Dividend Growth Stock Overview: Bank of the Ozarks

Photo of the Ozarks Valley: Freeimages.com/Angela Seiffert

About Bank of the Ozarks, Inc.

Bank of the Ozarks, Inc. is a regional bank holding company that owns Arkansas-chartered Bank of the Ozarks. The company has 174 offices across 9 states, with nearly half in Arkansas, and provides a wide variety of retail and commercial banking services. The company is headquartered in Little Rock, Arkansas and employed nearly 1,500 people at the end of 2015.

Bank of the Ozarks provides standard banking services, including checking, savings, money market and IRA accounts; real estate, consumer, industrial, commercial and agricultural loans, including mortgages; and trust and wealth management services for individuals, non-profits and businesses. The company also has a full-service investment brokerage arm, and provides business services including processing merchant debit and credit card transactions.

The history of Bank of the Ozarks dates back to the formation of a small community bank in Jaspar, Arkansas in 1903 and by 1937, the bank had expanded to Ozark, AR. The bank remained small for most of its history, and when George Gleason purchased it in 1979 it only had about $28 million in assets. In 1994 the board, led by Gleason, decided to begin a strategy of expansion and to focus on building new branches in Arkansas. Through the late 1990s and into the 2000s, the company expanded its reach by opening new bank branches and loan production offices in the Carolinas, Texas, California and Florida. The company also went on an aggressive series of acquisitions, purchasing 12 small banks from 2010 through 2014.

In the past, Bank of the Ozarks has usually financed the acquisitions through a combination of cash and the issuance of new stock for the acquired company’s shareholders. However, going forward the 4 acquisitions that were completed or were underway in 2015 were or are going to be all-stock transactions. These acquisitions are:

  • Intervest National Bank, acquired in May 2015
  • Bank of the Carolinas, acquired August 2015
  • Community & Southern Holdings, expected to close 1st quarter 2016
  • C1 Financial, also expected to close 1st quarter 2016

Altogether, these 4 acquisitions will result in the issuance of an additional 34.6 million shares (based on a current share price of roughly $45), which is an increase of 40% over the number of outstanding shares currently. Despite this, the company expects all the acquisitions to immediately add to earnings per share. In addition, the acquisitions expand Bank of the Ozarks’ presence in the operating areas of New York City, Georgia, North Carolina and Florida.

Bank of the Ozarks operates in a single business segment. The company saw an increase in total assets of 46% to nearly $10 billion and total deposits of 45% to nearly $8 billion at the end of 2015. The company’s book value was up 44.2% in 2015 to $14.48, and earnings per share were up 37.5% to $2.09. The company’s current annualized payout of 60 cents results in a payout ratio of 28.7%.

The company has announced that it plans to continue its expansion strategy, which has taken it from a small local bank to a mid-size regional bank with a market capitalization of over $4 billion. This expansion will include both the opening of new bank branches to better cover existing service areas, along with continuing to acquire smaller banks to expand into new service areas. The company is also looking at opening loan production offices in the metropolitan areas of Boston, Chicago, Seattle and Washington, DC.

The company is a member of the S&P Small Cap 600 and Russell 2000 indices and trades under the ticker symbol OZRK.

Bank of the Ozarks’ Dividend and Stock Split History

Bank of the Ozarks Dividend Growth

Bank of the Ozarks has compounded its dividend at nearly 24% a year since 1998.

Bank of the Ozarks has grown dividends year-over-year since coming public in 1997. Rather than increasing dividends annually, Bank of the Ozarks has increased the quarterly dividend each quarter since 2010. From 2014 – 2015, the year-over-year dividend increased by 17.02% to a total of 55 cents. The current quarterly dividend is 15 cents a share or an annualized 60 cents.

Bank of the Ozarks’ rapid growth in assets and earnings has powered very fast dividend growth. The company has compounded dividends over the last 5 and 10 years at rates of 29.67% and 19.51%, respectively. Since coming public in July 1997 to the end of 2015, Bank of the Ozarks’ dividend growth rate has averaged 23.90%.

Bank of the Ozarks has split its stock 4 times since coming public in July 1997. The most recent split, which was 2-for-1, was in June 2014. The other 3 splits, also 2-for-1, were completed in June 2002, December 2003 and August 2011. A single share of Bank of the Ozarks stock purchased when the company went public in 1997 has split into 16 shares.

Over the 5 years ending on December 31, 2015, Bank of the Ozarks stock appreciated at an annualized rate of 37.61%, from a split-adjusted $9.99 to $49.30. This dramatically outperformed the 10.20% compounded return of the S&P 500 index, the 10.07% compounded return of the S&P Small Cap 600 index and the 7.71% compounded return of the Russell 2000 index over the same period.

Bank of the Ozarks’ Direct Purchase and Dividend Reinvestment Plans

Bank of the Ozarks does not have a direct purchase or dividend reinvestment plan. In order to invest in Bank of the Ozarks stock, you’ll need to purchase it through a broker. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Bank of the Ozarks’ Investor Relations Website

Current quote and financial summary for Bank of the Ozarks (finviz.com)

 

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