Bank of the Ozarks reports record 2Q earnings, ‘hitting on all cylinders’ with assets over $12 billion

Bank of the Ozarks on Monday (July 11) kicked-off the second quarter earnings period for Arkansas publicly-traded companies with a strong showing of record profits and near across-the-board improvements in the local bank’s financial metrics.

For the period ended June 30, 2016, the Little Rock-based bank reported $54.5 million or 60 cents per common share, up 21.7% from $44.8 million or 51 cents per share for the second quarter of 2015. Wall Street had expected the Arkansas bank to report second quarter earnings of 59 cents per share, according to analysts surveyed by Thomson Reuters.

In the first half of fiscal 2016, highlighted by two of the largest acquisitions in the banks history, Bank of the Ozarks’ net income totaled $106.2 million, a 25.4% increase from net income of $84.7 million for the first six months of 2015. Diluted earnings per common share for the first six months of 2016 were $1.16, an 18.4% increase from $0.98 for the first six months of 2015.

“We are very pleased with our excellent second quarter results, highlighted by quarterly records for net income, earnings per share, net interest income, service charge income, mortgage income and trust income,” George Gleason, Bank of the Ozarks chairman and CEO, said in a statement. “Combined with our 4.82% net interest margin, 35.4% efficiency ratio, excellent growth in both the funded and unfunded balances of closed loans, and some of our best asset quality ratios as a public company, we are clearly hitting on all cylinders.”

The strong quarterly earnings record, announced before Monday’s opening bell, pushed the bank’s share (NASDAQ: OZRK) price up $1.62 or 4.4% at $38.41 in the week-opening session. Still, the share price is down nearly 20% in the past 52 weeks as the price has ranged from a low of $33.66 and and a high of $54.96.

Two weeks ago, Bank of the Ozarks received final regulatory approval from the Federal Reserve for its previously announced merger transactions with St. Petersburg, Fla.-based C1 Financial, Inc. and Community & Southern Holdings Inc. of Atlanta. The Arkansas bank, which now has total assets of $12.2 billion, said it anticipates closing the C&S transaction on or about July 20, 2016. The C1 transaction is expected to close a day later on or about July 21, 2016, subject to customary closing conditions for each transaction.

Bank of the Ozarks first announced Oct. 19 an all-stock pact and plan of merger to acquire Atlanta-based Community & Southern 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, C&S had approximately $4.4 billion of total assets, $3 billion of loans and $3.7 billion of deposits.

Following that deal, Bank of the Ozarks announced Nov. 16 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.

Following are other highlights from the quarterly earnings report:
• Net interest income for the second quarter of 2016 was a record $119 million, a 27% increase from $93.8 million for the second quarter of 2015.

• Non-interest income for the second quarter of 2016 decreased 2.3% to $22.7 million compared to $23.3 million for the second quarter of 2015, but increased 14.4% compared to $19.9 million for the first quarter of 2016.

• Total loans and leases, including purchased loans, were $9.73 billion in the second quarter, a 47.5% increase from $6.6 billion from a year ago. Non-purchased loans and leases were $8.21 billion, a 72.3% increase from $4.77 billion from the same period a year ago. The unfunded balance of closed loans increased 83.5% to $7.35 billion at June 30, 2016, compared to $4.01 billion at June 30, 2015.

• Deposits in the second quarter were $10.2 billion, a 43.8% increase from $7.09 billion at June 30, 2015. Total assets were $12.28 billion at June 30, 2016, a 41% increase from $8.71 billion a year ago.

• The bank’s ratio of common stockholders’ equity to total assets decreased to 12.68% at June 30, 2016, compared to 13.88% at June 30, 2015. Its ratio of tangible common stockholders’ equity to total tangible assets decreased to 11.6% at June 30, 2016, compared to 12.38% at June 30, 2015.