Summary of FIRST FEDERAL BANCSHARES OF ARKANSAS INC

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On March 6, 2009, First Federal Bancshares of Arkansas, Inc. (the "Company") entered into a Letter Agreement, which incorporates by reference the Securities Purchase Agreement - Standard Terms (the "Purchase Agreement"), with the United States Department of the Treasury ("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 Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Preferred Stock") and (ii) a warrant (the "Warrant") to purchase 321,847 shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), exercisable at an initial price of $7.69 per share. In addition, the Company entered into a letter agreement ("ARRA Letter Agreement"), dated March 6, 2009, with the Treasury confirming the applicability of the provisions of the American Recovery and Reinvestment Act of 2009 (the "ARRA") to the transaction documents. The description of the Purchase Agreement contained or incorporated herein is a summary and is qualified in its entirety by reference to the full text of the Purchase Agreement attached as Exhibit 10.1 hereto, which is incorporated herein by reference.

The Preferred Stock will qualify as Tier 1 capital and will pay cumulative dividends at a rate of 5% per annum for the first five years, and 9% per annum thereafter. Pursuant to the terms of the ARRA and the ARRA Letter Agreement, the Company may, upon consultation with its primary federal regulator, redeem the shares of Preferred Stock from Treasury at any time, without regard to whether the Company has replaced such funds from any source or to any waiting period. Upon repayment of the amount received for the Preferred Stock, Treasury will liquidate the associated Warrant in accordance with the ARRA and any rules and regulations thereunder. The Preferred Stock is generally non-voting. The description of the Preferred Stock contained herein is a summary and is qualified in its entirety by reference to the full text of the Statement of Designations, which is attached as Exhibit 3.1 hereto and incorporated herein by reference.

The Warrant has a 10-year term and is immediately exercisable upon its issuance, with an initial per share exercise price of $7.69 per share. The Warrant provides for the adjustment of the exercise price and the number of shares of Common Stock issuable upon exercise pursuant to customary anti-dilution provisions, such as upon stock splits or distributions of securities or other assets to holders of Common Stock, and upon certain issuances of Common Stock at or below a specified price relative to the initial exercise price. Upon repayment by the Company of the amount received for the Preferred Stock, Treasury will liquidate the associated Warrant in accordance with the ARRA and any rules and regulations thereunder. If the Company receives aggregate gross cash proceeds of not less than $16.5 million from Qualified Equity Offerings (as defined in the Statement of Designations) on or prior to December 31, 2009, the number of shares of Common Stock issuable pursuant to Treasury's exercise of the Warrant will be reduced by one half of the original number of shares of Common Stock, taking into account all adjustments, underlying the Warrant. Pursuant to the Purchase Agreement, Treasury has agreed not to exercise voting power with . . .

ITEM 3.03 MATERIAL MODIFICATION TO RIGHTS OF SECURITYHOLDERS.

Under the terms of the Purchase Agreement, prior to March 6, 2012, unless the Company has redeemed the Preferred Stock or Treasury has transferred the Preferred Stock to a third party, the consent of Treasury will be required for the Company to (1) declare or pay any dividend or make any distribution on its Common Stock (other than regular quarterly cash dividends of not more than $0.16 per share of Common Stock) or (2) redeem, purchase or acquire any shares of the Company's Common Stock or other equity or capital securities, other than in connection with benefit plans consistent with past practice and certain other circumstances specified in the Purchase Agreement.

In addition, pursuant to the Statement of Designations described in Item 5.03 below, the ability of the Company to declare or pay dividends or distributions on, or repurchase, redeem or otherwise acquire for consideration, shares of its Junior Stock and Parity Stock will be subject to restrictions in the event that the Company fails to declare and pay full dividends (or declare and set aside a sum sufficient for payment thereof) on its Preferred Stock.

"Junior Stock" means the Common Stock and any other class or series of stock of the Company the terms of which expressly provide that it ranks junior to the Preferred Stock as to dividend rights and/or rights on liquidation, dissolution or winding up of the Company. "Parity Stock" means any class or series of stock of the Company the terms of which do not expressly provide that such class or series will

rank senior or junior to the Preferred Stock as to dividend rights and/or rights on liquidation, dissolution or winding up of the Company (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).

In addition to the restrictions on dividends pursuant to the Purchase Agreement and the Certificate of Designations, the Company also has a limitation upon payment of dividends as a result of a voluntary agreement made with the Regional Director of the U.S. Office of Thrift Supervision ("OTS"), which is discussed in this Form 8-K under Item 8.01.

ITEM 7.01 REGULATION FD DISCLOSURE.

On March 6, 2009, the Company issued a press release announcing its participation in the Treasury's TARP CPP. A copy of this press release is furnished as Exhibit 99.1 hereto.

The information in this press release shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference.

ITEM 8.01 OTHER EVENTS.

In connection with the Company's participation in the CCP, the Company voluntarily agreed with the Regional Director of the OTS to restrict its ability to pay future quarterly dividends to the holders of Company Common Stock in excess of $.01 per share. This dividend restriction on the shares of Common Stock is effective and is expected to continue until such time as (i) the Preferred Stock is no longer outstanding; (ii) the Company receives approval from the OTS to increase future quarterly dividends on its common stock; or
(iii) the OTS Regional Director removes the dividend restriction on Company common stock.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

The following exhibits are filed herewith:

EXHIBIT NO.                           DESCRIPTION OF EXHBIT

3.1           Statement of Designations for the Preferred Stock

4.1           Form of Certificate for the Preferred Stock

4.2           Warrant for Purchase of Shares of Common Stock

10.1          Letter Agreement, dated March 6, 2009, between First Federal
              Bancshares of Arkansas, Inc. and the U.S. Department of the Treasury

10.2          ARRA Letter Agreement, dated March 6, 2009, between First Federal
              Bancshares of Arkansas, Inc. and the U.S. Department of the Treasury

10.3          Form of Amendment to the Amended and Restated Employment Agreements
              among First Federal Bancshares of Arkansas, Inc., First Federal Bank
              and each of, Larry J. Brandt, Tommy W. Richardson and Sherri R.
              Billings

10.4          Form of Amendment to the Amended and Restated Change In Control
              Agreements among First Federal Bancshares of Arkansas, Inc., First
              Federal Bank and each of Ross Mallioux and Jeffrey L. Brandt

99.1          Press Release