10 Most Profitable Bank Stocks (Update 1)

1. Bank of the Ozarks

Shares of Little Rock, Arkansas-based Bank of the Ozarks(OZRK) are up nearly 30% over a one-year period and have gained 7% year to date.

With a return on asset of 2.7%, the bank is a cut above the rest in profitability measures.

Net income for 2011 was a record $101.3 million, a 58.3% increase from $64.0 million for 2010, helped by three acquisitions.

The bank's spreads are among the highest in the industry at 5.84% in 2011.

"We think 4Q11 was an important milestone, as the company demonstrated for the second consecutive quarter that it could sustain its earnings momentum without the benefit from assisted deals," Sandler O' Neill analysts wrote in a note following the results.

However, the bank might remain dependent on deals to drive growth, according to the analysts. "In the absence of further deals, we still think that maintaining the NIM at or close to the current 6.05% is going to be very challenging for this year. Funding costs can only be lowered so much, and the company will be hard-pressed to expand earning asset yields even if it meets its loan growth targets. Thus, we think that the company's ability to execute on additional assisted transactions remains a key component to the story."

All the 10 analysts covering the stock have a neutral rating.

>>To see these stocks in action, visit the 10 Most Profitable Bank Stocks portfolio on Stockpickr.

-- Written by Shanthi Bharatwaj in New York.

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