<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
__________________
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________.
Commission File Number 0-22759
BANK OF THE OZARKS, INC.
(Exact name of registrant as specified in its charter)
ARKANSAS 71-0556208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12615 CHENAL PARKWAY, LITTLE ROCK, ARKANSAS 72211
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 978-2265
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practical date.
Class Outstanding at March 31, 2000
- --------------------------------------- -----------------------------
Common Stock, $0.01 par value per share 3,779,555
<PAGE>
BANK OF THE OZARKS, INC.
FORM 10-Q
March 31, 2000
INDEX
PART I. Financial Information
Item 1. Consolidated Balance Sheets as of March 31, 2000
and 1999 and December 31, 1999 1
Consolidated Statements of Income for the Three Months
Ended March 31, 2000 and 1999 2
Consolidated Statements of Stockholders' Equity for the
Three Months Ended March 31, 2000 and 1999 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Selected and Supplemental Financial Data 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 20
PART II. Other Information
Item 1. Legal Proceedings N/A
Item 2 Change in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
Reference is made to the Exhibit Index contained
at the end of this report.
(b). Reports on Form 8-K N/A
Signature 21
Exhibit Index 22
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
March 31, December 31,
--------------------------- --------------
2000 1999 1999
-------- -------- --------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 24,785 $ 13,260 $ 24,279
Interest bearing deposits 519 184 283
Investment securities - available for sale 44,560 44,778 44,837
Investment securities - held to maturity 218,536 170,271 218,558
Federal funds sold 11,835 2,180 -
Loans, net of unearned income 477,265 400,851 467,131
Allowance for loan losses (6,139) (4,850) (6,072)
Premises and equipment, net 30,672 27,939 30,547
Foreclosed assets held for sale, net 1,883 855 2,238
Interest receivable 8,243 6,288 7,174
Intangible assets, net 3,258 3,520 3,323
Other 3,689 1,645 3,744
-------- -------- --------
Total assets $819,106 $666,921 $796,042
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand - non-interest bearing $ 64,665 $ 56,280 $ 56,177
Savings and interest-bearing transaction 117,500 104,895 105,211
Time 429,944 420,529 434,542
-------- -------- --------
Total deposits 612,109 581,704 595,930
Repurchase agreements with customers 11,837 2,124 9,026
Other borrowings 129,183 38,608 126,989
Accrued interest and other liabilities 3,634 2,855 2,973
-------- -------- --------
Total liabilities 756,763 625,291 734,918
-------- -------- --------
Guaranteed preferred beneficial interest in the Company's
subordinated debentures 17,250 - 17,250
Stockholders' equity
Preferred Stock, $0.01 par value, 1,000,000 shares authorized,
no shares issued and outstanding - - -
Common stock; $0.01 par value; Authorized 10,000,000 shares;
3,779,555 shares issued and outstanding in 2000 and 1999 38 38 38
Additional paid-in capital 14,314 14,314 14,314
Retained earnings 32,453 27,070 31,045
Accumulated other comprehensive income (1,712) 208 (1,523)
-------- -------- --------
Total stockholders' equity 45,093 41,630 43,874
-------- -------- --------
Total liabilities and stockholders' equity $819,106 $666,921 $796,042
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
2000 1999
------- -------
<S> <C> <C>
Interest income
Loans $10,183 $ 8,617
Investment securities - taxable 3,737 2,758
- non-taxable 481 347
Federal funds sold 2 3
Deposits with banks 1 5
------- -------
Total interest income 14,404 11,730
Interest expense
Deposits 6,390 5,717
Repurchase agreements with customers 105 13
Other borrowings 1,703 691
------- -------
Total interest expense 8,198 6,421
------- -------
Net interest income 6,206 5,309
Provision for loan losses (378) (611)
------- -------
Net interest income after provision for
loan losses 5,828 4,698
------- -------
Other income
Trust income 130 128
Service charges on deposit accounts 763 502
Other income, charges and fees 328 602
Gains on sales of securities - 25
Other 29 12
------- -------
Total other income 1,250 1,269
------- -------
Other expense
Salaries and employee benefits 2,246 2,000
Net occupancy and equipment 700 636
Other operating expenses 1,241 1,132
------- -------
Total other expense 4,187 3,768
------- -------
Income before income taxes and trust
distribution 2,891 2,199
Distributions on trust preferred securities 397 -
Provision for income taxes 708 673
------- -------
Net income $ 1,786 $ 1,526
======= =======
Basic and diluted earnings per common share $ 0.47 $ 0.40
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
Unaudited
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Retained Comprehensive
Stock Capital Earnings Income Total
------- --------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1999 $38 $14,314 $25,922 $ 81 $40,355
Comprehensive income:
Net income 1,526 1,526
Other comprehensive income
Unrealized gains on available for
sale securities net of $113 tax effect 182 182
Reclassification adjustment for gains
included in income net of $35 tax effect (55) (55)
--------
Comprehensive income 1,653
--------
Cash dividends (378) (378)
------- --------- ---------- ------------ --------
Balance - March 31, 1999 $38 $14,314 $27,070 $ 208 $41,630
======= ========= ========== ============ ========
Balance - January 1, 2000 $38 $14,314 $31,045 $ (1,523) $43,874
Comprehensive income:
Net income 1,786 1,786
Other comprehensive income (loss)
Unrealized losses on available for sale
securities net of $117 tax effect (189) (189)
Reclassification adjustment for gains
included in income - -
--------
Comprehensive income 1,597
--------
Cash dividends (378) (378)
------- --------- ---------- ------------ --------
Balance - March 31, 2000 $38 $14,314 $32,453 ($1,712) $45,093
======= ========= ========== ============ ========
</TABLE>
3
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,786 $ 1,526
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 379 331
Amortization 74 67
Provision for loan losses 378 611
Provision for losses on foreclosed assets 47 16
Amortization and accretion on investment securities (17) (51)
Gain on disposition of investments - (25)
(Increase) decrease in mortgage loans held for sale (772) 1,481
Gain on disposition of premises and equipment (1) (4)
Loss on disposition of foreclosed assets 13 10
Deferred income taxes 252 (67)
Changes in assets and liabilities:
Interest receivable (1,069) (771)
Other assets, net (87) (276)
Accrued interest and other liabilities 659 550
--------------- ----------------
Net cash provided by operating activities 1,642 3,398
--------------- ----------------
Cash flows from investing activities
Proceeds from sales and maturities of investment securities
available for sale 75 6,713
Purchases of investment securities available for sale (97) (33,634)
Proceeds from maturities of investment securities held to
maturity 33 26,111
Purchase of investment securities held to maturity - (37,393)
Increase in federal funds sold (11,835) (2,180)
Net increase in loans (9,900) (16,153)
Proceeds from dispositions of bank premises and equipment 1 15
Purchase of bank premises and equipment (504) (1,126)
Proceeds from dispositions of foreclosed assets 521 330
--------------- ----------------
Net cash used by investing activities (21,706) (57,317)
--------------- ----------------
Cash flows from financing activities
Net increase in deposits 16,179 52,664
Net proceeds from other borrowings 2,194 (663)
Net increase in repurchase agreements 2,811 716
Dividends paid (378) (378)
--------------- ----------------
Net cash provided by financing activities 20,806 52,339
--------------- ----------------
Net increase (decrease) in cash and cash equivalents 742 (1,580)
Cash and cash equivalents - beginning of period 24,562 15,024
--------------- ----------------
Cash and cash equivalents - end of period $ 25,304 $ 13,444
=============== ================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Principles of Consolidation:
The consolidated financial statements of Bank of the Ozarks, Inc. include
the accounts of the parent company and its wholly owned subsidiaries, including
Bank of the Ozarks and Ozark Capital Trust (collectively the "Company"). All
material intercompany transactions have been eliminated.
2. Basis of Presentation:
The accompanying consolidated financial statements have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") in Article 10 of Regulation S-X and
with the instructions to Form 10-Q, and in accordance with generally accepted
accounting principles for interim financial information. Certain information,
accounting policies and footnote disclosures normally included in complete
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with such rules and
regulations. It is therefore suggested that these consolidated financial
statements be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's annual report on Form 10-
K for the year ended December 31, 1999.
In the opinion of management all adjustments considered necessary,
consisting of normal recurring items, have been included for a fair presentation
of the accompanying consolidated financial statements. Operating results for the
three months ended March 31, 2000 are not necessarily indicative of the results
that may be expected for the full year.
3. Earnings Per Common Share:
Basic EPS is computed by dividing reported earnings available to common
stockholders by weighted average shares outstanding. Diluted EPS includes only
the dilutive effect of stock options. In computing dilution for stock options,
the average share price is used for the reporting period. The Company had
approximately 165,000 and 39,800 outstanding options to purchase shares that
were not included in the dilutive EPS calculation because they would have been
antidilutive.
Basic and diluted earnings per common share is computed as follows:
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
------------------
2000 1999
------- --------
<S> <C> <C>
Common shares - weighted averages................. 3,780 3,780
Common share equivalents - weighted averages...... 4 16
------ ------
3,784 3,796
====== ======
Net income........................................ $1,786 $1,526
Basic earnings per common share................... $ 0.47 $ 0.40
Diluted earnings per common share................. 0.47 0.40
</TABLE>
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5
<PAGE>
4. Federal Home Loan Bank ("FHLB") Advances
FHLB advances with original maturities exceeding one year totaled $112.5
million at March 31, 2000. Interest rates on these advances ranged from 5.20%
to 6.30% at March 31, 2000 with a weighted average rate of 5.62%. Aggregate
annual maturities (amounts in thousands) and weighted average interest rates of
FHLB advances with an original maturity of over one year at March 31, 2000 are
as follows:
<TABLE>
<CAPTION>
Weighted
Amounts Average Rate
------- ------------
<S> <C> <C>
2000 $ 1,947 5.72%
2001 4,198 5.95
2002 198 6.30
2003 198 6.30
2004 197 6.30
Thereafter 105,790 5.60
--------
$112,528
========
</TABLE>
FHLB advances of $105.0 million maturing in 2009 and 2010 may be called
quarterly and if called the Company expects to refinance with short-term FHLB
advances, other short-term funding sources or FHLB long-term callable advances.
At March 31, 2000 the Company had no FHLB advances outstanding with
original maturities of one year or less.
5. Guaranteed Preferred Beneficial Interest in the Company's Subordinated
Debentures
On June 18, 1999 Ozark Capital Trust ("Ozark Capital"), a Delaware business
trust wholly owned by Bank of the Ozarks, Inc., sold to investors in a public
underwritten offering $17.3 million of 9% cumulative trust preferred securities.
The proceeds were used to purchase an equal principal amount of 9% subordinated
debentures of Bank of the Ozarks, Inc. Bank of the Ozarks, Inc. has, through
various contractual arrangements, fully and unconditionally guaranteed all
obligations of Ozark Capital on a subordinated basis with respect to the
preferred securities. Subject to certain limitations, the preferred securities
qualify as Tier 1 capital and are presented in the Consolidated Balance Sheets
as "Guaranteed preferred beneficial interest in the Company's subordinated
debentures." The sole asset of Ozark Capital is the subordinated debentures
issued by Bank of the Ozarks, Inc. Both the preferred securities of Ozark
Capital and the subordinated debentures of Bank of the Ozarks, Inc. will mature
on June 18, 2029; however, they may be prepaid, subject to regulatory approval,
prior to maturity at any time on or after June 18, 2004, or earlier upon certain
changes in tax or investment company laws or regulatory capital requirements.
The net proceeds from the offering were used to repay $12.5 million of
outstanding borrowings under the Company's revolving line of credit with the
balance of the proceeds used for general corporate purposes including a $3.0
million capital investment in the Company's bank subsidiary.
6. Supplementary Data for Cash Flows:
Cash payments for interest by the Company during the three months ended
March 31, 2000 amounted to $8.0 million and during the three months ended March
31, 1999 amounted to $6.4 million. No cash payments for income taxes were made
during the three months ended March 31, 2000 and cash payments of $148,000 were
made for income taxes for the three months ended March 31, 1999.
(The remainder of this page intentionally left blank)
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Net income was $1,786,000 for the first quarter of 2000, a 17.0% increase
over net income of $1,526,000 for the same quarter in 1999. Diluted earnings
rose 17.5% to $0.47 per share for the quarter ended March 31, 2000, compared to
$0.40 per share for the same quarter in 1999.
The Company's returns on average assets and on average stockholders' equity
were 0.90% and 16.13%, respectively, for the first quarter of 2000, compared
with 0.97% and 15.14%, respectively, for the same quarter of 1999.
Total assets increased from $796 million at December 31, 1999 to $819
million at March 31, 2000. Loans were $477 million at March 31, 2000, compared
to $467 million at December 31, 1999. Deposits were $612 million at March 31,
2000, compared to $596 million at December 31, 1999.
Stockholders' equity increased from $43.9 million at December 31, 1999, to
$45.1 million at March 31, 2000, increasing book value per share from $11.61 to
$11.93.
Annualized results for these interim periods may not be indicative of those
for the full year or future periods.
Analysis of Results of Operations
The Company's results of operations depend primarily on net interest
income, which is the difference between the interest income from earning assets,
such as loans and investments, and the interest expense incurred on interest
bearing liabilities, such as deposits and other borrowings. The Company also
generates non-interest income, including service charges on deposit accounts,
mortgage lending income, other charges and fees, trust income, and gains on
sales of assets. The Company's non-interest expenses primarily consist of
employee compensation and benefits, occupancy, equipment, and other operating
expenses. The Company's results of operations are also impacted by its provision
for loan losses. The following discussion provides a summary of the Company's
operations for the three months ended March 31, 2000 and 1999.
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7
<PAGE>
Net Interest Income
Net interest income is analyzed in the discussion and tables below on a
fully taxable equivalent ("FTE") basis. The adjustment to convert certain income
to an FTE basis consists of dividing tax-exempt income by one minus the
statutory federal income tax rate (34%).
Net interest income (FTE) increased 17.8% to $6,479,00 for the three months
ended March 31, 2000, from $5,502,000 for the three months ended March 31, 1999.
This increase primarily resulted from a 24.2% increase in average earning assets
to $735 million for the 2000 period from $592 million for the 1999 period. The
increase in average earning assets for the 2000 period resulted from continued
growth in the Company's loan portfolio as well as substantial growth in the
Company's investment securities portfolio.
The Company's net interest margin was 3.55% for the first quarter of 2000
compared with 3.77% for the first quarter of 1999. This decline in net interest
margin is a result of rising interest rates coupled with intense competition for
loans and deposits in a number of the Company's markets. Yields on average loan
balances for the quarter ended March 31, 2000 were 19 basis points lower than
the same quarter in 1999 and the interest rate on the average balance of
interest bearing deposits was 7 basis points higher for the first quarter of
2000 compared with the same quarter in 1999.
Analysis of Net Interest Income
(FTE = Fully Taxable Equivalent)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
2000 1999
--------- --------
(Dollars in thousands)
<S> <C> <C>
Interest income............................. $14,404 $11,730
FTE adjustment.............................. 273 193
------- -------
Interest income - FTE....................... 14,677 11,923
Interest expense............................ 8,198 6,421
------- -------
Net interest income - FTE................... $ 6,479 $ 5,502
======= =======
Yield on interest earning assets - FTE...... 8.03% 8.17%
Cost of interest bearing liabilities........ 4.90 4.77
Net interest spread - FTE................... 3.13 3.40
Net interest margin - FTE................... 3.55 3.77
</TABLE>
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8
<PAGE>
<TABLE>
<CAPTION>
Average Consolidated Balance Sheet and Net Interest Analysis
(Dollars in thousands)
-----------------------------------------------------------------------------
Three Months Ended March 31,
-----------------------------------------------------------------------------
2000 1999
----------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate Balance Expense Rate
-------- ------- ------ -------- ------- ------
Earnings assets:
Interest bearing deposits........................ $ 91 $ 1 5.53% $ 347 $ 5 5.45%
Federal funds sold............................... 130 2 6.52 208 3 4.88
Investment securities:
Taxable......................................... 223,782 3,736 6.72 166,560 2,758 6.72
Tax-exempt - FTE................................ 39,650 730 7.40 30,914 525 6.89
Loans - FTE (net of unearned income)............. 471,208 10,208 8.71 393,493 8,632 8.90
----------- ---------- ---------- ---------
Total earning assets........................... 734,861 14,677 8.03 591,522 11,923 8.17
Non-earning assets................................ 61,305 49,270
----------- ----------
Total assets................................... $796,166 $640,792
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Savings and interest bearing transaction........ $109,193 $ 761 2.81% $ 98,861 $ 649 2.66%
Time deposit of $100,000 or more................ 190,991 2,575 5.42 159,165 1,997 5.09
Other time deposits............................. 239,389 3,054 5.13 236,156 3,071 5.27
----------- ---------- ---------- ---------
Total interest bearing deposits................ 539,573 6,390 4.76 494,182 5,717 4.69
Repurchase agreements with customers............. 9,004 105 4.68 1,379 13 3.95
Other borrowings................................. 123,652 1,702 5.53 37,903 486 5.20
Notes payable.................................... 84 1 6.79 12,821 205 6.47
----------- ---------- ---------- ---------
Total interest bearing liabilities............. 672,313 8,198 4.90 546,285 6,421 4.77
Non-interest liabilities:
Non-interest bearing deposits.................... 58,612 50,799
Other non-interest liabilities................... 3,450 2,841
----------- ----------
Total liabilities.............................. 734,375 599,925
Trust preferred securities........................ 17,250 -
Stockholders' equity.............................. 44,541 40,867
----------- ----------
Total liabilities and stockholders' equity..... $796,166 $640,792
=========== ==========
Interest rate spread - FTE........................ 3.13% 3.40%
---------- ---------
Net interest income - FTE......................... $ 6,479 $ 5,502
========== ==========
Net interest margin - FTE......................... 3.55% 3.77%
</TABLE>
9
<PAGE>
Non-Interest Income
The Company's non-interest income can primarily be broken down into five
main sources: (1) service charges on deposit accounts, (2) mortgage lending
income, (3) other charges and fees including appraisal fees and commissions from
the sale of credit related insurance products, (4) trust income, and (5) gains
on sales of assets.
Non-interest income for the first quarter of 2000 was $1,250,000 compared
with $1,269,000 for the first quarter of 1999, a 1.5% decrease. In the first
quarter of 2000 the Company benefited from strong growth in service charges on
deposits which increased 52.0% compared to the first quarter of 1999. The
increase in service charge income resulted from continued growth in the number
of retail checking, savings and money market accounts, growth in the number of
commercial checking accounts and cash management customers, increased service
charge rates and improved collection and waiver practices. This improvement was
offset by declining mortgage lending income as rising interest rates resulted in
a significant reduction in the rate of mortgage refinancing and slowed real
estate activity in general from the level of early 1999.
The table below shows non-interest income for the three months ended March
31, 2000 and 1999.
Non-Interest Income
Three Months Ended
March 31,
-------------------
2000 1999
------ ------
(Dollars in thousands)
Service charges on deposit accounts.............. $ 763 $ 502
Mortgage lending income.......................... 175 449
Other charges and fees........................... 154 154
Trust income..................................... 130 128
Gain (loss) on sales of foreclosed real estate... (13) (10)
Gain (loss) on sales of other assets............. 1 3
Gain on sales of securities...................... - 25
Printed check sales.............................. 10 8
Other............................................ 30 10
------ ------
Total non-interest income................... $1,250 $1,269
====== ======
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10
<PAGE>
Non-Interest Expense
Non-interest expense for the first quarter of 2000 was $4,187,000 compared
with $3,768,000 for the same period in 1999, an 11.1% increase. This increase
resulted primarily from the Company's growth and expansion activities during
1999 including the opening of four new offices that year.
The table below shows non-interest expense for the three months ended March
31, 2000 and 1999.
Non-Interest Expense
Three Months Ended
March 31,
-----------------------
2000 1999
-------- --------
(Dollars in thousands)
Salaries and employee benefits............... $2,246 $2,000
Net occupancy expense........................ 344 297
Equipment expense............................ 356 339
Other real estate and foreclosure expense.... 119 63
Other operating expense:
Professional and outside services.......... 69 100
Postage.................................... 56 71
Telephone.................................. 118 101
Data lines................................. 59 41
Operating supplies......................... 129 112
Advertising and public relations........... 158 176
Directors' fees............................ 29 30
Software expense........................... 102 64
Check printing charges..................... 12 -
ATM expense................................ 48 36
FDIC & state assessment.................... 70 47
Business development, meals and travel..... 30 36
Amortization of goodwill................... 22 22
Amortization of other intangibles ......... 42 45
Other ..................................... 178 188
------ ------
Total non-interest expense............... $4,187 $3,768
====== ======
The Company's efficiency ratio (non-interest expenses divided by the sum of
net interest income on a tax equivalent basis and non-interest income) improved
to 54.2% for the first quarter of 2000 compared to 55.7% for the first quarter
of 1999.
Income Taxes
The provision for income taxes was $708,000 for the quarter ended March 31,
2000, compared to $673,000 for the same period in 1999. The effective income
tax rates were 28.4% and 30.6%, respectively, for these periods. The decrease
in effective tax rates for the 2000 period resulted primarily from the Company's
increased investments in tax-exempt securities. These include securities exempt
from both federal and Arkansas income taxes as well as other securities exempt
solely from Arkansas income taxes.
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11
<PAGE>
Analysis of Financial Condition
Loan Portfolio
At March 31, 2000, the Company's loan portfolio was $477 million, an
increase from $467 million at December 31, 1999. As of March 31, 2000, the
Company's loan portfolio consisted of approximately 63.5% real estate loans,
16.4% consumer loans, 15.4% commercial and industrial loans and 3.9%
agricultural loans (non-real estate).
The amount and type of loans outstanding at March 31, 2000 and 1999 and
December 31, 1999 are reflected in the following table.
Loan Portfolio
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------- ------------
2000 1999 1999
---------- ---------- ------------
(Dollars in thousands)
<S> <C> <C> <C>
Real Estate:
Owner-occupied 1-4 family residential...... $146,686 $119,404 $136,856
Non-farm/non-residential................... 98,574 86,560 101,766
Agricultural............................... 22,523 20,784 20,396
Construction/land development.............. 30,589 26,778 28,294
Multifamily residential.................... 4,796 5,465 4,687
---------- ---------- ----------
Total real estate..................... 303,168 258,991 291,999
Consumer................................... 78,449 64,976 81,753
Commercial and industrial.................. 73,500 55,163 70,012
Agricultural (non-real estate)............. 18,772 20,027 19,947
Other...................................... 3,376 1,694 3,420
---------- ---------- ----------
Total loans........................... $477,265 $400,851 $467,131
========== ========== ==========
</TABLE>
Nonperforming Assets
Nonperforming assets consist of (1) nonaccrual loans, (2) accruing loans 90
days or more past due, (3) restructured loans providing for a reduction or
deferral of interest or principal because of a deterioration in the financial
position of the borrower and (4) real estate or other assets that have been
acquired in partial or full satisfaction of loan obligations or upon
foreclosure.
The Company generally places a loan on nonaccrual status when payment of
principal or interest is contractually past due 90 days, or earlier when doubt
exists as to the ultimate collection of principal and interest. The Company
continues to accrue interest on certain loans contractually past due 90 days if
such loans are both well secured and in the process of collection. At the time a
loan is placed on nonaccrual status, interest previously accrued but uncollected
is generally reversed and charged against interest income. If a loan is
determined to be uncollectible, the portion of the loan principal determined to
be uncollectible will be charged against the allowance for loan losses. Interest
income on nonaccrual loans is recognized on a cash basis when and if actually
collected.
Nonperforming assets as a percent of total assets were 0.47% as of March
31, 2000, compared to 0.53% as of December 31, 1999, and 0.75% as of March 31,
1999. Nonperforming loans as a percent of total loans were 0.42% as of March 31,
2000 compared to 0.42% as of December 31, 1999, and 1.04% as of March 31, 2000.
(The remainder of this page intentionally left blank)
12
<PAGE>
The following table presents information concerning nonperforming assets,
including nonaccrual and restructured loans and foreclosed assets held for sale.
Nonperforming Assets
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------- ------------
2000 1999 1999
---------- ---------- ------------
(Dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans......................................... $1,996 $4,126 $1,972
Accruing loans 90 days or more past due.................. - 30 -
Restructured loans....................................... - - -
------ ------ ------
Total nonperforming loans.......................... 1,996 4,156 1,972
Foreclosed assets held for sale and repossessions/(1)/... 1,883 855 2,238
------ ------ ------
Total nonperforming assets......................... $3,879 $5,011 $4,210
====== ====== ======
Nonperforming loans to total loans....................... 0.42% 1.04% 0.42%
Nonperforming assets to total assets..................... 0.47 0.75 0.53
</TABLE>
(1) Foreclosed assets held for sale and repossessions are generally written
down to estimated market value at the time of transfer from the loan portfolio.
The value of such assets is reviewed from time to time throughout the holding
period with the value adjusted to the then estimated market value, if lower,
until disposition. Under Arkansas banking law, other real estate owned is
generally required to be written off over a five year period unless approval of
the Arkansas State Bank Department is obtained to write such assets off over an
extended period.
Allowance and Provision for Loan Losses
Allowance for Loan Losses: The following table shows an analysis of the
allowance for loan losses for the three month periods ended March 31, 2000 and
1999 and the year ended December 31, 1999.
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, December 31,
--------------------------------------------
2000 1999 1999
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
Balance, beginning of period .................................. $ 6,072 $ 4,689 $ 4,689
Loans charged off:
Real estate ............................................... 114 237 386
Consumer .................................................. 110 180 516
Commercial and industrial ................................. 93 79 271
Agricultural (non-real estate) ............................ 13 4 52
------- ------- -------
Total loans charged off............................... 330 500 1,225
------- ------- -------
Recoveries of loans previously charged off:
Real estate ............................................... - - 6
Consumer................................................... 15 49 111
Commercial and industrial ................................. 4 1 6
Agricultural (non-real estate) ............................ - - -
------- ------- -------
Total recoveries...................................... 19 50 123
------- ------- -------
Net loans charged off ......................................... 311 450 1,102
Provision charged to operating expense ........................ 378 611 2,485
------- ------- -------
Balance, end of period......................................... $ 6,139 $ 4,850 $ 6,072
======= ======= =======
Net charge-offs to average loans outstanding during
the periods indicated........................................ 0.27%/(1)/ 0.46%/(1)/ 0.26%
Allowance for loan losses to total loans ...................... 1.29 1.21 1.30
Allowance for loan losses to nonperforming loans .............. 307.57 116.70 307.91
</TABLE>
(1) Annualized
13
<PAGE>
The amounts of provisions to the allowance for loan losses are based on
management's judgment and evaluation of the loan portfolio utilizing objective
and subjective criteria. The objective criteria utilized by the Company to
assess the adequacy of its allowance for loan losses and required additions to
such reserve are (1) an internal grading system, (2) a peer group analysis, and
(3) a historical analysis. In addition to this objective criteria, the Company
subjectively assesses adequacy of the allowance for loan losses and the need for
additions thereto, with consideration given to the nature and volume of the
portfolio, overall portfolio quality, review of specific problem loans,
national, regional and local business and economic conditions that may affect
the borrowers' ability to pay or the value of collateral securing the loans, and
other relevant factors. The Company's allowance for loan losses increased to
$6,139,000 at March 31, 2000, or 1.29% of total loans, compared with $6,072,000,
or 1.30% of total loans, at December 31, 1999. While management believes the
current allowance is adequate, changing economic and other conditions may
require future adjustments to the allowance for loan losses.
For the first three months of 2000, annualized net charge-offs were 0.27%
of average outstanding loans compared with 0.26% for the year of 1999 and 0.46%
annualized for the first three months of 1999.
Provision for Loan Losses: The loan loss provision reflects management's
ongoing assessment of the loan portfolio and is evaluated in light of risk
factors mentioned above. The provision for loan losses was $378,000 for the
three months ended March 31, 2000 compared to $611,000 for the same three month
period in 1999.
Investments and Securities
The Company's securities portfolio is the second largest component of
earning assets and provides a significant source of revenue for the Company. The
table below presents the amortized cost and the fair value of investment
securities for each of the dates indicated.
Investment Securities
<TABLE>
<CAPTION>
March 31, March 31, December 31,
2000 1999 1999
----------------------------- ----------------------------- -------------------------
Book Fair Book Fair Book Fair
Value/(1)/ Value/(2)/ Value/(1)/ Value/(2)/ Value/(1)/ Value/(2)/
----------------------------- ------------------------------ ------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Securities of U.S. Government
Agencies............................. $215,723 $203,732 $167,290 $165,151 $215,713 $202,947
Mortgage-backed securities............ 182 182 253 254 192 192
Obligations of state and political
subdivisions......................... 39,306 39,251 44,116 44,167 39,705 39,665
Other securities...................... 7,885 7,882 3,390 3,390 7,785 7,782
-------- -------- -------- -------- -------- --------
Total................................ $263,096 $251,047 $215,049 $212,962 $263,395 $250,586
======== ======== ======== ======== ======== ========
</TABLE>
(1) The book value on available-for-sale securities is adjusted to reflect
the unrealized gains or losses on those securities.
(2) The fair value of the Company's investment securities is based on
quoted market prices where available. If quoted market price is not available,
fair values are based on market prices for comparable securities.
Liquidity and Capital Resources
Line of Credit. The Company maintains a revolving line of credit for up to
$22 million with a correspondent bank. Interest accrues on all outstanding
borrowings due under the line of credit at a variable rate equal to the average
prime lending rate reported from time to time by the Wall Street Journal minus
1.25%, provided, however, the rate is not to exceed 7.75%. Interest is payable
quarterly. The line of credit is effective through March 31, 2003 subject to an
annual compliance review by the lender. No standby or unused commitment fees
are payable by the Company under the line of credit. All borrowings under the
line of credit are secured by a pledge of 100% of the Company's stock in its
bank subsidiary. As of March 31, 2000, there were no borrowings outstanding
under this line of credit.
14
<PAGE>
The line of credit requires the Company's bank subsidiary to maintain,
among other requirements, (1) a return on average assets for each calendar year
equal to at least 1.0%, (2) a ratio of capital, as defined in the line of
credit, to assets at levels acceptable to bank regulatory authorities but at
least 7.0% at each calendar year end, (3) its classified assets as defined by
regulatory authorities not in excess of 40% of its capital, (4) non-performing
assets (as shown on its call report) in an amount not to exceed 2% of assets as
of year end, (5) a loan loss reserve equal to the greater of 1% of total loans
or 100% of non-performing assets, and (6) net charges to the reserve for loan
losses at less than 1.0% of net loans during any calendar year. In addition, the
line of credit requires that the parent company's aggregate indebtedness not
exceed 55.0% of the Company's tangible net worth through March 31, 2000,
reducing 5% a year thereafter and that borrowings under the line of credit not
exceed 50.0% of the tangible book value of its bank subsidiary stock pledged to
secure such borrowings. At March 31, 2000 the Company was in compliance with
these requirements.
Growth and Expansion. Construction continued in the first quarter on a
branch in Yellville, Arkansas with completion expected in the second quarter of
2000. The Company has received regulatory approval for additional branches in
the Otter Creek area of Little Rock, Arkansas and on Zero Street in Fort Smith,
Arkansas. Construction of these new Little Rock and Fort Smith branches should
begin in late 2000 with completion estimated in the first half of 2001.
Bank Liquidity. Liquidity represents an institution's ability to provide
funds to satisfy demands from depositors and borrowers by either converting
assets into cash or accessing new or existing sources of incremental funds.
Generally, the Company's bank subsidiary relies on customer deposits and loan
repayments as its primary sources of funds. The Company has used these funds,
together with FHLB advances and other borrowings, to make loans, acquire
investment securities and other assets and to fund continuing operations.
Deposit levels may be affected by a number of factors, including rates paid
by competitors, general interest rate levels, returns available to customers on
alternative investments and general economic conditions. Loan repayments are a
relatively stable source of funds, but such loans generally are not readily
convertible to cash. Accordingly, the Company may be required from time to time
to rely on secondary sources of liquidity to meet loan and withdrawal demands or
otherwise fund operations. Such sources include FHLB advances, federal funds
lines of credit from correspondent banks, Federal Reserve Bank borrowings, and
borrowings by the Company under its line of credit described above.
At March 31, 2000, the Company's bank subsidiary had substantial unused
borrowing availability. This availability is primarily comprised of the
following three options: (1) $1.7 million from the Federal Home Loan Bank, (2)
$34.6 million of securities available to pledge on a federal funds line of
credit, and (3) up to $213.9 million from borrowing programs of the Federal
Reserve Bank.
Management anticipates that the Company's bank subsidiary will continue to
rely primarily on customer deposits and loan repayments to provide liquidity.
Additionally, where necessary, the above described borrowings (including
borrowings under the Company's line of credit) will be used to augment the
Company's primary funding sources.
Capital Compliance. Bank regulatory authorities in the United States impose
certain capital standards on all bank holding companies and banks. These
capital standards require compliance with certain minimum "risk-based capital
ratios" and a minimum "leverage ratio". The risk-based capital ratios consist
of (1) Tier 1 capital (i.e. common stockholders' equity excluding goodwill,
certain intangibles and net unrealized gains on available for sale securities,
but including, subject to limitations, trust preferred securities and other
qualifying items) to total risk-weighted assets and (2) total capital (Tier 1
capital plus Tier 2 capital which is the qualifying portion of the allowance for
loan losses and the portion of trust preferred securities not counted as Tier 1
capital) to risk-weighted assets. The leverage ratio is measured as Tier 1
capital to adjusted quarterly average assets.
The Company's risk-based and leverage capital ratios exceeded these minimum
requirements at March 31, 2000, and December 31, 1999, and are presented below,
followed by the capital ratios of the Company's bank subsidiary at March 31,
2000.
(The remainder of this page intentionally left blank)
15
<PAGE>
Consolidated Capital Ratios
<TABLE>
<CAPTION>
March 31, December 31,
-------------- --------------
2000 1999
-------------- --------------
(Dollars in thousands)
<S> <C> <C>
Tier 1 capital:
Stockholders' equity....................................................... $ 45,093 $ 43,874
Allowed amount of guaranteed preferred beneficial interest in
Company's subordinated debentures (trust preferred securities)........... 15,601 15,132
Plus (less) net unrealized losses (gains) on available for sale securities. 1,711 1,523
Less goodwill and certain intangible assets................................ (3,244) (3,304)
-------------- --------------
Total tier 1 capital................................................. $ 59,161 $ 57,225
============== ==============
Tier 2 capital:
Qualifying allowance for loan losses....................................... 6,139 6,072
Remaining amount of guaranteed preferred beneficial interest in
Company's subordinated debentures (trust preferred securities)........... 1,649 2,118
-------------- --------------
Total risk-based capital............................................. $ 66,949 $ 65,415
============== ==============
Risk-weighted assets......................................................... $506,396 $497,460
============== ==============
Ratios at end of period:
Leverage................................................................... 7.46% 7.46%
Tier 1 risk-based capital.................................................. 11.68 11.50
Total risk-based capital................................................... 13.22 13.15
Minimum ratio guidelines:
Leverage capital (1)....................................................... 3.00% 3.00%
Tier 1 risk-based capital.................................................. 4.00 4.00
Total risk-based capital................................................... 8.00 8.00
</TABLE>
Capital Ratios of Bank Subsidiary
<TABLE>
<CAPTION>
March 31, 2000
------------------------
(Dollars in thousands)
<S> <C>
Stockholders' equity - Tier 1........................ $59,105
Leverage capital..................................... 7.46%
Tier 1 risk-based capital............................ 11.55
Total risk-based capital........................... 12.75
</TABLE>
(1) Regulatory authorities require institutions to operate at varying levels
(ranging from 100-200 basis points) above a minimum leverage ratio of 3%
depending upon capitalization classification.
(The remainder of this page intentionally left blank)
16
<PAGE>
Year 2000
The Company has substantially completed its Year 2000 Project as scheduled.
As of May 4, 2000, the Company's computer and other systems with imbedded
microchips have operated without Year 2000 related problems and appear to be
Year 2000 compliant. The Company is not aware that any of its software and
hardware vendors, major loan customers, correspondent banks or governmental
agencies with which the Company interacts have experienced material Year 2000
related problems.
While the Company believes all of its critical systems are Year 2000 ready,
there can be no guarantee the Company has discovered all possible failure points
including all of its systems, non-ready third parties whose systems and failures
could impact the Company, or other uncertainties. Many experts believe that the
risk of potential Year 2000 related failures could continue beyond the date of
January 1, 2000 as certain other sensitive target dates occur. As a result the
Company will continue to monitor its own systems (including new systems brought
into operation by the Company) and maintain contact with mission critical third
parties as these target dates approach. Additionally, the Company will maintain
its previously developed contingency plan for implementation in the event that
mission critical third party systems fail to address remaining Year 2000 issues.
The Company's aggregate expenses incurred since 1996 with respect to its Year
2000 Project were less than $130,000, all of which were expensed through
December 31, 1999. A significant portion of these costs were represented by the
redeployment of existing staff to the Year 2000 project. No projects under
consideration by the Company have been deferred because of Year 2000 efforts.
The Company does not anticipate any additional material costs relating to the
Year 2000 issue.
Forward-Looking Information
This Management's Discussion and Analysis of Financial Condition and Results
of Operations, other filings made by the Company with the Securities and
Exchange Commission and other oral and written statements or reports by the
Company and its management, include certain forward-looking statements
including, without limitation, statements with respect to anticipated future
operating and financial performance, growth opportunities and growth rates,
acquisition opportunities and other similar forecasts and statements of
expectation. Words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Forward-looking statements
made by the Company and its management are based on estimates, projections,
beliefs and assumptions of management at the time of such statements and are not
guarantees of future performance. The Company disclaims any obligation to
update or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.
Actual future performance, outcomes and results may differ materially from
those expressed in forward-looking statements made by the Company and its
management due to certain risks, uncertainties and assumptions. Certain factors
that may affect operating results of the Company include, but are not limited
to, the following: (1) potential delays or other problems in implementing the
Company's growth and expansion strategy; (2) the ability to attract new deposits
and loans; (3) interest rate fluctuations; (4) competitive factors and pricing
pressures; (5) general economic conditions; and (6) changes in legal and
regulatory requirements, as well as, other factors described in this and other
Company reports and statements. Should one or more of the foregoing risks
materialize, or should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described in the forward-looking
statements.
(The remainder of this page intentionally left blank)
17
<PAGE>
Selected and Supplemental Financial Data
The Company is also providing the selected and supplemental financial data in
the tables below.
The following table sets forth selected consolidated financial data concerning
the Company for the three month periods ended March 31, 2000 and 1999 and is
qualified in its entirety by the consolidated financial statements, including
the notes thereto, included elsewhere herein.
Selected Consolidated Financial Data
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Income statement data:
Interest income............................................ $ 14,404 $ 11,730
Interest expense........................................... 8,198 6,421
Net interest income........................................ 6,206 5,309
Provision for loan losses.................................. 378 611
Non-interest income........................................ 1,250 1,269
Non-interest expenses...................................... 4,187 3,768
Net income................................................. 1,786 1,526
Per common share data:
Earnings - diluted......................................... $ 0.47 $ 0.40
Book value................................................. 11.93 11.01
Dividends.................................................. 0.10 0.10
Weighted avg. shares outstanding (thousands)............... 3,784 3,796
Balance sheet data at period end:
Total assets............................................... $819,106 $666,921
Total loans................................................ 477,265 400,851
Allowance for loan losses.................................. 6,139 4,850
Total investment securities................................ 263,096 215,049
Total deposits............................................. 612,109 581,704
Repurchase agreements with customers....................... 11,837 2,124
Other borrowings........................................... 129,183 38,608
Total stockholders' equity................................. 45,093 41,630
Loan to deposit ratio...................................... 77.97% 68.91%
Average balance sheet data:
Total average assets....................................... 796,166 640,792
Total average stockholders' equity......................... 44,541 40,867
Average equity to average assets........................... 5.59% 6.38%
Performance ratios:
Return on average assets*.................................. 0.90% 0.97%
Return on average stockholders' equity*.................... 16.13 15.14
Net interest margin........................................ 3.55 3.77
Efficiency................................................. 54.17 55.65
Dividend payout............................................ 21.28 25.00
Asset quality ratios:
Net charge-offs as a percentage of average total loans*.... 0.27% 0.46%
Nonperforming loans to total loans......................... 0.42 1.04
Nonperforming assets to total assets....................... 0.47 0.75
Allowance for loan losses as a percentage of:
Total loans................................................ 1.29% 1.21%
Nonperforming loans........................................ 307.57 116.70
Capital ratios at period end:
Leverage capital........................................... 7.46% 5.95%
Tier 1 risk-based capital.................................. 11.68 8.89
Total risk-based capital................................... 13.22 10.03
*Annualized based on actual days
</TABLE>
18
<PAGE>
Bank of the Ozarks, Inc.
Supplemental Quarterly Financial Data
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99 3/31/00
-------- -------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings Summary:
- -----------------
Net interest income $ 4,430 $ 4,641 $ 5,137 $ 5,309 $ 5,887 $ 6,222 $ 6,375 $ 6,206
Federal tax (FTE) adjustment 158 156 56 193 242 244 267 273
-------- -------- --------- -------- -------- -------- --------- ----------
Net interest margin (FTE) 4,588 4,797 5,193 5,502 6,129 6,466 6,642 6,479
Loan loss provision (255) (742) (804) (611) (580) (578) (716) (378)
Non-interest income 1,152 1,333 1,451 1,269 1,303 1,293 1,282 1,250
Non-interest expense (3,329) (3,267) (3,599) (3,768) (4,241) (4,195) (4,261) (4,187)
-------- -------- --------- -------- -------- -------- --------- ----------
Pretax income (FTE) 2,156 2,121 2,241 2,392 2,611 2,986 2,947 3,164
FTE adjustment (158) (156) (56) (193) (242) (244) (267) (273)
Provision for taxes (611) (544) (738) (673) (658) (639) (539) (708)
Distribution on trust preferred
securities - - - - (52) (397) (397) (397)
-------- -------- --------- -------- -------- -------- --------- --------
Net income $ 1,387 $ 1,421 $ 1,447 $ 1,526 $ 1,659 $ 1,706 $ 1,744 $ 1,786
======== ======== ========= ======== ======== ======== ========= ========
Earnings per share - diluted $ 0.36 $ 0.37 $ 0.38 $ 0.40 $ 0.44 $ 0.45 $ 0.46 $ 0.47
Non-interest Income Detail:
- ---------------------------
Trust income $ 99 $ 62 $ 96 $ 128 $ 115 $ 113 $ 124 $ 130
Service charges on deposit
accounts 326 366 399 502 599 674 724 763
Mortgage lending income 423 570 748 449 351 316 190 175
Gain (loss) on sale of assets 12 6 6 (7) (5) 16 7 (12)
Security gains 74 130 - 25 50 - (6) -
Other 218 199 202 172 193 174 243 194
-------- -------- --------- -------- -------- -------- --------- --------
Total non-interest income $ 1,152 $ 1,333 $ 1,451 $ 1,269 $ 1,303 $ 1,293 $ 1,282 $ 1,250
Non-interest Expense Detail:
- ----------------------------
Salaries and employee
benefits $ 1,955 $ 1,651 $ 1,913 $ 2,000 $ 2,322 $ 2,273 $ 2,158 $ 2,246
Net occupancy expense 453 529 553 636 619 681 719 700
Other operating expenses 894 1,051 1,045 1,065 1,234 1,176 1,320 1,177
Goodwill charges 22 23 44 22 23 23 22 22
Amortization of other
intangibles - pretax 5 13 44 45 43 42 42 42
-------- -------- --------- -------- -------- -------- --------- --------
Total non-interest expense $ 3,329 $ 3,267 $ 3,599 $ 3,768 $ 4,241 $ 4,195 $ 4,261 $ 4,187
Allowance for Loan Losses:
Balance beginning of period $ 3,822 $ 3,853 $ 4,392 $ 4,689 $ 4,850 $ 5,248 $ 5,611 $ 6,072
Net charge offs (224) (203) (507) (450) (182) (215) (255) (311)
Loan loss provision 255 742 804 611 580 578 716 378
-------- -------- --------- -------- -------- -------- --------- --------
Balance at end of period $ 3,853 $ 4,392 $ 4,689 $ 4,850 $ 5,248 $ 5,611 $ 6,072 $ 6,139
Selected Ratios:
- ----------------
Net interest margin - FTE* 4.50% 3.93% 3.77% 3.77% 3.81% 3.79% 3.71% 3.55%
Overhead expense ratio* 3.01 2.46 2.41 2.38 2.45 2.28 2.20 2.12
Efficiency ratio 58.00 53.30 54.17 55.65 57.06 54.07 53.77 54.17
Non-performing loans
to total loans 0.55 0.65 0.70 1.04 1.01 0.59 0.42 0.42
Non-performing assets
to total assets 0.45 0.45 0.50 0.75 0.70 0.62 0.53 0.47
*Annualized
</TABLE>
19
<PAGE>
PART I (continued)
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's interest rate risk management is the responsibility
of the Asset/Liability Management Committee, which reports to the
Board of Directors. This committee establishes policies that monitor
and coordinate the Company's sources, uses and pricing of funds. The
committee is also involved with management in the Company's planning
and budgeting process.
Management does not believe there have been any material changes
in the Company's interest rate risks from those disclosed in the
Company's 1999 Annual Report to shareholders.
PART II
Other Information
Item 1. Legal Proceedings
-----------------
Not Applicable
Item 2. Changes in Securities
---------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable
Item 5. Other Information
-----------------
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a). Exhibits
Reference is made to the Exhibit Index contained at the end of
this report.
(b). Reports on Form 8-K
Not Applicable
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Bank of the Ozarks, Inc.
DATE: May 4, 2000 /s/ Paul E. Moore
-------------------
Paul E. Moore
Chief Financial Officer
(Chief Accounting Officer)
21
<PAGE>
Bank of the Ozarks, Inc.
Exhibit Index
Exhibit
Number
- ------
3 (a) Amended and Restated Articles of Incorporation of the Company,
effective May 22, 1997, (previously filed as Exhibit 3.1 to the
Company's Form S-1 Registration Statement (File No. 333-27641) and
incorporated herein by reference).
3 (b) Amended and Restated Bylaws of the Company, dated as of March 13,
1997, (previously filed as Exhibit 3.2 to the Company's Form S-1
Registration Statement (File No. 333-27641) and incorporated herein by
reference).
27 Financial Data Schedule for the period ended March 31, 2000
(attached).
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS & NOTES THERETO INCORPORATED BY REFERENCE IN QUARTERLY
REPORT 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 24,785
<INT-BEARING-DEPOSITS> 519
<FED-FUNDS-SOLD> 11,835
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 44,560
<INVESTMENTS-CARRYING> 218,536
<INVESTMENTS-MARKET> 206,486
<LOANS> 477,265
<ALLOWANCE> 6,139
<TOTAL-ASSETS> 819,106
<DEPOSITS> 612,109
<SHORT-TERM> 30,553
<LIABILITIES-OTHER> 3,634
<LONG-TERM> 110,467
17,250
0
<COMMON> 38
<OTHER-SE> 45,055
<TOTAL-LIABILITIES-AND-EQUITY> 819,106
<INTEREST-LOAN> 10,183
<INTEREST-INVEST> 4,218
<INTEREST-OTHER> 3
<INTEREST-TOTAL> 14,404
<INTEREST-DEPOSIT> 6,390
<INTEREST-EXPENSE> 8,198
<INTEREST-INCOME-NET> 6,206
<LOAN-LOSSES> 378
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,187
<INCOME-PRETAX> 2,494
<INCOME-PRE-EXTRAORDINARY> 2,494
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,786
<EPS-BASIC> .47
<EPS-DILUTED> .47
<YIELD-ACTUAL> 8.03
<LOANS-NON> 1,996
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,631
<ALLOWANCE-OPEN> 6,072
<CHARGE-OFFS> 330
<RECOVERIES> 19
<ALLOWANCE-CLOSE> 6,139
<ALLOWANCE-DOMESTIC> 6,139
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
