EX-99.1 2 a5445695ex991.txt EXHIBIT 99.1 Exhibit 99.1 Bank of the Ozarks, Inc. Announces Second Quarter 2007 Earnings LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 12, 2007--Bank of the Ozarks, Inc. (NASDAQ: OZRK) today announced that net income for the quarter ended June 30, 2007 was $8,086,000, a 2.0% increase over net income of $7,931,000 for the second quarter of 2006. Diluted earnings per share were $0.48 for the second quarter of 2007 compared to $0.47 for the second quarter of 2006, an increase of 2.1%. For the six months ended June 30, 2007, net income totaled $15,607,000, a 4.4% decrease from net income of $16,328,000 for the first six months of 2006. Diluted earnings per share for the first six months of 2007 were $0.93, compared to $0.97 for the first six months of 2006, a decrease of 4.1%. The Company's annualized returns on average assets and average stockholders' equity for the second quarter of 2007 were 1.27% and 17.82%, respectively, compared to 1.37% and 21.13% for the second quarter of 2006. Annualized returns on average assets and average stockholders' equity for the six months ended June 30, 2007 were 1.23% and 17.47%, respectively, compared with 1.46% and 21.72% for the six months ended June 30, 2006. Loans and leases were $1.76 billion at June 30, 2007 compared to $1.55 billion at June 30, 2006, an increase of 13.0%. Deposits were $2.16 billion at June 30, 2007 compared to $1.82 billion at June 30, 2006, an increase of 18.5%. Total assets were $2.58 billion at June 30, 2007, a 6.6% increase from $2.42 billion at June 30, 2006. Stockholders' equity increased 19.0% to $178 million at June 30, 2007 compared to $150 million at June 30, 2006. Book value per share increased 18.7% to $10.62 at June 30, 2007 compared to $8.95 at June 30, 2006. 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 6.90% as of June 30, 2007 compared to 6.18% as of June 30, 2006, and its ratio of tangible common equity to tangible assets was 6.68% as of June 30, 2007 compared to 5.94% as of June 30, 2006. In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, "We are pleased to report our second quarter results, which, for the second consecutive quarter, include record net interest income, record income from service charges on deposit accounts and quarter-to-quarter improvement in our net interest margin. We also achieved our best mortgage lending income in seven quarters and our second best quarter of trust income ever. While non-interest expense for the quarter just ended increased compared to the second quarter of 2006, the rate of increase was less than our year-over-year rate of increase of non-interest expense during any of the preceding five quarters. These results reflect good progress in achieving our dual goals of accelerating our rate of revenue growth and decelerating our rate of overhead growth in 2007. Maintaining good asset quality is another of our key goals for 2007, and accordingly we are very pleased to report our favorable second quarter asset quality results." NET INTEREST INCOME Net interest income for the second quarter of 2007 increased 7.3% to a record $19,291,000 compared to $17,985,000 for 2006. Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.46% in the second quarter of 2007, a decrease of 15 basis points from 3.61% in the second quarter of 2006. Compared to the first quarter of 2007, second quarter 2007 net interest margin (FTE) improved 11 basis points. Net interest income for the six months ended June 30, 2007 increased 6.0% to $37,540,000 compared to $35,423,000 for the six months ended June 30, 2006. The Company's net interest margin (FTE) for the first half of 2007 was 3.41%, a decrease of 31 basis points from 3.72% in the first half of 2006. Mr. Gleason stated, "The relatively flat to slightly inverted yield curve between short-term and long-term interest rates and intense competition continued to provide a challenging interest margin environment during the quarter just ended. Despite these conditions, our growth in loans and leases and the quarter-to-quarter improvement in our net interest margin allowed us to achieve our second consecutive quarter of record net interest income. Our goals for 2007 include improving net interest income each quarter by maintaining, or hopefully improving, our net interest margin and achieving good growth in earning assets, primarily loans and leases." NON-INTEREST INCOME Non-interest income for the second quarter of 2007 was $5,623,000 compared to $4,954,000 for the second quarter of 2006, a 13.5% increase. Non-interest income for the six months ended June 30, 2007 was $11,582,000 compared to $11,118,000 for the six months ended June 30, 2006, a 4.2% increase. Service charges on deposit accounts, the Company's largest source of non-interest income, were a record $3,107,000 in the second quarter of 2007, an increase of 20.1% compared to $2,587,000 in the second quarter of 2006. Service charges on deposit accounts increased 21.0% to $5,942,000 for the first half of 2007 compared with $4,909,000 for the first half of 2006. Mortgage lending income increased 4.9% to $817,000 in the second quarter of 2007 compared to $779,000 in the second quarter of 2006. Mortgage lending income was $1,548,000 in the first half of 2007, a 12.0% increase from $1,382,000 in the first half of 2006. Trust income increased 11.1% to $531,000 in the second quarter of 2007 compared to $478,000 in the second quarter of 2006. Trust income was $996,000 in the first half of 2007, a 9.3% increase from $911,000 in the first half of 2006. Sales of investment securities and other assets resulted in a net loss of $47,000 in the second quarter of 2007 compared to a $38,000 net gain in the second quarter of 2006. Net gains from sales of investment securities and other assets were $325,000 for the first half of 2007 compared to $1,871,000 for the first half of 2006. NON-INTEREST EXPENSE Non-interest expense for the second quarter of 2007 was $11,876,000 compared to $11,017,000 for the second quarter of 2006, an increase of 7.8%, but down slightly from $12,138,000 in the first quarter of 2007. The Company's efficiency ratio for the quarter ended June 30, 2007 was 46.1% compared to 45.8% for the second quarter of 2006. Non-interest expense for the first six months of 2007 was $24,014,000 compared with $22,177,000 for the first six months of 2006, an increase of 8.3%. The Company's efficiency ratio for the first six months of 2007 was 47.3% compared to 45.2% for the first six months of 2006. A number of factors contributed to the Company's growth in non-interest expense in the second quarter of 2007 compared to the second quarter of 2006. These factors include the ongoing costs of facilities and staff added as part of the Company's 2006 branching and corporate growth initiatives, costs from resumption of FDIC deposit insurance assessments and costs of the Company's ongoing growth and expansion efforts. The Company is continuing its growth and de novo branching strategy in 2007, although at a slower pace than in 2006. The Company opened a new banking office in Hot Springs, Arkansas during the quarter just ended, and, in the remainder of 2007, it plans to add two new Arkansas banking offices and replace a temporary banking office in Frisco, Texas with a new permanent facility. During the quarter just ended, the Company discontinued its plans to establish a new Oklahoma bank subsidiary and closed its Tulsa loan production office. This may delay the Company's plans to expand its North Carolina loan production office to a full-service banking operation. Opening new offices and replacing existing temporary offices with permanent facilities are 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 accurately predict with certainty. ASSET QUALITY, CHARGE-OFFS AND ALLOWANCE Nonperforming loans and leases as a percent of total loans and leases were 0.23% as of June 30, 2007 compared to 0.18% as of June 30, 2006 and 0.25% as of March 31, 2007. Nonperforming assets as a percent of total assets were 0.26% as of June 30, 2007 compared to 0.13% as of June 30, 2006 and 0.27% as of March 31, 2007. 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 0.53% as of June 30, 2007 compared to 0.45% as of June 30, 2006 and 0.84% as of March 31, 2007. The Company's annualized net charge-off ratio for the second quarter of 2007 was 0.14% compared to 0.09% in the second quarter of 2006 and 0.16% for the first quarter of 2007. The Company's annualized net charge-off ratio was 0.15% for the first six months of 2007 compared to 0.09% for the first six months of 2006 and 0.12% for the full year of 2006. The Company's allowance for loan and lease losses was $18.7 million at June 30, 2007, or 1.07% of total loans and leases, compared to $17.3 million, or 1.12% of total loans and leases, at June 30, 2006. As of June 30, 2007, the Company's allowance for loan and lease losses equaled 466% 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 Friday, July 13, 2007. 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 4714174. The telephone playback will be available through July 31, 2007, and the website recording of the call will be available for 12 months. FORWARD LOOKING STATEMENTS This release contains forward looking statements regarding the Company's plans, expectations, goals and outlook for the future, including the Company's goals to accelerate its rate of revenue growth, decelerate its rate of overhead growth, and maintain good asset quality, and the Company's goals and expectations for improving net interest income, maintaining or improving net interest margin, growth in earning assets, growth in loans and leases, continuation of its growth and de novo branching strategy, plans to replace a temporary banking office with a new permanent facility and plans to add new banking offices. 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 2006 Annual Report to Stockholders and the most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. GENERAL INFORMATION Bank of the Ozarks, Inc. trades on the NASDAQ Global Select Market under the symbol "OZRK". The Company owns a state-chartered subsidiary bank that conducts banking operations through 63 offices in 34 communities throughout northern, western and central Arkansas, five 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, -------------------------------- 2007 2006 % Change ----------- ----------- -------- Income statement data: ------------------------------------ Net interest income $ 19,291 $ 17,985 7.3% Provision for loan and lease losses 1,250 500 150.0 Non-interest income 5,623 4,954 13.5 Non-interest expense 11,876 11,017 7.8 Net income 8,086 7,931 2.0 Common stock data: ------------------------------------ Net income per share - diluted $ 0.48 $ 0.47 2.1% Net income per share - basic 0.48 0.47 2.1 Cash dividends per share 0.10 0.10 - Book value per share 10.62 8.95 18.7 Diluted shares outstanding (thousands) 16,834 16,808 End of period shares outstanding (thousands) 16,771 16,718 Balance sheet data at period end: ------------------------------------ Total assets $2,580,545 $2,420,597 6.6% Total loans and leases 1,756,383 1,553,893 13.0 Allowance for loan and lease losses 18,747 17,332 8.2 Total investment securities 575,433 655,631 (12.2) Goodwill 5,243 5,243 - Other intangibles - net of amortization 765 1,028 (25.6) Total deposits 2,155,643 1,818,628 18.5 Repurchase agreements with customers 45,063 55,230 (18.4) Other borrowings 120,807 342,027 (64.7) Subordinated debentures 64,950 44,331 46.5 Stockholders' equity 178,081 149,610 19.0 Loan and lease to deposit ratio 81.48% 85.44% Selected ratios: ------------------------------------ Return on average assets(a) 1.27% 1.37% Return on average stockholders' equity(a) 17.82 21.13 Average equity to total average assets 7.10 6.47 Net interest margin - FTE(a) 3.46 3.61 Overhead ratio(a) 1.86 1.90 Efficiency ratio 46.12 45.77 Net charge-offs to average loans and leases(a) 0.14 0.09 Nonperforming loans and leases to total loans and leases 0.23 0.18 Nonperforming assets to total assets 0.26 0.13 Allowance for loan and lease losses to total loans and leases 1.07 1.12 Other information: ------------------------------------ Non-accrual loans and leases $ 4,022 $ 2,784 Accruing loans and leases - 90 days past due - - ORE and repossessions 2,685 391 Six Months Ended June 30, -------------------------------- 2007 2006 % Change ----------- ----------- -------- Income statement data: ------------------------------------ Net interest income $ 37,540 $ 35,423 6.0% Provision for loan and lease losses 2,350 1,000 135.0 Non-interest income 11,582 11,118 4.2 Non-interest expense 24,014 22,177 8.3 Net income 15,607 16,328 (4.4) Common stock data: ------------------------------------ Net income per share - diluted $ 0.93 $ 0.97 (4.1)% Net income per share - basic 0.93 0.98 (5.1) Cash dividends per share 0.20 0.20 - Book value per share 10.62 8.95 18.7 Diluted shares outstanding (thousands) 16,830 16,802 End of period shares outstanding (thousands) 16,771 16,718 Balance sheet data at period end: ------------------------------------ Total assets $2,580,545 $2,420,597 6.6% Total loans and leases 1,756,383 1,553,893 13.0 Allowance for loan and lease losses 18,747 17,332 8.2 Total investment securities 575,433 655,631 (12.2) Goodwill 5,243 5,243 - Other intangibles - net of amortization 765 1,028 (25.6) Total deposits 2,155,643 1,818,628 18.5 Repurchase agreements with customers 45,063 55,230 (18.4) Other borrowings 120,807 342,027 (64.7) Subordinated debentures 64,950 44,331 46.5 Stockholders' equity 178,081 149,610 19.0 Loan and lease to deposit ratio 81.48% 85.44% Selected ratios: ------------------------------------ Return on average assets(a) 1.23% 1.46% Return on average stockholders' equity(a) 17.47 21.72 Average equity to total average assets 7.06 6.74 Net interest margin - FTE(a) 3.41 3.72 Overhead ratio(a) 1.90 1.99 Efficiency ratio 47.26 45.23 Net charge-offs to average loans and leases(a) 0.15 0.09 Nonperforming loans and leases to total loans and leases 0.23 0.18 Nonperforming assets to total assets 0.26 0.13 Allowance for loan and lease losses to total loans and leases 1.07 1.12 Other information: ------------------------------------ Non-accrual loans and leases $ 4,022 $ 2,784 Accruing loans and leases - 90 days past due - - ORE and repossessions 2,685 391 (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 9/30/05 12/31/05 3/31/06 6/30/06 --------- --------- --------- --------- Earnings Summary: ----------------------------- Net interest income $ 17,460 $ 17,845 $ 17,438 $ 17,985 Federal tax (FTE) adjustment 1,247 1,357 1,357 1,130 --------- --------- --------- --------- Net interest income (FTE) 18,707 19,202 18,795 19,115 Provision for loan and lease losses (800) (500) (500) (500) Non-interest income 5,164 4,804 6,164 4,954 Non-interest expense (10,270) (10,306) (11,160) (11,017) --------- --------- --------- --------- Pretax income (FTE) 12,801 13,200 13,299 12,552 FTE adjustment (1,247) (1,357) (1,357) (1,130) Provision for income taxes (3,483) (3,460) (3,545) (3,491) --------- --------- --------- --------- Net income $ 8,071 $ 8,383 $ 8,397 $ 7,931 ========= ========= ========= ========= Earnings per share - diluted $ 0.48 $ 0.50 $ 0.50 $ 0.47 Non-interest Income: ----------------------------- Service charges on deposit accounts $ 2,570 $ 2,537 $ 2,322 $ 2,587 Mortgage lending income 888 763 603 779 Trust income 448 442 433 478 Bank owned life insurance income 465 446 443 455 Gains on sales of investment securities 211 3 1,831 27 Gains (losses) on sales of other assets 33 68 2 11 Other 549 545 530 617 --------- --------- --------- --------- Total non-interest income $ 5,164 $ 4,804 $ 6,164 $ 4,954 Non-interest Expense: ----------------------------- Salaries and employee benefits $ 6,221 $ 5,945 $ 6,584 $ 6,569 Net occupancy expense 1,632 1,673 1,660 1,738 Other operating expenses 2,351 2,622 2,850 2,644 Amortization of intangibles 66 66 66 66 --------- --------- --------- --------- Total non-interest expense $ 10,270 $ 10,306 $ 11,160 $ 11,017 Allowance for Loan and Lease Losses: ----------------------------- Balance at beginning of period $ 16,745 $ 16,915 $ 17,007 $ 17,175 Net charge-offs (630) (408) (332) (343) Provision for loan and lease losses 800 500 500 500 --------- --------- --------- --------- Balance at end of period $ 16,915 $ 17,007 $ 17,175 $ 17,332 Selected Ratios: ----------------------------- Net interest margin - FTE(a) 4.19% 4.02% 3.84% 3.61% Overhead ratio(a) 2.10 1.97 2.08 1.90 Efficiency ratio 43.02 42.93 44.71 45.77 Net charge-offs to average loans and leases(a) 0.20 0.12 0.10 0.09 Nonperforming loans and leases/total loans and leases 0.18 0.25 0.24 0.18 Nonperforming assets/total assets 0.13 0.18 0.17 0.13 Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases 0.38 0.39 0.63 0.45 9/30/06 12/31/06 3/31/07 6/30/07 --------- --------- --------- --------- Earnings Summary: ----------------------------- Net interest income $ 17,774 $ 17,523 $ 18,249 $ 19,291 Federal tax (FTE) adjustment 1,196 912 848 838 --------- --------- --------- --------- Net interest income (FTE) 18,970 18,435 19,097 20,129 Provision for loan and lease losses (550) (900) (1,100) (1,250) Non-interest income 5,680 6,434 5,959 5,623 Non-interest expense (11,707) (12,506) (12,138) (11,876) --------- --------- --------- --------- Pretax income (FTE) 12,393 11,463 11,818 12,626 FTE adjustment (1,196) (912) (848) (838) Provision for income taxes (3,187) (3,196) (3,449) (3,702) --------- --------- --------- --------- Net income $ 8,010 $ 7,355 $ 7,521 $ 8,086 ========= ========= ========= ========= Earnings per share - diluted $ 0.48 $ 0.44 $ 0.45 $ 0.48 Non-interest Income: ----------------------------- Service charges on deposit accounts $ 2,540 $ 2,768 $ 2,834 $ 3,107 Mortgage lending income 792 744 731 817 Trust income 486 550 465 531 Bank owned life insurance income 463 471 465 478 Gains on sales of investment securities 718 1,341 337 - Gains (losses) on sales of other assets 42 (145) 35 (47) Other 639 705 1,092 737 --------- --------- --------- --------- Total non-interest income $ 5,680 $ 6,434 $ 5,959 $ 5,623 Non-interest Expense: ----------------------------- Salaries and employee benefits $ 6,993 $ 7,360 $ 7,310 $ 7,016 Net occupancy expense 1,732 1,900 1,971 1,967 Other operating expenses 2,917 3,182 2,792 2,827 Amortization of intangibles 65 65 65 66 --------- --------- --------- --------- Total non-interest expense $ 11,707 $ 12,507 $ 12,138 $ 11,876 Allowance for Loan and Lease Losses: ----------------------------- Balance at beginning of period $ 17,332 $ 17,340 $ 17,699 $ 18,128 Net charge-offs (542) (541) (671) (631) Provision for loan and lease losses 550 900 1,100 1,250 --------- --------- --------- --------- Balance at end of period $ 17,340 $ 17,699 $ 18,128 $ 18,747 Selected Ratios: ----------------------------- Net interest margin - FTE(a) 3.34% 3.22% 3.35% 3.46% Overhead ratio(a) 1.88 1.99 1.94 1.86 Efficiency ratio 47.49 50.29 48.44 46.12 Net charge-offs to average loans and leases(a) 0.14 0.13 0.16 0.14 Nonperforming loans and leases/total loans and leases 0.21 0.34 0.25 0.23 Nonperforming assets/total assets 0.15 0.24 0.27 0.26 Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases 0.60 0.60 0.84 0.53 (a) Annualized based on actual days Bank of the Ozarks, Inc. Average Consolidated Balance Sheet and Net Interest Analysis (Dollars in Thousands) Unaudited Quarter Ended June 30, 2007 ------------------------------ Average Income/ Yield/ Balance Expense Rate ---------- ---------- -------- ASSETS Earnings assets: Interest earning deposits and federal funds sold $ 316 $ 4 5.11% Investment securities: Taxable 453,876 6,245 5.52 Tax-exempt - FTE 132,221 2,358 7.15 Loans and leases - FTE 1,746,889 36,359 8.35 ---------- ---------- Total earnings assets - FTE 2,333,302 44,966 7.73 Non-earning assets 228,929 ---------- Total assets $2,562,231 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 538,518 $ 3,739 2.78% Time deposits of $100,000 or more 964,287 12,424 5.17 Other time deposits 497,076 6,061 4.89 ---------- ---------- Total interest bearing deposits 1,999,881 22,224 4.46 Repurchase agreements with customers 46,286 437 3.79 Other borrowings 83,859 917 4.39 Subordinated debentures 64,950 1,259 7.78 ---------- ---------- Total interest bearing liabilities 2,194,976 24,837 4.54 Non-interest bearing liabilities: Non-interest bearing deposits 175,066 Other non-interest bearing liabilities 10,182 ---------- Total liabilities 2,380,224 Stockholders' equity 182,007 ---------- Total liabilities and stockholders' equity $2,562,231 ========== Interest rate spread - FTE 3.19% ---------- Net interest income - FTE $ 20,129 ========== Net interest margin - FTE 3.46% Six Months Ended June 30, 2007 ------------------------------ Average Income/ Yield/ Balance Expense Rate ---------- ---------- -------- ASSETS Earnings assets: Interest earning deposits and federal funds sold $ 283 $ 11 7.51% Investment securities: Taxable 466,202 12,840 5.55 Tax-exempt - FTE 133,218 4,734 7.17 Loans and leases - FTE 1,722,082 71,057 8.32 ---------- ---------- Total earnings assets - FTE 2,321,785 88,642 7.70 Non-earning assets 228,923 ---------- Total assets $2,550,708 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing liabilities: Deposits: Savings and interest bearing transaction $ 522,787 $ 7,085 2.73% Time deposits of $100,000 or more 939,047 24,040 5.16 Other time deposits 491,667 11,924 4.89 ---------- ---------- Total interest bearing deposits 1,953,501 43,049 4.44 Repurchase agreements with customers 46,966 898 3.86 Other borrowings 126,540 2,959 4.72 Subordinated debentures 64,950 2,510 7.79 ---------- ---------- Total interest bearing liabilities 2,191,957 49,416 4.55 Non-interest bearing liabilities: Non-interest bearing deposits 168,286 Other non-interest bearing liabilities 10,300 ---------- Total liabilities 2,370,543 Stockholders' equity 180,165 ---------- Total liabilities and stockholders' equity $2,550,708 ========== Interest rate spread - FTE 3.15% ---------- Net interest income - FTE $ 39,226 ========== Net interest margin - FTE 3.41% CONTACT: Bank of the Ozarks, Inc. Susan Blair, 501-978-2217