Bank of Ozarks profit jumps

$90.5M net in­come in 2Q a record, up 66% from year ago

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - DAVID SMITH ARKANSAS DEMOCRAT-GAZETTE

Bank of the Ozarks earned a record $90.5 mil­lion in the sec­ond quar­ter, up 66 per­cent from a profit of $54.5 mil­lion a year ear­lier, the Lit­tle Rock bank said Wed­nes­day.

The bank earned 73 cents a share, match­ing the av­er­age es­ti­mate of 11 an­a­lysts sur­veyed by Thom­son Reuters. Bank of the Ozarks closed at $46.40 a share, down 15 cents in trad­ing on the Nas­daq ex­change.

Bank of the Ozarks is the largest bank in the state with $20.1 bil­lion in as­sets on June 30, up from $12.3 bil­lion in as­sets a year ear­lier. It has a goal of reach­ing $50 bil­lion in as­sets, which it doesn’t ex­pect to hit for at least three years.

“We had ex­cel­lent sec­ond-quar­ter re­sults, which in­cluded our sev­enth con­sec­u­tive quar­ter of record net in­come and other fa­vor­able fi­nan­cial re­sults,” said Ge­orge Glea­son, Bank of the Ozarks’ chair­man and chief ex­ec­u­tive of­fi­cer.

Other records were set in net in­ter­est in­come and ser­vice charge in­come, Glea­son said.

“The sec­ond-quar­ter re­sults re­flect record in­creases in al­most all ar­eas from the prior year, such as earn­ings and loans and as­sets,” said Gar­land Binns, a Lit­tle Rock bank­ing at­tor­ney. “And man­age­ment ex­pects con­tin­ued growth go­ing for­ward.”

Dur­ing the quar­ter, Bank of the Ozarks is­sued al­most $ 300 mil­lion in com­mon stock, Glea­son said. The bank raised the money to pro­vide cap­i­tal for fu­ture growth, he said.

Bank of the Ozarks ex-

pects to have its first fed­eral reg­u­la­tory stress test in July next year, Glea­son said.

In most cases, a bank can­not raise cap­i­tal as it un­der­goes the stress tests over nine quar­ters, he said.

“Based on our ex­pected sig­nif­i­cant growth, we de­ter­mined that we would need to aug­ment our reg­u­la­tory cap­i­tal ra­tios dur­ing 2017 to sup­port the pro­jected growth in 2018, 2019 and the first quar­ter of 2020,” Glea­son said. “Our [re­cent] cap­i­tal raise should pro­vide that needed cap­i­tal.”

Bank of the Ozarks is still in­ter­ested in mak­ing ac­qui­si­tions, al­though Glea­son ac­knowl­edged that the bank backed off some re­cent po­ten­tial deals.

“There are op­por­tu­ni­ties out there,” Glea­son said. The bank con­sid­ered sev­eral deals in the first six months of the year that would have met its cri­te­ria.

Bank of the Ozarks had de­posits of $16.2 bil­lion and loans of $15.2 bil­lion on June 30, both in­creases of more than 50 per­cent from June 2016.

The bank orig­i­nated more than $1 bil­lion in new loans in the sec­ond quar­ter, Glea­son said. That in­cluded $746

mil­lion in loans in the quar­ter in New York; $324 mil­lion in Mi­ami, $306 mil­lion in Los Angeles; $148 mil­lion in Or­lando, Fla.; $94 mil­lion in metropoli­tan At­lanta; $80 mil­lion in the Bos­ton area; $76 mil­lion in Chicago; and $56 mil­lion in Philadel­phia, Glea­son said.

Ev­ery other area had less than $50 mil­lion in loans for the quar­ter, in­clud­ing San Fran­cisco; Sum­mit Park, Utah; Madi­son, Wis.; Min­neapo­lis; Dal­las; Port­land, Ore.; Austin, Texas; and Denver, Glea­son said.

The bank had an ef­fi­ciency ra­tio of 35.32 per­cent for the sec­ond quar­ter, which means it cost the bank $35.32

to earn $100.

Based on its ef­fi­ciency ra­tio, Bank of the Ozarks is one of the best per­form­ing banks in the coun­try, Binns said.

In June, Bank of the Ozarks moved into the Rus­sell 1000, an in­dex of the 1,000 largest stocks based on the com­pa­nies’ mar­ket cap­i­tal­iza­tion, which is cal­cu­lated by mul­ti­ply­ing the num­ber of shares out­stand­ing by the com­pany’s price per share. Bank of the Ozarks has a mar­ket cap­i­tal­iza­tion of about $5.9 bil­lion.

Bank of the Ozarks has 251 of­fices in Arkansas, Alabama, Cal­i­for­nia, Ge­or­gia, Florida, North Carolina, New York, South Carolina and Texas.

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