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Bank Of The Ozarks, Inc. Announces Third Quarter 2015 Earnings

The following excerpt is from the company's SEC filing.

LITTLE ROCK, Ark.--(BUSINESS WIRE)--October 13, 2015--Bank of the Ozarks, Inc. (NASDAQ: OZRK) today announced that net income for the third quarter of 2015 was $46.1 million, a 43.7% increase from $32.1 million for the third quarter of 2014. Diluted earnings per common share for the third quarter of 2015 were $0.52, a 30.0% increase from $0.40 for the third quarter of 2014.

The Company’s results during the quarter just ended included approximately $2.9 million of acquisition-related and systems conversion expenses and $0.2 million of software and contract termination charges. Net of applicable income taxes, these items, in the aggregate, reduced the Company’s diluted earnings per common share by approximately $0.02 in the quarter just ended.

For the nine months ended September 30, 2015, net income totaled $130.8 million, a 56.0% increase from net income of $83.9 million for the first nine months of 2014. Diluted earnings per common share for the first nine months of 2015 were $1.51, a 39.8% increase from $1.08 for the first nine months of 2014.

The Company’s results for the first nine months of 2015 included $2.3 million of tax-exempt income from bank owned life insurance (“BOLI”) death benefits, $2.6 million in net gains on sales of investment securities, $2.5 million in prepayment penalties from prepaying Federal Home Loan Bank (“FHLB”) advances, approximately $5.7 million of acquisition-related and systems conversion expenses and $1.0 million of software and contract termination charges. Net of applicable income taxes, these items, in the aggregate, reduced the Company’s diluted earnings per common share by approximately $0.02 in the first nine months of 2015.

The Company’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the third quarter of 2015 were 2.05%, 14.46% and 16.48%, respectively, compared to 1.98%, 14.80% and 16.93%, respectively, for the third quarter of 2014. The Company’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first nine months of 2015 were 2.11%, 14.95% and 17.08%, respectively, compared to 1.98%, 14.92% and 16.27%, respectively, for the first nine months of 2014. The calculation of the Company’s annualized return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) is included in the schedules accompanying this release.

Non-purchased loans and leases were $5.45 billion at September 30, 2015, a 49.7% increase from $3.64 billion at September 30, 2014. Including purchased loans, total loans and leases were $7.41 billion at September 30, 2015, a 50.6% increase from $4.92 billion at September 30, 2014.

The unfunded balance of closed loans increased 88.2% to $4.86 billion at September 30, 2015, compared to $2.58 billion at September 30, 2014.

George Gleason, Chairman and Chief Executive Officer, stated, “We are very pleased with our outstanding third quarter results, including our record $680 million growth in non-purchased loans and leases, our record $859 million growth in the unfunded balance of our closed loans, some of our best asset quality ratios as a public company, and our excellent efficiency ratio of 37.6%. Our annualized returns on average assets of 2.05% for the third quarter and 2.11% for the first nine months of 2015 continued our track record of having achieved returns on average assets in excess of 2.00% in each of the last five years.”

Deposits were $7.61 billion at September 30, 2015, a 48.0% increase from $5.14 billion at September 30, 2014.

Total assets were $9.33 billion at September 30, 2015, a 41.8% increase from $6.58 billion at September 30, 2014.

Common stockholders’ equity was $1.31 billion at September 30, 2015, a 50.1% increase from $876 million at September 30, 2014. Tangible common stockholders’ equity was $1.16 billion at September 30, 2015, a 50.7% increase from $768 million at September 30, 2014. Book value per common share was $14.89 at September 30, 2015, a 35.5% increase from $10.99 at September 30, 2014. Tangible book value per common share was $13.12 at September 30, 2015, a 36.1% increase from $9.64 at September 30, 2014. The calculations of the Company’s tangible common stockholders’ equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.

The Company’s ratio of common stockholders’ equity to total assets was 14.09% at September 30, 2015, compared to 13.31% at September 30, 2014. Its ratio of tangible common stockholders’ equity to total tangible assets was 12.62% at September 30, 2015, compared to 11.87% at September 30, 2014. The calculation of the Company’s ratio of tangible common stockholders’ equity to total tangible assets and the reconciliation to GAAP are included in the schedules accompanying this release.

NET INTEREST INCOME

Net interest income for the third quarter of 2015 was a record $96.4 million, a 29.2% increase from $74.6 million for the third quarter of 2014. Net interest margin, on a fully taxable equivalent (“FTE”) basis, was 5.07% for the third quarter of 2015, a decrease of 42 basis points from 5.49% for the third quarter of 2014. Average earning assets were $7.73 billion for the third quarter of 2015, a 37.9% increase from $5.61 billion for the third quarter of 2014.

Net interest income for the first nine months of 2015 was $275.6 million, a 43.7% increase from $191.8 million for the first nine months of 2014. Net interest margin, on a FTE basis, was 5.28% for the first nine months of 2015, a 24 basis point decrease from 5.52% for the first nine months of 2014. Average earning assets were $7.17 billion for the first nine months of 2015, a 48.2% increase from $4.84 billion for the first nine months of 2014.

NON-INTEREST INCOME

Non-interest income for the third quarter of 2015 increased 15.0% to $22.1 million compared to $19.2 million for the third quarter of 2014, but decreased 4.9% compared to $23.3 million for the second quarter of 2015. Non-interest income for the first nine months of 2015 increased 30.7% to $74.5 million compared to $57.0 million for the first nine months of 2014.

Service charges on deposit accounts increased 0.9% to a record $7.43 million in the third quarter of 2015 compared to $7.36 million in the third quarter of 2014. Service charges on deposit accounts increased 7.9% to $21.1 million in the first nine months of 2015 compared to $19.6 million in the first nine months of 2014.

Mortgage lending income increased 5.6% to $1.83 million in the third quarter of 2015 compared to $1.73 million in the third quarter of 2014. Mortgage lending income increased 34.1% to $5.10 million in the first nine months of 2015 compared to $3.81 million in the first nine months of 2014.

Trust income increased 5.7% to a record $1.50 million in the third quarter of 2015 compared to $1.42 million in the third quarter of 2014. Trust income increased 7.2% to $4.40 million in the first nine months of 2015 compared to $4.10 million in the first nine months of 2014.

BOLI income increased 62.9% to $2.26 million in the third quarter of 2015 compared to $1.39 million in the third quarter of 2014 primarily due to $85 million of BOLI purchased in May 2015. BOLI income increased 101.9% to $7.67 million in the first nine months of 2015 compared to $3.80 million in the first nine months of 2014 primarily due to $2.3 million of tax-exempt BOLI death benefits in the first quarter of 2015 and the $85 million of BOLI purchased in May 2015.

Other income from purchased loans increased 61.9% to $5.46 million in the third quarter of 2015 compared to $3.37 million in the third quarter of 2014, but decreased 21.7% compared to $6.97 million in the second quarter of 2015. Other income from purchased loans increased 107.0% to $21.3 million in the first nine months of 2015 compared to $10.3 million in the first nine months of 2014. Net gains on sales of other assets increased to $1.90 million in the third quarter of 2015 compared to $1.69 million in the third quarter of 2014, but decreased compared to $2.56 million in the second quarter of 2015. Net gains on sales of other assets increased to $7.29 million in the first nine months of 2015 compared to $4.11 million in the first nine months of 2014. The increases in the Company’s other income from purchased loans and net gains on sales of other assets during the third quarter and first nine months of 2015 compared to the same periods in 2014 are, in part, attributable to the Company having terminated, in the fourth quarter of 2014, the loss share agreements on all seven of its FDIC-assisted acquisitions.

There were no net gains on investment securities in the third quarter of 2015 compared to $43,000 in the third quarter of 2014. Net gains on investment securities were $2.6 million in the first nine months of 2015 compared to $0.1 million in the first nine months of 2014.

NON-INTEREST EXPENSE

Non-interest expense for the third quarter of 2015 increased 6.8% to $45.4 million compared to $42.5 million for the third quarter of 2014. During the third quarter of 2015, the Company incurred approximately $2.9 million of acquisition-related and systems conversion expenses and $0.2 million of...


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