Good day, ladies and gentlemen and welcome to the Bank of the Ozarks’ Second Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. Tim Hicks, Chief Administrative Officer and Executive Director of Investor Relations. Sir, you may begin.

Good morning. I am Tim Hicks, Chief Administrative Officer and Executive Director of Investor Relations for Bank of the Ozarks. Purpose of this call is to discuss the company’s results for the quarter just ended and our outlook for upcoming quarters. During today’s call and in other disclosures and presentations, we may make certain statements about our plans, estimates, strategies and outlook that are forward-looking statements. These statements are based on management’s current expectations concerning future events that by their nature are subject to risks and uncertainties. Actual results and future events could differ possibly materially from those anticipated in our statements and from historical performance due to a variety of risks and other factors. Information about such factors as well as GAAP reconciliations and other information on non-GAAP financial measures we discuss is included in today’s earnings press release and in our 10-K, 10-Qs and various other public filings and investor materials. These are all available on our corporate website, bankozarks.com, under Investor Relations. 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. Finally, the company is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third-parties. The only authorized live and archived webcast and transcripts are located on our website. Let me turn the call over to our Chairman and Chief Executive Officer, George Gleason.

We are very pleased to report our excellent second quarter results, which include our seventh consecutive quarter of record net income and other favorable financial results as well as a number of significant strategic accomplishments. My comments today will focus primarily on strategic matters before Tim, Greg, and Tyler speak on the financial results. First, on June 26, we completed the previously announced merger of our holding company into our bank with the bank continuing as the surviving corporation. We expect this corporate reorganization to contribute to future efficiency by eliminating redundant corporate infrastructure and the associated administration accounting and duplicative federal regulatory oversight. Bank of the Ozarks, the surviving entity, continues to use our OZRK ticker symbol and the same CUSIP number as previously used by Bank of the Ozarks Inc. Second, on May 31, we closed a secondary common stock issuance resulting in net proceeds of $299.7 million. This increased our already robust regulatory capital ratios and provides capital for significant future growth. As most of you know, we expect to file our first Dodd-Frank Act Stress Test, or DFAST submission in July 2018 based on our year end 2017 financials. As part of DFAST, we will project our expected growth and performance under three scenarios known as the base case, adverse, and severely adverse scenarios over a period of nine quarters. With limited exceptions, you cannot include projected future capital raises in your DFAST projections. Based on our expected significant growth in the base case scenario, we determined that we would need to augment our regulatory capital ratios during 2017 to support the projected growth in 2018, 2019, and the first quarter of 2020. Our May 31 capital raise should provide that needed capital. Third, for some time now, we have been evaluating holding additional on balance…

Thank you, George. Our $20.1 billion in total assets at June 30, 2017 was a 63% increase from June 30 last year. This balance sheet growth translated into excellent income growth. Our net income for the quarter just ended was a record $90.5 million, a 66% increase from the second quarter of 2016. Our diluted earnings per common share of $0.73 for the quarter just ended or a 22% increase compared to the second quarter of 2016. In the quarter just ended the funded balance of our non-purchased loans and leases grew $808 million and our unfunded balance of closed loans grew another $625 million. This unfunded balance of closed loans was a record $11.9 billion at June 30, 2017, which will be instrumental in achieving our loan growth goals in the remainder of 2017, 2018 and early 2019. RESG accounted for about 44% of our growth in the funded balance of non-purchased loans and leases in the quarter just ended and our other loan and lease teams accounted for 56% of the growth. As George mentioned earlier we expect RESG will continue to be our largest growth engine, but we are pleased by the positive momentum and contribution from our various other loan teams. At June 30, 2017, the RESG portfolio accounted for 68% of the funded balance and 93% of the unfunded balance of our total non-purchased loans and leases. At quarter end our average loan to cost for the RESG portfolio was a very conservative 49.1% and our average loan to appraised value was even lower just 42.0%. The extremely low leverage of this portfolio exemplifies our very conservative credit culture and is one of many reasons we have such confidence in the quality of our loan and lease portfolio. Given the growth in our customer base,…

As a company we are focused on three disciplines; net interest margin, efficiency and asset quality. First, let me discuss net interest margin. In the quarter just ended, our net interest income was a record $202.1 million and our net interest margin of 4.99%, increased 11 basis points from the first quarter. In recent calls we have mentioned that we have recently focused more on our core spread than our net interest margin. In the quarter just ended our yield on non-purchased loans and leases increased 16 basis points to 5.42%, while our cost of interest paying deposits increased 9 basis points to 0.67% resulting in a 7 basis point increase in our core spread and continuing an improving trend over the last five quarters. Increases in LIBOR rates and the Federal Reserve’s fed funds target rate have contributed among other factors to this improvement. As a result of our robust level of loan originations in the quarter, we had $47.1 million in net deferred credits at June 30, 2017, meaning we had $47.1 million more in unamortized deferred loan origination fees than unamortized deferred loan origination costs. This along with $123.9 million valuation discount on our purchase loans at June 30, 2017 has favorable implications for future earnings. Let me switch to efficiency, our efficiency ratio has been among the top decile of the industry every year for 15 consecutive years. In the quarter just ended our efficiency ratio was an excellent 35.3% and for the first six months of 2017 was 35.2%. While our efficiency ratio will vary from quarter-to-quarter, we have stated in recent calls that we expect to see a generally improving trend in our efficiency ratio in the coming years. There are several key factors among others needed to accomplish our long-term efficiency goals. First…

In regard to liquidity, we have long expected that we could accelerate deposit growth as needed to fund our loan and lease growth. Our experience in recent years has validated that expectation. At least monthly and more often as needed, we to update a comprehensive 36-month projection of our expected loan fundings, loan pay-downs and other sources and uses of funds. These detailed monthly projections of needed deposit growth provide the goals for our deposit growth strategies. This has proven to be a very effective process. Currently, we have 41 offices in 28 cities in spin-up mode, offering various deposit specials along with an enhanced level of marketing activity. Our branch network of approximately 242 deposit offices continues to have substantial untapped capacity, and we believe that capacity is sufficient to fund our expected loan and lease growth over the next several years. Planned de novo branch additions and possible future acquisitions should provide additional deposit growth capacity, as needed for the future. At June 30, 2017, our total deposits were $16.2 billion, which was a $528 million increase from the previous quarter end. Because of our significant growth in organic deposits in the quarter just ended, we decreased our volume of broker deposits by $434 million from $2.00 billion at March 31, 2017 to $1.57 billion at June 30, 2017. That’s a decrease from 12.8% of total deposits to 9.7% of total deposits. Of course, we are not subject to any regulatory limitations on our volume of broker deposits and our internal policy calls for a 50% limit, which we are well below; but we are, nonetheless, pleased to see our percentage of broker deposits continue its recent downward trend. As a result of the shift in mix, our non-brokered deposits grew a healthy $962 million in the quarter…

Next Monday, we will celebrate our 20th anniversary as a public company. Over those 20 years, we’ve grown from 13 offices with $309 million in total assets to 251 offices with over $20 billion in total assets. Our shareholders benefited greatly from our constant pursuit of excellence, as evidenced by our 22.5% compounded annual total return to shareholders over that 20-year period. Such exceptional and sustained results can only be achieved by an exceptional team. I want to thank our 2,459 employees, who I believe are among the best in the industry, for their hard work and great accomplishments, as we celebrate our 20th anniversary is a public company. Well done. We look forward to continuing this success for decades to come. That concludes our prepared remarks. At this time, we will entertain questions. Let me ask our operator, Amanda, to once again remind our listeners how to queue in for questions. Amanda?

Thank you. [Operator Instruction] Our first question comes from the line of Joe Gladue of Merion Capital Group. And your line is open.

Thank you. And the next question comes from the line of Jennifer Demba of SunTrust Robinson.

Thank you. And our next question is from the line of Timur Braziler of Wells Fargo Securities.

Thank you. And our next question is from the line of Michael Rose of Raymond James. Your line is open.

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Thank you. And our next question comes from the line of Matt Olney of Stephens & Company. Your line is open.

Thank you. And our next question comes from the line of Catherine Mealor of KBW. Your line is open.

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Thank you. Our next question comes from the line of [indiscernible] of UBS. Your line is open.

And your next question comes from the line of Blair Brantley of Brean Capital. Your line is open.

Thank you. And at this time I am showing no further questions.