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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
(_) 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 (I.R.S. Employer
incorporation or organization) Identification Number)
12615 CHENAL PARKWAY, P. O. BOX 8811, LITTLE ROCK, ARKANSAS 72231-8811
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (501) 978-2265
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
(Title of Class)
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 (_)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (_)
State the aggregate market value of the Registrant's common stock held by
non-affiliates: $59,758,062 (based upon the average bid and asked prices quoted
on the Nasdaq National Market on March 1, 2002).
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 March 1, 2002
- --------------------------------------- -----------------------------
Common Stock, par value $0.01 per share 3,784,405
Documents incorporated by reference: Parts I, II and III of this Form 10-K
incorporate certain information by reference from the Registrant's Annual Report
to Stockholders for the year ended December 31, 2001 and the Proxy Statement for
its 2002 annual meeting.
BANK OF THE OZARKS, INC.
FORM 10-K
December 31, 2001
INDEX
PART I. Financial Information Page
----
Item 1. Business 1
Item 2. Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
PART II.
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters 13
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 14
PART III.
Item 10. Directors and Executive Officers of the Registrant 14
Item 11. Executive Compensation 14
Item 12. Security Ownership of Certain Beneficial Owners and
Management 14
Item 13. Certain Relationships and Related Transactions 15
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 15
Signatures 18
Part I
Item 1. BUSINESS
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General
Bank of the Ozarks, Inc. (the "Company") is an Arkansas business
corporation registered under the Bank Holding Company Act of 1956. The Company
owns a state chartered subsidiary bank, Bank of the Ozarks, which conducts
banking operations through 28 offices in 19 communities throughout northern,
western and central Arkansas. The Company also owns Ozark Capital Trust, a
Delaware business trust. At December 31, 2001 the Company had total assets of
$871 million, total loans of $616 million and total deposits of $678 million.
The Company provides a wide range of retail and commercial banking
services. Deposit services include checking, savings, money market, time deposit
and individual retirement accounts. Loan services include various types of real
estate, consumer, commercial, industrial and agricultural loans. The Company
also provides mortgage lending, cash management, trust services, safety deposit
boxes, real estate appraisals, credit related life and disability insurance,
ATMs, telephone banking, internet banking and debit cards.
In 1994 the Company initiated an expansion strategy, via de novo
branching, into target Arkansas markets. Since embarking on this strategy, the
Company has opened twenty-three new offices in northern, western and central
Arkansas. The Company's de novo branching strategy initially focused on opening
branches in smaller communities throughout its market area. During the period
from 1994 through 1997 the Company opened a total of nine additional full
service offices including new offices in Marshall, Van Buren, Mulberry, Alma,
Paris, Bellefonte, Harrison and two offices in Clarksville, Arkansas.
In 1998 the Company added a new element to its growth strategy by
significantly expanding into two of Arkansas' largest metropolitan markets -
Little Rock/North Little Rock and Fort Smith. The Company originally entered the
Little Rock market in 1995, when it opened its corporate headquarters and a
small commercial lending office. In 1996 the Company opened a residential
mortgage lending office. In February 1998 the Company began full service banking
operations in Little Rock with the acquisition of a small savings and loan with
$9.4 million in deposits. In 1998 and 1999 four Little Rock offices were opened,
including its new corporate headquarters which houses a full-service banking
center, corporate offices, mortgage lending center and full service trust
operations. In 1999 the Company opened two offices in North Little Rock,
Arkansas. The Company began a major expansion in a second metropolitan market of
Fort Smith in September 1998 with the opening of a banking center and in 2001
opened a second office.
In 2001 the Company continued its expansion and opened a total of four
new banking offices, one in Bryant, one in Lonoke, a second office in Fort Smith
and a fifth office in Little Rock. In addition the Company opened a small loan
production office in Charlotte, N.C. in 2001. The Company plans to continue its
expansion in and around these metropolitan markets. In January 2002 the Company
announced it was entering the Conway, Arkansas market. Conway is Arkansas'
eighth largest city and is located approximately 25 miles northwest of Little
Rock. The Company expects to open at least two or more offices in and around
Conway in 2002. In 2002, the Company hopes to open additional fill-in offices in
and around metropolitan Little Rock/North Little Rock and Ft. Smith, however the
exact number of new offices to be opened in 2002 will depend upon a number of
factors including the availability of quality personnel and sites, the Company's
earnings growth and economic conditions.
Lending Activities
The Company's primary source of income is interest earned from its loan
portfolio and, to a lesser extent, earnings on its investment portfolio. In
underwriting loans, primary emphasis is placed on the borrower's financial
condition, including its ability to generate cash flow to support its debt
obligations and other cash expenses. Additionally, substantial consideration is
given to collateral value and marketability as well as the borrower's character,
reputation and other relevant factors. The Company's portfolio includes most
types of real estate loans, consumer loans, commercial and industrial loans,
agricultural loans and other types of loans. The vast majority of the properties
collateralizing the Company's mortgage loans are located within the trade areas
of the Company's offices.
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Real Estate Loans. The Company's portfolio of real estate loans
includes loans secured by residential 1-4 family, non-farm non-residential,
agricultural, construction and land development, and multifamily residential
(five or more family) properties. Non-farm non-residential loans include those
secured by real estate mortgages on owner occupied commercial buildings of
various types, leased commercial buildings, medical and nursing facilities,
underdeveloped raw land for commercial purposes, and other business and
industrial properties. Agricultural real estate loans include loans secured by
farmland and related improvements including loans guaranteed by the Farm Service
Agency. Agricultural real estate loans also include loans to individuals which
would normally be characterized as residential 1-4 family loans but for the fact
that the individual borrowers are primarily engaged in the production of timber,
poultry, livestock or crops. Real estate construction and land development loans
include loans with original maturities of sixty months or less to finance land
development or construction of industrial, commercial, residential or farm
buildings or additions or alterations to existing structures.
The Company offers a variety of real estate loan products that are
generally amortized over five to thirty years, payable in monthly or other
periodic installments of principal and interest, and due and payable in full
(unless renewed) at a balloon maturity generally within one to five years.
Certain loans, primarily first mortgage residential loans, may be structured as
term loans with adjustable interest rates (adjustable daily, every six months,
annually, or at other regular adjustment intervals usually not to exceed every
five years) and without balloon maturities.
Residential 1-4 family loans are underwritten primarily based on the
borrower's ability to repay, including prior credit history, and the value of
the collateral. Other real estate loans are underwritten based on the ability of
the property, in the case of income producing property, or the borrower's
business to generate sufficient cash flow to amortize the debt. Secondary
emphasis is placed upon collateral value and other factors. Loans collateralized
by real estate have generally been originated with loan to appraised value
ratios of not more than 89% for residential 1-4 family, 85% for other
residential and other improved property, 80% for construction loans secured by
commercial, multifamily and other non-residential properties, 75% for land
development loans and 65% for raw land loans.
The Company typically requires mortgage title insurance in the amount
of the loan and hazard insurance on improvements. Documentation requirements
vary depending on loan size, type, complexity and other factors.
Consumer Loans. The Company's portfolio of consumer loans generally
includes loans to individuals for household, family and other personal
expenditures. Proceeds from such loans are used to, among other things, fund the
purchase of automobiles, household appliances, furniture, trailers, boats,
mobile homes and for other similar purposes. Consumer loans made by the Company
are generally collateralized with terms typically ranging up to 72 months,
depending upon the nature of the collateral and size of the loan.
Consumer loans are attractive to the Company because they generally
have a short term with higher yielding interest rates. Such loans, however, pose
additional risks of collectibility and loss when compared to certain other types
of loans. The borrower's ability to repay is of primary importance in the
underwriting of consumer loans.
Commercial and Industrial Loans. The Company's commercial and
industrial loan portfolio consists of loans for commercial, industrial and
professional purposes including loans to fund working capital requirements (such
as inventory, floor plan and receivables financing), purchases of machinery and
equipment and other purposes. The Company offers a variety of commercial and
industrial loan arrangements, including term loans, balloon loans and lines of
credit with the purpose and collateral supporting a particular loan determining
its structure. These loans are offered to businesses and professionals for short
and medium terms on both a collateralized and uncollateralized basis. As a
general practice, the Company obtains as collateral a lien on furniture,
fixtures, equipment, inventory, receivables or other assets.
Commercial and industrial loans typically are underwritten on the basis
of the borrower's ability to make repayment from the cash flow of its business
and generally are collateralized by business assets. As a result, such loans
involve additional complexities, variables and risks and require more thorough
underwriting and servicing than other types of loans.
Agricultural (Non-Real Estate) Loans. The Company's portfolio of
agricultural (non-real estate) loans includes loans for financing agricultural
production, including loans to businesses or individuals engaged in the
production of timber, poultry, livestock or crops. The Company's agricultural
(non-real estate) loans are generally secured by farm
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machinery, livestock, crops, vehicles or other agri-related collateral. A
portion of the Company's portfolio of agricultural (non-real estate) loans are
loans to individuals which would normally be characterized as consumer loans but
for the fact that the individual borrowers are primarily engaged in the
production of timber, poultry, livestock or crops.
Deposits
The Company offers an array of deposit products consisting of
non-interest bearing checking accounts, interest bearing transaction (such as
MaxYieldTM checking), savings accounts, money market accounts, and time
deposits. The Company acts as depository for a number of state and local
governments and government agencies or instrumentalities. Such public fund
deposits are often subject to competitive bid and in many cases must be secured
by the Company's pledge of government agency or other securities.
The Company's deposits come primarily from within the Company's trade
area. As of December 31, 2001 the Company had $3.5 million "brokered deposits,"
defined as deposits which, to the knowledge of management of the Company, have
been placed with the bank subsidiary by a person who acts as a broker in placing
such deposits on behalf of others.
Other Banking Services
Trust Services. Prior to 1999 the Company provided trust services from
its Ozark, Arkansas office. As the Company expanded into larger markets, it
identified a need to expand the capabilities and services of this department. In
1998 the Company moved its trust services department to its main office in
Little Rock to handle personal trusts, corporate trusts, employee benefit
accounts and trust operations. In late 1998 operations in Little Rock and the
Ozark trust operations were consolidated into that office. As of December 31,
2001 total trust assets under management were $79.1 million compared to $114.5
million as of December 31, 2000.
Cash Management Services. In 1998 the Company introduced cash
management products which are designed to provide a high level of specialized
support to the treasury operations of business customers. In 2001 the Company
continued to build its cash management products and added new commercial account
customers. Cash management has four basic functions: deposit handling, funds
concentration, funds disbursement and information reporting. The Company's cash
management services include automated clearing house services (e.g., direct
deposit, direct debit and electronic cash concentration and disbursement), zero
balance accounts, current and prior day transaction reporting, wholesale lockbox
services, automated credit line transfer and account analysis. The Company
expects to continue to increase the number of customers to which it provides
such services.
Mortgage Lending. In 1996 the Company expanded its residential mortgage
product line by offering long-term fixed and variable rate loans to be sold on a
servicing released basis in the secondary market. The Company originates such
loans primarily through its Little Rock, Fort Smith and Harrison offices. In
2001 declining rates impacted the volume of mortgage loans being refinanced and
the volume of loans for home purchases resulting in a substantial increase in
the Company's mortgage loan originations and mortgage lending income.
Originations of mortgage loans for resale increased from $51.1 million in 1999
to $119.7 million in 2001. Although this business is cyclical, it will continue
to be an important component of non-interest income.
Internet Banking. In 2000 the Company launched an On-Line Banking
service providing complete banking service over the Internet for both business
customers and consumers. Through this service individuals can access their
account information, pay bills, transfer funds, reorder checks, change addresses
and issue stop payment requests electronically. Businesses are offered more
advanced features that allow them to take care of most cash management functions
electronically and gives them better access to their account information on a
more timely basis. At December 31, 2001, twenty months after offering this
service, 12% of the Company's individual checking account households were
enrolled in On-Line Banking.
3
Competition
The banking industry in the Company's market areas is highly
competitive. In addition to competing with other commercial and savings banks
and savings and loan associations, the Company competes with credit unions,
finance companies, mortgage companies, brokerage and investment banking firms,
asset-based non-bank lenders and many other financial service firms. Competition
is based upon interest rates offered on deposit accounts, interest rates charged
on loans, fees and service charges, the quality and scope of the services
rendered, the convenience of banking facilities and, in the case of loans to
commercial borrowers, relative lending limits.
A substantial number of the commercial banks operating in the Company's
market area are branches or subsidiaries of much larger organizations affiliated
with statewide, regional or national banking companies, and as a result may have
greater resources and lower costs of funds than the Company. Additionally, the
Company faces increased competition from de novo community banks, including
those with senior management who were previously with other local banks or those
controlled by investor groups with strong local business and community ties.
Management believes the Company will continue to be competitive because of its
strong commitment to quality customer service, convenient local branches, active
community involvement and competitive products and pricing.
Employees
At December 31, 2001 the Company employed 327 full-time equivalent
employees. None of the employees were represented by any union or similar group.
The Company has not experienced any labor disputes or strikes arising from any
organized labor groups. The Company believes its employee relations are good.
Executive Officers of Registrant
The following is a list of the executive officers of the Company:
George Gleason, age 48, Chairman and Chief Executive Officer. Mr.
Gleason has served the Company or its bank subsidiary as Chairman, Chief
Executive Officer and/or President since 1979. He holds a B.A. in Business and
Economics from Hendrix College and a J.D. from the University of Arkansas.
Mark Ross, age 46, Vice Chairman, President and Chief Operating
Officer. Mr. Ross has served as President since 1986 and in various capacities
for the bank subsidiary since 1980. He was elected as a director of the Company
in 1992. Mr. Ross holds a B.A. in Business Administration from Hendrix College.
Paul Moore, age 55, Chief Financial Officer since 1995. From December
1989 to 1995 Mr. Moore served as secretary, secretary/treasurer or director of
eight privately held companies under common ownership of Frank Lyon Jr. and
family. Such companies engaged in diverse activities ranging from real estate to
agricultural to banking. He is a C.P.A. and received a B.S.B.A. in Banking,
Finance and Accounting from the University of Arkansas.
Danny Criner, age 47, President of the bank subsidiary's northern
division since 1990. Mr. Criner received a B.S.B.A. in Banking and Finance from
the University of Arkansas.
C. E. Dougan, age 55, President of the bank subsidiary's western
division since November 2000. Prior to that Mr. Dougan served as a director of
the Company from February 1997. Mr. Dougan was co-owner from 1996 to 2000 of
Mooney-Dougan, Inc., specializing in residential real estate development,
construction and investments. Prior to 1997 Mr. Dougan, who has 28 years of
banking experience, served 12 years as president and chief executive officer of
Mercantile Bank of Crawford County, (formerly Peoples Bank & Trust Company of
Van Buren and First National Bank of Crawford County).
Jean Arehart, age 61, President of the bank subsidiary's mortgage
division since November 2000. She joined Bank of the Ozarks as Senior Vice
President in 1996 and was named an Executive Vice President in May 1997. In May
1999 Ms. Arehart resigned employment with the Company but returned to employment
in January 2000. Ms. Arehart served as Senior Vice President and a member of the
Executive Committee of Twin City Bank (subsequently Mercantile Bank of Arkansas,
now U.S. Bank), where she worked from 1979 to February 1996.
4
Darrel Russell, age 48, President of the bank subsidiary's central
division since December 2001. Served as Executive Vice President of the bank
subsidiary from May 1997 to December 2001. From 1992 to 1997 Mr. Russell served
as Senior Vice President of the bank subsidiary. He received a B.S.B.A. in
Banking and Finance from the University of Arkansas.
Gene Jennings, age 53, President of the bank subsidiary's Trust
Division since May 2001. He holds an undergraduate degree from Southern
Methodist University and a graduate degree in banking from the Stonier Graduate
School of Banking - Rutgers University. Mr. Jennings served as Vice President,
Corporate Trust/Personal Trust of Bank of America (formerly NationsBank, N.A.,
formerly Boatmen's Bank, formerly Worthen Bank) from December 1990 to April
2001.
John Stanton, age 50, President of the bank subsidiary's Conway
division since December 2001. He holds a BSE degree from the University of
Central Arkansas, a graduate of National Commercial Lending School and a
graduate from Southwestern School of Banking at Southern Methodist University in
Dallas, Texas. Mr. Stanton served as Market President of the Conway/Morrilton
market for U.S. Bank (formerly Firstar Bank of Arkansas, formerly Mercantile
Bank of Arkansas, formerly Twin City Bank) from October 1992 to December 2001.
Messrs. Gleason, Ross and Moore serve in the same position with both
the Company and its bank subsidiary.
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5
SUPERVISION AND REGULATION
In addition to the generally applicable state and federal laws
governing businesses and employers, bank holding companies and banks are
extensively regulated under both federal and state law. With few exceptions,
state and federal banking laws have as their principal objective either the
maintenance of the safety and soundness of the Bank Insurance Fund ("BIF") and
Savings Association Insurance Fund ("SAIF") of the FDIC or the protection of
consumers or classes of consumers, rather than the specific protection of the
stockholders of the Company. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to those particular statutory and regulatory provisions. Any change
in applicable law or regulation may have an adverse effect on the results of
operation and financial condition of the Company and its bank subsidiary.
Federal Regulations
The primary federal banking regulatory authority for the Company is the
Board of Governors of the Federal Reserve System (the "FRB"), acting pursuant to
its authority to regulate bank holding companies. Because the Company's bank
subsidiary is an insured depository institution which is not a member bank of
the Federal Reserve System, it is subject to regulation and supervision by the
FDIC and is not subject to direct supervision by the FRB.
Bank Holding Company Act. The Company is subject to supervision by the
FRB under the provisions of the Bank Holding Company Act of 1956, as amended
(the "BHCA"). The BHCA restricts the types of activities in which bank holding
companies may engage and imposes a range of supervisory requirements on their
activities, including regulatory enforcement actions for violations of laws and
policies. The BHCA limits the activities of the Company and any companies
controlled by it to the activities of banking, managing and controlling banks,
furnishing or performing services for its subsidiaries, and any other activity
that the FRB determines to be incidental to or closely related to banking. These
restrictions also apply to any company in which the Company owns 5% or more of
the voting securities.
Before a bank holding company engages in any non-bank-related
activities, either by acquisition or commencement of de novo operations, it must
comply with the FRB's notification and approval procedures. In reviewing these
notifications, the FRB considers a number of factors, including the expected
benefits to the public versus the risks of possible adverse effects. In general,
the potential benefits include greater convenience to the public, increased
competition and gains in efficiency, while the potential risks include undue
concentration of resources, decreased or unfair competition, conflicts of
interest and unsound banking practices.
Under the BHCA, a bank holding company must obtain FRB approval before
engaging in acquisitions of banks or bank holding companies. In particular, the
FRB must generally approve the following actions by a bank holding company:
. the acquisition of ownership or control of more than 5% of the
voting securities of any bank or bank holding company;
. the acquisition of all or substantially all of the assets of a bank;
and
. the merger or consolidation with another bank holding company.
In considering any application for approval of an acquisition or merger, the FRB
is required to consider various competitive factors, the financial and
managerial resources of the companies and banks concerned, the convenience and
needs of the communities to be served, the effectiveness of the applicant in
combating money laundering activities, and the applicant's record of compliance
with the Community Reinvestment Act (the "CRA"). The CRA generally requires
financial institutions to take affirmative action to ascertain and meet the
credit needs of its entire community, including low and moderate income
neighborhoods. The Attorney General of the United States may, within 30 days
after approval of an acquisition by the FRB, bring an action challenging such
acquisition under the federal antitrust laws, in which case the effectiveness of
such approval is stayed pending a final ruling by the courts.
Recent Banking Legislation. On November 12, 1999, the
Gramm-Leach-Bliley Act (the "GLBA") was signed into law and it became effective
March 11, 2000. Under the GLBA, a bank holding company that elects to become a
"financial holding company" will be permitted to engage in any activity that the
FRB, in consultation with the Secretary of the Treasury,
6
determines by regulation or order is (i) financial in nature or incidental to
such financial activity or (ii) complementary to a financial activity and does
not pose a substantial risk to the safety and soundness of depository
institutions or the financial system generally. In addition to traditional
lending activities, the GLBA specifies the following activities as financial in
nature:
. acting as principal, underwriter, agent or broker for insurance;
. underwriting, dealing in or making a market in securities;
. merchant banking activities; and
. providing financial and investment advice.
A bank holding company may become a financial holding company only if all
depository institution subsidiaries of the holding company are well-capitalized,
well-managed and have at least a satisfactory rating under the Community
Reinvestment Act. A financial holding company that falls out of compliance with
such requirement may be required to cease engaging in certain activities.
National banks are also authorized by the GLBA to engage, through
"financial subsidiaries," in any activity that is permissible for a financial
holding company, except (i) insurance underwriting, (ii) real estate development
or real estate investment activities (unless otherwise permitted by law), (iii)
insurance company portfolio investments and (iv) merchant banking. The authority
of a national bank to invest in a financial subsidiary is subject to a number of
conditions, including, among other things, requirements that the bank must be
well-managed and well-capitalized (after deducting from capital the bank's
outstanding investments in financial subsidiaries). The GLBA provides that state
banks, such as the Company's bank subsidiary, may invest in financial
subsidiaries that engage as principal in activities that would only be
permissible for a national bank to conduct in a financial subsidiary. This
authority is generally subject to the same conditions that apply to national
bank investments in financial subsidiaries.
The GLBA also adopts a number of consumer protections, including provisions
intended to protect privacy of bank customers' financial information and
provisions requiring disclosure of ATM fees imposed by banks on customers of
other banks. The consumer privacy regulation mandated by the GLBA was approved
on May 10, 2000. The rule became effective on November 13, 2000, and compliance
remained optional until July 1, 2001. Under the rule, when establishing a
customer relationship, a financial institution must give the consumer
information such as when it will disclose nonpublic, personal information to
unaffiliated third parties, what type of information it may share and what types
of affiliates may receive the information. The institution must also provide
customers with annual privacy notices, a reasonable means for preventing the
disclosure of information to third parties, and the opportunity to opt out of
the disclosure at any time.
The Company has no current plans to elect to become a financial holding
company. As long as the Company has not elected to become a financial holding
company, it will remain subject to the current restrictions of the BHCA.
Interstate Banking. On September 29, 1994, President Clinton signed into
law the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Act") which amended the BHCA to permit bank holding companies to
acquire existing banks in any state effective September 29, 1995. The Interstate
Act preempted barriers that restricted entry into states and created
opportunities for expansion into markets that were previously closed. Interstate
banking and branching authority (discussed below) is subject to certain
conditions and restrictions, such as capital adequacy, management and CRA
compliance.
The Interstate Act also contained interstate branching provisions that
allow multistate banking operations to merge into a single bank with interstate
branches. The interstate branching provisions became effective on June 1, 1997,
although states were allowed to pass laws to opt in early or to opt out
completely as long as they acted prior to that date. Effective May 31, 1997, the
Arkansas Interstate Banking and Branching Act of 1997 (the "Arkansas Interstate
Act") authorized banks to engage in interstate branching activities within the
borders of the state of Arkansas.
Banks acquired pursuant to this new branching authority may be converted to
branches. Interstate branching allows banks to merge across state lines to form
a single institution. Interstate merger transactions can be used to consolidate
existing multistate operations or to acquire new branches. A bank can also
establish a new branch as its initial entry into a state if the state has
authorized de novo branching. The Arkansas Interstate Act prohibits entry into
the state through de novo branching.
7
Deposit Insurance. The FDIC insures the deposits of the Company's bank
subsidiary to the extent provided by law. BIF is the primary insurance fund for
the bank's deposits, but SAIF insures a portion due to certain acquisitions by
the Company of deposits from SAIF-insured institutions. Under the FDIC's
risk-based insurance system, depository institutions are currently assessed
premiums based upon the institution's capital position and other supervisory
factors. BIF and SAIF members currently have the same risk-based assessment
schedule, which is 0 to 27 cents per $100 of eligible deposits.
Insured depository institutions are further assessed premiums for Financing
Corporation Bond debt service ("FICO"). Beginning January 1, 1997, FICO premiums
for BIF and SAIF became 1.22 and 6.1 basis points, respectively, per $100 of
eligible deposits. For the period July 1, 2001 through December 31, 2001, the
Company's bank subsidiary was assessed an average annualized premium of $0.0186
per $100 of BIF-eligible deposits and $0.0186 per $100 of SAIF-eligible
deposits.
Capital Adequacy Requirements. The FRB monitors the capital adequacy of
bank holding companies such as the Company, and the FDIC monitors the capital
adequacy of its bank subsidiary. The federal bank regulators use a combination
of risk-based guidelines and leverage ratios to evaluate capital adequacy.
Under the risk-based capital guidelines, bank regulators assign a risk
weight to each category of assets based generally on the perceived credit risk
of the asset class. The risk weights are then multiplied by the corresponding
asset balances to determine a "risk-weighted" asset base. The minimum ratio of
total risk-based capital to risk-weighted assets is 8.0%. At least half of the
risk-based capital must consist of Tier 1 capital, which is comprised of common
equity, retained earnings and certain types of preferred stock and excludes
goodwill and various intangible assets. The remainder, or Tier 2 capital, may
consist of a limited amount of subordinated debt, certain hybrid capital
instruments and other debt securities, preferred stock, and an allowance for
loan losses not to exceed 1.25% of risk-weighted assets. The sum of Tier 1
capital and Tier 2 capital is "total risk-based capital."
The leverage ratio is a company's Tier 1 capital divided by its adjusted
total assets. The leverage ratio requires a 3.0% Tier 1 capital to adjusted
average asset ratio for institutions with the highest regulatory rating of 1.
All other institutions must maintain a leverage ratio of 4.0% to 5.0%. For a
tabular summary of the Company's and the bank subsidiary's risk-weighted capital
and leverage ratios, see "Management's Discussion and Analysis of Financial
Condition and Results of Operation--Liquidity and Capital Resources."
Bank regulators from time to time consider raising the capital requirements
of banking organizations beyond current levels. However, the Company is unable
to predict whether higher capital requirements will be imposed and, if so, the
amount or timing of such increases. Therefore, the Company cannot predict what
effect such higher requirements may have on it or its bank subsidiary.
Enforcement Authority. The FRB has enforcement authority over bank holding
companies and non-banking subsidiaries to forestall activities that represent
unsafe or unsound practices or constitute violations of law. It may exercise
these powers by issuing cease-and-desist orders or through other actions. The
FRB may also assess civil penalties against companies or individuals who violate
the BHCA or related regulations in amounts up to $1 million for each day's
violation. The FRB can also require a bank holding company to divest ownership
or control of a non-banking subsidiary or require such subsidiary to terminate
its non-banking activities. Certain violations may also result in criminal
penalties.
The FDIC possesses comparable authority under the Federal Deposit Insurance
Act (the "FDI Act"), the Federal Deposit Insurance Corporation Improvement Act
("FDICIA") and other statutes with respect to the bank subsidiary. In addition,
the FDIC can terminate insurance of accounts, after notice and hearing, upon a
finding that the insured institution is or has engaged in any unsafe or unsound
practice that has not been corrected, is in an unsafe and unsound condition to
continue operations, or has violated any applicable law, regulation, rule, or
order of, or condition imposed by the appropriate supervisors.
The FDICIA required federal banking agencies to broaden the scope of
regulatory corrective action taken with respect to depository institutions that
do not meet minimum capital and related requirements and to take such actions
promptly in order to minimize losses to the FDIC. In connection with FDICIA,
federal banking agencies established capital measures (including both a leverage
measure and a risk-based capital measure) and specified for each capital measure
the levels at which depository
8
institutions will be considered well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically undercapitalized.
If an institution becomes classified as undercapitalized, the appropriate
federal banking agency will require the institution to submit an acceptable
capital restoration plan and can suspend or greatly limit the institution's
ability to effect numerous actions including capital distributions, acquisitions
of assets, the establishment of new branches and the entry into new lines of
business. On December 14, 2001 the FDIC advised the Company that the bank
subsidiary had been classified as "well-capitalized" under these guidelines.
Examination. The FRB may examine the Company and any or all of its
subsidiaries. The FDIC examines and evaluates insured banks every 12 months, and
it may assess the institution for its costs of conducting the examinations. The
FDIC has a reciprocal agreement with the Arkansas State Bank Department whereby
each will accept the other's examination reports in certain cases. As a result,
the bank subsidiary generally undergoes FDIC and state examinations either on a
joint basis or in alternating years.
Reporting Obligations. As a bank holding company, the Company must file
with the FRB an annual report and such additional information as the FRB may
require pursuant to the BHCA. The bank subsidiary must submit to federal and
state regulators annual audit reports prepared by independent auditors, and the
Company's audit report can be used to satisfy this requirement. The Company's
bank subsidiary must submit quarterly to the FDIC Reports of Condition and
Income (referred to in the banking industry as a Call Report).
Other Regulation. The Company's status as a registered bank holding company
under the BHCA does not exempt it from certain federal and state laws and
regulations applicable to corporations generally, including, without limitation,
certain provisions of the federal securities laws. The Company is under the
jurisdiction of the Securities and Exchange Commission and of state securities
commissions for matters relating to the offer and sale of its securities.
The bank subsidiary's loan operations are subject to certain federal laws
applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers, the Home Mortgage
Disclosure Act of 1975 requiring financial institutions to provide information
to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the
community it serves, the Equal Credit Opportunity Act prohibiting discrimination
on the basis of race, creed or other prohibited factors in extending credit, the
Fair Credit Reporting Act of 1978 governing the use and provision of information
to credit reporting agencies, the Fair Debt Collection Act governing the manner
in which consumer debts may be collected by collection agencies, the Fair
Housing Act prohibiting discriminatory practices relative to real estate-related
transactions, including the financing of housing, and the rules and regulations
of the various federal agencies charged with the responsibility of implementing
such federal laws. The deposit operations of the bank subsidiary also are
subject to the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes procedures for
complying with administrative subpoenas of financial records, the Electronic
Fund Transfer Act, which governs automatic deposits to and withdrawals from
deposit accounts and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking services, the Truth in
Savings Act requiring depository institutions to disclose the terms of deposit
accounts to consumers and the Expedited Funds Availability Act requiring
financial institutions to make deposited funds available according to specified
time schedules and to disclose funds availability policies to consumers.
State Regulations
The Company and its bank subsidiary are subject to examination and
regulation by the Arkansas State Bank Department. Examinations of the bank
subsidiary are conducted annually but may be extended to 24 months if an interim
examination is performed by the FDIC. The Arkansas State Bank Department may
also make at any time an examination of the Company as may be necessary to
disclose fully the relations between the holding company and its bank subsidiary
and the effect of those relations.
The Arkansas Constitution provides, in summary, that "consumer loans and
credit sales" have a maximum percentage limitation of 17% per annum and that all
"general loans" have a maximum limitation of 5% over the Federal Reserve
Discount Rate in effect at the time the loan was made. The Arkansas Supreme
Court has determined that "consumer loans and credit sales" are also "general
loans" and are thus subject to an interest rate limitation equal to the lesser
of 5% over the Federal Reserve Discount Rate or 17% per annum. The Arkansas
Constitution also provides penalties for usurious "general loans" and
9
"consumer loans and credit sales," including forfeiture of all principal and
interest on consumer loans and credit sales made at a greater rate of interest
than 17% per annum. Additionally, "general loans" made at a usurious rate may
result in forfeiture of uncollected interest and a refund to the borrower of
twice the interest collected.
Arkansas usury laws have historically been preempted by federal law with
respect to first residential real estate loans and certain loans guaranteed by
the Small Business Administration. Furthermore, the GLBA preempted the
application of the Arkansas Constitution's usury limits to the Company's bank
subsidiary effective November 12, 1999. In a non-adversarial test case involving
undisputed facts, the Eighth Circuit court of Appeals affirmed the District
Court's ruling that the preemptive provisions of the GLBA are constitutional.
Although the constitutionality of the preemption provision could be raised again
in the future, the Company's bank subsidiary currently may charge interest at
rates over and above the limitations set forth in the Arkansas Constitution.
The Company is also subject to the Arkansas Bank Holding Company Act of
1983 ("ABHCA") which places certain restrictions on the acquisition of banks by
bank holding companies. Any acquisition by the Company of more than 10% of any
class of the outstanding capital stock of any bank located in Arkansas would
require the Arkansas Bank Commissioner's approval. Further, no bank holding
company may acquire any bank if after such acquisition the holding company would
control, directly or indirectly, banks having 25% of the total bank deposits
(excluding deposits from other banks and public funds) in the State of Arkansas.
Under the ABHCA a bank holding company cannot own more than one bank subsidiary
if any of its bank subsidiaries has been chartered for less than 5 years.
Effective January 1, 1999 Arkansas law allows the Company to engage in
branching activities for its bank subsidiaries on a statewide basis. Immediately
prior to that date, the state's branching laws prevented state and national
banks from opening branches in any county of the state other than their home
county and the counties contiguous to their home county. Because the state
branching laws did not limit the branching activities of federal savings banks,
the Company was able to branch outside of the traditional areas of its state
bank subsidiaries through the federal thrift that it acquired in February 1998.
In response to the change in state branching laws, the Company merged its thrift
charter into its lead state bank subsidiaries in early 1999.
Bank Subsidiary
The lending and investment authority of the state bank subsidiary is
derived from Arkansas law. The lending power is generally subject to certain
restrictions, including the amount which may be lent to a single borrower.
Regulations of the FDIC and the Arkansas State Bank Department limit the
ability of the bank subsidiary to pay dividends to the Company without the prior
approval of such agencies. FDIC regulations prevent insured state banks from
paying any dividends from capital and allows the payment of dividends only from
net profits then on hand after deduction for losses and bad debts. The Arkansas
State Bank Department currently limits the amount of dividends that the bank
subsidiary can pay the Company to 75% of the bank's net profits after taxes for
the current year plus 75% of its retained net profits after taxes for the
immediately preceding year.
Federal law substantially restricts transactions between financial
institutions and their affiliates, particularly their non-financial institution
affiliates. As a result, the bank subsidiary is sharply limited in making
extensions of credit to the Company or any non-bank subsidiary, in investing in
the stock or other securities of the Company or any non-bank subsidiary, in
buying the assets of, or selling assets to, the Company, and/or in taking such
stock or securities as collateral for loans to any borrower. Moreover,
transactions between the bank subsidiary and the Company (or any nonbank
subsidiary) must generally be on terms and under circumstances at least as
favorable to the bank subsidiary as those prevailing in comparable transactions
with independent third parties or, in the absence of comparable transactions, on
terms and under circumstances that in good faith would be available to
nonaffiliated companies.
The federal banking laws require all insured banks, including the bank
subsidiary, to maintain reserves against their checking and transaction accounts
(primarily checking accounts, NOW and Super NOW checking accounts). Because
reserves must generally be maintained in cash or in non-interest bearing
accounts, the effect of the reserve requirements is to increase the bank
subsidiary's cost of funds. Arkansas law requires state chartered banks to
maintain such reserves as are required by the applicable federal regulatory
agency.
10
The bank subsidiary is subject to Section 23A of the Federal Reserve Act,
which places limits on the amount of loans or extensions of credit to, or
investments in, or certain other transactions with, affiliates, including the
Company. In addition, limits are placed on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. Most of
these loans and certain other transactions must be secured in prescribed
amounts. The bank subsidiary is also subject to Section 23B of the Federal
Reserve Act, which prohibits an institution from engaging in transactions with
certain affiliates unless the transactions are on terms substantially the same,
or at least as favorable to such institution or its subsidiaries, as those
prevailing at the time for comparable transactions with non-affiliated
companies. The bank subsidiary is subject to restrictions on extensions of
credit to executive officers, directors, certain principal stockholders, and
their related interests. These extensions of credit (1) must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with third parties and (2)
must not involve more than the normal risk of repayment or present other
unfavorable features.
Proposed Legislation For Bank Holding Companies And Banks
Certain proposals affecting the banking industry have been discussed from
time to time. Such proposals include: regulation of all insured depository
institutions by a single regulator; limitations on the number of accounts
protected by the federal deposit insurance funds; and modification of the
$100,000 coverage limit on deposits. It is uncertain which, if any, of the above
proposals may become law and what effect they would have on the Company and its
bank subsidiary.
Forward-Looking Information
This Management's Discussion and Analysis of Financial Condition and
Results of Operations, other filings made by the Company with the Securities and
Exchange Commission and other oral and written statements or reports by the
Company and its management, include certain forward-looking statements
including, without limitation, statements with respect to net interest margin,
net interest income and anticipated future operating and financial performance,
statements regarding asset quality and nonperforming loans, growth opportunities
and growth rates, acquisition opportunities and other similar forecasts and
statements of expectation. Words such as "anticipate," "believe," "estimate,"
"expect," "intend" and similar expressions, as they relate to the Company or its
management, identify forward-looking statements. Forward-looking statements made
by the Company and its management are based on estimates, projections, beliefs
and assumptions of management at the time of such statements and are not
guarantees of future performance. The Company disclaims any obligation to update
or revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.
Actual future performance, outcomes and results may differ materially from
those expressed in forward-looking statements made by the Company and its
management due to certain risks, uncertainties and assumptions. Certain factors
that may affect operating results of the Company include, but are not limited
to, the following: (1) potential delays or other problems in implementing the
Company's growth and expansion strategy; (2) the ability to attract new deposits
and loans; (3) interest rate fluctuations; (4) competitive factors and pricing
pressures; (5) general economic conditions, including the impact of the current
economic slowdown and its effect on the credit worthiness of borrowers and
collateral values; and (6) changes in legal and regulatory requirements, as well
as, other factors described in this and other Company reports and statements.
Should one or more of the foregoing risks materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those described in the forward-looking statements.
(The remainder of this page intentionally left blank)
11
Item 2. PROPERTIES
The Company serves its customers by offering a broad range of banking
services throughout northern, western and central Arkansas from the following
locations:
Banking Location /(1)/ Year Opened Square Footage
- ---------------------------------------------- -------------------- ---------------
Conway /(2)/ ................................ 2002 2,640
Maumelle .................................... 2002 3,576
Bryant Wal-Mart Supercenter/(3)/ ............ 2001 675
Lonoke /(4)/ ................................ 2001 5,731
Little Rock (Otter Creek) ................... 2001 2,400
Fort Smith (Zero) ........................... 2001 2,784
Yellville ................................... 2000 2,716
Clinton ..................................... 1999 2,784
North Little Rock (North Hills) /(5)/ ....... 1999 4,350
Harrison (Downtown) ......................... 1999 14,000
North Little Rock (Indian Hills) /(6)/ ...... 1999 1,500
Fort Smith (Rogers) ......................... 1998 22,500
Little Rock (Cantrell) ...................... 1998 2,700
Little Rock (Chenal) ........................ 1998 40,000
Little Rock (Rodney Parham) ................. 1998 2,500
Little Rock (Chester) /(7)/ ................. 1998 1,716
Bellefonte .................................. 1997 1,444
Alma ........................................ 1997 4,200
Paris ....................................... 1997 3,100
Mulberry .................................... 1997 1,875
Harrison (North) /(8)/ ...................... 1996 3,300
Clarksville (Rogers) /(8)/ .................. 1995 3,300
Van Buren ................................... 1995 2,520
Marshall /(8)/ .............................. 1995 2,520
Clarksville (Main) .......................... 1994 2,520
Ozark (Westside) ............................ 1993 2,520
Western Grove ............................... 1976 (expanded 1991) 2,610
Altus /(9)/ ................................. 1972 (rebuilt 1998) 1,500
Ozark (Main) ................................ 1971 (expanded 1985) 30,877
Jasper ...................................... 1967 (expanded 1984) 4,408
- -----------------
(1) Unless otherwise indicated, the Company owns, or will own upon the
completion of construction, its banking locations.
(2) Lease beginning February 2002 for six months with six one-month renewal
options. Space expected to be occupied as a temporary office until
permanent sites located and facilities constructed.
(3) The Company leases this facility with an initial term expiring May 9, 2006
subject to options to renew for two additional terms of five years each.
(4) This facility was acquired by the Company in 2001. The facility was
constructed in 1997.
(5) The Company owns the building and leases the land at this location. The
initial lease term expires twenty years from November 1999 with the right
to extend for four additional five-year periods.
(6) The Company leases the building and land at this location with an initial
term which expired in December 2001, and was renewed through 2003. This
property is subject to options to renew for four additional terms of two
years each.
(7) This location was acquired by the Company in February 1998. The facility
was constructed in 1994.
(8) The Company owns the buildings and leases the land at these locations. The
initial lease terms expired in 2001 for Harrison and was renewed through
2007. The initial lease terms expire in 2005 (Clarksville) and 2024
(Marshall).
12
The Company has renewal options on the Harrison and
Marshall facilities and purchase options on the Harrison and
Clarksville facilities.
(9) Original facility was destroyed by storm in 1997. This facility was
rebuilt and placed in service in 1998.
While management believes its existing banking locations are adequate
for its present operations, the Company intends to establish additional branch
offices in the future in accordance with its growth strategy.
Item 3. LEGAL PROCEEDINGS
-----------------
On July 26, 2000, the case of David Dodds, et. al. vs. Bank of the
------------------------------------
Ozarks and Jean Arehart was filed in the Circuit Court of Pulaski County,
- -----------------------
Arkansas, Fifth Division, which contains allegations that the Company's bank
subsidiary (the "Bank") committed breach of contract, certain common law torts,
fraud, and a violation of the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. ss. 1961, et. seq. ("RICO"). The Bank removed the case to the
United States District Court for the Eastern District of Arkansas, Western
Division. The complaint seeks alternative remedies of either (a) compensatory
damages of $5 million and punitive damages of $10 million based on the common
law tort claims, or (b) compensatory damages of $5 million trebled to $15
million based on RICO. Previously the Bank made several residential construction
loans related to houses built by the plaintiffs, and in 1998, the Bank commenced
foreclosure of a house that was being constructed by one of the plaintiffs. The
complaint relates to such transactions. The Bank filed a Motion for Partial
Summary Judgment in which the Bank asked the Court to dismiss with prejudice the
plaintiffs' RICO claims, as well as their state law claims of fraud, defamation
and outrage/intentional infliction of emotional distress. On October 29, 2001,
the Court granted the Bank's Motion for Partial Summary Judgment and dismissed
the plaintiffs' RICO claims and state law claims of fraud, defamation and
outrage/intentional infliction of emotional distress. Presently the only
surviving claims of the plaintiffs are breach of contract and intentional
interference with contract. The District Court then remanded the case back to
the Circuit Court of Pulaski County, Arkansas, Fifth Division, where it is
currently pending. The time for an appeal of the District Court's award of
partial summary judgment has passed. The Company believes it has substantial
defenses to the remaining claims made in the complaint and intends to vigorously
defend the case.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No information is required in response to this Item as no matters were
submitted to a vote of Registrant's security holders during the fourth quarter
of the fiscal year covered by this report.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------
The Company's Common Stock is listed on the Nasdaq National Market
under the symbol "OZRK" and as of March 1, 2002 the Company had 167 holders of
record representing approximately 1,800 beneficial owners. The other information
required by Item 201 of Regulation S-K is contained in the Management's
Discussion and Analysis section of the Company's 2001 Annual Report under the
heading "Summary of Quarterly Results of Operations, Common Stock Market Prices
and Dividends" on page 26, which information is incorporated herein by
reference.
Item 6 SELECTED FINANCIAL DATA
-----------------------
The information required by Item 301 of Regulation S-K is contained in
the Company's 2001 Annual Report under the heading "Selected Consolidated
Financial Data" on page 9, which information is incorporated herein by
reference.
13
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
The information required by Item 303 of Regulation S-K is contained in
the Company's 2001 Annual Report under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 10 through
26, which information is incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
The information required by Item 305 of Regulation S-K is contained in
the Management's Discussion and Analysis section of the Company's 2001 Annual
Report under the heading "Interest Rate Sensitivity" on pages 21 through 23,
which information is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The information required by this Item and by Item 302 of Regulation S-K
is contained in the Company's 2001 Annual Report on pages 27 through 43 and in
the Management's Discussion and Analysis section of the 2001 Annual Report under
the heading "Summary of Quarterly Results of Operations, Common Stock Market
Prices and Dividends" on page 26 which information is incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
----------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information required by Item 401 of Regulation S-K regarding
directors is contained in the Company's Proxy Statement for the 2002 annual
meeting under the heading "Nominees for Election as Directors" on pages 3
through 4, which information is incorporated herein by reference. In accordance
with Item 401(b) of Regulation S-K, Instruction 3, information concerning the
Company's executive officers is furnished in a separate item captioned
"Executive Officers of Registrant" in Part I above.
Item 405 of Regulation S-K requires the Company to disclose any failure
of its executive officers and directors to file on a timely basis reports of
ownership and subsequent changes of ownership with the Securities and Exchange
Commission. The Company disclosed in its Proxy Statement for the 2002 annual
meeting under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 17 its belief that during the preceding year all filing
requirements applicable to directors and executive officers had been complied
with, except for the one exception noted.
Item 11. EXECUTIVE COMPENSATION
----------------------
The information required by Item 402 of Regulation S-K is contained in
the Company's Proxy Statement for the 2002 annual meeting under the heading
"Executive Compensation and Other Information" on pages 9 through 11, which
information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required by Item 403 of Regulation S-K is contained in
the Company's Proxy Statement for the 2002 annual meeting under the headings
"Principal Stockholders" and "Security Ownership of Management" on pages 7
through 8 which information is incorporated herein by reference.
14
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information required by Item 404 of Regulation S-K is contained in
the Company's Proxy Statement for the 2002 annual meeting under the heading
"Certain Transactions" on page 16, which information is incorporated herein by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
(a) The following documents are filed as part of this report:
(1) The following consolidated financial statements of the Registrant
included on pages 28 to 43 in the Company's Annual Report for the
fiscal year ended December 31, 2001, and the Report of Independent
Auditors on page 27 of such Annual Report are incorporated herein by
reference.
Consolidated Balance Sheets as of December 31, 2001 and 2000.
Consolidated Statements of Income for the Years Ended December 31,
2001, 2000 and 1999.
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2001, 2000 and 1999.
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules:
All schedules are omitted for the reasons that they are not required or
are not applicable, or the required information is shown in the
consolidated financial statements or the notes thereto.
(b) Reports on Form 8-K:
Registrant did not file any reports on Form 8-K during the fourth
quarter of 2001.
(c) Exhibits:
The exhibits to this report are listed in the Exhibit Index at the end
of this Item 14.
(d) Financial Statement Schedules:
Not applicable.
15
EXHIBIT INDEX
The following exhibits are filed with this report or are incorporated
by reference to previously filed material.
Exhibit No.
- -----------
3.1 Amended and Restated Articles of Incorporation of the Registrant, dated
May 22, 1997 (previously filed as Exhibit No. 3.1 to the Company's
Registration Statement on Form S-1 filed with the Commission on May 22,
1997, as amended, Commission File No. 333-27641, and incorporated
herein by this reference).
3.2 Amended and Restated By-Laws of the Registrant, dated March 13, 1997
(previously filed as Exhibit No. 3.2 to the Company's Registration
Statement on Form S-1 filed with the Commission on May 22, 1997, as
amended, Commission File No. 333-27641, and incorporated herein by this
reference).
4.1 Amended and Restated Trust Agreement, dated June 18, 1999, relating to
the issuance of Ozark Capital Trust's $17,250,000 of 9.0% Cumulative
Trust Preferred Securities (previously filed as exhibit 4.1 to the
Company's quarterly report on Form 10-Q filed with the Commission for
the period ended June 30, 1999, and incorporated herein by this
reference).
4.2 9.0% Cumulative Trust Preferred Securities Certificate (included as an
exhibit to Item 4.1 previously filed with the Company's quarterly
report on Form 10-Q filed with the Commission for the period ended June
30, 1999, and incorporated herein by this reference).
4.3 Agreement as to Expenses and Liabilities (included as an exhibit to
Item 4.1, previously filed as exhibit 4.1 to the Company's quarterly
report on Form 10-Q filed with the Commission for the period ended June
30, 1999, and incorporated herein by this reference).
4.4 Subordinated Indenture, dated June 18, 1999, relating to the issuance
of the Company's $17,783,510 of 9.0% Subordinated Debentures
(previously filed as exhibit 4.4 to the Company's quarterly report on
Form 10-Q filed with the Commission for the period ended June 30, 1999,
and incorporated herein by this reference).
4.5 Form of 9.0% Subordinated Debenture (included as an exhibit to Item 4.4
previously filed with the Company's quarterly report on Form 10-Q filed
with the Commission for the period ended June 30, 1999, and
incorporated herein by this reference).
4.6 Form of Preferred Securities Guarantee Agreement, dated June 18, 1999,
(previously filed as exhibit 4.6 to the Company's quarterly report on
Form 10-Q filed with the Commission for the period ended June 30, 1999,
and incorporated herein by this reference).
10.1 Bank of the Ozarks, Inc. Stock Option Plan, dated May 22, 1997
(previously filed as Exhibit No. 10.1 to the Company's Registration
Statement on Form S-1 filed with the Commission on May 22, 1997, as
amended, Commission File No. 333-27641, and incorporated herein by this
reference).
10.2 Bank of the Ozarks, Inc. Non-Employee Director Stock Option Plan, dated
May 22, 1997 (previously filed as Exhibit No. 10.2 to the Company's
Registration Statement on Form S-1 filed with the Commission on May 22,
1997, as amended, Commission File No. 333-27641, and incorporated
herein by this reference).
10.3 Ground Lease - Marshall (Searcy County), dated October 15, 1993
(previously filed as Exhibit No. 10.6 to the Company's Registration
Statement on Form S-1 filed with the Commission on May 22, 1997, as
amended, Commission File No. 333-27641, and incorporated herein by this
reference).
10.4 Ground Lease - Harrison (Boone County), dated December 22, 1994
(previously filed as Exhibit No. 10.7 to the Company's Registration
Statement on Form S-1 filed with the Commission on May 22, 1997, as
amended, Commission File No. 333-27641, and incorporated herein by this
reference).
16
10.5 Ground Lease - Clarksville (Johnson County), dated January 1, 1995
(previously filed as Exhibit No. 10.7 to the Company's Registration
Statement on Form S-1 filed with the Commission on May 22, 1997, as
amended, Commission File No. 333-27641, and incorporated herein by this
reference).
10.6 Form of Indemnification Agreement between the Registrant and its
directors and certain of its executive officers (previously filed as
Exhibit No. 10.10 to the Company's Registration Statement on Form S-1
filed with the Commission on May 22, 1997, as amended, Commission File
No. 333-27641, and incorporated herein by this reference).
10.7 Ground Lease - North Little Rock, Indian Hills Shopping Center (Pulaski
County), dated November 20, 1998, between Bank of the Ozarks, wca and
Indian Hills Shopping Center Partnership d/b/a Indian Hills Shopping
Center, as amended December 8, 1998 (previously filed as Exhibit No.
10.16 to the Company's annual report on 10-K for the year ended
December 31, 1998 and incorporated herein by this reference).
10.8 Construction Contract, dated June 16, 1999, between Bank of the Ozarks
and East-Harding, Inc. (Clinton, Arkansas) (previously filed as Exhibit
10.15 to the Company's annual report on 10-K for the year ended
December 31, 1999 and incorporated herein by this reference).
10.9 Construction Contract, dated June 16, 1999, between Bank of the Ozarks
and East-Harding, Inc. (North Little Rock) (previously filed as Exhibit
10.16 to the Company's annual report on 10-K for the year ended
December 31, 1999 and incorporated herein by this reference).
10.10 Construction Contract, dated November 23, 1999, between Bank of the
Ozarks and East-Harding, Inc. (Yellville, Arkansas) (previously filed
as Exhibit 10.17 to the Company's annual report on 10-K for the year
ended December 31, 1999 and incorporated herein by this reference).
10.11 Ground Lease - North Little Rock, Lakewood Shopping Center (Pulaski
County), dated May 18, 1999, between Bank of the Ozarks, wca and
Metropolitan Realty and Development, LLC (previously filed as Exhibit
10.18 to the Company's annual report on 10-K for the year ended
December 31, 1999 and incorporated herein by this reference).
10.12 Construction Contract, dated September 20, 2000, between Bank of
the Ozarks and East-Harding, Inc. (Little Rock, Otter Creek, Arkansas)
(attached).
10.13 Employment agreement, dated December 31, 2000, between the Registrant
and George Gleason (previously filed as Exhibit No. 10.13 to the
Company's annual report on 10-K for the year ended December 31, 2000
and incorporated herein by this reference).
10.14 Employment agreement, dated December 31, 2001, between the Registrant
and George Gleason (attached).
13 Portions of the Registrant's Annual Report to Stockholders for the
year ended December 31, 2000 which are incorporated herein by
reference: pages 9 to 43 of such Annual Report (attached).
21 List of Subsidiaries of the Registrant (attached).
23.1 Consent of Ernst & Young LLP (attached).
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BANK OF THE OZARKS, INC.
By: /s/ George Gleason
-------------------------------------------
Chairman and Chief Executive Officer
Date: March 21, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ George Gleason Chairman of the Board, Chief Executive Officer March 21, 2002
- ------------------------- and Director
George Gleason
/s/ Mark Ross President and Director March 21, 2002
- -------------------------
Mark Ross
/s/ Paul Moore Chief Financial Officer March 21, 2002
- ------------------------- (Chief Accounting Officer)
Paul Moore
/s/ Steven Arnold Director March 21, 2002
- -------------------------
Steven Arnold
/s/ Jerry Davis Director March 21, 2002
- -------------------------
Jerry Davis
/s/ Robert East Director March 21, 2002
- -------------------------
Robert East
/s/ Linda Gleason Director March 21, 2002
- -------------------------
Linda Gleason
18
/s/ Porter Hillard Director March 21, 2002
- -------------------------------
Porter Hillard
/s/ Henry Mariani Director March 21, 2002
- -------------------------------
Henry Mariani
/s/ Dr. R. L. Qualls Director March 21, 2002
- ------------------------------
Dr. R. L. Qualls
/s/ Kennith Smith Director March 21, 2002
- ------------------------------
Kennith Smith
19