Bank of the Ozarks hits 9th consecutive year of record income

Not all banks are in trouble, especially when they unload millions in securities and physical assets.

Little Rock-based Bank of the Ozarks on Thursday (Jan. 14) announced net income of $36.826 million in 2009, a 6.8% gain over 2008 and marking the bank’s ninth consecutive year of record net income.

Diluted earnings per share for 2009 were a record $2.18, compared to $2.04 for 2008. Thursday’s announcement pushed the share price to a new 52-week intraday high of $30.86.

In the Fort Smith region, the bank has three offices in Fort Smith, two in Van Buren and Ozark, and one each in Alma, Altus, Mulberry and Paris. Overall, the bank operates in 34 cities in Arkansas, has seven bank offices in Texas and a loan office in Charlotte, N.C.

The big money generator for the bank in 2009 was its sale of physical assets and stocks, bonds and other investment securities.

“This reduction was undertaken primarily based on the Company’s ongoing evaluations of interest rate risk, including consideration of the potential effects of recent United States government monetary and fiscal policy actions,” the company noted in the earnings statement.

Such sales fueled income of $26.805 million in 2009, compared to a net loss of $3.977 million in 2008. The sales also helped result in the bank’s total assets standing at $2.77 billion as of Dec. 31, down 14.3% from $3.23 billion as of Dec. 31, 2008.

“These record results were largely due to our excellent revenue, which included our favorable net interest margin and record annual and quarterly income from both service charges on deposit accounts and trust services,” bank Chairman and CEO George Gleason said in a statement.

Comparing deposits and service charges shows just how aggressive the bank was in raising non-interest income. Deposits were $2.03 billion as of Dec. 31, down 13.3% compared to Dec. 31, 2008. However, service charges on deposit accounts were a record $12.421 million for the year, up 3.4% on a more than 13% decline in deposits.

The bank was able to post record income even with continuing problems with bad loans. The provision for loan and lease losses during 2009 was $44.8 million, more than double the $19 million posted in 2008. Also, the bank’s allowance for loan and lease losses (money it has to set aside for potential future bad loans) jumped to $39.6 million as of Dec. 31, up over the $29.5 million set aside as of Dec. 31, 2008.

The bank also posted record net income of $9.648 million in the fourth quarter of 2009, up 6.1% from the same quarter of 2008.

Bank of the Ozarks shares (NASDAQ: OZRK) closed Thursday at $30.79, up 95 cents During the past 52 weeks the share price has ranged from a $30.86 high to a $16.70 low.