EX-99.1 2 a5056324ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Bank of the Ozarks, Inc. Announces Record Fourth Quarter and Full Year 2005 Earnings LITTLE ROCK, Ark.--(BUSINESS WIRE)--Jan. 17, 2006--Bank of the Ozarks, Inc. (NASDAQ: OZRK) today announced record earnings for the fourth quarter and year ended December 31, 2005. Net income for 2005 totaled $31,489,000, a 21.7% increase over net income of $25,883,000 for 2004. Diluted earnings per share were $1.88 for 2005 compared to $1.56 for 2004, an increase of 20.5%. For the quarter ended December 31, 2005, net income totaled $8,383,000, a 19.6% increase over net income of $7,011,000 for the fourth quarter of 2004. Diluted earnings per share for the fourth quarter of 2005 were $0.50, compared to $0.42 for the same period in 2004, an increase of 19.0%. The Company's returns on average assets and average stockholders' equity for 2005 were 1.65% and 22.95%, respectively, compared with 1.67% and 23.87%, respectively, for 2004. Annualized returns on average assets and average stockholders' equity for the fourth quarter of 2005 were 1.60% and 23.02%, respectively, compared with 1.66% and 23.58%, respectively, for the fourth quarter of 2004. Loans and leases were $1.37 billion at December 31, 2005 compared to $1.13 billion at December 31, 2004, an increase of 20.8%. Deposits were $1.59 billion at December 31, 2005 compared to $1.38 billion at December 31, 2004, an increase of 15.3%. Total assets were $2.13 billion at December 31, 2005, a 23.6% increase from $1.73 billion at December 31, 2004. Stockholders' equity was $149.4 million at December 31, 2005 compared to $121.4 million at December 31, 2004, an increase of 23.1%. Book value per share was $8.97 at December 31, 2005 compared to $7.36 at December 31, 2004, a 21.9% increase. The Company's ratio of common equity to assets was 7.00% as of December 31, 2005 compared to 7.03% as of December 31, 2004, and its ratio of tangible common equity to tangible assets was 6.72% as of December 31, 2005 compared to 6.67% as of December 31, 2004. In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, "Our favorable fourth quarter results wrapped up another great year for Bank of the Ozarks. Strong growth in loans and leases, excellent asset quality and a record efficiency ratio helped us achieve record net income and earnings per share in each quarter of 2005. The fourth quarter was our 20th consecutive quarter of record net income and earnings per share. We have now reported record net income in 34 of the last 36 quarters. In addition to posting record earnings, in 2005 we continued our growth and de novo branching strategy adding six new banking offices and key staff to support future growth." NET INTEREST INCOME Net interest income for 2005 increased 13.1% to $68,576,000 compared to $60,623,000 for 2004. Net interest margin, on a fully taxable equivalent basis, was 4.18% in 2005 compared to 4.43% in 2004, a decrease of 25 basis points. Net interest income for the fourth quarter of 2005 increased 11.0% to $17,845,000 compared to $16,075,000 for the fourth quarter of 2004. The Company has now achieved 19 consecutive quarters of record net interest income. The Company's net interest margin, on a fully taxable equivalent basis, was 4.02% in the fourth quarter of 2005, compared to 4.34% in the fourth quarter of 2004, a decrease of 32 basis points. Net interest margin for the fourth quarter of 2005 decreased 17 basis points from 4.19% in the third quarter of 2005. The increase in the Company's net interest income in the fourth quarter and full year of 2005 is a result of growth in earning assets. The decline in the Company's net interest margin during the fourth quarter and full year resulted from a number of factors, including increased competitive pressures and the flattening yield curve between short-term and long-term interest rates. The Company expects that competitive conditions and the current relatively flat yield curve will continue to exert pressure on its net interest margin. The Company's goal in recent quarters has been, and will continue to be, for growth in earning assets to more than offset any pressure on its net interest income resulting from a decline in its net interest margin. NON-INTEREST INCOME Non-interest income for 2005 was a record $19,252,000 compared with $18,225,000 for 2004, a 5.6% increase. Non-interest income for the fourth quarter of 2005 was $4,804,000 compared with $4,397,000 for the fourth quarter of 2004, a 9.3% increase. Service charges on deposit accounts and trust income both achieved record levels in 2005. Compared to the previous year, 2005 service charges on deposit accounts increased 4.2% to $9,875,000 and trust income increased 13.3% to $1,673,000. These increases more than offset a 7.8% decline in 2005 mortgage lending income to $3,034,000. NON-INTEREST EXPENSE Non-interest expense for 2005 was $40,080,000 compared with $37,605,000 for 2004, an increase of 6.6%. The Company's efficiency ratio for 2005 improved to 43.4% compared to 46.2% for 2004. Non-interest expense for the fourth quarter of 2005 was $10,306,000 compared with $9,845,000 for the fourth quarter of 2004, an increase of 4.7%. The Company's efficiency ratio for the fourth quarter of 2005 was a record 42.9% compared to 46.5% for the fourth quarter of 2004. A number of factors contributed to the Company's growth in non-interest expense in the fourth quarter and full year of 2005 compared to the fourth quarter and full year of 2004, but the most significant was the Company's continued growth and expansion. During 2005, the Company continued to pursue its growth and de novo branching strategy, resulting in the addition of six new Arkansas banking offices in North Little Rock, Mountain Home, Bentonville, Fayetteville, Benton and Russellville, the expansion of its Marshall, Arkansas office and the replacement of two initial temporary banking offices with permanent facilities in Mountain Home, Arkansas and Texarkana, Texas. The Company expects to continue its growth and de novo branching strategy. It currently plans to open a record 12 new banking offices and replace two current temporary banking offices with permanent facilities in 2006. While adding these offices will increase its non-interest expense, the Company believes these offices are important elements of its plans for future growth. ASSET QUALITY, CHARGE-OFFS AND RESERVES Nonperforming loans and leases as a percent of total loans and leases were 0.25% at year-end 2005 compared to 0.57% as of year-end 2004 and 0.18% as of September 30, 2005. Nonperforming assets as a percent of total assets were 0.18% as of year-end 2005 compared to 0.39% as of year-end 2004 and 0.13% as of September 30, 2005. 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 0.39% at year-end 2005 compared to 0.76% at year-end 2004 and 0.38% as of September 30, 2005. The Company's net charge-off ratio for 2005 was 0.11% compared to 0.10% in 2004. Its annualized net charge-off ratio for the fourth quarter of 2005 was 0.12% compared to 0.09% for the fourth quarter of 2004. The Company's allowance for loan and lease losses increased to $17.0 million at December 31, 2005, or 1.24% of total loans and leases, from $16.1 million, or 1.42% of total loans and leases, at December 31, 2004. The $0.9 million increase in the allowance for loan and lease losses in 2005 is a result of the growth in the Company's loan and lease portfolio. As of December 31, 2005, the Company's allowance for loan and lease losses equaled 502% of its total nonperforming loans and leases. GROWTH AND EXPANSION The 12 new offices the Company expects to open in 2006 are intended to give the Company a presence in four important new markets. By year-end 2006 the Company expects to grow from its present two offices to nine permanent banking offices in Benton and Washington counties in northwest Arkansas, the state's second and third largest counties in terms of bank deposits and among its fastest growing. During 2006 the Company expects to open two offices in Hot Springs in Garland County, which is Arkansas' sixth largest county in terms of bank deposits. It also expects to expand from its current one office to three banking offices in the Texarkana market (both Bowie County, Texas and Miller County, Arkansas) and expand from one temporary banking office in Frisco, Texas into two permanent banking offices. Opening new offices and replacing existing temporary banking offices with permanent facilities is subject to availability of suitable sites, designing, constructing, equipping and staffing such offices, obtaining regulatory and other approvals and many other conditions and contingencies that the Company cannot predict with certainty. CONFERENCE CALL Management will conduct a conference call to review announcements made in this press release at 10:00 a.m. CST (11:00 a.m. EST) on Wednesday, January 18, 2006. 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 4071594. The telephone playback will be available through January 31, 2006, 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 to, among other things, continued interest rate changes including changes in the shape of the yield curve, competitive factors, general economic conditions and their effects on the creditworthiness of borrowers, collateral values and the value of investment securities, the ability to attract new deposits and loans and leases, delays in identifying and acquiring satisfactory sites and opening new offices, 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 54 offices in 29 communities throughout northern, western and central Arkansas, three Texas banking offices, and loan production offices in Bentonville and 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 December 31, ------------------------------- 2005 2004 % Change ---------- ---------- -------- Income statement data: ---------------------- Net interest income $ 17,845 $ 16,075 11.0% Provision for loan and lease losses 500 500 - Non-interest income 4,804 4,397 9.3 Non-interest expense 10,306 9,845 4.7 Net income 8,383 7,011 19.6 Common stock data: ------------------ Net income per share - diluted $0.50 $0.42 19.0% Net income per share - basic 0.50 0.43 16.3 Cash dividends per share 0.10 0.08 25.0 Book value per share 8.97 7.36 21.9 Diluted shares outstanding (thousands) 16,793 16,694 End of period shares outstanding (thousands) 16,665 16,494 Balance sheet data at period end: --------------------------------- Total assets $2,134,882 $1,726,840 23.6% Total loans and leases 1,370,723 1,134,591 20.8 Allowance for loan and lease losses 17,007 16,133 5.4 Total investment securities 574,120 434,512 32.1 Goodwill 5,243 5,243 - Other intangibles - net of amortization 1,159 1,421 (18.4) Total deposits 1,591,643 1,379,930 15.3 Repurchase agreements with customers 35,671 33,223 7.4 Other borrowings 304,865 144,065 111.6 Subordinated debentures 44,331 44,331 - Stockholders' equity 149,403 121,406 23.1 Loan and lease to deposit ratio 86.12% 82.22% Selected ratios: ---------------- Return on average assets (a) 1.60% 1.66% Return on average stockholders' equity (a) 23.02 23.58 Average equity to total average assets 6.96 7.04 Net interest margin - FTE (a) 4.02 4.34 Overhead ratio (a) 1.97 2.33 Efficiency ratio 42.93 46.50 Allowance for loan and lease losses to total loans and leases 1.24 1.42 Nonperforming loans and leases to total loans and leases 0.25 0.57 Nonperforming assets to total assets 0.18 0.39 Net charge-offs to average loans and leases (a) 0.12 0.09 Other information: ------------------ Non-accrual loans and leases $ 3,385 $ 6,497 Accruing loans and leases - 90 days past due - - ORE and repossessions 356 157 (a) Ratios for interim periods annualized based on actual days Years Ended December 31, ------------------------------- 2005 2004 % Change ---------- ---------- -------- Income statement data: ---------------------- Net interest income $ 68,576 $ 60,623 13.1% Provision for loan and lease losses 2,300 3,330 (30.9) Non-interest income 19,252 18,225 5.6 Non-interest expense 40,080 37,605 6.6 Net income 31,489 25,883 21.7 Common stock data: ------------------ Net income per share - diluted $ 1.88 $ 1.56 20.5% Net income per share - basic 1.89 1.58 19.6 Cash dividends per share 0.37 0.30 23.3 Book value per share 8.97 7.36 21.9 Diluted shares outstanding (thousands) 16,766 16,635 End of period shares outstanding (thousands) 16,665 16,494 Balance sheet data at period end: --------------------------------- Total assets $2,134,882 $1,726,840 23.6% Total loans and leases 1,370,723 1,134,591 20.8 Allowance for loan and lease losses 17,007 16,133 5.4 Total investment securities 574,120 434,512 32.1 Goodwill 5,243 5,243 - Other intangibles - net of amortization 1,159 1,421 (18.4) Total deposits 1,591,643 1,379,930 15.3 Repurchase agreements with customers 35,671 33,223 7.4 Other borrowings 304,865 144,065 111.6 Subordinated debentures 44,331 44,331 - Stockholders' equity 149,403 121,406 23.1 Loan and lease to deposit ratio 86.12% 82.22% Selected ratios: ---------------- Return on average assets (a) 1.65% 1.67% Return on average stockholders' equity (a) 22.95 23.87 Average equity to total average assets 7.17 7.01 Net interest margin - FTE (a) 4.18 4.43 Overhead ratio (a) 2.10 2.43 Efficiency ratio 43.43 46.23 Allowance for loan and lease losses to total loans and leases 1.24 1.42 Nonperforming loans and leases to total loans and leases 0.25 0.57 Nonperforming assets to total assets 0.18 0.39 Net charge-offs to average loans and leases (a) 0.11 0.10 Other information: ------------------ Non-accrual loans and leases $ 3,385 $ 6,497 Accruing loans and leases - 90 days past due - - ORE and repossessions 356 157 (a) Ratios for interim periods annualized based on actual days Bank of the Ozarks, Inc. Supplemental Quarterly Financial Data (Dollars in Thousands, Except Per Share Amounts) Unaudited 3/31/04 6/30/04 9/30/04 12/31/04 ------- ------- ------- -------- Earnings Summary: ----------------- Net interest income $13,919 $14,721 $15,908 $16,075 Federal tax (FTE) adjustment 591 582 625 702 ------- ------- ------- ------- Net interest income (FTE) 14,510 15,303 16,533 16,777 Loan and lease loss provision (745) (1,045) (1,040) (500) Non-interest income 3,993 5,204 4,631 4,397 Non-interest expense (8,384) (9,610) (9,766) (9,845) ------- ------- ------- ------- Pretax income (FTE) 9,374 9,852 10,358 10,829 FTE adjustment (591) (582) (625) (702) Provision for taxes (2,818) (3,010) (3,086) (3,116) ------- ------- ------- ------- Net income $ 5,965 $ 6,260 $ 6,647 $ 7,011 ======= ======= ======= ======= Earnings per share - diluted $ 0.36 $ 0.38 $ 0.40 $ 0.42 Non-interest Income: -------------------- Trust income $ 301 $ 358 $ 390 $ 427 Service charges on deposit accounts 2,107 2,441 2,520 2,411 Mortgage lending income 815 985 863 629 Gains (losses) on sales of assets 100 20 108 13 Investment security gains (losses) - 752 22 - Bank owned life insurance income 253 254 258 448 Other 417 394 470 469 ------- ------- ------- ------- Total non-interest income $ 3,993 $ 5,204 $ 4,631 $ 4,397 Non-interest Expense: --------------------- Salaries and employee benefits $ 4,901 $ 5,023 $ 5,550 $ 5,358 Net occupancy expense 1,213 1,254 1,286 1,436 Write-off of deferred debt costs - 852 - - Other operating expenses 2,208 2,416 2,865 2,985 Amortization of intangibles 62 65 65 66 ------- ------- ------- ------- Total non-interest expense $ 8,384 $ 9,610 $ 9,766 $ 9,845 Allowance for Loan and Lease Losses: ----------------------- Balance beginning of period $13,820 $14,460 $15,113 $15,888 Net charge-offs (105) (392) (265) (255) Loan and lease loss provision 745 1,045 1,040 500 ------- ------- ------- ------- Balance at end of period $14,460 $15,113 $15,888 $16,133 Selected Ratios: ---------------- Net interest margin - FTE (a) 4.48% 4.43% 4.47% 4.34% Overhead expense ratio (a) 2.39 2.57 2.44 2.33 Efficiency ratio 45.31 46.86 46.14 46.50 Nonperforming loans and leases/total loans and leases 0.36 0.25 0.27 0.57 Nonperforming assets/total assets 0.28 0.21 0.23 0.39 Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases 0.46 0.44 0.46 0.76 (a) Annualized 3/31/05 6/30/05 9/30/05 12/31/05 ------- ------- ------- -------- Earnings Summary: ----------------- Net interest income $16,459 $16,811 $17,460 $17,845 Federal tax (FTE) adjustment 767 1,095 1,247 1,357 ------- ------- ------- ------- Net interest income (FTE) 17,226 17,906 18,707 19,202 Loan and lease loss provision (500) (500) (800) (500) Non-interest income 4,371 4,913 5,164 4,804 Non-interest expense (9,495) (10,008) (10,270) (10,306) ------- ------- ------- ------- Pretax income (FTE) 11,602 12,311 12,801 13,200 FTE adjustment (767) (1,095) (1,247) (1,357) Provision for taxes (3,513) (3,503) (3,483) (3,460) ------- ------- ------- ------- Net income $ 7,322 $ 7,713 $ 8,071 $ 8,383 ======= ======= ======= ======= Earnings per share - diluted $ 0.44 $ 0.46 $ 0.48 $ 0.50 Non-interest Income: -------------------- Trust income $ 389 $ 394 $ 448 $ 442 Service charges on deposit accounts 2,204 2,564 2,570 2,537 Mortgage lending income 671 712 888 763 Gains (losses) on sales of assets 131 335 33 68 Investment security gains (losses) - - 211 3 Bank owned life insurance income 449 455 465 446 Other 527 453 549 545 ------- ------- ------- ------- Total non-interest income $ 4,371 $ 4,913 $ 5,164 $ 4,804 Non-interest Expense: --------------------- Salaries and employee benefits $ 5,445 $ 5,866 $ 6,221 $ 5,945 Net occupancy expense 1,447 1,502 1,632 1,673 Write-off of deferred debt costs - - - - Other operating expenses 2,538 2,574 2,351 2,622 Amortization of intangibles 65 66 66 66 ------- ------- ------- ------- Total non-interest expense $ 9,495 $10,008 $10,270 $10,306 Allowance for Loan and Lease Losses: ---------------------- Balance beginning of period $16,133 $16,437 $16,745 $16,915 Net charge-offs (196) (192) (630) (408) Loan and lease loss provision 500 500 800 500 ------- ------- ------- ------- Balance at end of period $16,437 $16,745 $16,915 $17,007 Selected Ratios: ---------------- Net interest margin - FTE (a) 4.33% 4.22% 4.19% 4.02% Overhead expense ratio (a) 2.18 2.15 2.10 1.97 Efficiency ratio 43.96 43.86 43.02 42.93 Nonperforming loans and leases/total loans and leases 0.36 0.26 0.18 0.25 Nonperforming assets/total assets 0.39 0.21 0.13 0.18 Loans and leases past due 30 days or more, including past due non- accrual loans and leases, to total loans and leases 0.49 0.45 0.38 0.39 (a) Annualized Bank of the Ozarks, Inc. Average Consolidated Balance Sheet and Net Interest Analysis (Dollars in Thousands) Unaudited Quarter Ended December 31, 2005 -------------------------- Average Income/ Yield/ Balance Expense Rate ---------- ------- ------ ASSETS Earnings assets: Interest earning deposits and federal funds sold $ 229 $ 2 3.38% Investment securities: Taxable 325,563 4,354 5.31 Tax-exempt - FTE 219,574 3,797 6.86 Loans and leases - FTE 1,351,662 25,250 7.41 ---------- ------- Total earnings assets 1,897,028 33,403 6.99 Non-earning assets 178,804 ---------- Total assets $2,075,832 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 497,866 $ 2,284 1.82% Time deposits of $100,000 or more 582,319 5,266 3.59 Other time deposits 311,895 2,370 3.01 ---------- -------- Total interest bearing deposits 1,392,080 9,920 2.83 Repurchase agreements with customers 26,413 141 2.11 Other borrowings 315,003 3,376 4.25 Subordinated debentures 44,331 764 6.84 ---------- -------- Total interest bearing liabilities 1,777,827 14,201 3.17 Non-interest bearing liabilities: Non-interest bearing deposits 144,021 Other non-interest bearing liabilities 9,468 ---------- Total liabilities 1,931,316 Stockholders' equity 144,516 ---------- Total liabilities and stockholders' equity $2,075,832 ========== Interest rate spread - FTE 3.82% -------- Net interest income - FTE $ 19,202 ======== Net interest margin - FTE 4.02% Year Ended December 31, 2005 -------------------------- Average Income/ Yield/ Balance Expense Rate ---------- ------- ------ ASSETS Earnings assets: Interest earning deposits and federal funds sold $ 332 $ 11 3.44% Investment securities: Taxable 319,234 16,998 5.32 Tax-exempt - FTE 181,386 12,468 6.87 Loans and leases - FTE 1,245,779 87,869 7.05 ---------- -------- Total earnings assets 1,746,731 117,346 6.72 Non-earning assets 166,230 ---------- Total assets $1,912,961 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 466,609 $ 7,041 1.51% Time deposits of $100,000 or more 542,378 16,265 3.00 Other time deposits 299,104 8,008 2.68 ---------- -------- Total interest bearing deposits 1,308,091 31,314 2.39 Repurchase agreements with customers 26,620 450 1.69 Other borrowings 251,589 9,848 3.91 Subordinated debentures 44,331 2,693 6.08 ---------- -------- Total interest bearing liabilities 1,630,631 44,305 2.72 Non-interest bearing liabilities: Non-interest bearing deposits 138,072 Other non-interest bearing liabilities 7,073 ---------- Total liabilities 1,775,776 Stockholders' equity 137,185 ---------- Total liabilities and stockholders' equity $1,912,961 ========== Interest rate spread - FTE 4.00% -------- Net interest income - FTE $ 73,041 ======== Net interest margin - FTE 4.18% CONTACT: Bank of the Ozarks Inc., Little Rock Susan Blair, 501-978-2217