Bank of the Ozarks, Inc. Announces Third Quarter 2009 Earnings.LITTLE ROCK, Ark. -- Bank of the Ozarks, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : OZRK) today announced that net income available to common stockholders for the quarter ended September 30, 2009 was $8,391,000, a decrease of 6.9% from $9,011,000 for the third quarter of 2008. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per common share for the third quarter of 2009 were $0.50, compared to $0.53 for the third quarter of 2008, a decrease of 5.7%. For the nine months ended September 30, 2009, net income totaled $27,178,000, a 7.1% increase from net income of $25,383,000 for the first nine months of 2008. Diluted earnings per common share for the first nine months of 2009 were $1.61, compared to $1.50 for the first nine months of 2008, an increase of 7.3%. The Company's annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. returns on average assets and average common stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. for the third quarter of 2009 were 1.14% and 12.46%, respectively, compared to 1.18% and 16.70%, respectively, for the third quarter of 2008. Annualized returns on average assets and average common stockholders' equity for the nine months ended September 30, 2009 were 1.19% and 13.64%, respectively, compared with 1.14% and 16.23%, respectively, for the nine months ended September 30, 2008. In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, "We are pleased to report another good quarter of both net income and earnings per share. During the quarter just ended, we enjoyed excellent revenue results including our favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. net interest margin and record quarterly income from both service charges on deposit accounts and trust services. We also benefited from a lower level of non-interest expense compared to the previous quarters this year, and this helped us once again achieve an excellent efficiency ratio. Our strong revenue generating capabilities, favorable operating efficiency, robust capital position and substantial allowance for loan and lease losses provide a solid foundation for continued success." Loans and leases were $1.93 billion at September 30, 2009, a 6.0% decrease from $2.06 billion at September 30, 2008. Mr. Gleason stated, "Slower economic conditions over the past year have diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. loan and lease demand. While we have been actively seeking and originating many good quality new loans and leases, loan and lease originations in recent quarters have been more than offset by loan and lease pay downs." Deposits were $2.05 billion at September 30, 2009, an 11.1% decrease from $2.30 billion at September 30, 2008. Mr. Gleason stated, "The decline in our total deposits in recent quarters obscures two favorable underlying trends. First, our non-CD deposits have grown significantly. From September 30, 2008 to September 30, 2009, total non-CD deposits grew $106 million and increased from 38.5% of total deposits to 48.5% of total deposits. Second, brokered deposits have been significantly reduced. Specifically, over the last four quarters, total brokered deposits decreased $373 million from 19.6% of total deposits at September 30, 2008 to 3.8% of total deposits at September 30, 2009. At the same time our total non-brokered deposits increased $116 million to 96.2% of total deposits at September 30, 2009. We feel that these changes in our deposit mix have improved the quality, value and profitability of our deposit base." Total assets were $2.89 billion at September 30, 2009, a 5.9% decrease from $3.07 billion at September 30, 2008. Common stockholders' equity increased 26.8% to $274 million at September 30, 2009 compared to $216 million at September 30, 2008. Book value per common share Book Value Per Common Share A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Formula: increased 26.6% to $16.21 at September 30, 2009 compared to $12.80 at September 30, 2008. Changes in common stockholders' equity and book value per common share reflect earnings, dividends paid, stock option and warrant transactions and a significant favorable change in the Company's mark-to-market adjustment for unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on available for sale ("AFS A distributed file system for large, widely dispersed Unix and Windows networks from Transarc Corporation, now part of IBM. It is noted for its ease of administration and expandability and stems from Carnegie-Mellon's Andrew File System. AFS - Andrew File System ") investment securities as of September 30, 2009 compared to September 30, 2008. The Company's ratio of common stockholders' equity to assets increased to 9.47% as of September 30, 2009 compared to 7.03% as of September 30, 2008. Its ratio of tangible common stockholders' equity to tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. increased to 9.29% as of September 30, 2009 compared to 6.86% as of September 30, 2008. Paul Moore The Right Reverend Paul Moore, Jr. (November 15, 1919 - May 1, 2003) was a bishop of the Episcopal Church and served as the 13th Bishop of New York. Ordination Bishop Moore was ordained in 1949 after attending General Theological Seminary in New York City. , Chief Financial Officer, stated, "We continue to maintain our status as 'well capitalized' as determined by all applicable regulatory capital ratios with a substantial margin above the minimum regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. for being 'well capitalized'. Our excellent earnings in recent quarters have contributed to increases in our common stockholders' equity, our tangible common equity ratio and our regulatory capital ratios, further enhancing our already strong capital position." NET INTEREST INCOME Net interest income for the third quarter of 2009 increased 18.8% to $29,232,000 compared to $24,616,000 for the third quarter of 2008, but decreased 3.4% from the second quarter of 2009 due to a 5.6% lower volume of average earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin resulting primarily from sales of investment securities over the past two quarters. Net interest margin, on a fully taxable equivalent ("FTE FTE Full-Time Equivalent FTE Full-Time Employee FTE Full-Time Equivalency FTE Full Time Employment FTE Foundation for Teaching Economics FTE Full Time Enrollment FTE For the Enterprise (SQL) FTE Fund for Theological Education ") basis, was 4.80% in the third quarter of 2009, an increase of 98 basis points from 3.82% in the third quarter of 2008 and unchanged from 4.80% in the second quarter of 2009. Net interest income for the nine months ended September 30, 2009 increased 28.4% to $89,829,000 compared to $69,970,000 for the nine months ended September 30, 2008. The Company's net interest margin (FTE) for the first nine months of 2009 was 4.77%, an increase of 101 basis points from 3.76% in the first nine months of 2008. NON-INTEREST INCOME Non-interest income for the third quarter of 2009 increased 19.3% to $5,810,000 compared to $4,871,000 for the comparable quarter of 2008. Non-interest income for the nine months ended September 30, 2009 was $37,793,000 compared to $15,553,000 for the nine months ended September 30, 2008, a 143.0% increase. The large increase in non-interest income for the first nine months of 2009 compared to the same period in 2008 was primarily attributable to significant gains on sales of investment securities during the first and second quarters of 2009. Service charges on deposit accounts were a record $3,234,000 in the third quarter of 2009, an increase of 4.3% from $3,102,000 in the third quarter of 2008. Service charges on deposit accounts increased 1.6% to $9,084,000 for the first nine months of 2009 compared to $8,939,000 for the first nine months of 2008. Mortgage lending income was $672,000 in the third quarter of 2009, an increase of 42.1% from $473,000 in the third quarter of 2008, but a decrease from the levels achieved in each of the first two quarters of 2009. Mortgage lending income was $2,630,000 in the first nine months of 2009, a 47.7% increase from $1,781,000 in the first nine months of 2008. Trust income was a record $801,000 in the third quarter of 2009, a 23.4% increase from $649,000 in the third quarter of 2008. Trust income was $2,198,000 in the first nine months of 2009, a 16.8% increase from $1,882,000 in the first nine months of 2008. Net gains on investment securities and from sales of other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. were $91,000 in the third quarter of 2009 compared to net losses on investment securities and from sales of other assets of $396,000 in the third quarter of 2008. Such net gains were $20,625,000 for the first nine months of 2009 compared to net losses of $262,000 in the first nine months of 2008. The Company was a net seller of investment securities in the first three quarters of 2009, resulting in substantial net gains on investment securities and a $299 million reduction of its investment securities portfolio. 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. government monetary and fiscal policy actions. NON-INTEREST EXPENSE Non-interest expense for the third quarter of 2009 increased 12.1% to $15,499,000 compared to $13,828,000 for the third quarter of 2008, but decreased 13.6% from the second quarter of 2009. The Company's efficiency ratio for the quarter ended September 30, 2009 was 41.2% compared to 43.8% for the third quarter of 2008 and 32.1% in the second quarter of 2009. The increase in the efficiency ratio in the most recent quarter, compared to the second quarter of 2009, was primarily attributable to the lower volume of net gains on investment securities in the third quarter of 2009, compared to the second quarter of 2009. Non-interest expense for the first nine months of 2009 increased 23.5% to $49,631,000 compared to $40,176,000 for the first nine months of 2008. The Company's efficiency ratio for the first nine months of 2009 was 36.1% compared to 43.6% for the first nine months of 2008. ASSET QUALITY, CHARGE-OFFS AND ALLOWANCE Nonperforming loans and leases as a percent of total loans and leases increased to 1.00% as of September 30, 2009 compared to 0.70% as of September 30, 2008 and 0.90% as of June 30, 2009. The Company's ratio of loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases was 1.77% as of September 30, 2009 compared to 0.94% as of September 30, 2008 and 2.34% as of June 30, 2009. Nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. as a percent of total assets increased to 2.88% as of September 30, 2009 compared to 0.66% as of September 30, 2008 and 1.37% as of June 30, 2009. The increase in nonperforming assets at September 30, 2009 is primarily attributable to three credit relationships which were placed on non-accrual status during the quarter and then transferred into other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most at the estimated fair value of the collateral received by the Company in satisfaction of the debts. The Company has executed conditional sales contracts Conditional sales contracts Similar to equipment trust certificates, except that the lender is either the equipment manufacturer or a bank or finance company to which the manufacturer has sold the conditional sales contract. for sale of the properties it received in connection with two of these credit relationships. These sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. covered 35.3% of the Company's total nonperforming assets at September 30, 2009 and are expected to result in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). substantially equal to the Company's book value of such assets. One of the contracts is expected to close in the fourth quarter of 2009, and the second contract is expected to close in the first quarter of 2010. The Company's annualized net charge-off ratio for the third quarter of 2009 was 2.38%, compared to 0.27% for the third quarter of 2008 and 2.89% for the second quarter of 2009. The Company's annualized net charge-off ratio was 1.97% for the first nine months of 2009 compared to 0.33% for the first nine months of 2008 and 0.45% for the full year of 2008. More than half of the Company's net charge-offs in the quarter just ended related to two credit relationships, which the Company had previously identified as potential problems and for which it had established $5.1 million of special allocations within its allowance for loan and lease losses as of June 30, 2009. During the third quarter of 2009, the Company's provision to its allowance for loan and lease losses was $7.5 million compared to $3.4 million in the third quarter of 2008. For the first nine months of 2009, the Company's provisions to its allowance for loan and lease losses totaled $39.2 million compared to $10.7 million in the first nine months of 2008. The Company's allowance for loan and lease losses was $39.3 million at September 30, 2009, or 2.03% of total loans and leases, compared to $25.4 million, or 1.24% of total loans and leases, at September 30, 2008 and $43.6 million, or 2.19% of total loans and leases, at June 30, 2009. As of September 30, 2009, the Company's allowance for loan and lease losses equaled 203% of its total nonperforming loans and leases compared to 176% at September 30, 2008 and 244% at June 30, 2009. OTHER MATTERS On September 29, 2009, a settlement agreement was executed by all parties to a previously disclosed lawsuit filed in the Circuit Court of Benton County, Arkansas Benton County is a county located in the U.S. state of Arkansas. As of the 2000 census, the population was 153,406. The county seat is Bentonville. Benton County was formed on 30 September 1836 and was named after Thomas Hart Benton, U.S. Senator from Missouri. on August 3, 2009 by William Lazenby and other plaintiffs against the Company and other defendants. On September 30, 2009, an order of dismissal with prejudice dismissal with prejudice n. see dismissal. was entered by the court pursuant to the settlement agreement. The settlement resulted in plaintiffs paying cash equal to the estimated value of one piece of collateral to obtain its release, and conveying to the Company's bank subsidiary all remaining collateral securing the related loans and dismissing all claims against the Company and the other defendants. In return, the Company and the other defendants agreed to release all claims, including any potential claim for a deficiency judgment An assessment of personal liability against a mortgagor, a person who pledges title to property to secure a debt, for the unpaid balance of the mortgage debt when the proceeds of a foreclosure sale are insufficient to satisfy the debt. , against Mr. Lazenby and the other plaintiffs. The Company concluded that any potential recovery from a deficiency judgment would not significantly exceed, and might even be less than, the costs of obtaining and collecting such deficiency judgment. As of September 30, 2009, the collateral conveyed to the Company's bank subsidiary pursuant to this settlement was held as other real estate owned at its estimated fair value and was included in nonperforming assets. GROWTH AND EXPANSION The Company is continuing its growth and de novo [Latin, Anew.] A second time; afresh. A trial or a hearing that is ordered by an appellate court that has reviewed the record of a hearing in a lower court and sent the matter back to the original court for a new trial, as if it had not been previously heard nor decided. branching strategy, although it has slowed the pace of new office openings in recent years. In September the Company opened a new banking office in downtown Little Rock, Arkansas Little Rock, Arkansas required military intervention to desegregate schools (1957–1958). [Am. Hist.: Van Doren, 556–557] See : Bigotry . In the fourth quarter of 2009, the Company expects to open a banking office in Allen, Texas Allen is a city in Collin County and a northern suburb of Dallas, Texas (USA). As of the 2000 census, the city had a total population of 43,554. As of April 2007, the city's population is estimated at 77,465. and close a small office in North Little Rock, Arkansas North Little Rock is a city located in central Arkansas across the Arkansas River from Little Rock in Pulaski County. According to 2005 Census Bureau estimates, the population of the city was 58,833 ranking it as the sixth most populous city in the state. where the leased space is no longer available. CONFERENCE CALL Management will conduct a conference call to review announcements made in this press release at 10:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT (11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) on Wednesday, October 14, 2009. The call will be available live or in recorded version on the Company's website www.bankozarks.com under "Investor Relations Investor relations The process by which the corporation communicates with its investors. " or interested parties calling from locations within the United States and Canada may call 1-800-990-4845 up to ten minutes prior to the beginning of the conference and ask for the Bank of the Ozarks conference call. A recorded playback Playback could mean:
FORWARD LOOKING STATEMENTS This release and other communications by the Company contain forward looking statements regarding the Company's plans, expectations, beliefs, goals and outlook for the future. Actual results may differ materially from those projected in such forward looking statements due to, among other things, continued interest rate changes including changes in the shape of the yield curve, competitive factors, general economic and real estate market conditions and their effects on the creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of borrowers and collateral values, recently enacted and potential legislation and regulatory actions including legislation and regulatory actions intended to stabilize stabilize See peg. economic conditions and credit markets and to protect homeowners, changes in the value and volume of investment securities, changes in U.S. government monetary and fiscal policy, changes in credit market conditions, the ability to attract new deposits and loans and leases, delays in or failure to achieve closing of the conditional sales contracts for certain nonperforming assets, and delays in opening new offices or inability to obtain all required regulatory or other approvals for opening new offices, as well as other factors identified in this press release or in Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial under the caption "Forward Looking Information" contained in the Company's 2008 Annual Report to Stockholders and the most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. GENERAL INFORMATION Bank of the Ozarks, Inc. common stock trades on the NASDAQ Global Select Market under the symbol "OZRK". The Company owns a state-chartered subsidiary bank that conducts banking operations through 73 offices including 66 banking offices in 34 communities throughout northern, western and central Arkansas, six Texas banking offices, and a loan production office in Charlotte, North Carolina “Charlotte” redirects here. For other uses, see Charlotte (disambiguation). Charlotte is the largest city in the state of North Carolina and the 20th largest city in the United States. . The Company may be contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. The Company's website is: www.bankozarks.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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