Back to the Future? Bank of the Ozarks eliminates its bank holding company

Jesse Johnston, Iowa Banking Law, Dickinson Law Firm, Des Moines Iowa

Posted on 04/28/2017 at 10:27 AM by Jesse Johnston

Bank of the Ozarks in Little Rock, Arkansas, has announced plans to dissolve their bank holding company through a merger where the bank-subsidiary will absorb the holding company.  It has been cited that the dissolution is an “efficiency play” which will result in savings to the bank. The Bank is $18 billion dollars in assets with 259 offices in ten states.  The holding company has 38 subsidiaries located other states as well as Arkansas

The benefits associated with the dissolution may have be borne out of the desire to cut costs, however, there are other pragmatic reasons to eliminate the holding company. For one, the Bank will no longer need to navigate the complexities of the Federal Reserve as a regulator, nor tightrope walk between the areas where regulators disagree. And for a Bank that has been actively acquiring other banks, the process of mergers and acquisitions will be streamlined without the Fed’s involvement. Perhaps most significantly, for the traded entities, its dissolution will remove the entities from the jurisdiction of the SEC in that bank stock enjoys certain exemptions that holding company stock would not. The cost savings then could be significant.

While the lure of less regulations might lead some Iowa banks to consider whether their holding company is a necessary accoutrement, there are some definite advantages to keeping the holding company in tact: it can provide flexibility and access to debt and other activities where that might not otherwise be accessible to an Iowa bank.  Iowa banks do not enjoy active capital equity investment markets and the holding company allows for more creativity in obtaining both debt and equity. 

This decision by the Bank of the Ozarks demonstrates that innovative banking may not solely grow out of Fintech incubators. Rethinking banking business to be more efficient doesn’t necessarily mean buying the latest technology, but it does require thought, external discussions, prudence, and a calm hand.

If you have any questions regarding Fintech or banking law, please contact Jesse Johnston.  

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed. 

-Jesse R. Johnston


Questions, Contact us today.

Contact Us


The material, whether written or oral (including videos) that is posted on the various blogs of Dickinson Bradshaw is not intended, nor should it be construed or relied upon, as legal advice. The opinions expressed in the various blog posting are those of the individual author, they may not reflect the opinions of the firm.  Your use of the Dickinson Bradshaw blog postings does NOT create an attorney-client relationship between you and Dickinson, Bradshaw, Fowler & Hagen, P.C. or any of its attorneys.  If specific legal information is needed, please retain and consult with an attorney of your own selection.

There are no comments yet.
Add Comment

* Indicates a required field