Tuesday, Bank of the Ozarks, Inc. (OZRK) reported a decrease in earnings for the third quarter ended September 30. The decline was attributed to an increase in the provisions and allowances for loans and lease losses, as well as an increase in non-performing assets.
Net income available to common stockholders for the quarter declined 6.9% to $8.4 million from $9.01 million during the third quarter of 2008. Earnings per share for the third quarter declined 5.7% to $0.50 from $0.53 a year-ago.
On average, eight analysts polled by Thomson Reuters estimated earnings of $0.48 per share for the quarter. Analysts' estimates typically exclude special items.
Net interest income for the third quarter increased 18.8% to $29.23 million from $24.61 million in the comparable period a year-ago. Three Wall Street analysts estimated revenues of $37.02 million for the quarter.
The company's net interest margin increased to 4.80% from 3.82% for the comparable period year-ago.
Provision for loan and lease losses increased to $7.50 million from $3.40 million year-ago. Net charge-offs for the quarter were higher at $11.85 million, compared with $1.40 million in the prior year period. The company's annualized net charge-off ratio for the third quarter was 2.38%, compared to 0.27% for the third quarter of 2008.
Net charge-offs for the quarter just ended related to two credit relationships, which Ozarks had previously identified as potential problems and for which it had established $5.1 million of special allocations within its allowance for loan and lease losses as of June 30.
Allowance for Loan and Lease losses at the end of the period were higher at $39.28 million, compared with $25.42 million year-ago. Nonperforming loans and leases to total loans and leases increased 1%, compared with 0.70% last year, while nonperforming assets to total assets increased 2.88%, compared with 0.66% year-ago.
While the company's total loans and leases for the third quarter declined by 6% to $1.93 billion from $2.06 million in the year-earlier period, total deposits declined 11.1% to $2.05 billion from $2.30 billion in the prior year.
According to George Gleason, chairman and chief executive officer, "Slower economic conditions over the past year have diminished loan and lease demand. While we have been actively seeking and originating many good quality new loans and leases, loan and lease originations in recent quarters have been more than offset by loan and lease pay downs."
The company's non-interest income increased 19.3% to $5.81 million from $4.87 million in the comparable period last year. Non-interest expense increased 12.1% to $15.49 million from $13.82 million a year-ago.
For the nine months ended September 30, net income increased 7.1% to $27.17 million from $25.38 million in the comparable period a year-ago. Year-to-date earnings per share increased 7.3% to $1.61 from $1.50 during the first nine months of 2008.
Year-to-date net interest income increased 28.4% to $89.82 million from $69.97 million in the prior-year period.
OZRK closed Tuesday's regular trading at $27.04, up $0.08 or 0.30%, on the Nasdaq. In after hours trading, the share lost $0.08 or 0.30%, trading at $26.96.
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