Bank of the Ozarks 2Q16 Earnings Call Notes

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George Gleason

We’re able to find good opportunities in markets with negative headlines by doing our homework

“A lot of our competitors tend to move as a pack and are heavily driven by headline risk and headline perceptions of market conditions. We have always tried to have a much more nuanced and intelligent and deeply analytic approach to originating credits. You can read the headlines and run with the herd, but when you do you miss tremendous opportunities and you often are running in the wrong direction. So what we have tried to do is sort of ignore the headlines to a great extent, I mean certainly you to have to take larger macroeconomic and market themes into account. But we have really tried to not let that drive our decisions, but instead to look at the supply demand metrics of each sub-market market and macro market and the relative competitive position of each product in the market and do a much deeper level of analysis on projects. So as a result of that, we are finding tremendous opportunities in Manhattan, Miami, Houston, Dallas as well as markets that probably have gotten better headlines, such as California and Seattle and Denver. So we are really doing our homework as we always have done and really developing detailed supply-demand analytics and models on the market and finding great business in a lot of markets where you are seeing some fairly negative headlines.”

We do keep an eye on growth capital needs

“Jim Hicks does an ongoing monitoring of that and has our capital needs and the growth on our balance sheet projected out over a number of years on a quarter-to-quarter basis looking at all ratios. On a pro forma basis, using June 30 numbers and assuming the pro forma addition of C&S and C1 into the mix, we project that we have about $2.5 billion of capacity for organic growth or acquisitions. Now, of course we will be generating additional retained earnings. So, that doesn’t mean that $2.5 billion from now we will need additional capital, because we should be generating very good retained earnings that will support even more growth. But we will continue to monitor that on a quarter-to-quarter basis and really more frequently and continue to evaluate future capital needs. ”

Examination schedule has changed since we became a larger bank

“Since we crossed $10 billion literally the first day of January, we have started our new examination cycle with our regulators. And instead of our exams being all clustered in about a 6 or 7-week, 8-week period in August, September and early October, our examination cycle now as a larger bank has become much more sort of continuous with exams really occurring every month on different parts of our company. ”

Don’t want to fall behind the curve of where your regulators think you are

“We are working really hard to make sure we stay ahead of the curve and ahead of expectations. You don’t ever want to fall behind and be trying to catch up to where your regulators think you are.”