Bank of the Ozarks post record 3Q profits of $76 million following summer acquisition binge

Bank of the Ozarks Inc. posted record third quarter profits before Tuesday’s (Oct. 11) opening bell as the Little Rock-based regional banking group looks to digest two of the largest acquisitions in the company’s history.

On July 20, Bank of the Ozarks completed its $800 million acquisition of Atlanta-based Community & Southern Holdings Inc. (C&S), the Little Rock bank’s largest takeover to date and its 14th acquisition since March 2010. A day later, the Arkansas banking group again expanded its southern U.S. reach with the completion of its acquisition of St. Petersburg, Fla.-based C1 Financial in an all-stock transaction valued at $402.5 million.

At the end of the second quarter, C&S had approximately $3.9 billion of total assets, $3.1 billion of loans and $3.3 billion of deposits. C1 had nearly $1.7 billion of total assets, $1.4 billion of loans and $1.3 billion of deposits.

The two acquisitions, which lifted the Arkansas bank’s total asset value to more than $18.4 billion, pushed third quarter earnings to a record $76 million, or 66 cents per share, up nearly 65% from $46.1 million, or 52 cents per share in the third quarter of 2015.

“We are very pleased to report our record third quarter results with our two recent acquisitions included. These transactions bring many strategic benefits to our company and significant value to our shareholders from the resulting accretion in book value, tangible book value and earnings per common share,” said Bank of the Ozarks Chairman and CEO George Gleason. “We had an excellent quarter, and the value of these acquisitions, the strength of our organic growth and our pristine asset quality were all clearly on display.”

Following are other highlights from the quarterly earnings report.
• Net interest income for the third quarter of 2016 was a record $175.1 million, an 81.7% increase from $96.4 million for the third quarter of 2015.

• Non-interest income for the third quarter of 2016 increased 32% to $29.2 million compared to $22.1 million for the third quarter of 2015. Non-interest income for the first nine months of 2016 decreased 3.6% to $71.8 million compared to $74.5 million for the first nine months of 2015.

• Total loans and leases, including purchased loans, were $14.16 billion at Sept. 30, a 91.1% increase from $7.41 billion a year ago. Non-purchased loans and leases were $8.76 billion in the third quarter, a 60.8% increase from $5.45 billion in the same period a year ago. Purchased loans were $5.4 billion for the three-month period ended Sept. 30, a 175.1% increase from $1.96 billion in September 2015. The unfunded balance of closed loans increased 77.9% to $8.66 billion at Sept. 30, 2016, compared to $4.86 billion at Sept. 30, 2015.

• Deposits in the second quarter were $15.1 billion, a 98.8% increase from $7.61 billion in September 2015. Total assets at the end of the third quarter were $18.45 billion, nearly double from $9.33 billion a year ago.

• The Arkansas bank’s ratio of common stockholders’ equity to total assets was 14.94% on Sept. 30, 2016, compared to 14.09% on Sept. 30, 2015. Its ratio of tangible common stockholders’ equity to total tangible assets was 11.47% at the end of the third quarter, compared to 12.63% a year ago.

At end of Tuesday’s session, Bank of the Ozarks (NASDAQ: OZRK) shares closed at $39.92, down $1.44 or 3.5%. However, the fast-growing Arkansas bank’s stock was up 2.2% in after hours trading following the release of the quarterly earnings report.