common Stock in the Rights
Offering.

Reasons for the Rights Offering

          The economic downturn in our market areas and resulting decline in real estate values have had a material adverse effect on our
financial condition and results of operations, as well as the results of operations of the Bank, our wholly-owned subsidiary. These material
adverse effects include reductions in our capital levels and the capital levels of the Bank as a result of our losses in 2010 and 2009 primarily
due to expenses related to our nonperforming assets, particularly elevated loan charge-offs and increases in the provision for loan losses and
real estate owned

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expenses. Furthermore, as described above in “Prospectus Summary — Regulatory Enforcement Action”, we are subject to the Company
Order and the Bank is subject to the Bank Order, issued by the OTS, our and the Bank’s primary regulator, requiring us to take steps to
improve our and the Bank’s financial condition and results of operations, including increasing our and the Bank’s capital levels. Due to these
challenges, we have been pursuing strategic alternatives to raise capital and strengthen our balance sheet. Our Board of Directors has worked
closely with management and our advisors to evaluate potential alternatives for raising additional capital, including possibly selling Common
Stock in public or private offerings, disposing of branches or related assets, and considering other strategic alternatives.

          On January 27, 2011, the Company and the Bank entered into the Investment Agreement with Bear State. Under the Investment
Agreement, the Company agreed to, among other things, commence the Rights Offering following the effectiveness of the Reverse Split and
the sale to Bear State of the First Closing Shares and Investor Warrant as contemplated by the Investment Agreement.

         We are conducting the Rights Offering because we are required to do so under the terms of the Investment Agreement. See
“Prospectus Summary — Recapitalization Plan” above. The purpose of the Rights Offering is to give our Legacy Stockholders the opportunity
to purchase shares of our Common Stock at the same price Bear State is purchasing our Common Stock in connection with the Bear State
Investment and thereby participate in the Company’s Recapitalization Plan.

Method of Exercising Rights

         The exercise of Rights is irrevocable and may not be cancelled or modified. You may exercise your Rights as follows:

Subscription by Registered Holders

          If you hold shares of Common Stock in your name, the number of shares you may purchase pursuant to your Basic Subscription
Rights is indicated on the enclosed Rights certificate. You may exercise your Rights by properly completing and executing the Rights
certificate and forwarding it, together with your full payment and any other required subscription documents, to the subscription agent at the
address given below under “—Subscription Agent,” to be received at or before the expiration of the Rights Offering.

Subscription by Beneficial Owners

         If you are a beneficial owner of shares of Common Stock that are registered in the name of a broker, dealer, custodian bank or other
nominee, you will not receive a Rights certificate. Instead, we will issue one Right to the nominee record holder for each share of Common
Stock, as adjusted to take into account the Reverse Split, that you own as of the Record Date. If you are not contacted by your nominee, you
should promptly contact your nominee in order to subscribe for shares in the Rights Offering and follow the instructions provided by your
nominee.

Payment Method

        As described in the instructions accompanying the Rights certificate, payments submitted by registered holders to the subscription
agent must be made in U.S. currency, by one of the following two methods:

              by an uncertified check drawn upon a U.S. bank payable to “Registrar and Transfer Company as rights agent for First Federal
             Bancshares of Arkansas, Inc.,” or

               by wire transfer of immediately available funds at the following account: ABA No. 031-201-467, further credit to Account
             No. 200-001-814-9168 at Wachovia Bank, N.A., Avondale, Pennsylvania, with an account name of “Registrar and Transfer
             Company as rights agent for First Federal Bancshares of Arkansas, Inc.” Any wire transfer should clearly indicate the identity of
             the subscriber who is paying the Subscription Price by wire transfer.

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         Payments by registered holders will be deemed to have been received upon (i) clearance of any uncertified check, or (ii) receipt of
collected funds in the account designated above. If paying by uncertified check, please note that the funds paid thereby may take five or more
business days to clear. Accordingly, Rights holders who wish to pay the subscription price by means of uncertified check are urged to
make payment sufficiently in advance of the expiration time to ensure that such payment is received and clears by such date.

        If you hold your shares in the name of a broker, dealer, custodian bank or other nominee, separate payment instructions may
apply. Please contact your nominee, if applicable, for further payment instructions.

          You should read the instruction letter accompanying the Rights certificate or the Beneficial Owner Election Form, as the case may be,
carefully and strictly follow it. DO NOT SEND RIGHTS CERTIFICATES, BENEFICIAL OWNER ELECTION FORMS OR
PAYMENTS DIRECTLY TO THE COMPANY OR THE BANK. We will not consider your subscription received until the subscription
agent has received delivery of a properly completed and duly executed Rights certificate or Beneficial Owner Election Form, as the case may
be, all other required subscription documents and payment of the full subscription amount.

          The method of delivery of Rights certificates or Beneficial Owner Election Form, as the case may be, all other required subscription
documents and payment of the subscription amount to the subscription agent will be at the risk of the holders of Rights. If sent by mail, we
recommend that you send those documents and payments by registered mail, properly insured, with return receipt requested, and that you allow
a sufficient number of days to ensure delivery to the subscription agent and clearance of payment before the Rights Offering expires.

Missing, Incomplete or Incorrect Subscription Documents or Payment

         If you fail to properly complete and duly sign the Rights certificate or Beneficial Owner Election Form, as the case may be, and all
other required subscription documents or otherwise fail to follow the subscription procedures that apply to the exercise of your Rights before
the Rights Offering expires, the subscription agent will reject your subscription or accept it only to the extent of the payment received. Neither
we nor our subscription agent accepts any responsibility to contact you concerning an incomplete or incorrect subscription document, nor are
we under any obligation to correct such documents. We have the sole discretion to determine whether a subscription exercise properly
complies with the subscription procedures.

         If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested is
not specified in the forms, the exercise of your Rights will be given effect to the fullest extent possible based on the amount of the payment
received, subject to the availability of shares and allocation procedure applicable to the exercise of the Oversubscription Privilege and the
elimination of fractional shares. Any excess subscription payments received by the subscription agent will be returned, without interest or
penalty, as soon as practicable following the closing of the Rights Offering.

Special Instructions for Participants in Our 401(k) Plan

         Rights will be allocated to any participant or other account holder (such as a beneficiary) in the 401(k) Plan whose account under the
401(k) Plan who held shares of our Common Stock as of 5:00 p.m., Eastern Time, on the Record Date, based upon the number of shares held in
the account as of that time on the Record Date. Those participants (or other account holders) with 401(k) Plan accounts who are allocated
Rights will have the ability to direct Pentegra Retirement Services (the “ 401(k) Plan Trustee ”) to exercise some or all of the Rights allocable
to them.

         If shares of our Common Stock were held in your account under the 401(k) Plan as of 5:00 p.m., Eastern Time, on the Record Date,
you will receive subscription solicitation materials from the subscription agent, which will include specific instructions for participating in the
Rights Offering with respect to Rights held by the 401(k) Plan, a copy of this prospectus and a special election form, called the “First Federal
Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust Non-Transferable Subscription Rights Election Form,”
which we refer to herein as the “ 401(k) Plan Participant Election Form .” If you wish to exercise your Rights, in whole or in part, your
completed 401(k) Plan Participant Election Form must be received by the Company by the 401 (k)

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Deadline, which is 5:00 p.m., Eastern Time, on [  ] [  ], 2011, which is 5 business days prior to the Expiration Date. If your 401(k) Plan
Participant Election Form is not received by the 401(k) Deadline, your election to exercise your Rights with respect to shares of our Common
Stock that you hold through the 401(k) Plan will not be effective. This is a special deadline that applies to participants (and other account
holders) in the 401(k) Plan (notwithstanding the different deadline set forth in this prospectus for shareholders participating in the Rights
Offering generally) and solely with respect to the Rights held by the 401(k) Plan. Any Rights credited to your 401(k) Plan account will expire
unless they are properly exercised by the 401(k) Deadline. You should receive the 401(k) Plan Participant Election Form with the other
offering materials related to the Rights Offering. If you do not receive this form, and you believe you are entitled to participate in the Rights
Offering with respect to shares you hold under the 401(k) Plan, you should contact the subscription agent by calling (800) 368-5948 (toll free).

          If you elect to exercise some or all of the Rights in your 401(k) Plan account, you must ensure that the amount allocated in your
401(k) Plan Participant Election Form for purposes of exercising your Rights is adequate to satisfy the subscription payment based upon the
number of Rights you are exercising. Your selected investments will be liquidated in the amount specified in your 401 (k) Plan Participant
Election Form on or about [  ] [  ], 2011, and cash equal to the necessary subscription payment amount will be transferred to the “First
Federal Bancshares of Arkansas, Inc. Rights Fund” (the “ 401(k) Plan Rights Fund ”), which has been established in anticipation of the Rights
Offering. On or about [  ] [  ], 2011, the 401(k) Plan Rights Fund will be liquidated and cash equal to the necessary subscription payment
will be transferred to the subscription agent. However, notwithstanding any election forms received from participants (and other account
holders) in the 401(k) Plan regarding the exercise of their Rights with respect to shares of Common Stock held through the 401(k) Plan, no
Rights held by the 401(k) Plan will be exercised if the per share public trading price of our Common Stock is not greater than or equal to the
subscription price on [  ] [  ], 2011.

      Notwithstanding your election to exercise all of your Rights, the 401(k) Plan’s trustee, Reliance Trust Company, will be directed to
exercise that number of Rights and purchase only the number of shares of Common Stock that can be acquired with the money generated by
liquidating the 401(k) Plan Rights Fund in your 401(k) Plan account. If the value of the 401(k) Plan Rights Fund in your 401(k) Plan account
does not equal or exceed the purchase price of the shares of Common Stock that you have elected to purchase in the Rights Offering, none of
the Rights held by your 401(k) Plan account will be exercised for shares of Common Stock and you will be deemed not to have exercised your
Rights with regard to any shares held in your 401(k) Plan account.

         Any shares of our Common Stock purchased upon exercise of the Rights held by your 401(k) Plan account will be allocated to your
account under the Common Stock investment option, where they will remain subject to your further investment directions in accordance with
the terms of the 401(k) Plan.

         Once you submit your completed 401(k) Plan Participant Election Form, you may not revoke your exercise instructions. If you elect to
exercise your Rights, you should be aware that the market value of our Common Stock may go up or down during the period after you submit
your 401(k) Plan Participant Election Form and before the time that our Common Stock is purchased under the Rights and allocated to your
account under the 401(k) Plan. However, as discussed above, notwithstanding any election that you make pursuant to a 401(k) Plan Participant
Election Form, your Rights held by your 401(k) Plan account will not be exercised if the per share public trading price of our Common Stock is
not greater than or equal to the subscription price on [  ] [  ], 2011.

         All subscription payments received on your behalf and not applied to the purchase of shares of our Common Stock in the Rights
Offering will be returned to the 401(k) Plan and deposited based upon your current 401(k) Plan investment allocation election.

          Neither we, the subscription agent nor the 401(k) Plan Trustee, or anyone else will be under any duty to notify you of any defect or
irregularity in connection with your submission of the 401(k) Plan Participant Election Form, and we will not be liable for failure to notify you
of any defect or irregularity with respect to the completion of such form. We reserve the right to reject your exercise of the Rights if your
exercise is not in accordance with the terms of the Rights Offering or in the proper form. We will also not accept the exercise of Rights if our
issuance of shares of our Common Stock to you could be deemed unlawful under applicable law.

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         The 401(k) Plan Participant Election Form must be received by the Company by the 401(k) Deadline, which is 5:00 p.m., Eastern
Time, on [  ] [  ], 2011. A self-addressed envelope has been included in the materials provided to our 401(k) Plan participants (and other
account holders) along with this prospectus that may be used to mail the 401(k) Plan Participant Election Form. In any event, you must use the
address set forth below:

                                           By First-Class Mail, Overnight Courier or Hand-Delivery:

                                                   First Federal Bancshares of Arkansas, Inc.
                                                           1401 Highway 62-65 North
                                                                  P.O. Box 550
                                                            Harrison, Arkansas 72602
                                            Attention: Tommy W. Richardson, Corporate Secretary

         Delivery to any address or by a method other than those set forth above does not constitute valid delivery.

Expiration Date

          You may exercise your Rights, prior to 5:00 p.m., Eastern Time, on [  ] [  ], 2011, which is the expiration of the Rights Offering. If
you do not properly exercise your Rights before that time, your Rights will expire and will no longer be exercisable and any Rights not
exercised before that time will be void and worthless without any payment to the holders thereof. We will not be required to issue shares to
you if the subscription agent receives your Rights certificate, any required subscription document or your subscription payment after such time
of expiration.

         If you hold your shares of Common Stock in the name of a broker, dealer, custodian bank or other nominee, the nominee will exercise
the Rights on your behalf in accordance with your instructions. Please note that your nominee may establish a deadline before the expiration
time of the Rights Offering.

         We do not intend to extend the expiration time of the Rights Offering.

Conditions to the Rights Offering

         We reserve the right to cancel or terminate the Rights Offering at any time before completion of the Rights Offering for any reason.

No Fractional Shares

         Legacy Stockholders may only exercise the Basic Subscription Right and Oversubscription Privilege for whole shares. In the event,
however, that fractional shares of Common Stock result from the application of the Oversubscription Allocation Formula to oversubscription
requests, then such fractional shares will be eliminated by rounding down to the nearest whole share, with the total exercise price being
adjusted accordingly. Any excess subscription payments received by the subscription agent will be returned, without interest or penalty, as
soon as practicable.

Notice to Brokers and Nominees

          If you are a broker, custodian bank or other nominee holder that holds shares of Common Stock for the account of others on the
Record Date, you should notify the beneficial owners of the shares for whom you are the nominee of the Rights Offering as soon as possible to
determine whether or not they intend to exercise their Rights. You should obtain instructions from the beneficial owners of our Common
Stock. If a beneficial owner of our Common Stock so instructs, you should complete the Rights certificate and all other required subscription
documents and submit them to the subscription agent with the full subscription payment by the Expiration Date. You may exercise, on behalf
of all beneficial owners for whom you are the record holder as so instructed by such beneficial owners, the number of Rights to which all such
beneficial owners in the aggregate otherwise would have been entitled had they been direct holders of our Common Stock on the Record Date,
provided that you, as a nominee record holder, make a proper showing to the subscription agent by submitting the form titled “Nominee Holder
Certification,” which is provided with your Rights Offering materials. If you did not receive this form, you should contact the subscription
agent to request a copy.

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Beneficial Owners

         If you are a beneficial owner of shares of Common Stock and will receive your Rights through a broker, custodian bank or other
nominee, we will ask your nominee to notify you of the Rights Offering. If you wish to exercise your Rights, you will need to have your
nominee act for you, as described above. To indicate your decision with respect to your Rights, you should follow the instructions of your
nominee. You should contact your nominee if you do not receive notice of the Rights Offering, but believe you are entitled to participate in
the Rights Offering. We are not responsible if you do not receive the notice by mail or otherwise from your nominee or if you receive notice
without sufficient time to respond to your nominee by the deadline established by your nominee, which may be before the expiration of the
Rights Offering.

No Recommendation to Rights Holders

         Neither our Board of Directors nor Bear State is making a recommendation regarding any exercise of your Rights. Rights holders
who exercise Rights risk investment loss on money invested. The market price of our Common Stock may be volatile and, accordingly, the
shares of Common Stock that you purchase in this Rights Offering may trade at a price lower than the subscription price and may prevent you
from being able to sell the shares when you want to or at prices you find attractive. You should make your decision based on your assessment
of our business and financial condition, our prospects for the future and the terms of the Rights Offering. You should carefully consider the
risks, among other things, described under the heading “Risk Factors” beginning on page 23 of this prospectus and in the documents
incorporated by reference into this prospectus.

Market for Common Stock

       The shares of Common Stock issuable upon exercise of the Rights will be listed on the NASDAQ Global Market under the symbol
“FFBH.”

Validity of Subscriptions

         We will resolve all questions regarding the validity and form of the exercise of your Rights, including time of receipt and eligibility to
participate in the Rights Offering. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and
we will not accept any alternative, conditional or contingent subscriptions or directions. We reserve the absolute right to reject any
subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must provide missing documents or
information, correct any inaccurate information and resolve any other discrepancies in connection with your subscriptions before the Rights
Offering expires, unless we waive those defects in our sole discretion. Neither we nor the subscription agent is under any duty to notify you or
your representative of defects in your subscriptions. A subscription will be considered accepted only when the subscription agent receives a
properly completed and duly executed Rights certificate and any other required subscription documents and the full subscription payment
including final clearance of any uncertified check. Our interpretations of the terms and conditions of the Rights Offering will be final and
binding.

No Revocation or Change

          Once you submit the Rights certificate or have instructed your nominee of your subscription request, you are not allowed to revoke or
change the exercise or request a refund of monies paid. All exercises of Rights are irrevocable, even if you learn information about us or the
Common Stock that you consider to be unfavorable. You should not exercise your Rights unless you are certain that you wish to purchase
shares at the subscription price and on the terms set forth in this prospectus.

Stockholder Rights

          You will have no Rights as a holder of the shares of Common Stock you purchase in the Rights Offering until such shares of Common
Stock are issued to you. If you are the record holder, we will mail you a direct registration account statement or, upon request, a stock
certificate as soon as practicable following the closing of the

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Rights Offering. If your shares are held by a broker, dealer, custodian bank or other nominee and you purchase shares in the Rights Offering,
your account with your nominee will be credited by your nominee.

Foreign Stockholders

          We will not mail this prospectus or Rights certificates to stockholders with addresses that are outside the United States or that have an
Army Post Office or foreign post office address. The subscription agent will hold these Rights certificates for their account. To exercise
Rights, our foreign stockholders must notify the subscription agent prior to 5:00 p.m., Eastern Time, at least three (3) business days prior to the
Expiration Date of their exercise of such Rights, and, with respect to holders whose addresses are outside the United States, provide evidence
satisfactory to us that the exercise of such Rights does not violate the laws of the jurisdiction of such stockholder.

Fees and Expenses

         We will pay all fees charged by the subscription agent and all other expenses incurred by us in the Rights Offering. You are
responsible for paying any commissions, fees, taxes or other expenses incurred in connection with your exercise of your Rights.

Backstop Commitment

         Bear State has agreed to purchase from us in a private placement, at $3.00 per share (or $0.60 per share pre-Reverse Split), all of the
shares of Common Stock offered pursuant to the Rights Offering that are not purchased by the Legacy Stockholders. For additional details, see
“Questions and Answers Related to the Offering — How does the backstop commitment work?”

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                                       CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

      TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED
THAT ANY DISCUSSION OF TAX MATTERS DISCUSSED IN THIS PROSPECTUS WAS WRITTEN IN CONNECTION WITH
THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN AND WAS NOT
INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY YOU, FOR THE PURPOSE OF AVOIDING
TAX-RELATED PENALTIES UNDER FEDERAL, STATE OR LOCAL TAX LAW. WE RECOMMEND THAT YOU CONSULT
YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF
PARTICIPATING IN THE RIGHTS OFFERING.

        The following discussion is a summary of the material United States federal income tax consequences to U.S. holders (as defined
below) of the receipt and ownership of the Rights acquired in the Rights Offering.

         You are a U.S. holder if you are a beneficial owner of Rights or shares of Common Stock and you are:

               an individual citizen or resident of the United States;

               a corporation (or any other entity taxed as a corporation for United States federal income tax purposes) created or organized in
             or under the laws of the United States, any state thereof or the District of Columbia;

               an estate whose income is subject to United States federal income tax regardless of its source; or

                a trust if it (1) is subject to the primary supervision of a court within the United States and one or more “United States persons,”
             as defined in the Code, have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under
             applicable Treasury regulations to be treated as a United States person.

          The following discussion is based upon the provisions of the Code, regulations promulgated by the Treasury thereunder, and
administrative rulings and judicial decisions, in each case as of the date hereof. These authorities are subject to differing interpretations and
may be changed, perhaps retroactively, which could result in United States federal income tax consequences different from those discussed
below. We have not sought any ruling from the United States Internal Revenue Service (“ IRS ”) with respect to the statements made and the
conclusions reached in this discussion, and there can be no assurance that the IRS will agree with such statements and conclusions. This
discussion applies only to U.S. holders who acquire the Rights in the Rights Offering. Further, this discussion assumes that the Rights or
shares of Common Stock issued upon exercise of the Rights including, if applicable, pursuant to the Oversubscription Privilege will be held as
capital assets within the meaning of Section 1221 of the Code. In addition, this summary does not address all tax considerations that may be
applicable to your particular circumstances or to you if you are a U.S. holder that may be subject to special tax rules, including, without
limitation:

               banks, insurance companies or other financial institutions;

               regulated investment companies;

               real estate investment trusts;

               dealers in securities or commodities;

               traders in securities that elect to use a mark-to-market method of accounting for securities holdings;

               tax-exempt organizations;

               persons liable for alternative minimum tax;

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               persons that hold shares of Common Stock as part of a straddle or a hedging or conversion transaction;

               partnerships or other entities treated as partnerships for United States federal income tax purposes; or

               persons whose “functional currency” is not the United States dollar.

          If a partnership (including any entity treated as a partnership for United States federal income tax purposes) receives the Rights or
holds shares of Common Stock received upon exercise of the Rights or the Oversubscription Privilege, the tax treatment of a partner in a
partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner or partnership should
consult its own tax advisor as to the United States federal income tax consequences of the receipt and ownership of the Rights.

      THIS SUMMARY IS ONLY A GENERAL DISCUSSION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE
CONSTRUED TO BE, LEGAL, OR TAX ADVICE. ACCORDINGLY, EACH U.S. HOLDER WHO ACQUIRES RIGHTS IS STRONGLY
URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISER WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND
FOREIGN INCOME, ESTATE AND OTHER TAX CONSEQUENCES OF THE ACQUISITION OF THE RIGHTS, WITH SPECIFIC
REFERENCE TO SUCH PERSON’S PARTICULAR FACTS AND CIRCUMSTANCES.

Taxation of Subscription Rights

Receipt of Subscription Rights

          Your receipt of Rights in the Rights Offering should be treated as a nontaxable distribution for United States federal income tax
purposes. If this position is finally determined by the IRS or a court to be incorrect, the fair market value of the rights would be taxable to you
as a dividend to the extent of your pro rata share of our current and accumulated earnings and profits, if any, with any excess being treated as a
return of capital to the extent of your adjusted tax basis in your shares of Common Stock and thereafter as capital gain.

          The distribution of the Rights would be taxable to you under Section 305(b) of the Code if it were a distribution or part of a series of
distributions, including deemed distributions, that have the effect of the receipt of cash or other property by some of our shareholders and an
increase in the proportionate interest of other shareholders in our assets or earnings and profits, if any.

         The discussion below assumes that the receipt of Rights will be treated as a nontaxable distribution.

Tax Basis and Holding Period of Subscription Rights

         Your tax basis of the Rights for United States federal income tax purposes will depend on the fair market value of the Rights you
receive and the fair market value of your existing shares of Common Stock on the date you receive the Rights.

         If the fair market value of the Rights you receive is 15% or more of the fair market value of your existing shares of Common Stock on
the date you receive the Rights, then you must allocate the tax basis of your existing shares of Common Stock between the existing shares of
Common Stock and the Rights you receive in proportion to their respective fair market values determined on the date you receive the Rights.

               If the fair market value of the Rights you receive is less than 15% of the fair market value of your existing shares of Common
             Stock on the date you receive the Rights, the Rights will be allocated a zero tax basis, unless you elect to allocate the tax basis of
             your existing shares of Common Stock between the existing shares of Common Stock and the Rights you receive in proportion to
             their respective fair market values determined on the date you receive the Rights. If you choose to allocate the tax basis between
             your existing shares of Common Stock and the Rights, you must make this election on a statement included with your United
             States federal income tax return for the taxable year in which you receive the Rights. Such an election is irrevocable. If you
             make such an election you should retain a

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             copy of the election and your tax return with which it was filed in order to substantiate the use of an allocated basis upon a
             subsequent disposition of the stock acquired by exercise of the Rights. If you do not make the election described above, your
             basis of the shares of Common Stock with respect to which such Rights are received will not change.

                The fair market value of the Rights on the date the Rights are distributed is uncertain, and we have not obtained, and do not
             intend to obtain, an appraisal of the fair market value of the Rights on that date. In determining the fair market value of the
             Rights, you should consider all relevant facts and circumstances, including any difference between the subscription price of the
             Rights and the trading price of our Common Stock on the date that the Rights are distributed, the length of the period during which
             the Rights may be exercised and the fact that the Rights are non-transferable.

         Your holding period of the Rights will include your holding period of the shares of Common Stock with respect to which the Rights
were distributed.

Exercise of Rights

         You generally will not recognize gain or loss upon exercise of the Rights. The tax basis of the shares of Common Stock you receive
upon exercise of the Rights including, if applicable, pursuant to the Oversubscription Privilege generally will equal the sum of (i) the
subscription price and (ii) the tax basis, if any, of the Rights as determined above. Your holding period of the shares of Common Stock you
receive upon exercise of the Rights will begin on the date the Rights are exercised. If you exercise the Rights after disposing of the shares of
our Common Stock with respect to which the Rights are received, you should consult your tax advisor regarding the potential application of the
“wash sale” rules under Section 1091 of the Code and allocation of tax basis issues.

Expiration of Subscription Rights

         If you do not exercise the Rights, you should not recognize a capital loss for United States federal income tax purposes and any
portion of the tax basis of your existing shares of Common Stock previously allocated to the Rights not exercised will be re-allocated to the
existing Common Stock.

Sale or Other Disposition of the Rights Shares

         If you sell or otherwise dispose of the shares received as a result of exercising the Rights, the gain or loss recognized upon that sale or
other disposition will be a capital gain or loss assuming the share is held as a capital asset at the time of sale. This gain or loss will be
long-term if the share has been held at the time of sale for more than one year.

Information Reporting and Backup Withholding

          Payments made to you of proceeds from the sale or other disposition of Rights shares may be subject to information reporting to the
IRS and possible U.S. federal backup withholding. Backup withholding will not apply if you furnish a correct taxpayer identification number
(certified on the IRS Form W-9) or otherwise establish that you are exempt from backup withholding. Backup withholding is not an additional
tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability. You may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS and furnishing any
required information.

Receipt of Subscription Rights as a Beneficial Owner of Common Stock in the 401(k) Plan

         Participants in the Company’s qualified deferred compensation plan who have directed the investment of some of their account
balances in Common Stock may have the opportunity to participate in this Rights Offering by directing the Company or the 401(k) Plan
Trustee to exercise the Rights on their behalf.

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        The Company’s qualified plan which offers investments in Common Stock is the 401(k) Plan. The Company does not have any
nonqualified plans which offer investments in Common Stock.

         If you are a participant in the 401(k) Plan, there are no income tax consequences to you upon the issuance of the Rights, the exercise
of the Rights or the purchase of Common Shares by the 401(k) Plan. The following discussion covers the tax consequences of distribution of
shares of Common Stock purchased in the Rights Offering from the 401(k) Plan.

         Upon a lump sum distribution of the Common Stock from the 401(k) Plan, you may defer the income tax on the excess of the fair
market value of the Common Stock on the date of distribution over the basis of the Common Stock to the 401(k) Plan (“ Net Unrealized
Appreciation ”). Upon a sale of the Common Stock, the Net Unrealized Appreciation will be taxed at favorable long-term capital gain
rates. Gain in excess of the Net Unrealized Appreciation will be taxed as either long-term or short-term capital gain depending upon how long
you have held the Common Stock from the date of distribution. You must hold the Common Stock for one year from the date of distribution in
order to qualify for the favorable long-term federal capital gain rate. In 2010, the long-term federal capital gain rate is 15%. You may defer
paying income tax upon a lump sum distribution from the 401(k) Plan by rolling over or transferring the distribution to another qualified
retirement plan or individual retirement account.

          If the distribution from the 401(k) Plan does not qualify as a lump sum distribution or if you elect to include the value of a lump sum
distribution of the Common Stock into income in the year of distribution, you will be taxed on the fair market value of the Common Stock as of
the date of the distribution at ordinary income tax rates. Your basis in the Common Stock will equal fair market value of the Common Stock
on the date of distribution and your holding period for purposes of determining long-term or short-term capital gain begins on such date.

          If the fair market value of the Common Stock distributed is less than the 401(k) Plan’s basis in such stock, you will not recognize a
loss at the time of the distribution. Your basis in the Common Stock will be the same as the 401(k) Plan’s basis in the stock. You may
recognize a capital loss upon the sale of the shares.

        Participants in the 401(k) Plan are urged to consult their own tax advisors as to the specific tax consequences of distributions from the
401(k) Plan.

                                                              LEGAL MATTERS

         The validity of the shares of Common Stock issuable upon exercise of the Rights and selected other legal matters in connection with
the Rights Offering will be passed upon for us by the law firm of Patton Boggs LLP, Washington, DC. Attorneys at Patton Boggs LLP own an
aggregate of approximately 10,693 shares of First Federal Common Stock.

                                                                   EXPERTS

         The consolidated financial statements incorporated by reference into this prospectus from the Company’s Annual Report on
Form 10-K for the year ended December 31, 2010 (the “ Form 10-K ”) as of December 31, 2010 and for the year ended December 31, 2010
have been audited by BKD, LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

        The consolidated financial statements as of December 31, 2009 and for the two years in the period ended December 31, 2009,
incorporated by reference in this prospectus from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, have
been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report (which includes an
explanatory paragraph regarding the Company’s ability to continue as a going concern), which is incorporated by reference herein. Such
consolidated financial statements have been incorporated in reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.

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                                          WHERE YOU CAN FIND ADDITIONAL INFORMATION

         We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any
materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Washington, DC. 20549. Please call the SEC at
1-800-SEC-0330 for more information about the operation of the public reference rooms. The SEC also maintains an Internet website, at
http://www.sec.gov , that contains our filed reports, proxy and information statements and other information that we file electronically with the
SEC. Additionally, we make these filings available, free of charge, on our website at http://www.ffbh.com as soon as reasonably practicable
after we electronically file such materials with, or furnish them to, the SEC. Except for those SEC filings incorporated by reference in this
prospectus, none of the information contained on, or that may be accessed through, our website is a prospectus or constitutes part of, or is
otherwise incorporated into, this prospectus.

                                   INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         The SEC allows us to “incorporate by reference” information into this prospectus from the documents listed below that we have
previously filed with the SEC (File No. 000-28312). This means that we can disclose important information to you by referring you to another
document without restating that information in this document. Any information incorporated by reference into this prospectus is considered to
be part of this prospectus unless it is superseded by a subsequently filed document prior to the date of this prospectus or by this prospectus.

       We incorporate by reference into this prospectus the following documents or information filed with the SEC (other than, in each case,
documents, or information deemed to have been furnished and not filed in accordance with SEC rules):

         (a)             Our Annual Report on Form 10-K for the year ended December 31, 2010, filed on March 16, 2011.

         (b)             Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 filed on [  ] [  ], 2011.

         (c)               Our Current Reports on Form 8-K and amendments thereto filed on December 6, 2010 (there were two Current Reports
                    filed on this date), and [  ] [  ], 2011 (in each case, other than information and exhibits “furnished” to and not “filed” with
                    the SEC in accordance with SEC rules).

          We will provide without charge, upon written or oral request, a copy of any or all of the documents that are incorporated by reference
into this prospectus and a copy of any or all other contracts or documents which are referred to in this prospectus. You may request a copy of
these documents by writing to or telephoning us at the following address and telephone number:

                                                     First Federal Bancshares of Arkansas, Inc.
                                                             1401 Highway 62-65 North
                                                                    P.O. Box 550
                                                              Harrison, Arkansas 72602
                                              Attention: Tommy W. Richardson, Corporate Secretary
                                                                   (870) 741-7641

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                                        TABLE OF CONTENTS

                                                               Page

ABOUT THIS PROSPECTUS                                                 1

CAUTIONARY STATEMENT ABOUT FORWARD LOOKING STATEMENTS                 2

QUESTIONS AND ANSWERS RELATED TO THIS RIGHTS OFFERING                 5

PROSPECTUS SUMMARY                                                    14

SELECTED CONSOLIDATED FINANCIAL DATA                                  21

RISK FACTORS                                                          23

PLAN OF DISTRIBUTION                                                  36

USE OF PROCEEDS                                                       36

CAPITALIZATION AND PRO FORMA FINANCIAL INFORMATION                    38

MARKET FOR COMMON STOCK AND DIVIDEND POLICY                           42

DESCRIPTION OF CAPITAL STOCK                                          43

TERMS OF OFFERING                                                     46

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES                          54

LEGAL MATTERS                                                         57

EXPERTS                                                               57

WHERE YOU CAN FIND ADDITIONAL INFORMATION                             58

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE                     58

                                            2,908,071 Shares
Common Stock


[  ] [  ], 2010
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                                      PART II—INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

         The following table sets forth the various expenses to be incurred in connection with the Rights Offering, all of which will be borne by
us. All amounts shown are estimates, except the SEC registration fee.

                            Type of Expense                                                            Amount


                            SEC registration fee                                                  $          1,013
                            Subscription agent fees and expenses*                                           12,000
                            Legal fees and expenses*                                                       100,000
                            Accounting fees and expenses*                                                   30,000
                            Printing fees and expenses*                                                      5,500
                            Mailing and other miscellaneous expenses*                                       30,000

                              Total Expenses                                                      $         178,513



         * Estimated pursuant to Item 511 of Regulation S-K.

Item 14. Indemnification of Directors and Officers.

         Article VIII of the Company’s amended articles of incorporation provides as follows:

         Limitation of Liability. No director of the Company shall be personally liable to the Company or its stockholders for monetary
damages for any act or omission by such director as a director; provided that a director’s liability shall not be eliminated to the extent provided
by Section 7.06B. of the Texas Miscellaneous Corporation Laws Act or any successor provision thereto. No amendment to or repeal of this
limitation of liability shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to
any acts or omissions of such director occurring prior to such amendment.

          Indemnification. The Company shall indemnify any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, by reason of the
fact that such person is or was a director, officer, employee or agent of the Company or any predecessor of the Company, or is or was serving at
the request of the Company or any predecessor of the Company as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against liability and expenses (including court costs and attorney’s fees), judgments, fines, excise taxes
and amounts paid in satisfaction, settlement or compromise actually and reasonably incurred by such person in connection with such action,
suit or proceeding to the full extent authorized by law.

          Advancement of Expenses. Reasonable expenses incurred by a director, officer, employee or agent of the Company in defending a
civil or criminal action, suit or proceeding described above shall be paid by the Company in advance of the final disposition of such action, suit
or proceeding as authorized by the Company’s Board of Directors only upon receipt of written affirmation by or on behalf of such person of his
or her good faith belief that he or she has met the standard of conduct necessary for indemnification under relevant law and a written
undertaking to repay such amount if it shall ultimately be determined that the person has not met that standard or if it is ultimately determined
that indemnification of the person against expenses incurred by him or her in connection with that proceeding is prohibited by relevant law.

         Other Rights and Remedies. The indemnification described above shall not be deemed to exclude any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the Company’s Articles of Incorporation, any insurance or other
agreement, vote of stockholders or disinterested directors or otherwise, both as to actions in their official capacity and as to actions in another
capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such person; provided that no indemnification shall be made to

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or on behalf of a person if a judgment or other final adjudication establishes that his or her actions, or omissions to act, were material to the
cause of action as adjudicated and (i) the person is found liable on the basis that personal benefit was improperly received by him or her; (ii) the
person is found liable to the Company; or (iii) the person is found liable for willful or intentional misconduct in the performance of his or her
duty to the Company; provided , however, that persons found liable under clauses (i) and (ii) above, may still be indemnified solely as to
reasonable expenses actually incurred by such person in connection with the proceeding.

          Insurance. Upon resolution passed by the Company’s Board of Directors, the Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the Company, or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or another enterprise, against any liability asserted
against him or her or incurred by him or her in any such capacity, or arising out of his or her status, whether or not the Company would have
the power to indemnify him or her against such liability under the provisions of Article VIII of the Company’s amended articles of
incorporation or the Texas Business Organizations Code as successor to the Texas Business Corporation Act.

        Modification. The duties of the Company to indemnify and to advance expenses to a director or officer provided in Article VIII of the
Company’s amended articles of incorporation are in the nature of a contract between the Company and each such director or officer, and no
amendment or repeal of any provision of Article VIII shall alter, to the detriment of such director or officer, the right of such person to the
advance of expenses or indemnification related to a claim based on an act or failure to act which took place prior to such amendment or repeal.

          Proceedings Initiated by Indemnified Persons. Notwithstanding any other provision of such Article VIII described above, the
Company shall not indemnify a director, officer, employee or agent for any liability incurred in an action, suit or proceeding initiated by (which
shall not be deemed to include counter-claims or affirmative defenses), or participated in as an intervenor or amicus curiae by, the person
seeking indemnification unless such initiation of or participation in the action, suit or proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the members of the Board of Directors then in office.

          Texas Business Organizations Code (the “ TBOC ”). The TBOC permits a corporation to eliminate in its charter all monetary
liability of the corporation’s directors to the corporation or its stockholders for conduct in the performance of such director’s duties. However,
Texas law does not permit any limitation of liability of a director for: (i) breaching a duty of loyalty to a corporation or its stockholders;
(ii) failing to act in good faith; or (iii) engaging in willful or intentional misconduct.

          Sections 8.101 and 8.103 of the TBOC provide that a corporation may indemnify a person who was, is, or is threatened to be a named
defendant or respondent in a proceeding because the person is or was a director only if a determination is made that such indemnification is
permissible under the TBOC: (i) by a majority vote of the directors who at the time of the vote are disinterested and independent, regardless of
whether such directors constitute a quorum; (ii) by a majority vote of a board committee designated by a majority of disinterested and
independent directors and consisting solely of disinterested and independent directors; (iii) by special legal counsel selected by the board of
directors or a committee of the board of directors as set forth in (i) or (ii); or (iv) by the stockholders in a vote that excludes the shares held by
directors who are not disinterested and independent. The power to indemnify applies only if such person acted in good faith and, in the case of
conduct in the person’s official capacity as a director, in a manner he or she reasonably believed to be in the best interest of the corporation,
and, in all other cases, that the person’s conduct was not opposed to the best interest of the corporation, and with respect to any criminal action
or proceeding, that such person had no reasonable cause to believe his conduct was unlawful.

          Section 8.104 of the TBOC provides that the corporation may pay or reimburse, in advance of the final disposition of the proceeding,
reasonable expenses incurred by a present director who was, is, or is threatened to be made a named defendant or respondent in a proceeding
after the corporation receives a written affirmation by the director of his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification under Section 8.101 and a written undertaking by or on behalf of the director to repay the amount paid or
reimbursed if it is ultimately determined that he has or she not met that standard or if it is ultimately determined that indemnification of the
director is not otherwise permitted under the TBOC. Section 8.105 also provides that reasonable expenses incurred by a former director or
officer, or a present or former employee or agent of the

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corporation, who was, is, or is threatened to be made a named defendant or respondent in a proceeding may be paid or reimbursed by the
corporation, in advance of the final disposition of the action, as the corporation considers appropriate.

         Section 8.105 of the TBOC provides that a corporation may indemnify and advance expenses to a person who is not a director,
including an officer, employee, or agent of the corporation as provided by: (i) the corporation’s governing documents; (ii) an action by the
corporation’s governing authority; (iii) resolution by the stockholders; (iv) contract; or (v) common law. As consistent with Section 8.105, the
Company may indemnify and advance expenses to persons who are not directors on terms the Company considers appropriate.

Item 15. Recent Sales of Unregistered Securities.

         As described in the Current Report on Form 8-K of the Company, filed on March 6, 2009, on March 6, 2009, the Company entered
into a Letter Agreement, which incorporates by reference the Securities Purchase Agreement — Standard Terms, with the Treasury, pursuant to
which the Company issued and sold to the Treasury for an aggregate purchase price of $16.5 million in cash (i) 16,500 shares of the Series A
Preferred Stock and (ii) the TARP Warrant. The issuance and sale of the Series A Preferred Stock and the TARP Warrant was conducted in
compliance with the exemption from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “ Securities Act
”). The Company did not engage in any general solicitation or advertising with regard to the issuance and sale of such securities and has not
offered securities to the public in connection with the issuance and sale of the Series A Preferred Stock or the TARP Warrant.

        As described in the Current Report on Form 8-K of the Company, filed on January 28, 2011, on January 27, 2011, the Company and
the Bank entered into the Investment Agreement with Bear State which contemplates that, among other things:

               the Company will amend its Articles of Incorporation to effect the Reverse Split;

               Bear State will purchase from the Treasury for $6 million aggregate consideration, the Company’s 16,500 shares of Series A
             Preferred Stock, including any accrued but unpaid dividends thereon, and TARP Warrant, both of which were previously issued to
             the Treasury through the Troubled Asset Relief Program — Capital Purchase Program as described above;

              the Company will sell in a private placement to Bear State at the First Closing (i) the First Closing Shares, and (ii) the Investor
             Warrant; and

               Bear State will pay the Company aggregate consideration of approximately $46.3 million for the First Closing Shares and
             Investor Warrant, consisting of (i) $40.3 million in cash, and (ii) Bear State’s surrendering to the Company the Series A Preferred
             Stock and TARP Warrant for a $6 million credit against the purchase price of the First Closing Shares.

          On [  ] [  ], 2011, as part of the First Closing, the Company issued the First Closing Shares, consisting of 15,425,262 post-Reverse
Split shares of the Company’s Common Stock at a price of $3.00 per share (or $0.60 per share pre-Reverse Split) to Bear State in exchange for
(i) $40.3 million in cash, and (ii) Bear State’s surrendering to the Company the Series A Preferred Stock and TARP Warrant for a $6 million
credit against the purchase price of the First Closing Shares. The shares were offered and sold in compliance with the exemption from
registration pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D, as promulgated by the SEC.

         In addition, as part of the First Closing, on [  ] [  ], 2011 the Company issued to Bear State the Investor Warrant to purchase
2,000,000 post-Reverse Split shares of our Common Stock at an exercise price of $3.00 per share (or $0.60 per share pre-Reverse Split). The
issuance of the Investor Warrant was conducted in compliance with the exemption from registration pursuant to Section 4(2) of the Securities
Act. The Company did not engage in any general solicitation or advertising with regard to the issuance and sale of the First Closing Shares or
the Investor Warrant and has not offered securities to the public in connection with the issuance and sale of the First Closing Shares or the
Investor Warrant.

                                                                       II-3
Table of Contents

Item 16. Exhibits and Financial Statement Schedules.

        The exhibits and financial statement schedules filed as part of this registration statement are as follows:

  (a) List of Exhibits

        2 (1)             Plan of Conversion

        3.1 (2)          Articles of Incorporation of First Federal Bancshares of Arkansas, Inc., as amended

        3.2 (3)          Amended and Restated Bylaws of First Federal Bancshares of Arkansas, Inc.

        4.1 (4)          Stock Certificate of First Federal Bancshares of Arkansas, Inc.

        4.2               Form of Rights Certificate*

        5                  Opinion of Patton Boggs LLP regarding the legality of the securities being registered*

        10.1 (5)         Stipulation and Consent to Issuance of Order to Cease and Desist for Company

        10.2 (5)         Company Cease and Desist Order

        10.3 (5)         Stipulation and Consent to Issuance of Order to Cease and Desist for Bank

        10.4 (5)         Bank Cease and Desist Order

        10.5 (6)        Investment Agreement, dated as of January 27, 2011, by and among the Company, the Bank and Bear State Financial
                    Holdings, LLC

        10.7 (2)         Form of Termination of Amended and Restated Employment Agreement and Release

        10.8 (2)         Form of Termination of Amended and Restated Change in Control Severance Agreement and Release

        10.6 (2)         First Federal Bancshares of Arkansas, Inc. 2011 Omnibus Incentive Plan

        21 (7)           Subsidiaries of the Registrant

        23.1             Consent of Patton Boggs LLP (included in Exhibit 5)

        23.2             Consent of BKD, LLP*

        23.3             Consent of Deloitte & Touche LLP*

        24                Power of Attorney (included on signature page)

        99.1             Form of Instructions as to Use of First Federal Bancshares of Arkansas, Inc. Rights Certificates*

        99.2             Form of Letter to Clients*

        99.3             Form of Letter to Stockholders*

        99.4             Form of Nominee Holder Certification*

        99.5             Form of Beneficial Owner Election Form*

        99.6             Form of Notice of Important Tax Information*

                                                                       II-4
Table of Contents

        99.7             Form of Letter to Brokers and Other Nominee Holders*

        99.8             Form of Cover Letter to Participants of the Company’s 401(k) Plan*

        99.9             Form of Q&A Letter to Participants of the Company’s 401(k) Plan*

        99.10            Form of Election Form for Participants in the Company’s 401(k) Plan*



        *           Filed herewith.
        (1)        Incorporated herein by reference from the Company’s Registration Statement on Form S-1 (File No. 333-612) filed with the
               SEC.
        (2)        Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on [  ] [  ], 2011.
        (3)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2007
               filed with the SEC on March 6, 2008.
        (4)        Incorporated herein by reference from the Company’s Registration Statement on Form 8-A filed with the SEC on April 12,
               1996.
        (5)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2009
               filed with the SEC on April 15, 2010.
        (6)        Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 28, 2011.
        (7)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010
               filed with the SEC on March 16, 2011.

                                                                      II-5
Table of Contents

Item 17. Undertakings.

         The undersigned registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

           (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

            (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement; and

           (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration statement.

        (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.

         (4) For the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registration
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it
was declared effective.

          (5) For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.

          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of such issue.

                                                                        II-6
Table of Contents

                                                                 SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Harrison, Arkansas, on April 6, 2011.


                                                                         FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.


                                                                         By:    /s/ LARRY J. BRANDT
                                                                                Larry J. Brandt
                                                                                President, Chief Executive Officer and Director

          KNOW ALL MEN BY THESE PRESENTS , that each person whose signature appears below does hereby constitute and appoint
Larry J. Brandt, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign all pre-effective and post-effective amendments to this Registration Statement
and all registration statements filed pursuant to Rule 462(b) which incorporate this Registration Statement by reference, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said
attorney-in-fact and agent, or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.

                          Name                                                             Title                                        Date


                                                             President, Chief Executive Officer and Director (Principal
/s/ LARRY J. BRANDT                                          Executive Officer)                                                  April 6, 2011
Larry J. Brandt


/s/ SHERRI R. BILLINGS                                       Executive Vice President and Chief                                  April 6, 2011
Sherri R. Billings                                           Financial and Accounting Officer
                                                             (Principal Financial and Accounting Officer)


/s/ JOHN P. HAMMERSCHMIDT
John P. Hammerschmidt                                        Director                                                            April 6, 2011


/s/ JEFF BRANDT
Jeff Brandt                                                  Director                                                            April 6, 2011
Table of Contents

/s/ KENNETH C. SAVELLS   Director   April 6, 2011
Kenneth C. Savells


/s/ FRANK CONNER         Director   April 6, 2011
Frank Conner
Table of Contents

                                                                EXHIBIT LIST

        The exhibits and financial statement schedules filed as part of this registration statement are as follows:

        (a) List of Exhibits

        2 (1)           Plan of Conversion

        3.1 (2)        Articles of Incorporation of First Federal Bancshares of Arkansas, Inc., as amended

        3.2 (3)        Amended and Restated Bylaws of First Federal Bancshares of Arkansas, Inc.

        4.1 (4)        Stock Certificate of First Federal Bancshares of Arkansas, Inc.

        4.2             Form of Rights Certificate*

        5                Opinion of Patton Boggs LLP regarding the legality of the securities being registered*

        10.1 (5)       Stipulation and Consent to Issuance of Order to Cease and Desist for Company

        10.2 (5)       Company Cease and Desist Order

        10.3 (5)       Stipulation and Consent to Issuance of Order to Cease and Desist for Bank

        10.4 (5)       Bank Cease and Desist Order

        10.5 (6)    Investment Agreement, dated as of January 27, 2011, by and among the Company, the Bank and Bear State Financial
                    Holdings, LLC

        10.6 (2)       First Federal Bancshares of Arkansas, Inc. 2011 Omnibus Incentive Plan

        10.7 (2)       Form of Termination of Amended and Restated Employment Agreement and Release

        10.8 (2)       Form of Termination of Amended and Restated Change in Control Severance Agreement and Release

        21 (7)          Subsidiaries of the Registrant

        23.1            Consent of Patton Boggs LLP (included in Exhibit 5)

        23.2            Consent of BKD, LLP*

        23.3            Consent of Deloitte & Touche LLP*

        24              Power of Attorney (included on signature page)

        99.1            Form of Instructions as to Use of First Federal Bancshares of Arkansas, Inc. Rights Certificates*

        99.2            Form of Letter to Clients*

        99.3            Form of Letter to Stockholders*

        99.4            Form of Nominee Holder Certification*

        99.5            Form of Beneficial Owner Election Form*

        99.6            Form of Notice of Important Tax Information*
Table of Contents

        99.7             Form of Letter to Brokers and Other Nominee Holders*

        99.8             Form of Cover Letter to Participants of the Company’s 401(k) Plan*

        99.9             Form of Q&A Letter to Participants of the Company’s 401(k) Plan*

        99.10           Form of Election Form for Participants in the Company’s 401(k) Plan*



        *           Filed herewith.
        (1)       Incorporated herein by reference from the Company’s Registration Statement on Form S-1 (File No. 333-612) filed with the
                  SEC.
        (2)        Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on [  ] [  ], 2011.
        (3)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2007
               filed with the SEC on March 6, 2008.
        (4)        Incorporated herein by reference from the Company’s Registration Statement on Form 8-A filed with the SEC on April 12,
               1996.
        (5)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2009
               filed with the SEC on April 15, 2010.
        (6)        Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on January 28, 2011.
        (7)        Incorporated herein by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2010
               filed with the SEC on March 16, 2011.
                                                                                                                                        Exhibit 4.2

                             THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH
                                    IN THE COMPANY’S PROSPECTUS (THE “ PROSPECTUS ”)
                                  AND ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF
                             THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM REGISTRAR &
                                     TRANSFER COMPANY AS THE SUBSCRIPTION AGENT.

                      SUBSCRIPTION RIGHTS
                        CERTIFICATE NO.                                                           NUMBER OF RIGHTS
                              []                                                                       []

                                          FIRST FEDERAL BANCSHARES OF
                                                     ARKANSAS, INC.
                                                 HARRISON, ARKANSAS
                                      Incorporated under the laws of the State of Texas
                                       SUBSCRIPTION RIGHTS CERTIFICATE
                    Evidencing Non-Transferable Rights to Purchase Shares of Common Stock (the “ Rights ”)
                                           Subscription Price: $3.00 per Full Share
    VOID IF NOT EXERCISED ON OR BEFORE 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE (AS DEFINED IN THE
                                                       PROSPECTUS)

REGISTERED OWNER:

THIS CERTIFIES THAT the registered owner whose name is inscribed hereon is the owner of the number of Rights set forth above, each of
which entitles the owner to subscribe for and purchase three (3) shares of common stock, $0.01 par value per share (“ Common Stock ”), of
First Federal Bancshares of Arkansas, Inc., a Texas corporation (the “ Company ”), on the terms and subject to the conditions set forth in the
Prospectus and instructions relating hereto on the reverse side hereof and in the instructions as to the use of this Subscription Rights Certificate
included in this mailing. The non-transferable Rights represented by this Subscription Rights Certificate may be exercised by duly and properly
completing Section 1 on the reverse side hereof and by returning the full payment of the subscription price for each share of Common Stock as
described on the reverse side hereof. Special delivery instructions may be specified by completing Section 2 on the reverse side hereof. THE
RIGHTS EVIDENCED BY THIS SUBSCRIPTION RIGHTS CERTIFICATE ARE NOT TRANSFERABLE AND MAY NOT BE
EXERCISED UNLESS THE REVERSE SIDE HEREOF IS COMPLETED AND SIGNED, WITH A SIGNATURE GUARANTEE, IF
APPLICABLE. This certificate is governed by the laws of the State of Texas.

Dated: [  ] [  ], 2011

                                                                          COUNTERSIGNED AND REGISTERED:
                                                                          REGISTRAR AND TRANSFER COMPANY
                                                                          (Cranford, NJ)
                                                                          TRANSFER AGENT AND REGISTRAR

                                                                          By:
                                                                                AUTHORIZED SIGNATURE


                                                              [CORPORATE SEAL]


                    Larry J. Brandt, President/CEO                                      Tommy W. Richardson, Corporate Secretary
                                     DELIVERY OPTIONS FOR SUBSCRIPTION RIGHTS CERTIFICATE
                                                  By Mail, Hand or Overnight Courier:
                                                     Registrar & Transfer Company
                                                           10 Commerce Drive
                                                       Cranford, New Jersey 07016
                                                 Attention: Reorg/Exchange Department

Delivery to an address other than the address listed above will not constitute valid delivery. Delivery by facsimile will not constitute
valid delivery.

                          EXERCISE FORM. PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY.

SECTION 1

IF YOU WISH TO SUBSCRIBE FOR YOUR FULL SUBSCRIPTION PRIVILEGE OR A PORTION THEREOF:

Basic Subscription Right

I exercise                   rights x         3.00     =
          (no. of your rights)               (ratio)                 (total no. of your new shares)

Therefore, I apply for                x         $ 3.00         =$
                  (no. of new shares)         (sub. price)          (Basic Subscription amount enclosed)

Oversubscription Privilege

If you fully exercise your Basic Subscription Right and wish to subscribe for additional shares up to the total number of unsubscribed shares,
you may exercise your Oversubscription Privilege. If sufficient shares of Common Stock are available, the Company will seek to honor the
Oversubscription requests in full.

The maximum number of unsubscribed shares:

2,908,071                    -                                 =                             shares
(total offered shares)           (total no. of new shares)         (maximum unsubscribed shares)

Therefore, I apply for:

                                 x        $ 3.00       =                             shares
(no. of oversubscription                (sub. price)         (Oversubscription Privilege amount enclosed)
shares applied for)


Total Amount Enclosed: $
                                 (Sum of Basic Subscription and Oversubscription Amounts)

       An uncertified check drawn on a U.S. bank payable to “Registrar and Transfer Company,” as Subscription Agent.
       Wire transfer directly to the segregated account maintained by Registrar and Transfer Company, as Subscription Agent.

TO SUBSCRIBE: I acknowledge that I have received the Prospectus for this rights offering and I hereby irrevocably subscribe for the number
of shares indicated above on the terms and conditions specified in the Prospectus. I hereby agree that if I fail to pay for the shares of Common
Stock for which I have subscribed, the Company may exercise legal remedies against me.


Signature(s) of Subscriber(s)

 Indicate, by initialing in the provided blank, that you are aware of the absence of deposit insurance covering the securities being sold
pursuant to this Subscription Rights Certificate.
 Indicate, by initialing in the provided blank, that you certify that, after giving effect to your participation in the rights offering, and taking
into account your holdings within and outside the 401(k) Plan and the holdings of you and your affiliates, you will not exceed the overall
beneficial ownership limitation described in the Prospectus of the Company’s outstanding Common Stock (or 19,302,690 shares of Common
Stock outstanding assuming that all of the shares available in the rights offering are purchased by Rights holders or by the backstop purchaser).

IMPORTANT: THE SIGNATURE(S) MUST CORRESPOND IN EVERY PARTICULAR, WITHOUT ALTERATION, WITH THE
NAME(S) AS PRINTED ON THE REVERSE OF THIS SUBSCRIPTION RIGHTS CERTIFICATE.

If signature is by trustee(s), executor(s), administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a corporation or another acting
in a fiduciary or representative capacity, please provide the following information (please print). See the instructions.

Name(s):
Capacity (Full Title):
Taxpayer ID# or Social Security#:

SECTION 2

SPECIAL ISSUANCE OR DELIVERY INSTRUCTIONS FOR SUBSCRIPTION RIGHTS HOLDERS

(a) To be completed ONLY if the account statement representing the Common Stock is to be issued in a name other than that of the registered
holder. (See the Instructions.) DO NOT FORGET TO COMPLETE THE GUARANTEE OF SIGNATURE(S) SECTION BELOW.

ISSUE COMMON STOCK TO:

                                                                 (Please Print Name)


                                                                 (Print Full Address)


                                                           (Social Security # or Tax ID #)

(b) To be completed ONLY if the account statement representing the Common Stock is to be sent to an address other than that shown on the
front of this certificate.

DO NOT FORGET TO COMPLETE THE GUARANTEE OF SIGNATURE(S) SECTION BELOW.


                                                                 (Please Print Name)


                                                                 (Print Full Address)


                                                           (Social Security # or Tax ID #)

Requests for certificates may be made only after having received an account statement from the Subscription Agent.

                                 GUARANTEE OF SIGNATURE(S)
YOU MUST HAVE YOUR SIGNATURE GUARANTEED IF YOU WISH TO HAVE YOUR SHARES DELIVERED TO AN
ADDRESS OTHER THAN YOUR OWN OR TO A STOCKHOLDER OTHER THAN THE REGISTERED HOLDER.

Your signature must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as
amended. These generally include (a) a commercial bank or trust company, (b) a member firm of a domestic stock exchange, or (c) a credit
union.

Signature:
                                                                      (Name of Bank or Firm)

By:
                                                                        (Signature of Officer)
FULL PAYMENT FOR THE SHARES MUST ACCOMPANY THIS FORM AND MUST BE MADE IN UNITED STATES
DOLLARS BY AN UNCERTIFIED CHECK DRAWN UPON A UNITED STATES BANK OR WIRE TRANSFER PAYABLE TO
REGISTRAR AND TRANSFER COMPANY. IF YOU FAIL TO PROPERLY COMPLETE THIS SUBSCRIPTION RIGHTS
CERTIFICATE, THE COMPANY OR THE SUBSCRIPTION AGENT HAS THE SOLE DISCRETION TO DETERMINE
WHETHER YOUR SUBSCRIPTION EXERCISE PROPERLY COMPLIES WITH THE SUBSCRIPTION PROCEDURES.
                                                                                                                                            Exhibit 5

                                                   [PATTON BOGGS LLP LETTERHEAD]

April 6, 2011

Board of Directors
First Federal Bancshares of Arkansas, Inc.
1401 Highway 62-65 North
Harrison, Arkansas

                  Re: Registration Statement on Form S-1

Dear Ladies and Gentlemen:

         We have acted as counsel to First Federal Bancshares of Arkansas, Inc., a Texas corporation (the “Company”), in connection with the
preparation and filing of a Registration Statement on Form S-1 (as amended and supplemented, the “ Registration Statement ”), as filed on
April 6, 2011 with the U.S. Securities and Exchange Commission (the “ SEC ”) by the Company under the Securities Act of 1933, as amended
(the “ Securities Act ”). The Registration Statement relates to the proposed issuance to its stockholders of record as of 5:00 p.m. Eastern Time
on March 23, 2011 (the “ Record Date ”) of non-transferable subscription rights (the “ Rights ”) entitling the holders thereof to purchase up to
an aggregate of 2,908,071 shares of common stock, $0.01 par value per share (the “ Common Stock ”), of the Company (the “ Rights Offering
”). Pursuant to the Rights Offering, shares of Common Stock may be issued and sold by the Company upon exercise of the Rights (the “ Rights
Shares ”). The Registration Statement includes a prospectus (the “ Prospectus ”) to be furnished to the stockholders of record as of the Record
Date in connection with the Rights Offering. This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of
Regulation S-K under the Securities Act.

          In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement, including the Prospectus, (ii) a specimen certificate representing the Rights Shares, (iii) the Articles of Incorporation, as
amended, of the Company, as currently in effect, (iv) the Amended and Restated Bylaws of the Company, as currently in effect, and (v) certain
resolutions adopted by the Board of Directors of the Company with respect to the issuance of the Rights and the Rights Shares. We have also
examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements,
certificates of public officials, certificates of officers or other representatives of the Company and others, and such other documents, certificates
and records, as we have deemed necessary or appropriate as a basis for the opinion set forth herein.

          In our examination, we have assumed and have not verified (i) the legal capacity of all natural persons, (ii) the genuineness of all
signatures (other than persons signing on behalf of the Company), (iii) the authenticity of all documents submitted to us as originals, (iv) the
conformity with the originals of all documents supplied to us as copies, (v) the accuracy and completeness of all corporate records and
documents made available to us by the Company, and (vi) that the foregoing documents, in the form submitted to us for our review, have not
been altered or amended in any respect material to our opinion stated herein. We also have obtained from the officers of the Company
certificates as to certain factual matters necessary for the purpose of this opinion and, insofar as this opinion is based on such matters of fact,
we have relied solely on such certificates without independent investigation.

          The following opinion is limited in all respects to matters of the State of Texas relating to corporation law, and we express no opinion
as to the laws of any other jurisdiction.

      Based upon the foregoing and subject to the assumptions, limitations and exceptions set forth herein, we are of the opinion that the
Rights Shares have been duly authorized, and when issued and delivered against payment
therefor in accordance with the terms of the Rights and the Registration Statement following the effectiveness of the Registration Statement and
while the Registration Statement remains effective, will be validly issued, fully paid and non-assessable.

          The opinions and statements contained in this letter are given as of the date of this letter, and we hereby disclaim any obligation to
notify any person or entity after the date hereof if any change in fact or law should change our opinions or statements with respect to any matter
set forth in this letter. This opinion may be used only in connection with the issuance of the Rights and the offer and sale of the Rights Shares
following the effectiveness of the Registration Statement and while the Registration Statement remains effective.

         We hereby consent to your filing of this opinion with the SEC as an exhibit to the Registration Statement and the use of our name
therein under the caption “Legal Matters” in the Prospectus contained therein. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the SEC adopted under the
Securities Act.


                                                                         Very truly yours,

                                                                         /s/ PATTON BOGGS LLP

                                                                         PATTON BOGGS LLP

                                                                        2
                                                                                                                              Exhibit 23.2

                                      Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement on Form S-1 of First Federal Bancshares of Arkansas, Inc. (the
Company) of our report dated March 16, 2011, on our audit of the consolidated financial statements of the Company as of December 31, 2010,
and for year ended December 31, 2010, which includes an explanatory paragraph regarding the Company’s ability to continue as a going
concern, which report is included in the Annual Report on Form 10-K. We also consent to the reference to our firm under the caption
“Experts.”


/s/ BKD, LLP

Little Rock, Arkansas
April 6, 2011
                                                                                                                                  Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Registration Statement on Form S-1 of our report dated April 15, 2010, relating to the
consolidated financial statements of First Federal Bancshares of Arkansas, Inc. (which includes an explanatory paragraph regarding the
Company’s ability to continue as a going concern), included in the Annual Report on Form 10-K of First Federal Bancshares of Arkansas, Inc.
for the year ended December 31, 2010, and to the use of our report dated April 15, 2010, incorporated by reference in the Prospectus, which is
part of this Registration Statement. We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ Deloitte & Touche LLP

Little Rock, AR
April 6, 2011
                                                                                                                                        Exhibit 99.1

                                          FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                                               FORM OF INSTRUCTIONS AS TO USE OF
                                          FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
                                                     RIGHTS CERTIFICATES

                                 CONSULT THE SUBSCRIPTION AGENT OR YOUR BANK OR BROKER
                                                  AS TO ANY QUESTIONS

          The following instructions relate to a Rights offering (the “ Rights Offering ”) by First Federal Bancshares of Arkansas, Inc. (the “
Company ”), a Texas corporation, to the holders of record, after taking into account the 1-for-5 reverse stock split that occurred on [  ] [  ],
2011 (the “ Recordholders ”) of its common stock, par value $0.01 per share (“ Common Stock ”), as described in the Company prospectus
dated [  ] [  ], 2011 (the “ Prospectus ”). Recordholders of Common Stock as of 5:00 p.m., Eastern Time, on March 23, 2011 (the “ Record
Date ”), , are receiving, at no charge, non-transferable subscription rights (the “ Rights ”) to subscribe for and purchase shares of Common
Stock (the “ Underlying Shares ”). In the Rights Offering, the Company is offering an aggregate of up to 2,908,071 Underlying Shares.

        Each Recordholder will receive one Right for each share of Common Stock owned of record as of 5:00 p.m., Eastern Time, on the
Record Date. The Rights will expire, if not exercised prior to 5:00 p.m., Eastern Time, on [  ] [  ], 2011, unless extended (as it may be
extended, the “ Expiration Time ”). Each Right allows the holder thereof to subscribe for three (3) shares of Common Stock (the “ Basic
Subscription Right ”) at the cash price of $3.00 per full share (the “ Subscription Price ”). For example, if a Recordholder owned 100 shares of
Common Stock as of the Record Date, it would receive 100 Rights and would have the right to purchase 300 shares of Common Stock for the
Subscription Price.

          If a Recordholder purchases all of the shares of Common Stock available to it pursuant to its Basic Subscription Right, the holder may
also exercise an oversubscription privilege (the “ Oversubscription Privilege ”) to purchase a portion of any shares of our Common Stock that
are not purchased by our other holders through the exercise of their Basic Subscription Rights (the “ Unsubscribed Shares ”), subject to
availability and allocation of such shares, and provided that no Recordholder may thereby acquire, together with its affiliates, beneficial
ownership of 4.9% or more of the shares of our outstanding Common Stock (19,302,690 shares of Common Stock outstanding assuming that
all of the shares available in the Rights Offering are purchased). If, however, oversubscription requests exceed the number of shares of
Common Stock available, we will allocate the available shares of common stock pro rata among the stockholders exercising the
Oversubscription Privilege in proportion to the number of shares of Common Stock owned by such stockholder as of 5:00 p.m., Eastern Time,
on the Record Date, relative to the number of shares owned on the Record Date by all stockholders exercising the Oversubscription Privilege.

         Each Recordholder will be required to submit payment in full for all the shares it wishes to buy with its Basic Subscription Right and
its Oversubscription Privilege. Because the Company will not know the total number of Unsubscribed Shares prior to the expiration of the
Rights Offering, if a Recordholder wishes to maximize the number of shares purchased pursuant to the Recordholder’s Oversubscription
Privilege, the Recordholder will need to deliver payment in an amount equal to the aggregate Subscription Price for the maximum number of
shares of Common Stock desired by the Recordholder, assuming that no stockholders other than such Recordholder purchased any shares of
Common Stock pursuant to their Basic Subscription Right.

         Fractional shares of Common Stock resulting from the exercise of the Oversubscription Privilege will be eliminated by rounding down
to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription payments received by Registrar
and Transfer Company (the “Subscription Agent”) will be returned, without interest or penalty, as soon as practicable.

          The Company will not be required to issue shares of our Common Stock to you if Registrar and Transfer Company, as Subscription
Agent, does not receive your subscription payment and applicable subscription documents prior to the Expiration Time, regardless of when you
send the subscription payment and related documents. The Company may extend the Expiration Time for any reason by giving oral or written
notice to the
Subscription Agent on or before the Expiration Time. If the Company elects to extend the Expiration Time, it will issue a press release
announcing such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced Expiration Time.
The Rights will be evidenced by non-transferable Rights certificates (the “ Rights Certificates ”).

         The number of Rights to which you are entitled is printed on the face of your Rights Certificate. You should indicate your wishes with
regard to the exercise of your Rights, including any pursuant to the Oversubscription Privilege, by completing the appropriate portions of your
Rights Certificate and returning the certificate to the Subscription Agent in the envelope provided.

       YOUR RIGHTS CERTIFICATE AND SUBSCRIPTION PRICE PAYMENT FOR EACH RIGHT THAT IS EXERCISED
PURSUANT TO THE BASIC SUBSCRIPTION RIGHT PLUS THE FULL SUBSCRIPTION PRICE FOR ANY ADDITIONAL SHARES
OF COMMON STOCK SUBSCRIBED FOR PURSUANT TO THE OVERSUBSCRIPTION PRIVILEGE, INCLUDING FINAL
CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR BEFORE THE EXPIRATION
TIME. ONCE A RECORDHOLDER HAS EXERCISED THE BASIC SUBSCRIPTION RIGHT OR THE OVERSUBSCRIPTION
PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED. RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION TIME OF THE
RIGHTS OFFERING WILL EXPIRE.

1. Method of Subscription—Exercise of Rights

          To exercise Rights, complete your Rights Certificate and send the properly completed and executed Rights Certificate evidencing such
Rights with any signatures required to be guaranteed so guaranteed, together with payment in full of the Subscription Price for each Underlying
Share subscribed for pursuant to the Basic Subscription Right plus the full Subscription Price for any Unsubscribed Shares you elect to
subscribe for pursuant to the Oversubscription Privilege, to the Subscription Agent, on or prior to the Expiration Time. Payment of the
Subscription Price will be held in a segregated account to be maintained by the Subscription Agent. All payments must be made in U.S. dollars
for the full number of Underlying Shares being subscribed for:

                       by any uncertified check drawn upon a U.S. bank payable to the “Registrar and Transfer Company as Rights agent for
                 First Federal Bancshares of Arkansas, Inc.”, or

                        by wire transfer of immediately available funds, to the following account maintained by the Subscription Agent for
                 purposes of accepting subscriptions in the Rights Offering (the “ Subscription Account ”): ABA No. 031-201-467, further
                 credit to Account No. 200-001-814-9168 at Wachovia Bank, N.A., Avondale, Pennsylvania, with an account name of
                 “Registrar and Transfer Company as Rights agent for First Federal Bancshares of Arkansas, Inc.”, with an account name of
                 “Registrar and Transfer Company as Rights agent for the First Federal Bancshares of Arkansas, Inc.” Any wire transfer
                 should clearly indicate the identity of the subscriber who is paying the Subscription Price by wire transfer.

         Payments will be deemed to have been received upon (i) clearance of any uncertified check, or (ii) receipt of collected funds in
the account designated above. Please note that the funds paid by uncertified check may take five or more business days to
clear. Accordingly, Recordholders who wish to pay the Subscription Price by means of uncertified check are urged to make payment
sufficiently in advance of the Expiration Time to ensure that such payment is received and clears by such date.

         The Rights Certificate and payment of the Subscription Price must be delivered to the Subscription Agent by one of the methods
described below:

By Mail, Hand or Overnight Courier:
Registrar and Transfer Company
10 Commerce Drive Cranford, NJ 07016
Attn. Reorg/Exchange Department
Telephone Number for Confirmation:
(800) 368-5948 (toll free)

Telephone Number for Information:
(800) 368-5948 (toll free)

Email Address for Information:
info@rtco.com

Delivery to an address other than those above does not constitute valid delivery.

         By making arrangements with your bank or broker for the delivery of funds on your behalf, you may also request such bank or broker
to exercise the Rights Certificate on your behalf.

         If you fail to properly complete and duly sign the Rights Certificate and all other required subscription documents or otherwise fail to
follow the subscription procedures that apply to the exercise of your Rights before the Rights Offering expires, the Subscription Agent will
reject your subscription or accept it only to the extent of the payment received. Neither the Company nor the Subscription Agent accepts any
responsibility to contact you concerning an incomplete or incorrect subscription document, nor are they under any obligation to correct such
documents. Either the Company or the Subscription Agent has the sole discretion to determine whether a subscription exercise properly
complies with the subscription procedures.

         If you send a payment that is insufficient to purchase the number of shares you requested, or if the number of shares you requested is
not specified in the forms, the exercise of your Rights will be given effect to the fullest extent possible based on the amount of the payment
received, subject to the availability of shares and allocation procedure applicable to the exercise of the Oversubscription Privilege and the
elimination of fractional shares. Any excess subscription payments received by the Subscription Agent will be returned, without interest or
penalty, as soon as practicable following the closing of the Rights Offering.

         Brokers, custodian banks and other nominee holders of Rights who exercise the Basic Subscription Right and the Oversubscription
Privilege on behalf of beneficial owners of Rights will be required to certify to the Subscription Agent and the Company, in connection with
the exercise of the Oversubscription Privilege, as to the aggregate number of Rights that have been exercised pursuant to the Basic Subscription
Right, the number of shares of Common Stock that are being subscribed for pursuant to the Oversubscription Privilege, by each beneficial
owner of Rights (including such nominee itself) on whose behalf such nominee holder is acting.

         The Company can provide no assurances that each Recordholder will actually be entitled to purchase the number of shares of
Common Stock issuable upon the exercise of its Oversubscription Privilege in full at the expiration of the Rights Offering. The Company will
not be able to satisfy a Recordholder’s exercise of the Oversubscription Privilege if all of the stockholders exercise their Basic Subscription
Rights in full, and the Company will only honor an Oversubscription Privilege to the extent sufficient shares of Common Stock are available
following the exercise of Rights under the Basic Subscription Rights. See “Terms of the Offering —Oversubscription Privilege” in the
Prospectus for more information on how the oversubscription shares will be allocated.

            To the extent the aggregate Subscription Price of the actual number of shares allocated to you pursuant to the Oversubscription
         Privilege is less than the amount you actually paid to the Subscription Agent, the excess subscription payments will be returned to you
         by the Subscription Agent as soon as practicable, without interest or penalty, following the closing of this Rights Offering.

           To the extent the amount you actually paid in connection with the exercise of the Oversubscription Privilege is less than the
         aggregate Subscription Price of the shares allocated to you pursuant to the Oversubscription Privilege, you will receive only the
         number of shares for which you actually paid.
2. Issuance of Common Stock

          The following deliveries and payments will be made to the address shown on the face of your Rights Certificate, unless you provide
instructions to the contrary on your Rights Certificate.

         (a) Basic Subscription Right. As soon as practicable after the Expiration Time and the valid exercise of Rights, and after all
prorations and adjustments contemplated by the terms of the Rights Offering have been effected, the Subscription Agent will mail to each
validly exercising Recordholder a direct registration account statement detailing the number of shares of Common Stock that each exercising
Recordholder has purchased in the Rights Offering. You may request a stock certificate once you receive your direct registration account
statement.

         (b) Excess Cash Payments. As soon as practicable after the Expiration Time and after all prorations and adjustments contemplated
by the terms of the Rights Offering have been effected, any excess subscription payments received in payment of the Subscription Price by the
Subscription Agent will be mailed to each Recordholder, without interest or penalty.

3. Sale or Transfer of Rights

         The Rights granted to you are non-transferable and, therefore, you may not sell, transfer or assign your Rights to anyone.

4. Execution

          (a) Execution by Registered Holder. The signature on the Rights Certificate must correspond with the name of the registered holder
exactly as it appears on the face of the Rights Certificate without any alteration or change whatsoever. Persons who sign the Rights Certificate
in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by the Subscription Agent in its
sole and absolute discretion, must present to the Subscription Agent satisfactory evidence of their authority to so act. The signature of the
person purporting to act as the registered holder’s representative or fiduciary must be Medallion Signature Guaranteed.

         (b) Execution by Person Other than Registered Holder. If the Rights Certificate is executed by a person other than the holder named
on the face of the Rights Certificate the signature of such person must be Medallion Signature Guaranteed and proper evidence of authority of
the person executing the Rights Certificate must accompany the same unless, for good cause, the Subscription Agent dispenses with proof of
authority.

        (c) Signature Guarantees. Your signature must be guaranteed by an institution participating in the Medallion Signature program if
you specify special payment, delivery instructions or are signing the Rights Certificate as a representative or fiduciary of the registered holder.

5. Method of Delivery

         The method of delivery of Rights Certificates and payment of the subscription amount to the Subscription Agent will be at the risk of
the holders of Rights. If sent by mail, we recommend that you send those Rights Certificates and payments by registered mail, properly insured,
with return receipt requested, and that you allow a sufficient number of days to ensure delivery to the subscription agent and clearance of
payment before the Rights Offering expires.

6. Special Provisions Relating to the Delivery of Rights through the Depository Trust Company

         If you hold your shares in the name of a broker, dealer, custodian bank or other nominee who uses the services of the Depository Trust
Company (“ DTC ”), you will not receive a Rights Certificate. Instead, DTC will credit one Right to your nominee record holder for each
share of our Common Stock that you beneficially own as of the Record Date. If you are not contacted by your nominee, you should contact
your nominee as soon as possible.

         In the case of Rights that are held of record through the DTC, exercises of the Basic Subscription Right and of the Oversubscription
Privilege may be effected by instructing DTC to transfer Rights from the DTC account of
such holder to the DTC account of the Subscription Agent, together with certification as to the aggregate number of Rights subscribed for
pursuant to the Basic Subscription Right and the number of Unsubscribed Shares subscribed for pursuant to the Oversubscription Privilege by
each beneficial owner of Rights on whose behalf such nominee is acting, and payment of the Subscription Price for each share of Common
Stock subscribed for pursuant to the Basic Subscription Right and the Oversubscription Privilege.
                                                                                                                                     Exhibit 99.2

                                                     FORM OF LETTER TO CLIENTS

                                         FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                              SUBSCRIPTION RIGHTS TO PURCHASE SHARES OF COMMON STOCK

                                         OFFERED PURSUANT TO SUBSCRIPTION RIGHTS
                                                DISTRIBUTED TO STOCKHOLDERS
                                       OF FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                                                                                                                                   [  ] [  ], 2011

To Our Clients:

           Enclosed for your consideration are a prospectus, dated [  ] [  ], 2011 (the “ Prospectus ”), and the “ Beneficial Owner Election Form
” relating to the offering (the “ Rights Offering ”) by First Federal Bancshares of Arkansas, Inc. (the “ Company ”) of shares of Common Stock
(as defined below) pursuant to non-transferable subscription rights (the “ Rights ”) distributed to all holders of record of shares of the
Company’s common stock, par value $0.01 per share (the “ Common Stock ”), at 5:00 p.m., Eastern Time, March 23, 2011 (the “ Record Date
”), after taking into account the 1-for-5 reverse stock split that occurred on [  ] [  ], 2011. The Rights Offering, Rights and Common Stock are
described in the Prospectus.

        In the Rights Offering, the Company is offering an aggregate of up to 2,908,071 shares of Common Stock, as described in the
Prospectus.

        The Rights will expire, if not exercised prior to 5:00 p.m., Eastern Time, on [  ] [  ], 2011, unless extended by the Company (as it
may be extended, the “ Expiration Time ”).

          As described in the accompanying Prospectus, you will receive one Right for each share of Common Stock owned on the Record
Date. Each Right will allow you to subscribe for three (3) shares of Common Stock (the “ Basic Subscription Right ”) at the cash price of $3.00
per full share (the “ Subscription Price ”). For example, if a Rights holder owned 100 shares of Common Stock as of the Record Date, you
would receive 100 Rights, which would entitle the Rights holder to purchase 300 shares of Common Stock for the Subscription Price.

          In the event that you purchase all of the shares of Common Stock available to you pursuant to your Basic Subscription Right, you may
also exercise an oversubscription privilege (the “ Oversubscription Privilege ”) to purchase a portion of any shares of our Common Stock that
are not purchased by our other stockholders through the exercise of their Basic Subscription Rights (the “ Unsubscribed Shares ”), subject to
availability and allocation of such shares, and provided that no Rights holder may thereby acquire, together with its affiliates, beneficial
ownership of 4.9% or more of the shares of our outstanding Common Stock. If, however, oversubscription requests exceed the number of
Unsubscribed Shares, we will allocate the Unsubscribed Shares pro rata among the stockholders exercising the Oversubscription Privilege in
proportion to the number of shares of Common Stock owned by such stockholder as of 5:00 p.m., Eastern Time, on the Record Date, relative to
the number of shares owned on the Record Date by all stockholders exercising the Oversubscription Privilege.

         You will be required to submit payment in full for all the shares you wish to buy with your Basic Subscription Right and
Oversubscription Privilege. Because the Company will not know the total number of Unsubscribed Shares prior to the expiration of the Rights
Offering, if you wish to maximize the number of shares purchased pursuant to the your Oversubscription Privilege, you will need to deliver
payment in an amount equal to the aggregate Subscription Price for the maximum number of shares of Common Stock desired by you,
assuming that no stockholders other than you have purchased any shares of Common Stock pursuant to their Basic Subscription Right. The
Company will eliminate fractional shares of Common Stock resulting from the exercise of the Oversubscription Privilege by rounding down to
the nearest whole share, with the total subscription payment being adjusted accordingly. Any excess subscription payments received by the
Subscription Agent will be returned, without interest or penalty, as soon as practicable.

                                                                        1
         The Company can provide no assurances that each Rights holder will actually be entitled to purchase the number of shares of
Common Stock issuable upon the exercise of its Oversubscription Privilege in full at the expiration of the Rights Offering. The Company will
not be able to satisfy Rights holder’s exercise of the Oversubscription Privilege if all of the stockholders exercise their Basic Subscription
Rights in full, and we will only honor an Oversubscription Privilege to the extent sufficient shares of Common Stock are available following
the exercise of subscription rights under the Basic Subscription Rights. See “Terms of the Offering —Oversubscription Privilege” in the
Prospectus for more information on how the Unsubscribed Shares will be allocated.

            To the extent the aggregate Subscription Price of the actual number of shares allocated to you pursuant to the Oversubscription
         Privilege is less than the amount you actually paid to the Subscription Agent, the excess subscription payments will be returned to you
         by the Subscription Agent as soon as practicable, without interest or penalty, following the closing of this Rights Offering.

           To the extent the amount you actually paid in connection with the exercise of the Oversubscription Privilege is less than the
         aggregate Subscription Price of the shares allocated to you pursuant to the Oversubscription Privilege, you will receive only the
         number of shares for which you actually paid.

       THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF COMMON STOCK
CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. EXERCISES OF RIGHTS MAY BE MADE ONLY
BY US AS THE RECORD OWNER AND PURSUANT TO YOUR INSTRUCTIONS.

          Accordingly, we request instructions as to whether you wish us to elect to subscribe for any shares of Common Stock to which you are
entitled pursuant to the terms and subject to the conditions set forth in the enclosed Prospectus. However, we urge you to read the Prospectus
and all related documents carefully before instructing us to exercise your Rights.

          If you wish to have us, on your behalf, exercise the Rights for any shares of Common Stock to which you are entitled, please so
instruct us by completing, executing and returning to us the Beneficial Owner Election Form.

         Your payment and Beneficial Owner Election Form should be forwarded to us as promptly as possible in order to permit us to exercise
Rights on your behalf in accordance with the provisions of the Rights Offering. Please contact us for our deadline with respect to your
submission of the Beneficial Ownership Election Form. Once you have exercised the Basic Subscription Right or the Oversubscription
Privilege, such exercise may not be revoked.

        Please contact the Investor Relations Department of Registrar and Transfer Company, the Subscription Agent, by calling
(800) 368-5948 (toll free) or via e-mail at info@rtco.com.com if you have any inquiries or require assistance concerning the Rights Offering.


Very truly yours,
[]

                                                                        2
                                                                                                                                    Exhibit 99.3

                             FORM OF LETTER TO STOCKHOLDERS WHO ARE RECORD HOLDERS

                                         FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                                                     2,908,071 Shares of Common Stock
                                                 Offered Pursuant to Non-Transferable Rights

                                                                                                                                  [  ] [  ], 2011

                          THE RIGHTS OFFERING SUBSCRIPTION PERIOD WILL EXPIRE AT 5:00 P.M.,
                                EASTERN TIME, ON [  ] [  ], 2011 , UNLESS EXTENDED BY US.

Dear Stockholder:

           First Federal Bancshares of Arkansas, Inc. (the “ Company ” or “ we ” or “ us ”) is sending you this letter because you were a
stockholder of record of our Common Stock at 5:00 p.m., Eastern Time, on March 23, 2011, after taking into account the 1-for-5 reverse stock
split that occurred on [  ] [  ], 2011. As such, you are receiving non-transferable subscription rights (“ Rights ”) to purchase shares of our
common stock, par value $0.01 per share (the “ Common Stock ”) in a Rights Offering (the “ Rights Offering ”) by the Company. The Rights
Offering is described in the enclosed prospectus dated [  ] [  ], 2011 (“ Prospectus ”).

        We are offering up to 2,908,071 shares of Common Stock, as described in the Prospectus, at a cash price of $3.00 per share. The
number of these shares that you may purchase is described below.

         For each share of Common Stock owned by you as of the Record Date, you may purchase three (3) additional shares of Common
Stock under what we refer to as your “ Basic Subscription Right .” In addition, if you exercise your Basic Subscription Right in full, you will
be eligible to purchase any shares of Common Stock that are not purchased by other stockholders in the Rights Offering (the “ Unsubscribed
Shares ”) under what we refer to as your “ Oversubscription Privilege .” If the total oversubscription requests exceed the Unsubscribed Shares,
then we will allocate the Unsubscribed Shares pro rata among stockholders who exercise the Oversubscription Privilege, as further described in
the Prospectus. Please note that fractional shares resulting from the application of the oversubscription pro rata allocation will be rounded
down to the nearest whole number.

        Your right to purchase Common Stock in the Rights Offering will expire if not exercised by 5:00 p.m., Eastern Time, on [  ] [  ],
2011, unless we decide to extend the offering period as described in the Prospectus. Once submitted, all exercises of the Rights are
irrevocable. You should read the Prospectus carefully before deciding whether to exercise your rights.

         Your Rights are evidenced by the accompanying non-transferable subscription Rights certificate registered in your name (the “ Rights
Certificate ”). The back of the Rights Certificate contains the exercise form for participating in our Rights Offering.

         Enclosed are copies of the following documents:

         1.      Prospectus;
         2.      Your Rights Certificate;
         3.      Instructions as to the use of the Rights Certificates;
         4.      Notice of Important Tax Information; and
         5.      A return envelope addressed to the subscription agent, Registrar and Transfer Company (the “ Subscription Agent ”).

         Your prompt action is requested. To exercise your rights, you should deliver the properly completed and signed Rights Certificate,
with payment of the subscription price in full for each share of Common Stock subscribed for pursuant to the Basic Subscription Right and the
Oversubscription Privilege, to the Subscription Agent, as indicated in the Prospectus. The Subscription Agent must receive the Rights
Certificate with payment,

                                                                        1
including final clearance of any checks, prior to the Rights Offering expiration. You cannot revoke the exercise of your subscription
rights. Rights not exercised prior to the expiration time will expire.

         If you fail to properly complete and duly sign the Rights Certificate and all other required subscription documents or otherwise fail to
follow the subscription procedures that apply to the exercise of your Rights before the Rights Offering expires, the Subscription Agent will
reject your subscription or accept it only to the extent of the payment received. Neither the Company nor the Subscription Agent accepts any
responsibility to contact you concerning an incomplete or incorrect subscription document, nor are we under any obligation to correct such
documents. Either the Company or the Subscription Agent has the sole discretion to determine whether a subscription exercise properly
complies with the subscription procedures.

        Please contact the Investor Relations Department of Registrar and Transfer Company, the Subscription Agent, by calling
(800) 368-5948 (toll free) or via e-mail at info@rtco.com.com if you have any inquiries or require assistance concerning the Rights Offering.


                                                                         Very truly yours,


                                                                         First Federal Bancshares of Arkansas, Inc.

                                                                        2
                                                                                                                                     Exhibit 99.4

                                          FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                                              FORM OF NOMINEE HOLDER CERTIFICATION

The undersigned, a broker, custodian bank, trustee, depositary or other nominee holder of rights (the “ Rights ”) to purchase shares of common
stock (“ Common Stock ”) of First Federal Bancshares of Arkansas, Inc. (the “ Company ”) pursuant to the rights offering (the “ Rights
Offering ”) described and provided for in the Company’s registration statement, as amended, and final prospectus dated [  ] [  ], 2011 (the “
Prospectus ”), hereby certifies to the Company and Registrar and Transfer Company, as subscription agent for the Rights Offering, that (1) the
undersigned has exercised, on behalf of the beneficial owners thereof (which may include the undersigned), the number of Rights specified
below pursuant to the Basic Subscription Right (as defined in the Prospectus), and on behalf of beneficial owners of Rights who have
subscribed for the purchase of additional shares of Common Stock pursuant to the Oversubscription Privilege (as defined in the Prospectus),
listing separately below each such exercised Basic Subscription Right and the corresponding Oversubscription Privilege (without identifying
any such beneficial owner), (2) to the extent a beneficial owner exercises its Oversubscription Privilege that beneficial owner’s Basic
Subscription Right has been exercised in full, and (3) each such beneficial owner, based upon the representation of such beneficial owner in the
applicable Beneficial Owner Election Form, has complied with the overall beneficial ownership limitation of 4.9% of the Company’s
outstanding Common Stock (19,302,690 shares of Common Stock outstanding assuming that all of the shares available in the Rights Offering
are purchased) as described in the Prospectus, after giving effect to such beneficial owner’s participation in the Rights Offering and taking into
account the holdings of its affiliates:

                                                                                                                   Number of Shares Subscribed
              Number of Shares of Common                              Rights Exercised Pursuant to                   For Pursuant to Over-
             Stock Owned on the Record Date                             Basic Subscription Right                     Subscription Privilege
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Provide the following information if applicable:



Depository Trust Company (“ DTC ”)
Participant Number

Participant Name:

By:

            Name:

            Title:


DTC Basic Subscription Confirmation Number(s)
                                                                                                                                   Exhibit 99.5

                                          FORM OF BENEFICIAL OWNER ELECTION FORM

         The undersigned acknowledge(s) receipt of your letter and the enclosed materials relating to the grant of non-transferable rights (“
Rights ”) to purchase shares of common stock, par value $0.01 per share (“ Common Stock ”), of First Federal Bancshares of Arkansas, Inc.
(the “ Company ”).

         I (we) hereby instruct you as follows:

         (CHECK THE APPLICABLE BOXES AND PROVIDE ALL REQUIRED INFORMATION)

Box 1.  Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box 2.  Please EXERCISE RIGHTS for shares of Common Stock as set forth below:

Number of Shares Being Purchased (the sum of A and C below):

Total Exercise Price Payment Required (the sum of B and D below):

Basic Subscription Right

         As described in the accompanying Company prospectus dated [  ] [  ], 2011 (the “ Prospectus ”), I have received one Right for each
share of Common Stock owned as of 5:00 p.m., Eastern Time, on the Record Date. Each Right allows me to subscribe for three (3) shares of
Common Stock (the “ Basic Subscription Right ”) at the cash price of $3.00 per share (the “ Subscription Price ”).

I exercise                         Basic Subscription Rights     x                3             =                     (A)
                                                                                                    (no. of new shares)

Therefore, I apply for             shares of Common Stock        x             $3.00            =                     (B)
                         Pursuant to my Basic Subscription               (Subscription Price)       (price of new shares)
                         Rights


Oversubscription Privilege

         As described in the accompanying Prospectus, in the event that I purchase all of the shares of Common Stock available to me pursuant
to my Basic Subscription Right, I may also exercise an oversubscription privilege (the “ Oversubscription Privilege ”) to purchase a portion of
any shares of the Company’s Common Stock that are not purchased by other stockholders through the exercise of their Basic Subscription
Rights (the “ Unsubscribed Shares ”).

I have purchased all of the shares of Common Stock available to me pursuant to my Basic Subscription Right and wish to purchase additional
shares of Common Stock pursuant to my Oversubscription Privilege.  Yes  No

Therefore, I apply for             Unsubscribed Shares               x         $3.00            =                      (D)
                         Pursuant to my Oversubscription                 (Subscription Price)        (price of new shares)
                         Privilege (C)


Box 3.  Payment in the following amount is enclosed. $

(The total of the above Box 3 must equal the Total Exercise Price Payment Required.)
         I (we) on my (our) own behalf, or on behalf of any person(s) on whose behalf, or under whose directions, I am (we are) signing this
form:

           irrevocably elect to purchase the number of shares of Common Stock indicated above upon the terms and conditions specified in the
            Prospectus;

           certify that, after giving effect to my participation in the Rights Offering, and taking into account my holdings and the holdings of
            my affiliates, I will not exceed the overall beneficial ownership limitation described in the Prospectus of the Company’s outstanding
            Common Stock (19,302,690 shares of Common Stock outstanding assuming that all of the shares available in the Rights Offering
            are purchased);

           agree that if I (we) fail to properly complete and duly sign required subscription documents or otherwise fail to follow the
            subscription procedures that apply to the exercise of my (our) Rights before the Rights Offering expires, the Subscription Agent will
            reject my (our) subscription or accept it only to the extent of the payment received. Neither the Company nor the Subscription
            Agent accepts any responsibility to contact me (us) concerning an incomplete or incorrect subscription document, nor are they under
            any obligation to correct such documents. Either the Company or the Subscription Agent has the sole discretion to determine
            whether a subscription exercise properly complies with the subscription procedures; and

           agree that if I (we) fail to pay for the shares of Common Stock I (we) have elected to purchase, you may exercise any remedies
            available to you under law.

Name of Beneficial owner(s):


Signature of Beneficial Owner(s):


If you are signing in your capacity as a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or another
acting in a fiduciary or representative capacity, your signature must be Medallion Signature Guaranteed. Additionally, please provide the
following information:

Name:

Capacity:

Address (including Zip Code):


Telephone Number:
                                                                                                                                        Exhibit 99.6

                                       FORM OF NOTICE OF IMPORTANT TAX INFORMATION

         This tax information is provided in connection with a rights offering (the “ Rights Offering ”) by First Federal Bancshares of
Arkansas, Inc. (the “ Company ”), a Texas corporation, to the holders of record (the “ Recordholders ”) of its common stock, par value $0.01
per share ( “ Common Stock ”), as described in the Company prospectus dated [  ] [  ], 2011. Recordholders of Common Stock as of
5:00 p.m., Eastern Time, on March 23, 2011, after taking into account the 1-for-5 reverse stock split that occurred on [  ] [  ], 2011, are
receiving, at no charge, non-transferable subscription rights (the “ Rights ”) to subscribe for and purchase shares of Common Stock (the “
Underlying Shares ”). In the Rights Offering, the Company is offering an aggregate of up to 2,908,071 Underlying Shares.

         Under the United States federal income tax laws, proceeds from the sale or other disposition of shares of the Company’s Common
Stock or dividend payments that may be made by the Company on shares of Common Stock, issued upon the exercise of Rights, may be
subject to backup withholding. Generally such payments will be subject to backup withholding unless the holder (i) is exempt from backup
withholding or (ii) furnishes the payer with its correct taxpayer identification number (“ TIN ”) and certifies, under penalties of perjury, that the
number provided is correct and provides certain other certifications. Each holder that exercises Rights and wants to avoid backup withholding
must provide Registrar and Transfer Company (the “ Subscription Agent ”), as the Company’s agent in respect of the exercised Rights (the “
Requester ”), with a properly completed Substitute Form W-9 (set forth below) or a Form W-8BEN, Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding (as applicable).

         Certain holders (including, among others, corporations and certain foreign individuals) are exempt from these backup withholding and
reporting requirements. In general, in order for a foreign individual holder to qualify as an exempt recipient, that holder must submit a properly
completed Form W-8BEN (instead of a Substitute Form W-9), signed under the penalties of perjury, attesting to such holder’s foreign
status. Although a foreign holder may be exempt from backup withholding, dividend payments may be subject to withholding tax, currently at
a 30% rate (or, if an applicable tax treaty applies such applicable lower treaty rate). Such Form W-8BEN may be obtained from the
Subscription Agent. Exempt U.S. holders should indicate their exempt status on Substitute Form W-9 to avoid possible backup withholding.
See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional instructions. Holders
are urged to consult their tax advisers to determine whether they are exempt from withholding and reporting requirements.

          Recently enacted legislation will impose withholding taxes on certain types of payments made to “foreign financial institutions” (as
specially defined under those rules) and certain other non-U.S. entities. When effective, a failure to comply with additional certification,
information reporting and other specified requirements of the new rules could result in withholding tax being imposed on payments of
dividends (and sales proceeds) to foreign intermediaries and certain non-U.S. holders. The new legislation imposes a 30% withholding tax on
dividends on, or gross proceeds from, the sale or other disposition of, Common Stock paid to a foreign financial institution or to a foreign
non-financial entity, unless (i) the foreign financial institution undertakes certain diligence and reporting obligations or (ii) the foreign
non-financial entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial
U.S. owner. If the payee is a foreign financial institution, it must enter into an agreement with the U.S. Treasury requiring, among other things,
that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about
such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these reporting and other
requirements. The legislation would apply to payments made after December 31, 2012. Holders should consult their tax advisors regarding the
possible implications of this legislation on their investment in our Common Stock.

         If backup withholding applies, the Company or the Subscription Agent, as the case may be, will be required to withhold (currently at a
28% rate) on any dividend payments made to a holder that exercises Rights. Backup withholding is not an additional tax. Rather, the amount of
backup withholding can be credited against the U.S. federal income tax liability of the holder subject to backup withholding, provided that the
required information is provided to the Internal Revenue Service (“ IRS ”). If backup withholding results in an overpayment of taxes, a refund
may be obtained. A holder that exercises Rights is required to give the Subscription Agent the TIN of the
record owner of the Rights. If such record owner is an individual, the taxpayer identification number is generally the taxpayer’s social security
number. For most other entities, the TIN is the employer identification number. If the Rights are in more than one name or are not in the name
of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for
additional guidelines on which number to report. If the Subscription Agent is not provided with the correct TIN in connection with such
payments, the holder may be subject to a penalty imposed by the IRS and will be subject to backup withholding.

         If you do not have a TIN, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9” for instructions on applying for a TIN, write “Applied For” in the space for the TIN in part 1 of the Substitute Form W-9 and sign
and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If you do not provide your
TIN to the Subscription Agent within 60 days, backup withholding will begin and continue until you furnish your TIN to the Subscription
Agent. Note: writing “Applied For” on the form means that you have already applied for a TIN or that you intend to apply for one in the near
future.
                                  STOCKHOLDER MUST COMPLETE SUBSTITUTE W-9 BELOW
                                     (for instructions, go to http://www.irs.gov/pub/irs-pdf/fw9.pdf)

PAYER’S NAME:

                                          Part I Taxpayer Identification No. — For All Accounts

SUBSTITUTE                    Enter your taxpayer identification number in the                                       Part II — For Payees
FORM W-9 Department           appropriate box. For most individuals and sole      Social Security Number             Exempt From Backup
of Treasury                   proprietors, this is your social security number.                                      Withholdings, see
                              For other entities, it is your employer                                                enclosed Guidelines .
Internal Revenue Service      identification number. If awaiting a TIN, write     OR
Payer’s Request for           “Applied For” in the space at the right and
taxpayer Identification       complete the Certificate of Awaiting Taxpayer
Number (TIN)                  Identification Number below. If you do not
                                                                                  Employer Identification Number
                              have a number, see “How to Obtain a TIN” in
                              the enclosed Guidelines.

                              Note: If the account is in more than one name,
                              see the chart in the enclosed Guidelines to
                              determine what number to enter.


Check appropriate box:
 Individual/Sole Proprietor
 Corporation
 Partnership
 Limited liability company. Enter tax classification (D = disregarded entity, C = corporation, P = partnership) >
 Other (specify)____________________
 Exempt from Backup Withholding
Part III Certification —Under penalties of perjury, I certify that:

(1) The number shown on this form is my correct taxpayer identification number or I am waiting for a number to be issued to me;

(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (“ IRS ”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the
IRS has notified me that I am no longer subject to backup withholding; and

(3) I am a U.S. person (including a U.S. resident alien).

Certification Instructions —You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on your tax return.


Signature:

Address:

Date:
                            YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE
                                 “APPLIED FOR” IN PART I OF THIS SUBSTITUTE FORM W-9

                              CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

         I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, notwithstanding the information I
provided in Part III of the Substitute Form W-9 (and the fact that I have completed this Certificate of Awaiting Taxpayer Identification
Number), 28% of all payments made to me pursuant to this Offer to Purchase shall be retained until I provide a Taxpayer Identification
Number to the Payor and that, if I do not provide my Taxpayer Identification Number within sixty (60) days, such retained amounts shall be
remitted to the IRS as backup withholding.

Signature:
Date:

NOTE : Failure to complete and return this form may result in backup withholding of any payments made to you pursuant to this Offer. Please
review the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional details.
                                GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                                             NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number to Give the Payer —Social Security numbers have nine digits separated by
two hyphens: i.e. , 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. , 00-0000000. The
table below will help determine the number to give the payer.

                                                                                                         Give the
                                                                                                    SOCIAL SECURITY
For this type of account:                                                                              number of:


1. An individual                                                         The individual

2. Two or more individuals (joint account)                               The actual owner of the account or, if combined funds, the first
                                                                         individual on the account (1)

3. Husband and wife (joint account)                                      The actual owner of the account or, if combined funds, the first
                                                                         individual on the account (1)

4. Custodian account of a minor (Uniform Gift to Minors Act)             The minor (2)

5. Adult and minor (joint account)                                       The adult or, if the minor is the only contributor, the minor (1)

6. Account in the name of guardian or committee for a designated         The ward, minor or incompetent person (3)
ward, minor, or incompetent person.

7. a. The usual revocable savings trust (grantor is also trustee)        The grantor-trustee (1)

   b. So-called trust account that is not a legal or valid trust under   The actual owner (1)
state law

                                                                                            Give the EMPLOYER IDENTIFICATION
For this type of account:                                                                                number of:


8. Sole proprietorship or single-owner LLC                               The owner (4)

9. A valid trust, estate or pension trust                                The legal entity (5)

10. Corporate or LLC electing corporate status on Form 8832              The corporation

11. Association, club, religious, charitable, educational or other       The organization
tax-exempt organization
12. Partnership or multi-member LLC                                         The partnership

13. A broker or registered nominee                                          The broker or nominee

14.Account with the Department of Agriculture in the name of a              The public entity
public entity (such as a state or local government, school district or
prison) that receives agricultural program payments



(1)        List first and circle the name of the person whose number you furnish. If only one person on a joint account has an SSN, that
           person’s number must be furnished.

(2)        Circle the minor’s name and furnish the minor’s SSN.

(3)        Circle the ward’s, minor’s or incompetent person’s name and furnish such person’s social security number.

(4)        You must show your individual name and you may also enter your business or “doing business as” name on the second name line.
           You may use either your SSN or EIN (if you have one). If you are a sole proprietor, the IRS encourages you to use your SSN.

(5)        List first and circle the name of the legal trust, estate or pension trust. (Do not furnish the identifying number of the personal
           representative or trustee unless the legal entity itself is not designated in the account title.)

Note:      If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed.

Obtaining a Number

If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security
Number Card, Form SS-4, Application for Employer Identification Number, or Form W-7 for International Taxpayer Identification Number
(for alien individuals required to file U.S. tax returns) at the local office of the Social Security Administration or the Internal Revenue Service
(“ IRS ”) and apply for a number. These forms can also be obtained from the IRS’s website (http://irs.gov/formspubs/index.html).

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on all payments include the following:

      1.   An organization exempt from tax under section 501(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), an
           individual retirement plan or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2).

      2.   The United States or any of its agencies or instrumentalities.

      3.   A state, the District of Columbia, a possession of the United States or any of their subdivisions or instrumentalities.

      4.   A foreign government, a political subdivision of a foreign government or any of their agencies or instrumentalities.

      5.   An international organization or any of their agencies or instrumentalities.

Other payees that may be exempt from backup withholding include:

      6.   A corporation.
    7.   A foreign central bank of issue.

    8.   A dealer in securities or commodities required to register in the United States, the District of Columbia or a possession of the United
         States.

    9.   A futures commission merchant registered with the Commodity Futures Trading Commission.

   10.   A real estate investment trust.

   11.   An entity registered at all times during the tax year under the Investment Company Act of 1940.

   12.   A common trust fund operated by a bank under section 584(a) of the Code.

   13.   A financial institution.

   14.   A middleman known in the investment community as a nominee or custodian.

   15.   A trust exempt from tax under section 664 or described in section 4947 of the Code.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following:
       
        Payments to nonresident aliens subject to withholding under section 1441 of the Code.

         Payments to partnerships not engaged in a trade or business in the United States and that have at least one non-resident alien partner.

         Payments of patronage dividends not paid in money.

         Payments made by certain foreign organizations.

         Section 404(k) payments made by an ESOP.

Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and
is paid in the course of the payer’s trade or business and you have not provided your correct taxpayer identification number to the payer.
          
           Payments of tax-exempt interest (including exempt-interest dividends under Section 852).

         Payments described in Section 6049(b)(5) to nonresident aliens.

         Payments on tax-free covenant bonds under Section 1451.

         Payments made by certain foreign organizations.

The chart below shows two of the types of payments that may be exempt from backup withholding. The chart applies to the exempt recipients
listed above, 1 through 15.

IF the payment is for...                                                THEN the payment is exempt for...

Interest and dividend payments                                          All exempt recipients except for 9

Broker transactions                                                     Exempt recipients 1 through 13; also, a person who regularly acts as a
                                                                        broker and who is registered under the Investment Advisers Act of
                                                                        1940 who regularly acts as a broker
Barter exchange transactions and patronage dividends                      Exempt payees 1 through 5

Exempt payees should file the Substitute Form W-9 to avoid possible erroneous backup withholding. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF THE FORM IN PART II, SIGN AND DATE THE FORM, AND
RETURN IT TO THE PAYER. Foreign payees who are not subject to backup withholding should complete the appropriate IRS Form W-8 and
return it to the payer.

Privacy Act Notice

Section 6109 of the Code requires most recipients of dividend, interest or other payments to give their correct taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of tax
returns. It may also provide this information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of
Columbia and U.S. possessions to carry out their tax laws. It may also disclose this information to other countries under a tax treaty, to federal
and state agencies to enforce federal nontax criminal laws, and to federal law enforcement and intelligence agencies to combat terrorism.

Payees must provide payers with their taxpayer identification numbers whether or not they are required to file tax returns. Payers must
generally withhold 28% of taxable interest, dividend and certain other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number —If you fail to furnish your correct taxpayer identification number to
a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding —If you make a false statement with no reasonable basis which
results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information —Willfully falsifying certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.

                 FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
                                             REVENUE SERVICE.
                                                                                                                                     Exhibit 99.7

                               FORM OF LETTER TO BROKERS AND OTHER NOMINEE HOLDERS

                                         FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                              SUBSCRIPTION RIGHTS TO PURCHASE SHARES OF COMMON STOCK

                                         OFFERED PURSUANT TO SUBSCRIPTION RIGHTS
                                                DISTRIBUTED TO STOCKHOLDERS
                                       OF FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.

                                                                                                                                  [  ] [  ], 2011

To Security Dealers, Commercial Banks,
Trust Companies and Other Nominees:

          This letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the
rights offering (the “ Rights Offering ”) by First Federal Bancshares of Arkansas, Inc. (the “ Company ”) of shares of Common Stock (as such
term is defined below), pursuant to non-transferable subscription rights (the “ Rights ”) distributed to all holders of record after taking into
account the 1-for-5 reverse stock split that occurred on [  ] [  ], 2011 (the “ Recordholders ”) of shares of Company common stock, par value
$0.01 per share (“ Common Stock ”), at 5:00 p.m., Eastern Time, on March 23, 2011 (the “ Record Date ”),. The Rights and Common Stock are
described in the offering prospectus dated [  ] [  ], 2011 (the “ Prospectus ”).

        In the Rights Offering, the Company is offering an aggregate of up to 2,908,071 shares of Common Stock, as described in the
Prospectus.

        The Rights will expire, if not exercised prior to 5:00 p.m., Eastern Time, on [  ] [  ], 2011, unless extended by the Company (as it
may be extended, the “ Expiration Time ”).

         As described in the accompanying Prospectus, each beneficial owner of shares of Common Stock registered in your name or the name
of your nominee is entitled to one Right for each share of Common Stock owned by such beneficial owner at 5:00 p.m., Eastern Time, on the
Record Date. Each Right will allow the holder thereof to subscribe for three (3) shares of Common Stock (the “ Basic Subscription Right ”) at
the cash price of $3.00 per full share (the “ Subscription Price ”). For example, if a beneficial owner owned 100 shares of Common Stock as of
5:00 p.m., Eastern Time, on the Record Date, it would receive 100 Rights and would have the right to purchase 300 shares of Common Stock
for the Subscription Price.

          If a beneficial owner instructs you, as the Recordholder, to purchase all of the shares of Common Stock available to it pursuant to that
portion of the Basic Subscription Right attributable to the beneficial owner, the beneficial owner also may instruct you to exercise on its behalf
an oversubscription privilege (the “ Oversubscription Privilege ”) to purchase a portion of any shares of our Common Stock that are not
purchased by our Recordholders through the exercise of their Basic Subscription Rights (the “ Unsubscribed Shares ”), subject to availability
and allocation of such shares, and provided that no beneficial owner may thereby acquire, together with its affiliates, beneficial ownership of
4.9% or more of the shares of our outstanding Common Stock (19,302,690 shares of Common Stock outstanding assuming that all of the shares
available in the Rights Offering are purchased). If, however, oversubscription requests exceed the number of Unsubscribed Shares, we will
allocate the Unsubscribed Shares pro rata among the Recordholders exercising the Oversubscription Privilege in proportion to the number of
shares of Common Stock owned by such Recordholder as of 5:00 p.m., Eastern Time, on the Record Date, relative to the number of shares
owned on the Record Date by all Recordholders exercising the Oversubscription Privilege.

         Each Recordholder will be required to submit payment in full on behalf of the beneficial owner for all the shares it wishes you to buy
on its behalf with the Basic Subscription Right and the Oversubscription Privilege. Because the Company will not know the total number of
Unsubscribed Shares prior to the expiration of the Rights Offering, if a beneficial owner wishes to maximize the number of shares you
purchase on its behalf pursuant to the Oversubscription Privilege, you will need to deliver payment on behalf of the beneficial owner in an
amount equal
to the aggregate Subscription Price for the maximum number of shares of Common Stock desired by the beneficial owner. Fractional shares of
Common Stock resulting from the exercise of the Oversubscription Privilege will be eliminated by rounding down to the nearest whole share,
with the total subscription payment being adjusted accordingly. Any excess subscription payments received by Registrar and Transfer
Company, as the subscription agent (the “ Subscription Agent ”), will be returned, without interest or penalty, as soon as practicable.

          The Company can provide no assurances that each Recordholder will actually be entitled to purchase the number of shares of
Common Stock issuable upon the exercise of its Oversubscription Privilege in full at the expiration of the Rights Offering. The Company will
not be able to satisfy a Recordholder’s exercise of the Oversubscription Privilege if all Recordholders exercise their Basic Subscription Rights
in full, and we will only honor an Oversubscription Privilege to the extent sufficient shares of Common Stock are available following the
exercise of the Basic Subscription Rights. See “Terms of the Offering —Oversubscription Privilege” in the Prospectus for more information on
how the oversubscription shares will be allocated.

            To the extent the aggregate Subscription Price of the actual number of shares allocated to a Recordholder on behalf of a beneficial
         owner pursuant to the Oversubscription Privilege is less than the amount the Recordholder actually paid to the Subscription Agent, the
         excess subscription payments will be returned to the Recordholder by the Subscription Agent as soon as practicable, without interest
         or penalty, following the closing of this Rights Offering.

           To the extent the amount a Recordholder actually paid on behalf of a beneficial owner in connection with the exercise of the
         Oversubscription Privilege is less than the aggregate Subscription Price of the shares allocated to the Recordholder pursuant to the
         Oversubscription Privilege, the Recordholder will receive only the number of shares for which the Recordholder actually paid.

         We are asking all brokers, dealers, commercial banks, trust companies, or other nominees to notify beneficial owners as soon as
possible, provide the beneficial owner with the “Beneficial Owner Election Form” and other related materials, and instruct the beneficial owner
on completing and returning the forms necessary to effect transactions relating to the Rights on their behalf.

        All commissions, fees and other expenses (including brokerage commissions and transfer taxes), other than fees and expenses of the
Subscription Agent, incurred in connection with the exercise of the Rights will be for the account of the holder of the Rights, and none of such
commissions, fees or expenses will be paid by the Company or the Subscription Agent.

         Enclosed are copies of the following documents:

             1.      Prospectus;
             2.      A form of letter that may be sent to your clients for whose accounts you hold shares of Common Stock registered in your
                  name or the name of your nominee, with an attached form of instructions;
             3.      Beneficial Owner Election Form;
             4.      Nominee Holder Certification;
             5.      Notice of Important Tax Information; and
             6.      A return envelope addressed to Registrar and Transfer Company, the Subscription Agent.

         Your prompt action is requested. To exercise a beneficial owner’s Rights, you should deliver the properly completed Nominee Holder
Certification, with payment of the Subscription Price in full for each share of Common Stock subscribed for pursuant to the Basic Subscription
Right and the Oversubscription Privilege, to the Subscription Agent, as indicated in the Prospectus. The Subscription Agent must receive the
Nominee Holder Certification with payment of the Subscription Price, including final clearance of any checks, prior to the Expiration
Time. A beneficial owner cannot revoke the exercise of its Rights. Rights not exercised prior to the Expiration Time will expire.

         If you fail to properly complete and duly sign the required subscription documents or otherwise fail to follow the subscription
procedures on behalf of your clients that apply to the exercise of the Rights before the Expiration Time, the Subscription Agent will reject the
beneficial owner’s subscription or accept it only to the extent
of the payment received. Neither the Company nor the Subscription Agent accepts any responsibility to contact you concerning an incomplete
or incorrect subscription document, nor are we under any obligation to correct such documents. Either the Company or the Subscription Agent
has the sole discretion to determine whether a subscription exercise properly complies with the subscription procedures.

        Please contact the Investor Relations Department of Registrar and Transfer Company, the Subscription Agent, by calling
(800) 368-5948 (toll free) or via e-mail at info@rtco.com.com if you have any inquiries or require assistance concerning the Rights Offering.


                                                                       Very truly yours,


                                                                       First Federal Bancshares of Arkansas, Inc.


NOTHING IN THE PROSPECTUS OR IN THE OTHER ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS
AN AGENT OF THE COMPANY, THE SUBSCRIPTION AGENT OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING
OFFERS OF THE SECURITIES ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR
STATEMENTS MADE IN THE PROSPECTUS.
                                                                                                                                   Exhibit 99.8

FORM LETTER TO PARTICIPANTS IN THE FIRST FEDERAL BANCSHARES OF ARKANSAS, INC. EMPLOYEES’ SAVINGS
                                AND PROFIT SHARING PLAN & TRUST

[  ][  ], 2011

Dear [401(k) Plan Participant]:

         As a holder of common stock, $0.01 par value per share (the “ Common Stock ”) of First Federal Bancshares of Arkansas, Inc. (the “
Company ”) through the First Federal Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust (the “ 401(k) Plan ”),
you are eligible to participate in the rights offering to purchase additional Common Stock (the “ Rights Offering ”) through your 401(k) Plan
account. Enclosed with this letter, you will find the following materials to facilitate your participation in the Rights Offering through the
401(k) Plan:

                                  Offering Prospectus

                                  Instructions and Q&A regarding the Rights Offering for 401(k) Plan Participants

                                  401(k) Plan Participant Election Form

                                  Return envelope addressed to the Company

                                 Statement indicating the number of shares of Common Stock you held on 5:00 p.m., Eastern Time, on
                           March 23, 2011, as adjusted to take into account the 1-for-5 reverse stock split that occurred on [  ][  ], 2011
                           (the “ Record Date ”)

         The number of shares you held on the Record Date determines the number of shares of Common Stock you are authorized to purchase
in the Rights Offering.

      THE RIGHTS OFFERING SUBSCRIPTION PERIOD FOR 401(k) PLAN PARTICIPANTS WILL EXPIRE AT 5:00 P.M.,
EASTERN TIME, on [  ][  ], 2011, WHICH IS 5 BUSINESS DAYS BEFORE THE EXPIRATION DATE FOR THE RIGHTS
OFFERING, GENERALLY.

          Please understand that your participation in the Rights Offering through the 401(k) Plan is entirely your decision. We encourage you
to read the enclosed documents carefully before making a decision to participate. If you have any questions regarding your participation in the
Rights Offering through the 401(k) Plan, you may contact Tommy W. Richardson, Corporate Secretary of the Company, at 1401 Highway
62-65 North, P.O. Box 550, Harrison, Arkansas 72602, (870) 741-7641.

Very truly yours,


FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.
                                                                                                                                     Exhibit 99.9

     INSTRUCTIONS FOR PARTICIPANTS IN THE FIRST FEDERAL BANCSHARES OF ARKANSAS, INC. EMPLOYEES’
                              SAVINGS AND PROFIT SHARING PLAN & TRUST

                                                 Important Information on the Rights Offering

          The following questions and answers have been developed to provide the participants of the First Federal Bancshares of Arkansas,
Inc. Employees’ Savings and Profit Sharing Plan & Trust (the “ 401(k) Plan ” or “ Plan ”) with important information regarding a rights
offering by First Federal Bancshares of Arkansas, Inc. (the “ Company ”) (the “ Rights Offering ”). Because the 401(k) Plan allows for
investment in stock of the Company (“ Common Stock ”), the Plan participants who hold such Common Stock through the 401(k) Plan are
eligible to participate in the Rights Offering along with all other stockholders of the Company. A detailed description of the Rights Offering is
provided in the accompanying “offering prospectus” (the “ Prospectus ”). The following questions and answers are focused specifically on the
401(k) Plan participants and the procedures for participation in the Rights Offering through the Plan. To obtain a complete understanding of
the Rights Offering and the procedures to participate in the Rights Offering through the 401(k) Plan, we encourage you to read both the
Prospectus and the following questions and answers.

1. What is the Rights Offering?

          As described in the Prospectus, the Company is distributing, at no charge, to holders of Common Stock, non-transferable subscription
rights to purchase up to 2,908,071 shares of our Common Stock at a price of $3.00 per share in the Rights Offering (each such subscription
right, a “ Right ”). You will receive one Right for each share of Common Stock held by you of record as of 5:00 p.m., Eastern Time, on
March 23, 2011(the “ Record Date ”), after taking into account the 1-for-5 reverse stock split that occurred on [  ][  ], 2011. Each Right
will entitle you to purchase three (3) shares of Common Stock at a subscription price of $3.00 per share (the “ Basic Subscription Right ”). If
you timely and fully exercise your Basic Subscription Right with respect to all of the Rights you hold, and other Rights holders do not exercise
their Basic Subscription Right in full, you will have an oversubscription privilege to subscribe for a portion of shares of Common Stock offered
in the Rights Offering, subject to availability and allocation, that were not purchased by other Rights holders (the “ Oversubscription Privilege
”). However, your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limitation of 4.9% of
the Company’s outstanding Common Stock after giving effect to your participation in the Rights Offering and taking into account the holdings
of you and your affiliates.

          The Rights Offering will expire at 5:00 p.m., Eastern Time, on [  ] [  ], 2011. However, as a holder of Common Stock through the
401(k) Plan, you must return your 401(k) Plan Participant Election Form (defined below) to the Company by 5:00 p.m., Eastern Time,
on [  ] [  ], 2011, which is the fifth business day prior to the Expiration Date ( [  ] [  ], 2011) . You may return the form via hand
delivery, mail or overnight courier. Please note we have included a return envelope for your use. If your 401(k) Plan Participant Election
Form is not received by the Company by 5:00 p.m., Eastern Time, on [  ] [  ], 2011, the Plan Trustee WILL NOT exercise any Rights on your
behalf.

2. Can I participate in the Rights Offering?

            If, as of the Record Date, you held shares of Common Stock through the 401(k) Plan you will be entitled to participate in the Rights
Offering.

3. How will I know how many shares of Common Stock I owned as of the Record Date?

         You should have received with this letter a statement from the Company’s subscription agent, Registrar and Transfer Company,
showing the number of shares that you held on the Record Date. You may also retrieve the number of shares you held through the 401(k) Plan
on the Record Date by contacting the Company.
4. Will I also receive Rights for the shares of Common Stock that I own outside the 401(k) Plan?

         Yes, you will also receive Rights for any shares of Common Stock that you owned on the Record Date outside of the 401(k) Plan. You
will receive separate instructions for exercising the Rights issued with respect to the shares of Common Stock that you owned outside the
401(k) Plan as of the Record Date. This document only describes the procedures for exercising the Rights issued on the shares of Common
Stock that you hold through the 401(k) Plan as of the Record Date.

5. How many shares of Common Stock will I be able to purchase in the Rights Offering through the 401(k) Plan?

         As described in the Prospectus, for each share of Common Stock that you own as of the Record Date, including those you hold
through the 401(k) Plan, you will receive, at no charge, one Right. Please note that each Basic Subscription Right and the Oversubscription
Privilege may be exercised only for whole shares of Common Stock. Each whole Basic Subscription Right will entitle you to purchase three
(3) shares of Common Stock at a subscription price equal to $3.00 per share. For example, if you held 100 shares of Common Stock as of
5:00 p.m., Eastern Time, on the Record Date, you would receive 100 Rights, which would entitle you to purchase 300 shares of Common Stock
for $3.00 per share pursuant to your Basic Subscription Rights.

          As described above and in the Prospectus, if you timely and fully exercise your Basic Subscription Right with respect to all of the
Rights you hold, and other Rights holders do not exercise their Basic Subscription Right in full, you may also choose to exercise your
Oversubscription Privilege by purchasing a portion of any whole shares that other Rights holders do not purchase through their Basic
Subscription Rights. You should indicate on your 401(k) Plan Participant Election Form how many additional shares you would like to
purchase pursuant to your Oversubscription Privilege. If oversubscription requests exceed the number of shares available, the Company will
allocate the available shares pro rata among the Rights holders exercising the Oversubscription Privilege in proportion to the number of shares
of Common Stock each of those Rights holders owned on the Record Date, relative to the number of shares of Common Stock owned on the
Record Date by all Rights holders exercising the Oversubscription Privilege. In the event that fractional shares of Common Stock result from
the application of the oversubscription allocation formula to oversubscription requests, then such fractional shares will be eliminated by
rounding down to the nearest whole share, with the total exercise price being adjusted accordingly. Any excess subscription payments
received by the subscription agent will be returned, without interest or penalty, as soon as practicable.

          Your ability to purchase Common Stock in the Rights Offering is subject to an overall beneficial ownership limitation of 4.9% of our
outstanding Common Stock after giving effect to your participation in the Rights Offering and taking into account the holdings of you and your
affiliates.

        Notwithstanding the 401(k) Plan Participant Election Form received by the Company from you regarding the exercise of your
Rights with respect to shares of Common Stock held through the 401(k) Plan, no Rights held by the 401(k) Plan will be exercised if the
per share public trading price of the Company’s Common Stock is not greater than or equal to the subscription price on [  ] [  ],
2011.

6. Where will the money come from to pay of the Common Stock I elect to purchase by exercising the Rights attributable to my
401(k) Plan account?

         If you decide to exercise some or all of the Rights in your 401(k) Plan account, you must ensure that the amount allocated in your
401(k) Plan Participant Election Form (as defined below) for purposes of exercising your Rights is adequate to satisfy the subscription payment
based upon the number of Rights you are exercising. Your selected investments will be liquidated in the amount specified in your 401(k) Plan
Participant Election Form on or about [  ] [  ], 2011, and cash equal to the necessary subscription payment amount will be transferred to the
“First Federal Bancshares of Arkansas, Inc. Rights Fund” (the “ 401(k) Plan Rights Fund ”), which has been established in anticipation of the
Rights Offering. On or about [  ] [  ], 2011, the 401(k) Plan Rights Fund will be liquidated and cash equal to the necessary subscription
payment will be transferred to the subscription agent. However, notwithstanding any election forms received from participants (and other
account holders) in the 401(k) Plan regarding the exercise of their Rights with respect to shares of Common Stock held through the
401(k) Plan, no
Rights held by the 401(k) Plan will be exercised if the per share public trading price of our Common Stock is not greater than or equal to the
subscription price on [  ] [  ], 2011.

          Notwithstanding your election to exercise all of your Rights, the 401(k) Plan Trustee, Reliance Trust Company, will be directed to
exercise that number of Rights and purchase only the number of shares of Common Stock that can be acquired with the money generated by
liquidating the 401(k) Plan Rights Fund in your 401(k) Plan account. If the value of the 401(k) Plan Rights Fund in your 401(k) Plan account
does not equal or exceed the purchase price of the shares of Common Stock that you have elected to purchase in the Rights Offering, none of
the Rights held by your 401(k) Plan account will be exercised for shares of Common Stock and you will be deemed not to have exercised your
Rights with regard to any shares held in your 401(k) Plan account.

7. How can I exercise the Rights issued on the shares of Common Stock in the 401(k) Plan?

          Along with this document, you have received various solicitation materials, including the Prospectus, from Registrar and Transfer
Company regarding the Rights Offering with respect to the shares of Common Stock you hold through the 401(k) Plan. (You will receive
separate mailings of materials from Registrar and Transfer Company for any Rights issued on shares of Common Stock you own outside the
Plan.) These Rights Offering materials will also include an exercise election form (the “ 401(k) Plan Participant Election Form ”). To
participate in the Rights Offering, you must indicate on the 401(k) Plan Participant Election Form the number of Basic Subscriptions Rights
you wish to exercise, and if you fully exercise your Basic Subscription Rights, the number of additional shares of Common Stock you would
like to purchase pursuant to your Oversubscription Privilege. In addition, you must indicate on the 401(k) Plan Participant Election
Form which funds (and in what amounts) in your 401(k) Plan account you want liquidated in order to exercise the Rights.

         To exercise the Rights that were issued in respect of the shares of Common Stock that you hold through the 401(k) Plan, you must
return your 401(k) Plan Participant Election Form by 5:00 p.m., Eastern Time, on [  ] [  ], 2011, which is the fifth business day prior
to the Expiration Date ( [  ] [  ], 2011) . On the 401(k) Plan Participant Election Form, you must complete the following:

          1)            Affirm your intention to exercise the Rights that were issued in respect of the shares of Common Stock that you hold
                  through the 401(k) Plan.

          2)            Authorize the liquidation of funds in your account by directing the Plan Trustee as provided in the 401(k) Plan
                  Participant Election Form. You may only pay for the exercise of your Rights through the liquidation of other funds held by
                  your 401(k) Plan. Please do not send payment by cash or check directly to Registrar and Transfer Company, the Company,
                  the Plan Trustee, or any other party.

         3)              Affirming that, among other things, after giving effect to your participation in the Rights Offering, both with respect to
                  the Rights you receive based upon Common Stock you own through the 401(k) Plan as well as those Rights received based
                  upon Common Stock owned outside of the 401(k) Plan, and after taking into account the holdings of our affiliates, your
                  overall beneficial ownership of our Common Stock will not exceed 4.9% of our outstanding Common Stock.

8. How will I know if the purchasing transaction was successful?

           The Subscription Agent will close the solicitation window on [  ] [  ], 2011 and prepare the final results tabulation. The Plan Trustee
will liquidate funds as shown on the 401(k) Plan Participant Election Form and place the cash into the 401(k) Plan Rights Fund. For
participants who elected to exercise but do not have enough cash available through the liquidation of the fund or funds they selected on their
401(k) Plan Participant Election Form to cover the exercise, the Plan Trustee will not honor the request and the 401(k) Plan Participant Election
Form will be voided. The Plan Trustee is required to deliver the necessary funds to the Subscription Agent by 5:00 p.m., Eastern Time, on [  ]
[  ], 2011. That is why it is critical that you submit your 401(k) Plan Participant Election Form to the Company by 5:00 p.m., Eastern Time, on
[  ] [  ], 2011, to allow the necessary time for processing. Any 401(k) Plan Participant Election Forms received by the Company after
5:00 p.m., Eastern Time, on [  ] [  ], 2011 will be voided
and the election requests will not be honored. Participants may confirm that their Rights were exercised by contacting the Company.

9. How long do I have to exercise the Rights?

        You will be able to exercise your Rights during the period beginning on the date you receive your 401(k) Plan Participant Election
Form from the Subscription Agent until 5:00 p.m., Eastern Time, on [  ] [  ], 2011 .

10. What happens after the expiration of the Rights Offering?

         At 5:00 p.m., Eastern Time, on [  ] [  ], 2011, the Rights issued in the Rights Offering will expire and you will not have further
rights under them. On the Expiration Date ([  ] [  ], 2011), the Subscription Agent will perform the stock exercises based on the prescribed
formula. Trades will take place as normal stock transactions. Once the Rights have been exercised and the shares of Common Stock are placed
in your 401(k) Plan accounts, you will be able to sell the shares of Common Stock acquired in the Rights Offering according to the procedures
adopted by the 401(k) Plan for changing investments.

         Clean up residual balances: Participants who directed the Plan Trustee to liquidate an amount of their 401(k) Plan account that
exceeds the amount required to exercise their Rights, as directed in the 401(k) Plan Participant Election Form, will have their dollars
re-allocated to various investment funds based on the participant’s current investment election on file.

Important Contact Information

Tommy W. Richardson, Corporate Secretary
First Federal Bancshares of Arkansas, Inc.
1401 Highway 62-65 North
P.O. Box 550
Harrison, Arkansas 72602
(870) 741-7641
                                                                                                                                   Exhibit 99.10


                     First Federal Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust
                                         Non-Transferable Subscription Rights Election Form


    THIS FORM MUST BE COMPLETED AND RETURNED TO FIRST FEDERAL BANCSHARES OF ARKANSAS, INC. BY
                               5:00 P.M., EASTERN TIME, ON [  ][  ], 2011

THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN FIRST FEDERAL BANCSHARES OF
ARKANSAS, INC.’S PROSPECTUS DATED [  ][  ], 2011 (THE “ PROSPECTUS ”) AND ARE INCORPORATED HEREIN BY
REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM TOMMY W. RICHARDSON,
CORPORATE SECRETARY OF FIRST FEDERAL BANCSHARES OF ARKANSAS, INC. BY CALLING (870) 741-7641.

Employee:                                                              Employee Social Security Number:
(Please Print)
Date of Birth:                                                         Employee Number:

Work Phone:                                                            Date of Hire:

Home Phone:                                                            Home Address:

Spouse Name:

Spouse Date of Birth:

                                             SECTION I. RIGHTS OFFERING ELECTION

As a participant in the First Federal Bancshares of Arkansas, Inc. Employees’ Savings and Profit Sharing Plan & Trust (the “ 401(k) Plan ”), I
acknowledge receipt of your letter and the enclosed materials relating to the grant of non-transferable rights to purchase shares of common
stock, par value $0.01 per share (“ Common Stock ”), of First Federal Bancshares of Arkansas, Inc. (the “ Company ”).

I (we) hereby instruct as follows:

                         (CHECK THE APPLICABLE BOXES AND PROVIDE ALL REQUIRED INFORMATION)

Box 1.      Please DO NOT EXERCISE RIGHTS for shares of Common Stock.

Box 2.      Please EXERCISE RIGHTS for shares of Common Stock as set forth below:

Number of Shares Being Purchased (the sum of A and C below):

Total Exercise Price Payment Required (the sum of B and D below):

Basic Subscription Right

As described in the accompanying Prospectus, I have received one right (each a “ Right ”) for each share of Common Stock owned as of
5:00 p.m., Eastern Time, on the Record Date. Each Right allows me to subscribe for three (3) shares of Common Stock (the “ Basic
Subscription Right ”) at the cash price of $3.00 per full share (the “ Subscription Price ”).

I exercise                              Basic Subscription Rights           x           3            =                               (A)
                                                                                                             (no. of new shares)

Therefore, I apply for                   shares of Common Stock             x         $3.00          =                               (B)
                              Pursuant to my                                    (Subscription Price)         (price of new shares)
                              Basic Subscription Rights
Oversubscription Privilege

As described in the accompanying Prospectus, in the event that I purchase all of the shares of Common Stock available to me pursuant to my
Basic Subscription Right, I may also exercise an oversubscription privilege (the “ Oversubscription Privilege ”) to purchase a portion of any
shares of the Company’s Common Stock that are not purchased by its shareholders through the exercise of their Basic Subscription Rights (the
“ Unsubscribed Shares ”).

I have purchased all shares of Common Stock available to me pursuant to my Basic Subscription Right and wish to purchase additional shares
of Common Stock pursuant to my Oversubscription Privilege.  Yes          No

Therefore, I apply for                   Unsubscribed Shares                x         $3.00          =                                (D)
                              Pursuant to my Oversubscription                   (Subscription Price)          (price of new shares)
                              Privilege (C)


                                                                 PAYMENT


If you elect to participate in the Rights Offering, Pentegra Retirement Services will instruct Reliance Trust Company, the 401(k) Plan
Trustee, to liquidate funds equal to the Total Exercise Price Required, as indicated above, from your investments and in the amounts
identified below (please see the accompanying Q&A Letter to Participants of the Company’s 401(k) Plan for further details):

                                                                                                Dollar Amount to be
                  Investment Fund                                                                    Liquidated
                  International Stock Fund                                                $
                  Nasdaq 100 Stock Fund                                                   $
                  Russell 2000 Stock Fund                                                 $
                  S&P Midcap Stock Fund                                                   $
                  S&P Growth Stock Fund                                                   $
                  S&P Value Stock Fund                                                    $
                  S&P 500 Stock Fund                                                      $
                  US REIT Index Fund                                                      $
                  Long Treasury Index Fund (Govt Bond)                                    $
                  Aggregate Bond Index Fund                                               $
                  Stable Value Fund                                                       $
                  Short Term Investment Fund (Money Market)                               $
                  Income Plus Asset Allocation Fund                                       $
                  Growth & Income Asset Allocation Fund                                   $
                  Growth Asset Allocation Fund                                            $
                  Target Retirement Fund 2015                                             $
                  Target Retirement Fund 2025                                             $
                  Target Retirement Fund 2035                                             $
                  Target Retirement Fund 2045                                             $
                                        SECTION II. AUTHORIZATION AND CERTIFICATION

By executing this 401(k) Plan Participant Election Form:

(i)       I authorize the 401(k) Plan Trustee to subscribe for the number of shares of Common Stock listed in Section I of this form in
accordance with the Rights Offering and to liquidate funds in my accounts on my behalf in order for me to participate in the Rights Offering,
and agree that this election shall remain in effect until the Rights Offering expiration date stated in the Prospectus.

(ii)      I certify that, after giving effect to my participation in the Rights Offering, and taking into account my holdings within and outside
the 401(k) Plan and the holdings of my affiliates, I will not exceed the overall beneficial ownership limitation described in the Prospectus of the
Company’s outstanding Common Stock (or 19,302,690 shares of Common Stock outstanding assuming that all of the shares available in the
Rights Offering are purchased by Rights holders or by the backstop purchaser).

(iii)     I acknowledge and agree that:

                  (a) if the value of the investments I have instructed the 401(k) Plan Trustee to liquidate does not equal or exceed the Total
         Exercise Price Payment shown in Section I above, none of the Rights held by my 401(k) Plan account will be exercised for shares of
         Common Stock and I will be deemed not to have exercised my Rights with regard to any shares held in my 401(k) Plan account;

                   (b) notwithstanding the 401(k) Plan Participant Election Form received by the Company from me regarding the exercise of
         my Rights with respect to shares of Common Stock held through the 401(k) Plan, no Rights held by the 401(k) Plan will be exercised
         if the per share public trading price of the Company’s Common Stock is not greater than or equal to the subscription price on [  ] [ 
         ], 2011;

                   (c) book entry shares (in lieu of certificates) representing shares of Common Stock duly subscribed and paid for will be
         issued as soon as practicable after the termination of the Rights Offering in accordance with the terms of the Prospectus. I understand
         that these shares of Common Stock will be credited to my 401(k) Plan account and will not be issued to me personally;

                   (d) if I fail to properly complete and duly sign this 401(k) Plan Rights Offering Election Form or otherwise fail to follow the
         subscription procedures that apply to the exercise of my Rights before 5 : 00 p.m., Eastern Time, on [  ][  ], 2011, the Plan Trustee
         will reject my subscription;

                  (e) neither the Company nor the 401(k) Plan Trustee accepts any responsibility to contact me (us) concerning an incomplete
         or incorrect 401(k) Plan Rights Offering Election Form, nor are they under any obligation to correct my 401(k) Plan Rights Offering
         Election Form; and

                  (f) each of the Company and the 401(k) Plan Trustee has the sole discretion to determine whether my subscription exercise
         properly complies with the subscription procedures.

(iv)          I agree to all of the terms and conditions of this 401(k) Plan Participant Election Form and also those of the Prospectus, which is
incorporated into this 401(k) Plan Participant Election Form by reference.



Participant Signature                                                    Date


Signature of Authorized Bank Employee                                    Date


                                      FOR FIRST FEDERAL BANCSHARES OF ARKANSAS, INC.’S
                                                      OFFICE USE ONLY

Date Received:                                                           System Entry Date:

								
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