Bank of the Ozarks first quarter earnings jump 30%, total assets top $11 billion

Bank of the Ozarks kicked off the first quarter earnings period for Arkansas’ publicly traded concerns on a positive note as the Little Rock banking group posted record profits and pushed total assets easily over the $11 billion mark.

For the period ended March 31, the Little Rock bank reported first quarter net income of $51.7 million, or 57 cents per share, up 29.6% from $39.9 million, or 47 cents a year ago. Analysts surveyed by Thomson Reuters had expected the Little Rock banking holding company to report first quarter earnings of 55 cents per share on revenue of $133.7 million.

“We are very pleased with our outstanding first quarter results, highlighted by our $1.06 billion quarterly growth in non-purchased loans and leases and our $0.58 billion quarterly growth in the unfunded balance of closed loans. This excellent growth was achieved while adhering to our very conservative credit principles, as evidenced by some of our best asset quality ratios as a public company, including an annualized net charge-off ratio of just 0.05%,” George Gleason, chairman and CEO of the Little Rock banking group, said in the earnings report issued Monday (April 11) after the close of market.

Gleason continued: “We are equally pleased with our 4.92% net interest margin and 35.5% efficiency ratio for the first quarter. Our potent combination of strong growth, pristine asset quality, superb net interest margin and great efficiency helped us achieve our record quarterly earnings.”

The Little Rock regional bank’s strong first quarter balance sheet pushes the its asset base well beyond the $10 billion mark, the crucial milestone established by the Dodd-Frank Wall Street Reform and Consumer Protection act as the regulatory threshold between super-community banks and larger regional banking groups.

That asset base will expand more when the fast-growing financial institution closes on two major acquisitions announced in the fourth quarter of 2015, including the largest deal in the history of the former rural bank that got its start in the Ozark community of Jasper over a century ago.

On Oct. 19, Bank of the Ozarks announced an all-stock pact and plan of merger to acquire Community & Southern Holdings and its wholly-owned bank subsidiary, Community & Southern Bank, in a deal valued at nearly $800 million, or approximately $20.50 per fully diluted CSB share. At Sept. 30, 2015, CSB had approximately $4.4 billion of total assets, $3 billion of loans and $3.7 billion of deposits.

Following the CSB deal, Bank of the Ozarks announced on Nov. 16 that it would expand its southern U.S. reach and acquire St. Petersburg, Fla.-based C1 Financial in an all-stock transaction valued at $402.5 million. C1 operates 32 Florida banking offices on the west coast of Florida and in Miami-Dade and Orange counties. The majority of the offices are located in Florida’s top six metropolitan markets. At September 30, 2015, C1 had approximately $1.7 billion of total assets, $1.4 billion of loans and $1.3 billion of deposits.

Both those deals are expected to close in the first half of 2016, pending normal regulatory and shareholder approvals, bank officials have said.

Following are other highlights from the quarterly earnings report:

• Total loans and leases, including purchased loans, were $9.27 billion at March 31, 2016, a 45.7% increase from $6.36 billion at March 31, 2015. Non-purchased loans and leases were $7.59 billion at March 31, 2016, a 76.1% increase from $4.31 billion at March 31, 2015.

• Net interest income for the first quarter of 2016 was a record $112.5 million, a 31.6% increase from $85.5 million for the first quarter of 2015. Non-interest income for the first quarter of 2016 decreased 31.7% to $19.9 million compared to $29.1 million for the first quarter of 2015.

• Deposits were $9.63 billion at March 31, 2016, a 43.3% increase from $6.72 billion at March 31, 2015. Total assets were $11.43 billion at March 31, 2016, a 37.6% increase from $8.30 billion at March 31, 2015.

• Common stockholders’ equity was $1.51 billion at March 31, 2016, a 27.9% increase from $1.18 billion at March 31, 2015. Tangible common stockholders’ equity was $1.36 billion at March 31, 2016, a 31.9% increase from $1.03 billion at March 31, 2015.

The bank’s stock price (NASDAQ: OZRK) closed Monday at $41.08, up $1.14 or 2.8%, as more than 3 million shares traded hands, nearly three times the normal daily volume.  During the past 52 weeks, the share price has ranged from a low of $35.87 to a high of $54.96 touched on Nov. 11.

Earlier in the first quarter, Bank of the Ozarks announced it would build a new corporate headquarters in west Little Rock to keep pace with its rapid growth.