Shares of Bank of the Ozarks, Home BancShares and Simmons First National Bank each reached 52-week highs on Thursday. Bank of the Ozarks and Home BancShares repeated the feat on Friday, and Simmons came within a dime of another 52-week high.
All three stocks are being buoyed by the national banking market, which has done well since the election of Donald Trump as president, said Randy Dennis, president of DD&F Consulting Group, a Little Rock-based bank consulting company.
Little Rock-based Bank of the Ozarks closed at $52.11 Friday, Home BancShares of Conway closed at $28.46, and Pine Bluff-based Simmons closed at $66.40 in trading on the Nasdaq exchange.
Bank of the Ozarks shares are up almost 41 percent since the national elections on Nov. 8, Home BancShares is up about 30 percent, and Simmons has risen almost 33 percent.
The banking indexes are rising because Trump has "adamantly and loudly opposed" federal banking laws that have passed in recent years, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law in 2010, Dennis said.
"The restrictions have been killing our banks," Dennis said.
The election is considered a win for banks, said one bank expert who asked not to be identified.
"Traditionally, a Republican administration and a Republican-controlled Congress are pro-economic growth," the bank expert said. "The last several years have been focused on increased regulation for banks. I'm optimistic that the next four years should have an overall macroeconomic environment that could be a lot more friendly to banks in general."
It remains to be seen how much of the regulations will be rolled back, the bank expert said.
The three Arkansas banks also have made significant acquisitions recently.
Home BancShares, which owns Centennial Bank branches in Arkansas, Florida, Alabama and New York, announced in November that it would buy two Florida banks that will add $659 million in assets and nine locations.
The two acquisitions won't close until early next year and will barely push Home BancShares above $10 billion, a point at which the bank will be accountable to stricter federal regulatory requirements.
Simmons, which has branches in Arkansas, Kansas, Missouri and Tennessee, also announced last month that it would buy a Jackson, Tenn., based bank that will add $464 million in assets and 10 locations.
Bank of the Ozarks, which has offices in Arkansas, California, Florida, Georgia, New York, North Carolina, South Carolina and Texas, closed on two large purchases this year of an Atlanta bank and a St. Petersburg, Fla., bank. The two acquisitions added about $6.4 billion in assets to Bank of the Ozarks. It now has more than $18 billion in assets, more than any bank in Arkansas.
Bank of the Ozarks has recovered from a May announcement by investor Carson Block, founder of Muddy Waters Research, who said he was shorting the bank's stock. In one day, Bank of the Ozarks' stock fell 15 percent to $33.66 as more than 10 times its average volume of shares traded.
Short selling is a risky method of profiting from a declining stock price by borrowing shares of the stock, selling them at the current price and then repurchasing the same number of shares at a future date, hopefully at a lower price, to replace the borrowed shares. In essence, it's a gamble that the stock price will decline.
For the rest of the year, Bank of the Ozarks never again sold as low as $33.66. But it took until Nov. 14 before it sold as high as $44.74, which it closed at on April 20.
Bank of the Ozarks continues to be a heavily shorted stock.
"I don't know why that is," the bank expert said. "It's such a good-quality bank, it's surprising. ... The stock price is well above now what it was [in May]."
Matt Olney, a bank analyst in Little Rock with Stephens Inc., rates Bank of the Ozarks and Home BancShares as buys and Simmons as a hold. He has a price target of $50 on Bank of the Ozarks, $29 on Home BancShares and $68 on Simmons.
FIG Partners analyst Brian Martin has a $28 price target on Home BancShares and a $54 price target on Bank of the Ozarks. Martin has a buy on Bank of the Ozarks and a hold on Home BancShares.
"Arkansas has some great banks," Dennis said. "The beauty of it is that the market is recognizing how good the banks are that we have here."
Business on 12/10/2016