Bank of the Ozarks posts income gain, notes loan losses

Little Rock-based Bank of the Ozarks reported Monday (July 13) that its net income for the first six months of 2009 was $18.78 million, up 14.8% from the same period in 2008.

However, the bank saw declines in two key metrics. Deposits were $2.13 billion at June 30, 2009, a 7.6% decrease from $2.31 billion at June 30, 2008. Loans and leases were $2.00 billion at June 30, 2009, a 0.7% decrease from $2.01 billion at June 30, 2008.

Bank Chairman and CEO George Gleason said in a statement that the national recession has “diminished loan and lease demand.” The bank’s cup-half-full approach to the decline in deposits is that the bank has seen a shift from certificate of deposit business to non-CD business.

The bank, which has six bank facilities in the Fort Smith/Van Buren area, also saw an increase in its net charge-off ratio for the first six months of the year, meaning an increase in the amount of bad loans and leases it has had to reconcile. The bank’s charge-off ratio was 1.77% for the first six months of 2009, compared to 0.35% for the first six months of 2008, and 0.45% for the full year of 2008.

“The significant increase in the net charge-off ratio in the second quarter of 2009 was primarily attributable to a $10.5 million charge-off related to one large credit relationship in northwest Arkansas,” the bank noted in its earnings statement.

Continuing, the bank noted: “Although elevated from our historical levels, these ratios compare very favorably to the most recently available data for the industry as a whole.”

The provision for loan and lease losses as of June 30 was $31.7 million, up significantly over the $7.32 million the bank had to set aside for bad loans as of June 30, 2008.

The Bank of the Ozarks share price (NASDAQ: OZRK) closed Monday at $23.52, up $1.09. The bank reported earnings after the market closed. During the past 52 weeks, the share price has ranged from a $36.80 high to a $16.04 low.