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Bank Of The Ozarks Financial Analysis

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Bank of the Ozarks
Introduction:
The current holding of a checking and savings account is the reason Bank of the Ozarks has been chosen. Bank of the Ozarks was established in 1903 in Jasper, Arkansas (Corporate Profile). Currently, their headquarters are in Little Rock. As of their 2016 annual report, 2,315 full-time employees are employed within 256 offices, across 9 states (Corporate Profile).
Market Analysis:
Bank of the Ozarks is a state charter bank in Arkansas, and Federal Reserve non-member charter. The primary regulator of Bank of the Ozarks is the Federal Deposit Insurance Corporation (FDIC: Details and Financials – ID). In 2016, Bank of the Ozarks, Inc. dismembered their holding company and merged it into the bank (Corporate Profile). …show more content…

Bank of the Ozarks is considered a large commercial bank, according to The Federal Reserve’s website they rank 70th nationally (Federal Reserve Statistical Release). The chart below displays Return on Equity for the 2nd quarter of the previous three years in comparison to the national average.
Chart 1 -– Data provided by Bank of the Ozarks and Federal Reserve Statistical Release Return on Equity is a measure of the return to the bank’s owners (Cecchetti, Stephen G 307). While ROE has decreased over the previous three years, Bank of the Ozarks has consistently been above the national average. According to our textbook, a bank with higher ROE will have more leverage, a risker mix of assets, or existence of economies of scale (Cecchetti, Stephen G 307). The chart below displays Return on Assets for the 2nd quarter of the previous three years in comparison to the national average.
Chart 2 – Data provided by Bank of the Ozarks and Federal Reserve Statistical …show more content…

Return on assets is a measure of how efficiently a bank uses its assets (Cecchetti, Stephen G 305). Bank of the Ozarks’ ROA for the previous three years has decreased consistently, yet higher than the national average. The chart on the next page displays Net Interest Margin for the 2nd quarter of the previous three years in comparison to the national average.
Chart 3 – Data provided by Bank of the Ozarks and Federal Reserve Statistical Release Net interest margin is net interest income as a percentage of the banks total assets (Cecchetti, Stephen G 307). Net interest margin is closely related to ROA, well run banks will have a high interest margin (Cecchetti, Stephen G 307). This margin is not just a measure of current profitability but also that of the future (Cecchetti, Stephen G 307). Net interest margin and profitability are conversely related, when one rises the other will also rise (Cecchetti, Stephen G 307). Again, Bank of the Ozarks is well above the national average for banks. When measuring the profitability of Bank of the Ozarks, this institution is profitable despite the consecutive decrease of the past three years. Bank of the Ozarks would be a sound investment and an excellent choice for banking and lending

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