Bank of Ozarks profit jumps
$90.5M net income in 2Q a record, up 66% from year ago
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.