• January 16, 2018
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Bank of the Ozarks reports 2017 Q4 financial results

Bank of the Ozarks announced that net income for the fourth quarter of 2017 was a record $146.2 million, a 66.5% increase from $87.8 million for the fourth quarter of 2016. Diluted earnings per common share for the fourth quarter of 2017 were a record $1.14, a 58.3% increase from $0.72 for the fourth quarter of 2016.

For the full year of 2017, net income was a record $421.9 million, a 56.3% increase from net income of $270.0 million for the full year of 2016. Diluted earnings per common share for the full year of 2017 were a record $3.35, a 29.8% increase from $2.58 for the full year of 2016.

As a result of the Tax Cuts and Jobs Act that was enacted into law on December 22, 2017, the Bank revalued its net deferred tax liability position to reflect the reduction in its federal corporate income tax rate from 35% to 21%. This revaluation resulted in a one-time income tax benefit of approximately $49.8 million, or $0.39 of diluted earnings per common share, for the fourth quarter of 2017.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the fourth quarter of 2017 were 2.81%, 17.23% and 21.84%, respectively, compared to 1.92%, 12.62% and 17.08%, respectively, for the fourth quarter of 2016. The Bank’s returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the full year of 2017 were 2.15%, 13.49% and 17.49%, respectively, compared to 1.89%, 13.05% and 16.25%, respectively, for the full year of 2016. The calculation of the Bank’s return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer, stated, “We are pleased to report our excellent results for 2017, including annual records for net income, diluted earnings per share and net interest income, excellent asset quality and continued strong growth in both the funded and unfunded balance of our non-purchased loans.”

KEY BALANCE SHEET METRICS
Total loans, including purchased loans, were $16.04 billion at December 31, 2017, a 10.2% increase from $14.56 billion at December 31, 2016. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $12.73 billion at December 31, 2017, a 32.6% increase from $9.61 billion at December 31, 2016. Purchased loans, which consist of loans acquired in previous acquisitions, were $3.31 billion at December 31, 2017, a 33.3% decrease from $4.96 billion at December 31, 2016. The unfunded balance of closed loans totaled $13.19 billion at December 31, 2017, a 31.0% increase from $10.07 billion at December 31, 2016.

Deposits were $17.19 billion at December 31, 2017, a 10.4% increase from $15.57 billion at December 31, 2016. Total assets were $21.28 billion at December 31, 2017, a 12.6% increase from $18.89 billion at December 31, 2016.

Common stockholders’ equity was $3.46 billion at December 31, 2017, a 24.0% increase from $2.79 billion at December 31, 2016. Tangible common stockholders’ equity was $2.75 billion at December 31, 2017, a 32.9% increase from $2.07 billion at December 31, 2016. Book value per common share was $26.98 at December 31, 2017, a 17.2% increase from $23.02 at December 31, 2016. Tangible book value per common share was $21.45 at December 31, 2017, a 25.6% increase from $17.08 at December 31, 2016. The calculations of the Bank’s tangible common stockholders’ equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.

The Bank’s ratio of common stockholders’ equity to total assets was 16.27% at December 31, 2017 compared to 14.78% at December 31, 2016. Its ratio of tangible common stockholders’ equity to total tangible assets was 13.38% at December 31, 2017 compared to 11.40% at December 31, 2016. The calculation of the Bank’s ratio of total tangible common stockholders’ equity to total tangible assets and the reconciliation to GAAP are included in the schedules accompanying this release.

NET INTEREST INCOME
Net interest income for the fourth quarter of 2017 was a record $214.8 million, a 10.3% increase from $194.8 million for the fourth quarter of 2016. Net interest margin, on a fully taxable equivalent (“FTE”) basis, was 4.72% for the fourth quarter of 2017, a decrease of 30 basis points from 5.02% for the fourth quarter of 2016. Average earning assets were $18.28 billion for the fourth quarter of 2017, a 16.5% increase from $15.69 billion for the fourth quarter of 2016.

Net interest income for the full year of 2017 was a record $817.4 million, a 35.9% increase from $601.5 million for the full year of 2016. Net interest margin, on a FTE basis, was 4.85% for the full year of 2017, a decrease of seven basis points from 4.92% for the full year of 2016. Average earning assets were $17.11 billion for the full year of 2017, a 37.8% increase from $12.42 billion for the full year of 2016.

NON-INTEREST INCOME
Non-interest income for the fourth quarter of 2017 decreased 1.2% to $30.2 million compared to $30.6 million for the fourth quarter of 2016. Non-interest income for the full year of 2017 increased 21.0% to $123.9 million compared to $102.4 million for the full year of 2016.

Included in non-interest income were gains on investment securities totaling $1.2 million for the fourth quarter of 2017 and $4.0 million for the full year of 2017, compared to no significant gains on investment securities for the fourth quarter or full year of 2016.

NON-INTEREST EXPENSE
Non-interest expense for the fourth quarter of 2017 increased 10.0% to $86.2 million compared to $78.4 million for the fourth quarter of 2016. Non-interest expense for the full year of 2017 increased 30.1% to $332.7 million compared to $255.8 million for the full year of 2016.

During the fourth quarter of 2017, the Bank incurred $1.14 million of employee severance expenses associated with the elimination of the small ticket equipment finance group in its Leasing Division, the elimination of the secondary market mortgage loan group in its Mortgage Division and other restructuring of staff.

The Bank’s efficiency ratio (non-interest expense divided by the sum of net interest income FTE and non-interest income) for the fourth quarter of 2017 was 34.8% compared to 34.3% for the fourth quarter of 2016. The Bank’s efficiency ratio for the full year of 2017 was 34.9% compared to 35.8% for the full year of 2016.

Re-disseminated by The Asian Banker