LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 13, 2009--Bank of the Ozarks, Inc. (NASDAQ: OZRK) today announced that net income available to common stockholders for the quarter ended June 30, 2009 was a record $9,501,000, an increase of 10.4% from $8,607,000 for the second quarter of 2008. Diluted earnings per common share for the second quarter of 2009 were a record $0.56, compared to $0.51 for the second quarter of 2008, an increase of 9.8%.

For the six months ended June 30, 2009, net income totaled $18,787,000, a 14.8% increase from net income of $16,372,000 for the first six months of 2008. Diluted earnings per common share for the first six months of 2009 were $1.11, compared to $0.97 for the first six months of 2008, an increase of 14.4%.

The Company’s annualized returns on average assets and average common stockholders’ equity for the second quarter of 2009 were 1.25% and 14.29%, respectively, compared to 1.13% and 16.65%, respectively, for the second quarter of 2008. Annualized returns on average assets and average stockholders’ equity for the six months ended June 30, 2009 were 1.20% and 14.24%, respectively, compared with 1.12% and 15.99%, respectively, for the six months ended June 30, 2008.

In commenting on these results, George Gleason, Chairman and Chief Executive Officer, stated, “We are very pleased to report our fifth consecutive quarter of records in both net income and earnings per share. During the quarter just ended, our net interest margin continued to improve, income from service charges on deposit accounts improved from both the preceding quarter and the comparable quarter last year, mortgage lending income was the best since 2003, and trust income was a quarterly record. We also benefited from significant net gains on sales of investment securities. Our excellent revenue results helped us achieve a record efficiency ratio, which will likely be among the best in the nation. These revenue results allowed us to achieve record net income despite our significantly higher credit costs in the quarter just ended. Our strong revenue generating capabilities, substantial capital base and robust allowance for loan and lease losses provide a solid foundation for continued success.”

Loans and leases were $2.00 billion at June 30, 2009, a 0.7% decrease from $2.01 billion at June 30, 2008. Mr. Gleason stated, “Our total volume of loans and leases has declined slightly over the past year as slower economic conditions have diminished loan and lease demand. While we have been actively seeking and originating good quality new loans and leases, in recent quarters the volume of new loans and leases has essentially been offset by the volume of loan and lease pay downs.”

Deposits were $2.13 billion at June 30, 2009, a 7.6% decrease from $2.31 billion at June 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 June 30, 2008 to June 30, 2009, total non-CD deposits grew $192 million and increased from 36.3% of total deposits to 48.3% of total deposits. Second, brokered deposits have been significantly reduced as deposits from local customers have grown. Specifically, over the last four quarters, total brokered deposits decreased $340 million from 18.8% of total deposits at June 30, 2008 to 4.3% of total deposits at June 30, 2009. At the same time our total locally generated deposits increased $165 million to 95.7% of total deposits at June 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 $2.96 billion at June 30, 2009, a 3.3% decrease from $3.06 billion at June 30, 2008.

Common stockholders’ equity was $261 million at June 30, 2009 compared to $211 million at June 30, 2008, an increase of 23.6%. Book value per common share was $15.45 at June 30, 2009 compared to $12.53 at June 30, 2008, an increase of 23.3%. 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 and losses on available for sale (“AFS”) investment securities as of June 30, 2009 compared to June 30, 2008. Common stockholders’ equity and book value per common share decreased slightly from March 31, 2009 to June 30, 2009 as a result of an unfavorable change during the quarter in the Company’s mark-to-market adjustment for unrealized gains and losses on AFS investment securities.

The Company’s ratio of common stockholders’ equity to assets increased to 8.80% as of June 30, 2009 compared to 6.89% as of June 30, 2008. Its ratio of tangible common stockholders’ equity to tangible assets increased to 8.63% as of June 30, 2009 compared to 6.71% as of June 30, 2008.

Paul Moore, 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 for being ‘well capitalized’. Our record earnings over the past five 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 for the second quarter of 2009 increased 28.2% to $30,262,000 compared to $23,603,000 for the second quarter of 2008. Net interest income for the quarter just ended decreased slightly from the first quarter of 2009 due to a lower volume of average earning assets in the second quarter, resulting primarily from sales of investment securities. Net interest margin, on a fully taxable equivalent (“FTE”) basis, was 4.80% in the second quarter of 2009, an increase of 103 basis points from 3.77% in the second quarter of 2008 and seven basis points from 4.73% in the first quarter of 2009.

Net interest income for the six months ended June 30, 2009 increased 33.6% to $60,596,000 compared to $45,353,000 for the six months ended June 30, 2008. The Company’s net interest margin (FTE) for the first half of 2009 was 4.76%, an increase of 103 basis points from 3.73% in the first half of 2008.

Non-interest income for the second quarter of 2009 increased 306.9% to $22,610,000 compared to $5,557,000 for the comparable quarter of 2008. This large increase in non-interest income was primarily attributable to significant gains on sales of investment securities during the most recent quarter. Non-interest income for the six months ended June 30, 2009 was $31,983,000 compared to $10,682,000 for the six months ended June 30, 2008, a 199.4% increase.

Service charges on deposit accounts were $3,047,000 in the second quarter of 2009, an increase of 2.7% from $2,967,000 in the second quarter of 2008. Service charges on deposit accounts increased 0.2% to $5,850,000 for the first half of 2009 compared to $5,837,000 for the first half of 2008.

Mortgage lending income was $1,096,000 in the second quarter of 2009, an increase of 72.3% from $636,000 in the second quarter of 2008. Mortgage lending income was $1,958,000 in the first half of 2009, a 49.6% increase from $1,309,000 in the first half of 2008.

Trust income was a record $751,000 in the second quarter of 2009, a 19.4% increase from $629,000 in the second quarter of 2008. Trust income was $1,398,000 in the first half of 2009, a 13.4% increase from $1,233,000 in the first half of 2008.

Net gains on investment securities and from sales of other assets were $16,487,000 in the second quarter of 2009 compared to $206,000 in the second quarter of 2008. Such gains were $20,534,000 for the first half of 2009 compared to $134,000 in the first half of 2008.

The Company has been a net seller of investment securities in recent months, resulting in a $218 million reduction of its investment securities portfolio during the second quarter of 2009. 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 government monetary and fiscal policy actions.

Non-interest expense for the second quarter of 2009 was $17,945,000 compared to $13,467,000 for the second quarter of 2008, an increase of 33.3%. This large increase was due to a number of factors, including $1.3 million for the special assessment levied by the FDIC on all insured institutions, $0.5 million for the higher FDIC base insurance premium assessments applicable to all FDIC insured institutions in 2009, $1.2 million related to the write down in the second quarter of 2009 of the carrying value of items of other real estate owned, and $0.5 million related to delinquent and current property taxes and legal expenses associated with the transfer to other real estate owned of the collateral securing a large credit relationship in northwest Arkansas. The Company’s efficiency ratio for the quarter ended June 30, 2009 improved to a record 32.1% compared to 42.1% for the second quarter of 2008.

Non-interest expense for the first six months of 2009 was $34,132,000 compared with $26,347,000 for the first six months of 2008, an increase of 29.5%. The Company’s efficiency ratio for the first six months of 2009 improved to 34.2% compared to 43.5% for the first six months of 2008.

Nonperforming loans and leases as a percent of total loans and leases were 0.90% as of June 30, 2009 compared to 0.74% as of June 30, 2008 and 1.15% as of March 31, 2009. Nonperforming assets as a percent of total assets increased to 1.37% as of June 30, 2009 compared to 0.59% as of June 30, 2008 and 1.17% as of March 31, 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 increased to 2.34% as of June 30, 2009 compared to 0.92% as of June 30, 2008 and 2.24% as of March 31, 2009.

The Company’s annualized net charge-off ratio for the second quarter of 2009 increased to 2.89%, compared to 0.33% for the second quarter of 2008 and 0.64% for the first quarter of 2009. The Company’s annualized net charge-off ratio was 1.77% for the first six months of 2009 compared to 0.35% for the first six months of 2008 and 0.45% for the full year of 2008. The significant increase in the net charge-off ratio in the second quarter of 2009 was primarily attributable to a $10.5 million charge-off related to one large credit relationship in northwest Arkansas.

Mr. Gleason commented, “Except for the unusually large second quarter charge-off related to a single credit relationship, our net charge-off ratio for the first half of 2009 was generally in line with our guidance. During the quarter just ended, we had success in liquidating a number of problem assets, which allowed us to maintain our ratios of nonperforming loans and leases, nonperforming assets and past dues at levels slightly above or below the March 31, 2009 ratios. Although elevated from our historical levels, these ratios compare very favorably to the most recently available data for the industry as a whole. We have benefited from our long-standing commitment to sound underwriting standards, thorough documentation, effective servicing and diligent collection efforts.”

During the second quarter of 2009, the Company’s provisions to the allowance for loan and lease losses totaled $21.1 million. These provisions covered the Company’s net charge-offs of $14.4 million during the quarter and increased the allowance for loan and lease losses by $6.7 million. Provisions to the allowance for loan and lease losses in the second quarter of 2008 were $4.0 million and in the first quarter of 2009 were $10.6 million.

The Company’s allowance for loan and lease losses increased to $43.6 million at June 30, 2009, or 2.19% of total loans and leases, compared to $23.4 million, or 1.16% of total loans and leases, at June 30, 2008 and $36.9 million, or 1.86% of total loans and leases, at March 31, 2009. As of June 30, 2009, the Company’s allowance for loan and lease losses equaled 244% of its total nonperforming loans and leases compared to 158% at June 30, 2008 and 162% at March 31, 2009.

On June 30, 2009 a settlement agreement was executed by all parties to a previously disclosed lawsuit filed on May 1, 2009 in the Circuit Court of Washington County, Arkansas by Gary Combs and other plaintiffs against the Company and other defendants. On July 1, 2009 an order of dismissal with prejudice was entered by the court pursuant to the settlement agreement. This settlement resulted in plaintiffs conveying to the Company’s bank subsidiary all collateral securing the related loans and the plaintiffs 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, against Mr. Combs and the other plaintiffs.

Mr. Gleason stated, “We are pleased to have this matter resolved and to have title to our collateral. This puts us in a position to develop and implement an effective plan for the orderly sale of these properties without the delays that would result from continued litigation. To resolve this matter quickly, we agreed to forego our claim for a deficiency judgment against the borrowers and guarantors. We concluded this was in our Company’s best interest based on our belief 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.”

The collateral conveyed to the Company’s bank subsidiary pursuant to this settlement was held as “other real estate owned” at June 30, 2009 and was included in nonperforming assets. All loan charge-offs related to this previous credit relationship were recognized in the quarter just ended.

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 Tuesday, July 14, 2009. 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 17748879. The telephone playback will be available through July 31, 2009, and the website recording of the call will be available for 12 months.

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 of borrowers and collateral values, recently enacted and potential legislation and regulatory actions including legislation and regulatory actions intended to stabilize 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, and the ability to attract new deposits and loans and leases, 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 2008 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. 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 72 offices including 65 banking offices in 34 communities throughout northern, western and central Arkansas, six Texas banking offices, and a loan production office in 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								Six Months Ended
	June 30,								June 30,
	2009			2008			% Change		2009			2008			% Change
Income statement data:
Net interest income	$	30,262		$	23,603		28.2	%	$	60,596		$	45,353		33.6	%
Provision for loan and lease losses		21,100			4,000		427.5			31,700			7,325		332.8
Non-interest income		22,610			5,557		306.9			31,983			10,682		199.4
Non-interest expense		17,945			13,467		33.3			34,132			26,347		29.5
Non-controlling interest		-			25					(23	)		25
Preferred dividends		1,076			-					2,150			-
Net income available to common stockholders		9,501			8,607		10.4			18,787			16,372		14.8

Common stock data:
Net income per share – diluted	$	0.56		$	0.51		9.8	%	$	1.11		$	0.97		14.4	%
Net income per share – basic		0.56			0.51		9.8			1.11			0.97		14.4
Cash dividends per share		0.13			0.12		8.3			0.26			0.24		8.3
Book value per share		15.45			12.53		23.3			15.45			12.53		23.3
Diluted shares outstanding (thousands)		16,894			16,865					16,890			16,862
End of period shares outstanding (thousands)		16,871			16,834					16,871			16,834

Balance sheet data at period end:
Total assets	$	2,961,696		$	3,062,117		(3.3	)%	$	2,961,696		$	3,062,117		(3.3	)%
Total loans and leases		1,996,964			2,011,921		(0.7	)		1,996,964			2,011,921		(0.7	)
Allowance for loan and lease losses		43,635			23,432		86.2			43,635			23,432		86.2
Total investment securities		671,513			768,180		(12.6	)		671,513			768,180		(12.6	)
Goodwill		5,243			5,243		-			5,243			5,243		-
Other intangibles – net of amortization		366			503		(27.2	)		366			503		(27.2	)
Total deposits		2,132,870			2,307,475		(7.6	)		2,132,870			2,307,475		(7.6	)
Repurchase agreements with customers		56,067			43,903		27.7			56,067			43,903		27.7
Other borrowings		343,262			413,654		(17.0	)		343,262			413,654		(17.0	)
Subordinated debentures		64,950			64,950		-			64,950			64,950		-
Preferred stock		72,156			-					72,156			-
Common stockholders’ equity		260,729			210,897		23.6			260,729			210,897		23.6
Net unrealized gain (loss) on AFS investment securities included in common stockholders’ equity		9,239			(8,033	)				9,239			(8,033	)
Loan and lease to deposit ratio		93.63	%		87.19	%				93.63	%		87.19	%

Selected ratios:
Return on average assets*		1.25	%		1.13	%				1.20	%		1.12	%
Return on average common stockholders’ equity*		14.29			16.65					14.24			15.99
Average common equity to total average assets		8.73			6.77					8.46			7.03
Net interest margin – FTE*		4.80			3.77					4.76			3.73
Efficiency ratio		32.08			42.10					34.20			43.51
Net charge-offs to average loans and leases*		2.89			0.33					1.77			0.35
Nonperforming loans and leases to total loans and leases		0.90			0.74					0.90			0.74
Nonperforming assets to total assets		1.37			0.59					1.37			0.59
Allowance for loan and lease losses to total loans and leases		2.19			1.16					2.19			1.16

Other information:
Non-accrual loans and leases	$	17,887		$	14,878				$	17,887		$	14,878
Accruing loans and leases – 90 days past due		-			-					-			-
ORE and repossessions		22,727			3,147					22,727			3,147

*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

	9/30/07			12/31/07			3/31/08			6/30/08			9/30/08			12/31/08			3/31/09			6/30/09
Earnings Summary:
Net interest income	$	19,671		$	20,406		$	21,751		$	23,603		$	24,616		$	28,731		$	30,334		$	30,262
Federal tax (FTE) adjustment		899			974			1,691			2,767			2,074			3,950			4,169			3,060
Net interest income (FTE)		20,570			21,380			23,442			26,370			26,690			32,681			34,503			33,322
Provision for loan and lease losses		(1,100	)		(2,700	)		(3,325	)		(4,000	)		(3,400	)		(8,300	)		(10,600	)		(21,100	)
Non-interest income		5,419			5,975			5,125			5,557			4,871			3,796			9,373			22,610
Non-interest expense		(11,734	)		(12,508	)		(12,881	)		(13,467	)		(13,828	)		(14,233	)		(16,187	)		(17,945	)
Pretax income (FTE)		13,155			12,147			12,361			14,460			14,333			13,944			17,089			16,887
FTE adjustment		(899	)		(974	)		(1,691	)		(2,767	)		(2,074	)		(3,950	)		(4,169	)		(3,060	)
Provision for income taxes		(3,856	)		(3,437	)		(2,905	)		(3,111	)		(3,255	)		(655	)		(2,537	)		(3,250	)
Non-controlling interest		2			1			-			25			7			(21	)		(23	)		-
Preferred stock dividend		-			-			-			-			-			(227	)		(1,074	)		(1,076	)
Net income available to common stockholders	$	8,402		$	7,737		$	7,765		$	8,607		$	9,011		$	9,091		$	9,286		$	9,501

Earnings per common share – diluted	$	0.50		$	0.46		$	0.46		$	0.51		$	0.53		$	0.54		$	0.55		$	0.56

Non-interest Income:
Service charges on deposit accounts	$	3,075		$	3,176		$	2,871		$	2,967		$	3,102		$	3,067		$	2,803		$	3,047
Mortgage lending income		594			526			672			636			473			434			861			1,096
Trust income		565			661			604			629			649			712			647			751
Bank owned life insurance income		487			489			489			499			512			2,630			477			484
Gains (losses) on investment securities		77			106			20			-			(317	)		(3,136	)		3,999			16,519
Gains (losses) on sales of other assets		38			461			(93	)		206			(78	)		(579	)		48			(32	)
Other		583			556			562			620			530			668			538			745
Total non-interest income	$	5,419		$	5,975		$	5,125		$	5,557		$	4,871		$	3,796		$	9,373		$	22,610

Non-interest Expense:
Salaries and employee benefits	$	6,936		$	7,399		$	7,332		$	7,624		$	7,728		$	7,448		$	7,916		$	7,978
Net occupancy expense		2,059			2,101			2,074			2,183			2,318			2,306			2,578			2,449
Other operating expenses		2,673			2,943			3,410			3,594			3,727			4,452			5,666			7,490
Amortization of intangibles		66			65			65			66			55			27			27			28
Total non-interest expense	$	11,734		$	12,508		$	12,881		$	13,467		$	13,828		$	14,233		$	16,187		$	17,945

Allowance for Loan and Lease Losses:
Balance at beginning of period	$	18,747		$	19,067		$	19,557		$	21,063		$	23,432		$	25,427		$	29,512		$	36,949
Net charge-offs		(780	)		(2,210	)		(1,819	)		(1,631	)		(1,405	)		(4,215	)		(3,163	)		(14,414	)
Provision for loan and lease losses		1,100			2,700			3,325			4,000			3,400			8,300			10,600			21,100
Balance at end of period	$	19,067		$	19,557		$	21,063		$	23,432		$	25,427		$	29,512		$	36,949		$	43,635

Selected Ratios:
Net interest margin - FTE*		3.45	%		3.47	%		3.69	%		3.77	%		3.82	%		4.52	%		4.73	%		4.80	%
Efficiency ratio		45.14			45.72			45.09			42.10			43.79			39.08			36.95			32.08
Net charge-offs to average loans and leases*		0.17			0.47			0.38			0.33			0.27			0.83			0.64			2.89
Nonperforming loans and leases/total loans and leases		0.19			0.35			0.68			0.74			0.70			0.76			1.15			0.90
Nonperforming assets/total assets		0.22			0.36			0.58			0.59			0.66			0.81			1.17			1.37
Loans and leases past due 30 days or more, including past due non-accrual loans and leases, to total loans and leases		0.45			1.14			1.30			0.92			0.94			2.68			2.24			2.34

* Annualized based on actual days.




Bank of the Ozarks, Inc.
Average Consolidated Balance Sheet and Net Interest Analysis
(Dollars in Thousands)
Unaudited

	Quarter Ended						Six Months Ended
	June 30, 2009						June 30, 2009
	Average		Income/		Yield/		Average		Income/		Yield/
	Balance		Expense		Rate		Balance		Expense		Rate
ASSETS
Earning assets:
Interest earning deposits and federal funds sold	$	660	$	2	1.52	%	$	535	$	5	2.07	%
Investment securities:
Taxable		360,804		5,286	5.88			381,982		10,899	5.75
Tax-exempt – FTE		421,344		8,732	8.31			482,069		20,627	8.63
Loans and leases – FTE		2,002,257		31,626	6.34			2,007,940		63,546	6.38
Total earning assets – FTE		2,785,065		45,646	6.57			2,872,526		95,077	6.67
Non-earning assets		269,967						272,650
Total assets	$	3,055,032					$	3,145,176

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction	$	838,770	$	1,681	0.80	%	$	855,265	$	3,555	0.84	%
Time deposits of $100,000 or more		717,742		3,638	2.03			741,339		8,659	2.36
Other time deposits		431,985		2,724	2.53			462,540		6,380	2.78
Total interest bearing deposits		1,988,497		8,043	1.62			2,059,144		18,594	1.82
Repurchase agreements with customers		57,372		155	1.08			54,188		310	1.15
Other borrowings		369,581		3,554	3.86			397,111		7,127	3.62
Subordinated debentures		64,950		572	3.53			64,950		1,221	3.79
Total interest bearing liabilities		2,480,400		12,324	1.99			2,575,393		27,252	2.13
Non-interest bearing liabilities:
Non-interest bearing deposits		208,149						203,006
Other non-interest bearing liabilities		27,708						28,730
Total liabilities		2,716,257						2,807,129
Preferred stock		72,088						72,020
Common stockholders’ equity		266,687						266,027
Total liabilities and stockholders’ equity	$	3,055,032					$	3,145,176

Net interest income – FTE			$	33,322					$	67,825
Net interest margin – FTE					4.80	%					4.76	%