Bank of the Ozarks 3Q15 Earnings Call Notes

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Bank of the Ozarks’ (OZRK) CEO George Gleason on Q3 2015 Results

Getting to the later stages of real estate credit cycle here

“we think we are getting in the later stages of a real estate credit cycle here, so we are being very defensive in what we are doing. And our primary means of being defensive is to have a lot of equity in our transactions.”

There have been a lot of apartments constructed and you have to ask if demand is enough to absorb that supply

” pretty much wherever you go in the country and there are some places that I could name where you had a lot of apartments constructed and one has to ask if the demand and employment growth or population growth are there to absorb that supply. You just have to take all those factors into consideration and whether not you approve a loan, is there a sound loan, is there a sound and viable project, are you defensively enough structured in loans, so that’s what we do everyday and we would rather actually see a downturn in the economy. That would work to our benefits substantially we believe. But I think we are still some quarters away from that.”

I am saying we are late cycle

“I am saying we are late in the cycle and that’s predicated upon various things. And when you are seeing valuation of properties go up a lot and a lot of markets around the country look sort of toppy to us which is causing our response to just dig in as low in the caps back as we can get on things we are doing. You see transactions being pitched that you look at you think more in a normal time, don’t think response from this transaction probably would have looked at this deal. It’s got issues and variables and questions and things about it, it looks like some spots are reaching find deals and get deals done that make sense. Just the duration of the current economic expansion cause this one to do math and say we are longer than average here in a period of expansion and you got think we are getting into the end of fact but Fed’s talk about rising rates and using when the Fed rate is right, they eventually over do it on the upside and cause a downturn.”