OZRK earnings out and is a record. Divy increase and no surprises for loan losses.
Bank of the Ozarks, Inc. Announces Record Second Quarter 2008 Earnings
Thursday July 10, 6:00 pm ET
LITTLE ROCK, Ark.--(BUSINESS WIRE)--Bank of the Ozarks, Inc. (NASDAQ: OZRK - News) today announced that net income for the quarter ended June 30, 2008 was a record $8,607,000, an increase of 6.4% compared to net income of $8,086,000 in the second quarter of 2007. Diluted earnings per share were a record $0.51 for the second quarter of 2008 compared to $0.48 for the second quarter of 2007, an increase of 6.3%.
For the six months ended June 30, 2008, net income totaled $16,372,000, a 4.9% increase from net income of $15,607,000 for the first six months of 2007. Diluted earnings per share for the first six months of 2008 were $0.97, compared to $0.93 for the first six months of 2007, an increase of 4.3%.
The Company’s annualized returns on average assets and average stockholders’ equity for the second quarter of 2008 were 1.13% and 16.65%, respectively, compared to 1.27% and 17.82%, respectively, for the second quarter of 2007. Annualized returns on average assets and average stockholders’ equity for the six months ended June 30, 2008 were 1.12% and 15.99%, respectively, compared with 1.23% and 17.47%, respectively, for the six months ended June 30, 2007.
Loans and leases were $2.01 billion at June 30, 2008 compared to $1.76 billion at June 30, 2007, an increase of 14.5%. Deposits were $2.31 billion at June 30, 2008 compared to $2.16 billion at June 30, 2007, an increase of 7.0%. Total assets were $3.06 billion at June 30, 2008, an 18.7% increase from $2.58 billion at June 30, 2007.
Stockholders’ equity was $211 million at June 30, 2008, an increase of 18.4% from $178 million at June 30, 2007, but a slight decrease from $213 million at March 31, 2008. Book value per share was $12.53 at June 30, 2008, an increase of 18.0% from $10.62 at June 30, 2007, but a slight decrease from $12.66 at March 31, 2008. Changes in stockholders’ equity and book value per share reflect earnings, dividends paid, stock option transactions and changes in unrealized gains and losses on investment securities available for sale.
The Company’s ratio of common equity to assets was 6.89% as of June 30, 2008 compared to 6.90% as of June 30, 2007. Its ratio of tangible common equity to tangible assets was 6.71% as of June 30, 2008 compared to 6.68% as of June 30, 2007.
In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, “We are very pleased to report records in both net income and earnings per share for the quarter just completed. This was accomplished by achieving strong revenue growth while maintaining favorable asset quality results.”
NET INTEREST INCOME
Net interest income for the second quarter of 2008 increased 22.4% to $23,603,000 compared to $19,291,000 for the second quarter of 2007. Net interest margin, on a fully taxable equivalent (“FTE”) basis, improved to 3.77% in the second quarter of 2008, an increase of 31 basis points from 3.46% in the second quarter of 2007 and an increase of eight basis points from 3.69% in the first quarter of 2008.
Net interest income for the six months ended June 30, 2008 increased 20.8% to $45,353,000 compared to $37,540,000 for the six months ended June 30, 2007. The Company’s net interest margin (FTE) for the first half of 2008 was 3.73%, an increase of 32 basis points from 3.41% in the first half of 2007.
Mr. Gleason stated, “Good growth in average earning assets, combined with continued improvement in our net interest margin, allowed us to achieve our sixth consecutive quarter of record net interest income in the quarter just ended. Early in the year, we stated that one of our goals for 2008 was to achieve record net interest income in each quarter, and this will continue to be an important goal.”
NON-INTEREST INCOME
Non-interest income for the second quarter of 2008 decreased 1.2% to $5,557,000 compared to $5,623,000 for the comparable quarter of 2007. Non-interest income for the six months ended June 30, 2008 was $10,682,000 compared to $11,582,000 for the six months ended June 30, 2007, a 7.8% decrease.
Service charges on deposit accounts, the Company’s largest source of non-interest income, were $2,967,000 in the second quarter of 2008, a decrease of 4.5% compared to $3,107,000 in the second quarter of 2007. Service charges on deposit accounts decreased 1.8% to $5,837,000 for the first half of 2008 compared with $5,942,000 for the first half of 2007.
Mortgage lending income was $636,000 in the second quarter of 2008, a decrease of 22.2% compared to $817,000 in the second quarter of 2008. Mortgage lending income was $1,309,000 in the first half of 2008, a 15.4% decrease from $1,548,000 in the first half of 2007.
Trust income was $629,000 in the second quarter of 2008, an increase of 18.5% compared to $531,000 in the second quarter of 2007. Trust income was $1,233,000 in the first half of 2008, a 23.8% increase from $996,000 in the first half of 2007.
Net gains from sales of investment securities and other assets were $206,000 in the second quarter of 2008 compared to a $47,000 net loss in the second quarter of 2007. Such gains were $134,000 for the first half of 2008 compared to $325,000 for the first half of 2007.
NON-INTEREST EXPENSE
Non-interest expense for the second quarter of 2008 was $13,442,000 compared to $11,876,000 for the second quarter of 2007, an increase of 13.2%. The Company’s efficiency ratio for the quarter ended June 30, 2008 improved to 42.1% compared to 46.1% for the second quarter of 2007.
Non-interest expense for the first six months of 2008 was $26,322,000 compared with $24,014,000 for the first six months of 2007, an increase of 9.6%. The Company’s efficiency ratio for the first six months of 2008 improved to 43.5% compared to 47.3% for the first six months of 2007.
Mr. Gleason stated, “We have a tradition of operating with excellent efficiency and a goal of continuing to improve our efficiency ratio over time. The 42.1% efficiency ratio achieved in the quarter just ended is our best quarterly efficiency ratio since becoming a public company in 1997.”
ASSET QUALITY, CHARGE-OFFS AND ALLOWANCE
Nonperforming loans and leases as a percent of total loans and leases increased to 0.74% as of June 30, 2008 compared to 0.23% as of June 30, 2007 and 0.68% as of March 31, 2008. Nonperforming assets as a percent of total assets increased to 0.59% as of June 30, 2008 compared to 0.26% as of June 30, 2007 and 0.58% as of March 31, 2008. 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 0.92% as of June 30, 2008, an increase from 0.53% as of June 30, 2007, but a decrease from 1.30% as of March 31, 2008.
The Company’s annualized net charge-off ratio for the second quarter of 2008 was 0.33%, an increase from 0.14% for the second quarter of 2007, but a decrease from 0.38% for the first quarter of 2008. The Company’s annualized net charge-off ratio was 0.35% for the first six months of 2008 compared to 0.15% for the first six months of 2007 and 0.24% for the full year of 2007.
The Company’s allowance for loan and lease losses increased to $23.4 million at June 30, 2008, or 1.16% of total loans and leases, compared to $18.7 million, or 1.07% of total loans and leases, at June 30, 2007 and $21.1 million, or 1.06% of total loans and leases, at March 31, 2008.
During the first two quarters of 2008, the Company increased its allowance for loan and lease losses due to changes in economic conditions and continued growth of its loan and lease portfolio. In the quarter just ended, the Company’s provision to the allowance for loan and lease losses was $4.0 million and net charge-offs were $1.6 million, compared to a provision of $1.3 million and net charge-offs of $0.6 million in the second quarter of 2007. In the first six months of 2008, the Company’s provision to the allowance for loan and lease losses was $7.3 million and net charge-offs were $3.4 million, compared to a provision of $2.4 million and net charge-offs of $1.3 million in the first six months of 2007.
Mr. Gleason commented, “During the first half of 2008, our asset quality metrics have been impacted by slower economic and housing market conditions which adversely affected some borrowers. However, we believe our loan and lease portfolio has performed relatively well. This is a result of our strong commitment to sound underwriting standards, thorough documentation, effective servicing and diligent collection efforts. We believe that our strong credit culture will continue to serve us well.”
CONFERENCE CALL
Management will conduct a conference call to review announcements made in this press release at 10:00 a.m. CDT (11:00 a.m. EDT) on Friday, July 11, 2008. The call will be available live or in recorded version on the Company’s website www.bankozarks.com under “Investor Relations” 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 of the entire call will be available on the Company’s website or by telephone by calling 1-800-642-1687 in the United States and Canada or 706-645-9291 internationally. The passcode for this telephone playback is 54386315. The telephone playback will be available through July 31, 2008, and the website recording of the call will be available for 12 months.
