EX-99.1 2 a4928093ex99_1.txt EXHIBIT 99.1 - PRESS RELEASE Bank of the Ozarks, Inc. Announces Record Second Quarter Earnings LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 12, 2005--Bank of the Ozarks, Inc. (NASDAQ:OZRK) today announced record earnings for the quarter ended June 30, 2005. Net income for the quarter was $7,713,000, a 23.2% increase over net income of $6,260,000 for the second quarter of 2004. Diluted earnings per share were $0.46 for the second quarter of 2005 compared to $0.38 for the second quarter of 2004, an increase of 21.1%. For the six months ended June 30, 2005, net income totaled $15,035,000, a 23.0% increase over net income of $12,225,000 for the first six months of 2004. Diluted earnings per share for the first six months of 2005 were $0.90, compared to $0.74 for the comparable period in 2004, an increase of 21.6%. The Company's annualized returns on average assets and average stockholders' equity for the second quarter of 2005 were 1.66% and 23.07%, respectively, compared with 1.67% and 24.63%, respectively, for the second quarter of 2004. Annualized returns on average assets and average stockholders' equity for the six months ended June 30, 2005 were 1.67% and 23.37%, respectively, compared with 1.68% and 24.03%, respectively, for the six months ended June 30, 2004. Loans and leases were $1.22 billion at June 30, 2005 compared to $1.02 billion at June 30, 2004, an increase of 19.6%. Deposits were $1.47 billion at June 30, 2005 compared to $1.19 billion at June 30, 2004, an increase of 23.4%. Total assets were $1.90 billion at June 30, 2005, a 25.5% increase from $1.52 billion at June 30, 2004. Stockholders' equity was $139.7 million at June 30, 2005 compared to $100.3 million at June 30, 2004, an increase of 39.3%. Book value per share was $8.40 at June 30, 2005 compared to $6.12 at June 30, 2004, a 37.3% increase. Changes in stockholders' equity and book value per share reflect earnings, dividends paid, exercise of stock options and changes in unrealized gains and losses on investment securities available for sale. The Company's ratio of common equity to assets was 7.34% as of June 30, 2005 compared to 6.62% as of June 30, 2004, and its ratio of tangible common equity to tangible assets was 7.03% as of June 30, 2005 compared to 6.19% as of June 30, 2004. In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, "Record net interest income, record income from service charges, a record efficiency ratio and excellent asset quality were each important contributors to our favorable second quarter results. The quarter just ended was our 18th consecutive quarter of record net income and earnings per share. We have now reported record net income in 32 of the last 34 quarters." NET INTEREST INCOME Net interest income for the second quarter of 2005 increased 14.2% to $16,811,000 compared to $14,721,000 for the second quarter of 2004. The Company has now achieved 17 consecutive quarters of record net interest income. Net interest margin, on a fully taxable equivalent basis, was 4.22% in the quarter just ended compared to 4.43% in the second quarter of 2004, a decrease of 21 basis points. The Company's second quarter 2005 net interest margin of 4.22% reflected a decrease of 11 basis points from the first quarter's 4.33%. A number of factors contributed to this decrease, including continuing competitive pressures and the flattening yield curve between short and long term interest rates. Net interest income for the six months ended June 30, 2005 increased 16.2% to $33,271,000 compared with $28,640,000 for the six months ended June 30, 2004. The Company's net interest margin for the first half of 2005 was 4.28%, a decrease of 18 basis points from 4.46% in the first half of 2004. NON-INTEREST INCOME Non-interest income for the second quarter of 2005 was $4,913,000 compared with $5,204,000 for the second quarter of 2004, a 5.6% decline. Non-interest income for the six months ended June 30, 2005 was $9,284,000 compared to $9,197,000 for the six months ended June 30, 2004, a 0.9% increase. Income from service charges on deposit accounts and trust income for both the first and second quarters of 2005 improved from the levels achieved during the comparable quarters of 2004. Mortgage lending income in the first and second quarters of 2005 was below the levels achieved during the comparable quarters of 2004. Lower volumes of mortgage refinancing contributed significantly to this decline. During the second quarter of 2005, the Company realized net gains on sales of assets of $335,000. NON-INTEREST EXPENSE Non-interest expense for the second quarter of 2005 was $10,008,000 compared with $9,610,000 for the second quarter of 2004, an increase of 4.1%. The Company's efficiency ratio for the quarter ended June 30, 2005 improved to a record 43.9% compared to 46.9% for the second quarter of 2004. Non-interest expense for the first six months of 2005 was $19,504,000 compared with $17,993,000 for the first six months of 2004, an increase of 8.4%. The Company's efficiency ratio for the first six months of 2005 was 43.9% compared to 46.1% for the first six months of 2004. A number of factors contributed to the Company's growth in non-interest expense in the first half of 2005 compared to the first half of 2004, but the most significant was the Company's continued growth and expansion. From June 30, 2004 to June 30, 2005, the Company continued to pursue its growth and de novo branching strategy, resulting in the addition of ten new banking offices. Two of these offices opened in the second quarter of 2005, including the Company's first Fayetteville, Arkansas office which opened in temporary quarters in April and the Company's second permanent office in Benton, Arkansas which opened in June. Mr. Gleason stated, "While the continued execution of our growth and de novo branching strategy necessarily entails increases in non-interest expense, we have maintained our strong focus on both revenue growth and expense control. As a result, even as we have added a large number of new offices, our total revenue has grown faster than our non-interest expense. We are very proud to have achieved record efficiency ratios in both the first and second quarters of 2005." ASSET QUALITY, CHARGE-OFFS AND RESERVES Nonperforming loans and leases as a percent of total loans and leases were 0.26% at June 30, 2005 compared to 0.25% as of June 30, 2004. Nonperforming assets as a percent of total assets were 0.21% as of both June 30, 2005 and June 30, 2004. 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 0.45% at June 30, 2005 compared to 0.44% at June 30, 2004. The Company's annualized net charge-off ratio for the second quarter of 2005 was 0.06% compared to 0.16% for the second quarter of 2004. The Company's annualized net charge-off ratio was 0.07% for the first six months of 2005 compared to 0.10% for the first six months of 2004. Mr. Gleason stated, "Our second quarter asset quality ratios were outstanding. Our ratio of nonperforming assets as a percent of total assets was the best we have achieved at the end of any quarter since becoming a public company in 1997. Our 30-day past due ratio of 0.45% was our second best as a public company and just one basis point from the best. Our 0.06% annualized net charge-off ratio was the second best we have achieved in any quarter as a public company and just one basis point from our best. These ratios reflect our significant emphasis on asset quality." The Company's allowance for loan and lease losses increased to $16.7 million at June 30, 2005, or 1.37% of total loans and leases, compared to $15.1 million, or 1.48% of total loans and leases, at June 30, 2004. The increase of approximately $1.6 million in the allowance for loan and lease losses over the past twelve months is a result of the growth in the Company's loan and lease portfolio. As of June 30, 2005, the Company's allowance for loan and lease losses equaled 527% of its total nonperforming loans and leases. 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 Wednesday, July 13, 2005. 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 7529438. The telephone playback will be available through July 31, 2005, and the website recording of the call will be available for 12 months. GENERAL This release contains forward looking statements regarding the Company's plans, expectations, goals and outlook for the future. Actual results may differ materially from those projected in such forward looking statements, due, among other things, to continued interest rate changes, competitive factors, general economic conditions and their effects on the creditworthiness of borrowers, collateral values and the value of securities, the ability to attract new deposits and loans, delays in identifying, acquiring and opening satisfactory sites, delays in or inability to obtain required regulatory approvals, the ability to generate future revenue growth or to control future growth in non-interest expense, as well as other factors identified in this press release or in Management's Discussion and Analysis under the caption "Forward Looking Information" contained in the Company's 2004 Annual Report to Stockholders and the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. Bank of the Ozarks, Inc. trades on the NASDAQ National Market under the symbol "OZRK". The Company owns a state-chartered subsidiary bank that conducts banking operations through 53 offices in 29 communities throughout northern, western and central Arkansas, three Texas banking offices, and loan production offices in Little Rock, Arkansas and Charlotte, North Carolina. 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. Bank of the Ozarks, Inc. Selected Consolidated Financial Data (Dollars in Thousands, Except Per Share Amounts) Unaudited Quarters Ended June 30, -------------------------------- 2005 2004 % Change ---------- ---------- --------- Income statement data: ---------------------- Net interest income $ 16,811 $ 14,721 14.2% Provision for loan and lease losses 500 1,045 (52.2) Non-interest income 4,913 5,204 (5.6) Non-interest expense 10,008 9,610 4.1 Net income 7,713 6,260 23.2 Common stock data: ------------------ Net income per share - diluted $ 0.46 $ 0.38 21.1% Net income per share - basic 0.46 0.38 21.1 Cash dividends per share 0.09 0.07 28.6 Book value per share 8.40 6.12 37.3 Diluted shares outstanding (thousands) 16,770 16,616 End of period shares outstanding (thousands) 16,639 16,391 Balance sheet data at period end: --------------------------------- Total assets $1,902,603 $1,516,175 25.5% Total loans and leases 1,221,840 1,021,199 19.6 Allowance for loan and lease losses 16,745 15,113 10.8 Total investment securities 506,058 371,675 36.2 Goodwill 5,243 5,243 - Other intangibles - net of amortization 1,290 1,577 (18.2) Total deposits 1,466,541 1,188,675 23.4 Repurchase agreements with customers 24,306 39,227 (38.0) Other borrowings 219,031 155,702 40.7 Subordinated debentures 44,331 28,867 53.6 Stockholders' equity 139,746 100,322 39.3 Loan and lease to deposit ratio 83.31% 85.91% Selected ratios: ---------------- Return on average assets(a) 1.66% 1.67% Return on average stockholders' equity(a) 23.07 24.63 Average equity to total average assets 7.19 6.79 Net interest margin - FTE(a) 4.22 4.43 Overhead ratio(a) 2.15 2.57 Efficiency ratio 43.86 46.86 Allowance for loan and lease losses to total loans and leases 1.37 1.48 Nonperforming loans and leases to total loans and leases 0.26 0.25 Nonperforming assets to total assets 0.21 0.21 Net charge-offs to average loans and leases(a) 0.06 0.16 Other information: ------------------ Non-accrual loans and leases $ 3,180 $ 2,587 Accruing loans and leases - 90 days past due - - ORE and repossessions 727 624 Six Months Ended June 30, -------------------------------- 2005 2004 % Change ---------- ---------- --------- Income statement data: ---------------------- Net interest income $ 33,271 $ 28,640 16.2% Provision for loan and lease losses 1,000 1,790 (44.1) Non-interest income 9,284 9,197 0.9 Non-interest expense 19,504 17,993 8.4 Net income 15,035 12,225 23.0 Common stock data: ------------------ Net income per share - diluted $ 0.90 $ 0.74 21.6% Net income per share - basic 0.90 0.75 20.0 Cash dividends per share 0.17 0.14 21.4 Book value per share 8.40 6.12 37.3 Diluted shares outstanding (thousands) 16,752 16,599 End of period shares outstanding (thousands) 16,639 16,391 Balance sheet data at period end: --------------------------------- Total assets $1,902,603 $1,516,175 25.5% Total loans and leases 1,221,840 1,021,199 19.6 Allowance for loan and lease losses 16,745 15,113 10.8 Total investment securities 506,058 371,675 36.2 Goodwill 5,243 5,243 - Other intangibles - net of amortization 1,290 1,577 (18.2) Total deposits 1,466,541 1,188,675 23.4 Repurchase agreements with customers 24,306 39,227 (38.0) Other borrowings 219,031 155,702 40.7 Subordinated debentures 44,331 28,867 53.6 Stockholders' equity 139,746 100,322 39.3 Loan and lease to deposit ratio 83.31% 85.91% Selected ratios: ---------------- Return on average assets(a) 1.67% 1.68% Return on average stockholders' equity(a) 23.37 24.03 Average equity to total average assets 7.15 7.01 Net interest margin - FTE(a) 4.28 4.46 Overhead ratio(a) 2.17 2.48 Efficiency ratio 43.91 46.12 Allowance for loan and lease losses to total loans and leases 1.37 1.48 Nonperforming loans and leases to total loans and leases 0.26 0.25 Nonperforming assets to total assets 0.21 0.21 Net charge-offs to average loans and leases(a) 0.07 0.10 Other information: ------------------ Non-accrual loans and leases $ 3,180 $ 2,587 Accruing loans and leases - 90 days past due - - ORE and repossessions 727 624 (a) Ratios annualized based on actual days Bank of the Ozarks, Inc. Supplemental Quarterly Financial Data (Dollars in Thousands, Except Per Share Amounts) Unaudited 9/30/03 12/31/03 3/31/04 6/30/04 -------- --------- -------- -------- Earnings Summary: ----------------- Net interest income $ 12,658 $ 13,469 $ 13,919 $ 14,721 Federal tax (FTE) adjustment 312 479 591 582 -------- --------- -------- -------- Net interest income (FTE) 12,970 13,948 14,510 15,303 Loan and lease loss provision (1,050) (970) (745) (1,045) Non-interest income 5,147 4,128 3,993 5,204 Non-interest expense (8,629) (8,855) (8,384) (9,610) -------- --------- -------- -------- Pretax income (FTE) 8,438 8,251 9,374 9,852 FTE adjustment (312) (479) (591) (582) Provision for taxes (2,852) (2,160) (2,818) (3,010) -------- --------- -------- -------- Net income $ 5,274 $ 5,612 $ 5,965 $ 6,260 ======== ========= ======== ======== Earnings per share - diluted(a) $ 0.32 $ 0.34 $ 0.36 $ 0.38 Non-interest Income: -------------------- Trust income $ 493 $ 523 $ 301 $ 358 Service charges on deposit accounts 2,043 2,063 2,107 2,441 Mortgage lending income 1,958 922 815 985 Gain (loss) on sales of assets 8 8 100 20 Security gains (losses) 36 11 - 752 Bank owned life insurance income 299 258 253 254 Other 310 343 417 394 -------- --------- -------- -------- Total non-interest income $ 5,147 $ 4,128 $ 3,993 $ 5,204 Non-interest Expense:(b) ------------------------ Salaries and employee benefits $ 5,194 $ 4,697 $ 4,901 $ 5,023 Net occupancy expense 1,179 1,152 1,213 1,254 Write-off of deferred debt costs - - - 852 Other operating expenses 2,194 2,944 2,208 2,416 Amortization of intangibles 62 62 62 65 -------- --------- -------- -------- Total non-interest expense $ 8,629 $ 8,855 $ 8,384 $ 9,610 Allowance for Loan and Lease Losses: ---------------------------- Balance beginning of period $ 12,579 $ 13,100 $ 13,820 $ 14,460 Net charge-offs (529) (250) (105) (392) Loan and lease loss provision 1,050 970 745 1,045 -------- --------- -------- -------- Balance at end of period $ 13,100 $ 13,820 $ 14,460 $ 15,113 Selected Ratios: ---------------- Net interest margin - FTE(c) 4.48% 4.45% 4.48% 4.43% Overhead expense ratio(c) 2.75 2.61 2.39 2.57 Efficiency ratio 47.63 48.99 45.31 46.86 Nonperforming loans and leases/total loans and leases 0.50 0.47 0.36 0.25 Nonperforming assets/total assets 0.41 0.36 0.28 0.21 Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases 0.64 0.77 0.46 0.44 9/30/04 12/31/04 3/31/05 6/30/05 -------- --------- -------- -------- Earnings Summary: ----------------- Net interest income $ 15,908 $ 16,075 $ 16,459 $ 16,811 Federal tax (FTE) adjustment 625 702 767 1,095 -------- --------- -------- -------- Net interest income (FTE) 16,533 16,777 17,226 17,906 Loan and lease loss provision (1,040) (500) (500) (500) Non-interest income 4,631 4,397 4,371 4,913 Non-interest expense (9,766) (9,845) (9,495) (10,008) -------- --------- -------- -------- Pretax income (FTE) 10,358 10,829 11,602 12,311 FTE adjustment (625) (702) (767) (1,095) Provision for taxes (3,086) (3,116) (3,513) (3,503) -------- --------- -------- -------- Net income $ 6,647 $ 7,011 $ 7,322 $ 7,713 ======== ========= ======== ======== Earnings per share - diluted(a) $ 0.40 $ 0.42 $ 0.44 $ 0.46 Non-interest Income: -------------------- Trust income $ 390 $ 427 $ 389 $ 394 Service charges on deposit accounts 2,520 2,411 2,204 2,564 Mortgage lending income 863 629 671 712 Gain (loss) on sales of assets 108 13 131 335 Security gains (losses) 22 - - - Bank owned life insurance income 258 448 449 455 Other 470 469 527 453 -------- --------- -------- -------- Total non-interest income $ 4,631 $ 4,397 $ 4,371 $ 4,913 Non-interest Expense:(b) ------------------------ Salaries and employee benefits $ 5,550 $ 5,358 $ 5,445 $ 5,866 Net occupancy expense 1,286 1,436 1,447 1,502 Write-off of deferred debt costs - - - - Other operating expenses 2,865 2,985 2,538 2,574 Amortization of intangibles 65 66 65 66 -------- --------- -------- -------- Total non-interest expense $ 9,766 $ 9,845 $ 9,495 $ 10,008 Allowance for Loan and Lease Losses: ---------------------------- Balance beginning of period $ 15,113 $ 15,888 $ 16,133 $ 16,437 Net charge-offs (265) (255) (196) (192) Loan and lease loss provision 1,040 500 500 500 -------- --------- -------- -------- Balance at end of period $ 15,888 $ 16,133 $ 16,437 $ 16,745 Selected Ratios: ---------------- Net interest margin - FTE(c) 4.47% 4.34% 4.33% 4.22% Overhead expense ratio(c) 2.44 2.33 2.18 2.15 Efficiency ratio 46.14 46.50 43.96 43.86 Nonperforming loans and leases/total loans and leases 0.27 0.57 0.36 0.26 Nonperforming assets/total assets 0.23 0.39 0.39 0.21 Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases 0.46 0.76 0.49 0.45 (a) Adjusted to give effect to 2-for-1 stock split effective December 10, 2003 (b) Prior quarters' employee stock-based compensation expenses have been reclassified from other operating expenses to salaries and employee benefits to conform to the current quarter presentation of expense recorded pursuant to SFAS No. 123, as amended. (c) Annualized Note: All data adjusted to comply to FASB Interpretation No. 46 Bank of the Ozarks, Inc. Average Consolidated Balance Sheet and Net Interest Analysis (Dollars in Thousands) Unaudited Quarter Ended June 30, 2005 --------------------------- Average Income/ Yield/ Balance Expense Rate ----------- -------- ------ ASSETS Earnings assets: Interest bearing deposits and federal funds sold $ 349 $ 3 3.78% Investment securities: Taxable 316,291 4,203 5.33 Tax-exempt - FTE 178,356 3,058 6.88 Loans and leases - FTE 1,205,594 20,679 6.88 ---------- ------- Total earnings assets 1,700,590 27,943 6.59 Non-earning assets 164,172 ---------- Total assets $1,864,762 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 461,837 $ 1,639 1.42% Time deposits of $100,000 or more 532,633 3,691 2.78 Other time deposits 293,663 1,864 2.55 ---------- ------- Total interest bearing deposits 1,288,133 7,194 2.24 Repurchase agreements with customers 24,266 95 1.58 Other borrowings 228,495 2,105 3.69 Subordinated debentures 44,331 644 5.83 ---------- ------- Total interest bearing liabilities 1,585,225 10,038 2.54 Non-interest bearing liabilities: Non-interest bearing deposits 137,680 Other non-interest bearing liabilities 7,769 ---------- Total liabilities 1,730,674 Stockholders' equity 134,088 ---------- Total liabilities and stockholders' equity $1,864,762 ========== Interest rate spread - FTE 4.05% ------- Net interest income - FTE $17,905 ======= Net interest margin - FTE 4.22% Six Months Ended June 30, 2005 --------------------------- Average Income/ Yield/ Balance Expense Rate ----------- -------- ------ ASSETS Earnings assets: Interest bearing deposits and federal funds sold $ 388 $ 8 4.08% Investment securities: Taxable 323,844 8,618 5.37 Tax-exempt - FTE 150,884 5,179 6.92 Loans and leases - FTE 1,181,891 39,668 6.77 ---------- ------- Total earnings assets 1,657,007 53,473 6.51 Non-earning assets 158,229 ---------- Total assets $1,815,236 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 451,463 $ 2,968 1.33% Time deposits of $100,000 or more 521,483 6,665 2.58 Other time deposits 287,889 3,457 2.42 ---------- ------- Total interest bearing deposits 1,260,835 13,090 2.09 Repurchase agreements with customers 28,494 213 1.50 Other borrowings 211,783 3,810 3.63 Subordinated debentures 44,331 1,228 5.59 ---------- ------- Total interest bearing liabilities 1,545,443 18,341 2.39 Non-interest bearing liabilities: Non-interest bearing deposits 134,414 Other non-interest bearing liabilities 5,646 ---------- Total liabilities 1,685,503 Stockholders' equity 129,733 ---------- Total liabilities and stockholders' equity $1,815,236 ========== Interest rate spread - FTE 4.12% ------- Net interest income - FTE $35,132 ======= Net interest margin - FTE 4.28% CONTACT: Bank of the Ozarks Inc., Little Rock Susan Blair, 501-978-2217