Tuesday, September 14, 2010

Bank Analyst Surprised by Friday Florida Bank Takeover

Arkansas bank's purchase of failed Horizon a surprise

By John Hielscher


Published: Tuesday, September 14, 2010 at 1:00 a.m.

The Bank of the Ozarks' grab of the failed Horizon Bank of Bradenton Friday night took analyst Andy Stapp by surprise.

While Little Rock, Ark.-based Bank of the Ozarks had recently acquired two failed banks in the Southeast, Stapp said Monday the company had not disclosed any interest in jumping into Florida.

"This is the first I heard them talk about Florida," said Stapp, a senior analyst with B. Riley & Co. in Philadelphia who tracks the bank. "This deal caught me by surprise a little bit."

Bank of the Ozarks picked up 7,500 loan and deposit accounts from Horizon, a four-office, $187-million-asset bank in critical condition.

Horizon became the region's second bank failure of 2010 and the fourth Manatee County bank to fall during the recession.

It was the first U.S. bank failure in three weeks and the 119th of the year.

Bank of the Ozarks already installed temporary bag signs to cover up Horizon logos at branches in Bradenton, Palmetto and Brandon.

Deposits remain protected by the Federal Deposit Insurance Corp. Customers may be relieved to learn that Bank of the Ozarks is top-rated by BauerFinancial Inc., at five stars and has been one of its "recommended" banks for 16 straight quarters.

Only one bank has trekked farther than Bank of the Ozarks to take over a failed Southwest Florida bank. That would be Stearns Bank of St. Cloud, Minn., which bought First State of Sarasota and Community National of Venice in August 2009.

Stapp likes the deal. Monday morning, he reaffirmed his "buy" rating on Bank of the Ozarks' stock and said he expects it to boost the buyer's earnings right away.

"It's a relatively low-risk proposal to be able to expand into new markets and grow your balance sheet and earnings," he said.

Buyers love such FDIC-assisted deals. Bank of the Ozarks will pay nothing for Horizon's $164.6 million in deposits and will receive $27 million for taking over the assets.

In addition, the FDIC will reimburse up to 80 percent of any losses on loans the buyer inherits from Horizon.

In July, Bank of the Ozarks acquired the failed Woodlands Bank of Bluffton, S.C., expanding its footprint into Alabama and the Carolinas. Four months earlier, it bought Unity National Bank, a failed bank in Cartersville, Ga.

"They've been expanding into a variety of markets in the Southeast," Stapp said. "Arkansas is one of the healthier states in the country, and there are very limited opportunities to acquire failed banks in Arkansas."

Bank officials did not return calls Monday to comment on their plans for Horizon's 50-employee operation.

George Gleason, Ozarks' chairman and chief executive, on Friday called the acquisition "an entree for further expansion in Florida."

The $2.8-billion-asset bank now has 90 offices in seven states. It posted six-month earnings of $26.8 million, or $1.58 per share, up 42 percent from $18.7 million, or $1.11 per share, in the comparable 2009 period.

The company's shares, which trade under the symbol "OZRK" on the Nasdaq, were selling for $37.40 at the close of business Monday, up 79 cents.

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