Bank of the Ozarks reported Wednesday (Oct. 11) that third quarter profits topped $96 million, easily beating year ago results and continuing a two-year streak for record quarterly earnings results, company officials said.
For the period ended Sept. 30, Bank of the Ozarks reported third quarter earnings of $96 million, 75 cents per share, up 26.3% from $76 million, or 66 cents a year ago. A survey of Wall Street analysts had forecasted the fast-growing Arkansas regional bank to report third quarter earnings of 74 cents per share, according to Thomas Reuters.
“We are pleased to report another quarter of great results, including record net income for the eighth consecutive quarter, record diluted earnings per share, excellent asset quality and growth of $1.02 billion in non-purchased loans and leases,” said George Gleason, chairman and CEO of the Little Rock-based financial group.
Bank of the Ozarks posted its record third quarter results only three weeks after Gleason and other company officials revealed plans for the state’s largest bank by assets new 247,000-square-foot headquarters in west Little Rock by the end of 2017.
Arkansas Economic Development Commission executive director Mike Preston told Talk Business & Politics earlier this week that Bank of the Ozark’ commitment to keep the company’s headquarters in Little Rock aids state economic development officials in diversifying the state’s economy, which historically has been largely dependent on agriculture, tourism and manufacturing.
“They had a lot of pressure to move elsewhere,” Preston said. “A lot of their banking now is done outside of the confines of Arkansas, so being in one of the financial hubs like Charlotte, Dallas and Atlanta made sense to a lot of board members, but we fought hard to keep it here and it speaks to the commitment that they have in Arkansas.”
Last month at a State Capitol press conference with Gov. Asa Hutchinson, Gleason said that the bank had acquired a 44-acre site in west Little Rock to support initial development and future expansion for its new corporate headquarters. That campus, located at The Ranch development on Arkansas Highway 10, will replace three local offices that the company has outgrown over the past 21 years. Bank of the Ozarks said it expects to break ground for the initial building before year-end 2017. Approximately 500 employees are expected to move into the building when construction is completed in late 2019 or early 2020, with capacity to accommodate 800 to 900 employees.
The company’s headquarters expansion and consecutive string of quarterly earnings results over the past 24 months are not the only signs that the Little Rock bank is outgrowing its rural, community bank beginnings. In the second quarter, Bank of the Ozarks’ parent holding company folded into the bank’s publicly trading operating company to create a more efficient corporate structure.
In addition, Bank of the Ozarks’ record start in fiscal 2017 follows a notable year in which the bank completed two of the largest acquisitions in the company’s history. On July 20, 2016, 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.
Highlights from the 3Q earnings report include:
- Total loans and leases, including purchased loans, were nearly $15.8 billion at the end of third quarter, a 11.4% increase from $14.2 billion in the same period of 2016. Non-purchased loans and leases were $12 billion in the fourth quarter, a 37.5% increase from $8.76 billion a year ago.
- Net interest income for the third quarter of 2017 rose to $209.7 million, a 19.7% increase from $175.2 for the period ended Sept. 30, 2016. Net interest margin, on a fully taxable equivalent basis, was 4.84% for the third quarter of 2017, a decrease of six basis points from 4.9% for the same period of 2016.
- The Little Rock bank’s deposits grew 11.2% to $16.8 billion for the three-month period, compared to $15.1 billion in the third quarter of 2016. Total assets topped the $20 billion mark, jumping 12.6% to nearly $20.8 billion, compared to $18.5 billion a year ago.
- Common stockholders’ equity was $3.33 billion on Sept. 30, 2017, a 21% gain from $2.76 million in the third quarter of 2016. Tangible common stockholders’ equity was $2.62 billion at the end of the quarter, up 29% from $2.03 billion in the same period a year ago.
During the past 52 weeks, Bank of the Ozarks’ share price has ranged from a low of $35.53 to a high of $47.87. In early trading Wednesday on the Nasdaq stock exchange, the bank’s shares were just off the yearly high at $47.66, up 24 cents.