George Gleason
Record growth in loans, unfunded loans and deposits helped return Little Rock’s Bank of the Ozarks to its familiar road of record earnings.
The company achieved net income of $118.6 million for 2014, allowing it to stretch its string of record earnings to 15 of its 18 years as a public company.
“We made so much money in 2011, it took us awhile to get back on the record earnings pace,” said George Gleason, chairman and CEO, of the company’s two-year hiatus.
The item was among a slew of continued good news at Bank of the Ozarks that Gleason served up at the company’s annual shareholders meeting this morning at the corporate headquarters in west Little Rock.
The $6.7 billion-asset lender is one of only six banks in the nation with more than $3 billion in total assets that achieved a return on average assets greater than 2 percent each of the last five years.
“We’re pleased to be among such an elite group of banks,” Gleason said.
Gleason credited the company’s ongoing success to maintaining great discipline and capitalizing on opportunity and hard work. The company’s discipline is in full glory when it comes to profitably managing risk.
“We’ve never had a year where our net charge-off ratio has equaled or exceeded the industry average,” Gleason said.
The company has maintained better than average yields with lower risk in its active construction lending operations. Gleason highlighted the recent averages of 52 percent loan-to-cost and 45 percent loan-to-value in construction loans funded by Bank of the Ozarks.
“We’ve worked real hard to get our loan portfolio less risky, with more cash equity (from borrowers),” he said.
Gleason pointed with pride to the company’s ability to control costs while generating revenue, which is underscored by its favorable efficiency ratio.
Bank of the Ozarks spent 45.3 cents in overhead to produce every $1 in revenue during 2014. The industry average was 61.9 cents.
“We’re on track to have another excellent year in loan growth,” Gleason said.
The pending $64.7 million stock-swap acquisition of Carolinas Corp., which should close in the third quarter, will broaden the footprint of Bank of the Ozarks in vibrant North Carolina markets.
Carolinas Corp.’s $363 million-asset Bank of the Carolinas operates eight offices between Charlotte and Winston-Salem. But the lender has lost more than $46 million since 2008 while trying to return to profitability. Bank of the Ozarks will bring much needed capital to bear.
“This is an important opportunity to increase our North Carolina franchise,” Gleason said.
Reading the tea leaves to discern future direction by the Federal Reserve is haphazard at best, but Gleason does expect interest rates to rise in the coming months. From his perspective: the bigger the bump, the bigger the opportunity for enhanced gains for Bank of the Ozarks.
“We would have a brief cheering session here if the Fed decides to raise interest rates,” Gleason said.
Shareholders re-elected 14 returning members of the board of directors and approved the addition of two new members:
• Tyler Vance, 40, chief operating officer since 2013 and chief banking officer since 2011, joined Bank of the Ozarks in 2006 as senior vice president.
• William Koefoed Jr., 50, chief financial officer since 2013 for Puppet Labs Inc., an IT automation software development company and former CFO of Microsoft Corp.’s Skype division.
Returning members of the board include Gleason, 61; Dan Thomas, 52, chief lending officer and president of the bank’s real estate specialties group; Nicholas Brown, 56, president and CEO of Southwest Power Pool of Little Rock; Richard Cisne, 64, founding partner of the Little Rock accounting firm of Hudson Cisne & Co.; Robert East, 67, chairman of the Little Rock general contracting firm of East-Harding Inc.; Catherine Freedberg, 72, former director of The First National Bank of Shelby, North Carolina; Linda Gleason, 60, wife of George Gleason; Peter Kenny, 56, chief market strategist for Clearpool Group of New York; Henry Mariani, 76, chairman of NLC Products Inc. of Little Rock; Robert Proost, 77, a retired A.G. Edwards executive; R.L. Qualls, 81, retired president of Baldor Electric Co. of Fort Smith; John Reynolds, 50, a pathologist and laboratory director for Memorial Hospital in Bainbridge, Ga.; Sherece West-Scantlebury, 49, president and CEO of the Winthrop Rockefeller Foundation; and Ross Whipple, 63, former chairman and CEO of Summit Bancorp, Inc. of Arkadelphia.
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