Bank of the Ozarks posts record profits, gets one-time $50 million boost from GOP tax cut

Bank of the Ozarks closed out another historic year with record fourth quarter and yearly earnings and a $50 million boost from the GOP’s recent tax reform package, the fast-growing regional bank reported before Tuesday’s (Jan. 16) opening bell.

Kicking off the final quarterly results for Arkansas publicly-traded concerns for the period ended Dec. 31, the Little Rock-based banking group reported net income was a record $146.2 million, or $1.14 per share, up 66.5% increase from profits of $87.8 million or 72 cents per share, a year ago.

For the full year, net income grew to a record $421.9 million, or $3.35 per share, up 56.3% increase from profits of $270 million or $2.58 per share, a year ago. Company officials said a revaluation of the bank’s net deferred tax liability position due to the recent corporate tax cut from 35% to 21% resulted in a one-time income tax benefit of $49.8 million, or 39 cents in the fourth quarter.

Notwithstanding those pre-tax gains, Bank of the Ozarks reported fourth-quarter earnings of 75 cents per share, matching the expectations of eleven Wall Street analysts that cover the Arkansas bank, according to Thomson Reuters.

“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,” said Bank of the Ozarks Chairman and CEO George Gleason.

Overall, Bank of the Ozarks saw near-across the board improvements among its key financial metrics. Deposits grew to $17.19 billion at the close of the fourth quarter, a 10.4% increase from $15.57 billion a year ago. Total assets jumped 12.6% to $21.28 billion compared to $18.89 billion in the same period of 2016.

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. 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.

Total loans, including purchased loans, were $16.04 billion for the period ended Dec 31, a 10.2% increase from $14.56 billion in the fourth quarter of 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 for the year, a 32.9% increase from $2.07 billion on Dec. 31, 2016.

And although 2017 was not as eventful operationally as in 2016 when the Arkansas regional banking group completed two of the largest deals in the bank’s history, Bank of the Ozarks has made progress on other aspects of its business as the company integrates employees and assets from those acquisitions.

In July 2016, the bank closed on its $800 million acquisition of Atlanta-based Community & Southern Holdings Inc. (C&S), its largest takeover to date and its 14th acquisition since March 2010. At the same time, the Arkansas banking group expanded its southern U.S. reach with the completion of its acquisition of St. Petersburg, Fla.-based C1 Financial in an all-stock transaction valued at $402.5 million.

To accommodate that growth, Gleason joined Gov. Asa Hutchinson and Little Rock Mayor Mark Stodola in September to announce plans for a new corporate headquarters in an exclusive western part of the city on the Little Maumelle River. Construction on the new 247,000-square foot headquarters began at the end of 2017.

Two weeks ago, Bank of the Ozarks announced an annual cash-based incentive bonus plan for hourly employees and certain other employees. Under the terms of the plan, employees of the Little Rock-based bank will be eligible to receive a cash award of up to $1,200 annually based on company and individual employee performance.

Approximately 2,300 of the company’s current employees will be eligible to receive awards under the plan with the first payments made in the first quarter of 2018. Current estimates indicate the annual pre-tax cost of the plan for 2018, including payroll taxes and other benefits, will be between $2.4 million and $2.7 million.

During the past 52 weeks, Bank of the Ozarks’ share price has ranged from a low of $40.15 to a high of $56.86 touched on Dec. 28. Ahead of Tuesday’s opening bell, Bank of the Ozarks shares were up $1.03 at $53.50 a share in the pre-market session.