Bank of Ozarks profit up 27%; Miami, NYC top 2 areas of loan growth in 1Q, exec says

Graphs showing Bank of the Ozarks first quarter information.
Graphs showing Bank of the Ozarks first quarter information.

Bank of the Ozarks earned $113.1 million in the first quarter this year, up about 27 percent from $89.2 million earned a year earlier, the Little Rock bank said Thursday.

The state's largest bank with $22 billion in assets, Bank of the Ozarks made 88 cents per share, easily beating the average estimate of 85 cents projected from a survey by Thomson Reuters of 11 analysts who cover the bank.

"We think this was a really good quarter, but a quarter that is not the best or the worst that we will have this year," said George Gleason, Bank of the Ozarks' chairman and chief executive officer.

Bank of the Ozarks shares rose $1.73 to close Thursday at $47.76 in trading on the Nasdaq exchange.

On March 31, the bank had total deposits of $17.8 billion, a 13.5 percent increase from a year earlier, and total loans of $16.6 billion, up 12.2 percent over the previous year.

The biggest two areas of loan growth in the first quarter remained New York City and Miami, although Miami had greater growth this quarter, said Tim Hicks, chief administrative officer.

"Dallas, Chicago, Atlanta, Washington, D.C., Philadelphia, those are some of the top markets for the quarter where we saw originations," Hicks said. "Really good diversification by geography and some really great markets."

The bank's top growth priority is with loans and deposits, management said.

But management believes acquisitions will provide opportunities to augment that growth. The bank has made 15 acquisitions since 2010 but it has been more than two years since it announced the purchase of a bank.

Bank of the Ozarks' efficiency ratio was 37.9 percent in the first quarter, which means the bank spends $37.90 to earn $100.

That was higher than anticipated, said Matt Olney, a bank analyst in Little Rock with Stephens Inc.

The average projection by analysts was that the bank's efficiency ratio would be 35.9 percent.

Bank of the Ozarks said the reason for the higher efficiency ratio was because of infrastructure building, Olney said. A major project is the building of the bank's new 247,000-square-foot headquarters on Arkansas 10 in west Little Rock.

Olney has a hold rating on Bank of the Ozarks' stock.

The bank's management expects that the efficiency ratio will improve in the next three quarters, said Garland Binns, a Little Rock banking attorney.

"As a general rule of thumb, a bank with an efficiency ratio under 50 percent is doing well," Binns said.

In recent weeks, the bank announced that it would change its name to Bank OZK.

The bank considered changing its name for several years. Gleason recommended to senior management that the name be changed to Bank OZK.

"The idea was to protect and maintain the significant brand equity that we built into the name Bank of the Ozarks over many years," Gleason said. "Our customers know us well and they obviously like us. We have a good reputation and a good relationship with our customer base."

The new name is close enough to the bank's current name that existing customers would immediately recognize the name, Gleason said.

Gleason called Bank OZK an "edgy name" with an "international flair" that "conveys a sense of technology."

Bank of the Ozarks hired a branding firm to research how people perceived the name, Gleason said. The firm interviewed 500 people, including customers and noncustomers in existing markets and in markets where the bank is unknown, asking them their perception of Bank OZK.

"The name scored extremely well among all those different groups," Gleason said. "It accomplished our objectives of being very modern, being very international but having a warm feel."

Bank of the Ozarks expects the name change will receive final approval in July.

Bank of the Ozarks has 254 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.

With its wide-ranging lending practice, Gleason said the bank has customers in almost every state.

Business on 04/13/2018

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