UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 0-22759

BANK OF THE OZARKS, INC.

(Exact name of registrant as specified in its charter)

ARKANSAS	71-0556208
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

17901 CHENAL PARKWAY, LITTLE ROCK, ARKANSAS	72223
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (501) 978-2265

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨   (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practical date.

	Class		Outstanding at April 29, 2016
Common Stock, $0.01 par value per share		90,727,237

BANK OF THE OZARKS, INC.

FORM 10-Q

March 31, 2016

INDEX

PART I.	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2016 and 2015	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2016 and 2015	5
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2016 and 2015	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	65
PART II.	Other Information
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	66
Signature		67
Exhibit Index		68

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BANK OF THE OZARKS, INC.

CONSOLIDATED BALANCE SHEETS

	Unaudited
	March 31,			December 31,
	2016			2015
	(Dollars in thousands, except per share amounts)
ASSETS
Cash and due from banks	$	616,508		$	89,122
Interest earning deposits		6,253			1,866
Cash and cash equivalents		622,761			90,988
Investment securities - available for sale (“AFS”)		627,946			602,348
Non-purchased loans and leases		7,591,339			6,528,634
Purchased loans		1,678,351			1,806,037
Total loans and leases		9,269,690			8,334,671
Allowance for loan and lease losses		(61,760	)		(60,854	)
Net loans and leases		9,207,930			8,273,817
Premises and equipment, net		299,850			296,238
Foreclosed assets		22,248			22,870
Accrued interest receivable		33,327			25,499
Bank owned life insurance (“BOLI”)		345,288			300,427
Intangible assets, net		150,865			152,340
Other, net		117,204			114,932
Total assets	$	11,427,419		$	9,879,459
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand non-interest bearing	$	1,621,811		$	1,515,482
Savings and interest bearing transaction		4,935,235			4,017,504
Time		3,069,779			2,438,482
Total deposits		9,626,825			7,971,468
Repurchase agreements with customers		65,883			65,800
Other borrowings		41,933			204,540
Subordinated debentures		117,823			117,685
Accrued interest payable and other liabilities		63,705			52,172
Total liabilities		9,916,169			8,411,665
Commitments and contingencies
Stockholders’ equity:
Preferred stock; $0.01 par value; 1,000,000 shares authorized; no shares    outstanding at March 31, 2016 or at December 31, 2015		—			—
Common stock; $0.01 par value; 125,000,000 shares authorized;    90,714,199, and 90,612,388 shares issued at March 31, 2016    and December 31, 2015, respectively		907			906
Additional paid-in capital		752,029			755,995
Retained earnings		744,713			706,628
Accumulated other comprehensive income		10,431			7,959
Treasury stock, at cost, none at March 31, 2016 and    133,492 shares at December 31, 2015		—			(6,857	)
Total stockholders’ equity before noncontrolling interest		1,508,080			1,464,631
Noncontrolling interest		3,170			3,163
Total stockholders’ equity		1,511,250			1,467,794
Total liabilities and stockholders’ equity	$	11,427,419		$	9,879,459

See accompanying notes to consolidated financial statements.

3

BANK OF THE OZARKS, INC.

CONSOLIDATED STATEMENTS OF INCOME

Unaudited

	Three Months Ended
	March 31,
	2016			2015
	(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans and leases	$	87,010		$	50,432
Purchased loans		29,023			32,860
Investment securities:
Taxable		2,270			3,485
Tax-exempt		3,432			4,669
Deposits with banks and federal funds sold		6			9
Total interest income		121,741			91,455
Interest expense:
Deposits		7,850			3,537
Repurchase agreements with customers		19			17
Other borrowings		302			1,703
Subordinated debentures		1,053			709
Total interest expense		9,224			5,966
Net interest income		112,517			85,489
Provision for loan and lease losses		2,017			6,315
Net interest income after provision for loan and lease losses		110,500			79,174
Non-interest income:
Service charges on deposit accounts		7,657			6,627
Mortgage lending income		1,284			1,507
Trust income		1,507			1,432
BOLI income		2,861			3,623
Other income from purchased loans, net		3,052			8,908
Gains on sales of other assets		1,027			2,829
Net gains on investment securities		—			2,534
Other		2,477			1,607
Total non-interest income		19,865			29,067
Non-interest expense:
Salaries and employee benefits		23,362			22,597
Net occupancy and equipment		8,531			7,291
Other operating expenses		15,793			20,296
Total non-interest expense		47,686			50,184
Income before taxes		82,679			58,057
Provision for income taxes		30,984			18,139
Net income		51,695			39,918
Earnings attributable to noncontrolling interest		(7	)		(24	)
Net income available to common stockholders	$	51,688		$	39,894
Basic earnings per common share	$	0.57		$	0.48
Diluted earnings per common share	$	0.57		$	0.47
Dividends declared per common share	$	0.15		$	0.13

See accompanying notes to consolidated financial statements.

4

BANK OF THE OZARKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

	Three Months Ended
	March 31,
	2016			2015
	(Dollars in thousands)
Net income	$	51,695		$	39,918
Other comprehensive income:
Unrealized gains and losses on investment securities AFS		4,195			2,914
Tax effect of unrealized gains and losses on investment    securities AFS		(1,723	)		(1,110	)
Reclassification of gains and losses on investment    securities AFS included in net income		—			(2,534	)
Tax effect of reclassification of gains and losses    on investment securities AFS included in net income		—			965
Total other comprehensive income		2,472			235
Total comprehensive income	$	54,167		$	40,153

See accompanying notes to consolidated financial statements.

5

BANK OF THE OZARKS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Unaudited

	Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income		Treasury Stock			Non- Controlling Interest		Total
	(Dollars in thousands, except per share amounts)
Balances – January 1, 2015	$	799	$	324,354		$	571,454		$	14,132	$	(2,349	)	$	3,452	$	911,842
Net income		—		—			39,918			—		—			—		39,918
Earnings attributable to noncontrolling    interest		—		—			(24	)		—		—			24		—
Total other comprehensive income		—		—			—			235		—			—		235
Common stock dividends paid, $0.13 per share		—		—			(10,413	)		—		—			—		(10,413	)
Issuance of 53,000 shares of common stock    for exercise of stock options		—		547			—			—		—			—		547
Issuance of 243,300 shares of unvested    restricted common stock		2		(2,351	)		—			—		2,349			—		—
Excess tax benefit on exercise and forfeiture of    stock options and restricted common stock		—		330			—			—		—			—		330
Stock-based compensation expense		—		1,897			—			—		—			—		1,897
Forfeiture of 27,250 shares of unvested    restricted common stock		—		—			—			—		—			—		—
Issuance of 6,637,243 shares of common    stock for acquisition of Intervest Bancshares    Corporation, net of issuance costs of    $100,000		66		238,310			—			—		—			—		238,376
Balances – March 31, 2015	$	867	$	563,087		$	600,935		$	14,367	$	—		$	3,476	$	1,182,732
Balances – January 1, 2016	$	906	$	755,995		$	706,628		$	7,959	$	(6,857	)	$	3,163	$	1,467,794
Net income		—		—			51,695			—		—			—		51,695
Earnings attributable to noncontrolling    interest		—		—			(7	)		—		—			7		—
Total other comprehensive income		—		—			—			2,472		—			—		2,472
Common stock dividends paid, $0.15 per share		—		—			(13,603	)		—		—			—		(13,603	)
Issuance of 27,200 shares of common stock    for exercise of stock options		—		322			—			—		—			—		322
Issuance of 213,907 of unvested    restricted common stock		1		(6,858	)		—			—		6,857			—		—
Excess tax benefit on exercise and forfeiture of    stock options and restricted common stock		—		550			—			—		—			—		550
Stock-based compensation expense		—		2,020			—			—		—			—		2,020
Forfeiture of 5,804 shares of unvested    restricted common stock		—		—			—			—		—			—		—
Balances – March 31, 2016	$	907	$	752,029		$	744,713		$	10,431	$	—		$	3,170	$	1,511,250

See accompanying notes to consolidated financial statements.

6

BANK OF THE OZARKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

	Three Months Ended
	March 31,
	2016			2015
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	51,695		$	39,918
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,970			2,131
Amortization		1,865			1,596
Earnings attributable to noncontrolling interest		(7	)		(24	)
Provision for loan and lease losses		2,017			6,315
Provision for losses on foreclosed assets		670			2,203
Net amortization of investment securities AFS		230			70
Net gains on investment securities AFS		—			(2,534	)
Originations of mortgage loans held for sale		(47,322	)		(62,508	)
Proceeds from sales of mortgage loans held for sale		45,059			58,990
Accretion of purchased loans		(9,651	)		(15,101	)
Gains on sales of other assets		(1,027	)		(2,829	)
Prepayment penalty on Federal Home Loan Bank of Dallas advances		—			2,480
Deferred income tax benefit		(1,921	)		(277	)
Increase in cash surrender value of BOLI		(2,861	)		(1,364	)
BOLI death benefits in excess of cash surrender value		—			(2,259	)
Stock-based compensation expense		2,020			1,897
Excess tax benefit on stock-based compensation		(550	)		(330	)
Changes in assets and liabilities:
Accrued interest receivable		(7,828	)		(3,253	)
Other assets, net		(2,135	)		30,347
Accrued interest payable and other liabilities		12,091			8,043
Net cash provided by operating activities		45,315			63,511
Cash flows from investing activities:
Proceeds from sales of investment securities AFS		—			30,117
Proceeds from maturities/calls/paydowns of investment securities AFS		58,176			50,187
Purchases of investment securities AFS		(79,810	)		—
Net increase of non-purchased loans and leases		(1,064,677	)		(351,740	)
Net payments received on purchased loans		135,373			191,892
Purchases of premises and equipment		(6,582	)		(4,003	)
Purchases of BOLI		(42,000	)		—
Proceeds from sales of other assets		5,654			19,207
Cash received from (invested in) unconsolidated investments and noncontrolling interest		223			(286	)
Net cash received in merger and acquisition transaction		—			274,235
Net cash (used) provided by investing activities		(993,643	)		209,609
Cash flows from financing activities:
Net increase in deposits		1,655,357			35,631
Net repayments of other borrowings		(162,608	)		(32,018	)
Net increase in repurchase agreements with customers		83			11,382
Proceeds from exercise of stock options		322			547
Excess tax benefit on stock-based compensation		550			330
Cash dividends paid on common stock		(13,603	)		(10,413	)
Net cash provided by financing activities		1,480,101			5,459
Net increase in cash and cash equivalents		531,773			278,579
Cash and cash equivalents – beginning of period		90,988			150,203
Cash and cash equivalents – end of period	$	622,761		$	428,782

See accompanying notes to consolidated financial statements.

7

BANK OF THE OZARKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

1. Organization and Principles of Consolidation

Bank of the Ozarks, Inc. (the “Company”) is a bank holding company headquartered in Little Rock, Arkansas, which operates under the rules and regulations of the Board of Governors of the Federal Reserve System. The Company owns a wholly-owned state chartered bank subsidiary – Bank of the Ozarks (the “Bank”), eight 100%-owned finance subsidiary business trusts – Ozark Capital Statutory Trust II (“Ozark II”), Ozark Capital Statutory Trust III (“Ozark III”), Ozark Capital Statutory Trust IV (“Ozark IV”), Ozark Capital Statutory Trust V (“Ozark V”) (collectively, the “Ozark Trusts”), Intervest Statutory Trust II (“Intervest II”), Intervest Statutory Trust III (“Intervest III”), Intervest Statutory Trust IV (“Intervest IV”) and Intervest Statutory Trust V (“Intervest V”), (collectively, the “Intervest Trusts”; and together with Ozark Trusts, the “Trusts”) and, indirectly through the Bank, a subsidiary engaged in the development of real estate, a subsidiary that owns private aircraft and various other entities that hold foreclosed assets or tax credits or engage in other activities. The Company and Bank are subject to the regulation of certain federal and state agencies and undergo periodic examinations by those regulatory authorities. The consolidated financial statements include the accounts of the Company, the Bank, the real estate subsidiary, the aircraft subsidiary and certain of those various other entities in accordance with accounting principles generally accepted in the United States (“GAAP”). Significant intercompany transactions and amounts have been eliminated in consolidation.

At March 31, 2016, the Company had 176 offices, including 82 in Arkansas, 28 in Georgia, 25 in North Carolina, 22 in Texas, 10 in Florida, three in Alabama and two offices each in South Carolina, New York and California.

2. Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) in Article 10 of Regulation S-X and in accordance with the instructions to Form 10-Q and GAAP for interim financial information. Certain information, accounting policies and footnote disclosures normally included in complete financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In the opinion of management, all adjustments considered necessary, consisting of normal recurring items, have been included for a fair presentation of the accompanying consolidated financial statements. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the full year or future periods.

Certain reclassifications of prior period amounts have been made to conform with the current period presentation. These reclassifications had no impact on previously reported net income. During the second and fourth quarter of 2015, the Company revised its initial estimates regarding the expected recovery of certain acquired loans and deferred tax assets in its February 10, 2015 acquisition of Intervest Bancshares Corporation (“Intervest”).  As a result, certain amounts previously reported in the Company’s 2015 interim consolidated financial statements have been recast.

3. Pending Acquisitions

Community & Southern Holdings, Inc.

On October 19, 2015, the Company entered into a definitive agreement and plan of merger (the “C&S Agreement”) with Community & Southern Holdings, Inc. (“C&S”) and its wholly-owned bank subsidiary, Community & Southern Bank, whereby the Company will acquire all of the outstanding common stock and equity awards of C&S in a transaction valued at approximately $799.6  million.  Community & Southern Bank, headquartered in Atlanta, Georgia, operates 46 banking offices throughout Georgia and one banking office in Jacksonville, Florida.  At March 31, 2016, C&S had approximately $4.1 billion in total assets, approximately $3.1 billion in total loans, approximately $3.6 billion in total deposits and approximately $477 million in total stockholders’ equity.  

Under the terms of the C&S Agreement, each outstanding share of common stock of C&S and each outstanding C&S stock option, warrant, restricted stock unit and deferred stock unit will be converted into the right to receive shares of the Company’s common stock, plus cash in lieu of any fractional share, all subject to certain conditions and potential adjustments.  The number of Company shares to be issued will be determined based on the Company’s fifteen day volume weighted average stock price as of the second business day prior to the closing date, subject to a minimum price of $34.10 per share and a maximum price of $56.84 per

8

share.  Upon the closing of the transaction, which is expected to occur in the second quarter of 2016, C&S will merge into the Company and Community & Southern Bank will merge into the Bank.  Completion of the transaction is subject to certain closing conditions, including receipt of regulatory approvals.

C1 Financial, Inc.

On November 9, 2015, the Company entered into a definitive agreement and plan of merger (the “C1 Agreement”) with C1 Financial, Inc. (“C1”) and its wholly-owned bank subsidiary, C1 Bank, whereby the Company will acquire all of the outstanding common stock of C1 in a transaction valued at approximately $402.5 million.  C1 Bank, headquartered in St. Petersburg, Florida, operates 33 banking offices throughout the west coast of Florida and in Miami-Dade and Orange Counties.  At March 31, 2016, C1 had approximately $1.8 billion in total assets, approximately $1.4 billion in total loans, approximately $1.3 billion in total deposits and approximately $206 million in total stockholders’ equity.

Under the terms of the C1 Agreement, each outstanding share of common stock of C1 will be converted into the right to receive shares of the Company’s common stock, plus cash in lieu of any fractional or de minimis shares, all subject to certain conditions and potential adjustments.  The number of Company shares to be issued will be determined based on the Company’s ten day average closing stock price as of the second business day prior to the closing date, subject to a minimum price of $39.79 per share and a maximum price of $66.31 per share.  Upon the closing of the transaction, which is expected to occur in the second quarter of 2016, C1 will merge into the Company and C1 Bank will merge into the Bank.  Completion of the transaction is subject to certain closing conditions, including receipt of regulatory approvals.

4. Earnings Per Common Share (“EPS”)

Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding after consideration of the dilutive effect, if any, of outstanding common stock options using the treasury stock method. For the three months ended March 31, 2016 and 2015, options to purchase 659,858 shares and 535,000 shares, respectively, of the Company’s common stock were excluded from the diluted EPS calculations as inclusion of these options would have been anti-dilutive.  

The following table presents the computation of basic and diluted EPS for the periods indicated.

	Three Months Ended
	March 31,
	2016		2015
	(In thousands, except per share amounts)
Numerator:
Distributed earnings allocated to common stockholders	$	13,603	$	10,413
Undistributed earnings allocated to common    stockholders		38,085		29,481
Net income available to common stockholders	$	51,688	$	39,894
Denominator:
Denominator for basic EPS – weighted-average common    shares		90,687		83,699
Effect of dilutive securities – stock options		564		710
Denominator for diluted EPS – weighted-average    common shares and assumed conversions		91,251		84,409
Basic EPS	$	0.57	$	0.48
Diluted EPS	$	0.57	$	0.47

5. Investment Securities

At March 31, 2016 and December 31, 2015, the Company classified all of its investment securities portfolio as AFS. Accordingly, investment securities are stated at estimated fair value in the consolidated financial statements with unrealized gains and losses, net of related income tax, reported as a separate component of stockholders’ equity and included in accumulated other comprehensive income.

9

The following table presents the amortized cost and estimated fair value of investment securities AFS as of the dates indicated. The Company’s investment in the “CRA qualified investment fund” includes shares held in a mutual fund that qualifies under the Community Reinvestment Act of 1977 for community reinvestment purposes. The Company’s holdings of “other equity securities” include Federal Home Loan Bank of Dallas (“FHLB”) and First National Banker’s Bankshares, Inc. (“FNBB”) shares which do not have readily determinable fair values and are carried at cost.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in thousands)
March 31, 2016:
Obligations of state and political subdivisions	$	419,403	$	13,327	$	(88	)	$	432,642
U.S. Government agency securities		180,904		4,033		(224	)		184,713
Corporate obligations		3,542		—		—			3,542
CRA qualified investment fund		1,044		5		—			1,049
Other equity securities		6,000		—		—			6,000
Total	$	610,893	$	17,365	$	(312	)	$	627,946