Bank Of The Ozarks Inc (NASDAQ:OZRK) Q4 2014 Earnings Conference Call - Final Transcript

Jan 16, 2015 • 11:00 am ET


Bank Of The Ozarks Inc (NASDAQ:OZRK) Q4 2014 Earnings Conference Call - Final Transcript


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Q & A

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Jennifer Demba, SunTrust Robinson.

Jennifer Demba

Just curious on your thoughts on growth of the Texas economy and from your Real Estate Specialties Group for 2015, given that oil has continued to slide over the last month or so, further. I know when you and I talked in December, you didn't seem too concerned about it. But I'm just wondering about your thoughts now in terms of your overall growth outlook.

George Gleason

Jennifer, I am still not too concerned about it. Let me make a few comments on that. If you look at our September 30, 2014, 10-Q on page 55 of that Q, you would have noticed a table that showed the percentage of our loans by State of originating office. And at that point, Texas accounted for a little over 50% of our total originations came from our dozen or so offices in Texas.

But those Texas, offices include the Dallas, Houston, and Austin offices of our Real Estate Specialties Group that has made loans in 41 States, at September 30, and rolling forward to December 31, had loans literally all across the country.

So to say that we have over 50% of our loans in Texas, is a misnomer and inaccuracy because -- in fact, our Texas, offices have originated over 50% of our loan, but the portion in Texas is much less than that.

If you look at the geographic distribution of our non-purchased real estate loans that are on pages 56 through 58 of that September 30, 2014 10-Q2, you can see a breakdown of loans by State of collateral. And Texas is our second largest state for loans at September 30, trailing Arkansas.

At that time Texas accounted for about 23.8% of our non-purchased real estate loans and about 20.2% of all of our non-purchased loans as of September 30.

So, yes, we have a significant amount of loans in Texas, but it's not the 50% plus that one might surmise if they look just at the state of originating office.

Now, with that said, I want to tell you if we had 50% or 60% or 70% of our loans in Texas, that would not bother me at all. Because I think the Texas economy even in the

George Gleason

depressed oil price environment is still one of the best economies in the United States.

We've seen previous oil shocks in the past, this is not a new phenomena, if you go back to the early to mid 80s, there was a multi-year drop in oil prices and that drop in oil prices did have a fairly significant adverse effect on the State of Texas. But at that point in time the percentage of oil and gas as a percent of taxes, total GDP was much higher, many percentage points higher than I believe it is now.

And that drop in oil prices in the 80s occurred at the same time that our country was going through a