It was another record quarter for Little Rock-based Bank of the Ozarks. The company on Thursday (April 12) posted first-quarter net income of $113.1 million, up 27% compared to the first quarter of 2017. Earnings per share of 88 cents beat the consensus estimate of 85 cents.
Revenue for the quarter reached $286.199 million, well ahead of he $242.828 million in the first quarter of 2017. The revenue also beat the consensus estimate of $246.71 million.
The equity markets liked the report. Bank shares (NASDAQ: OZRK) were at $47.48 in afternoon trading, up $1.44. During the past 52 weeks the share price has ranged between $53.70 and $40.15.
Net interest income for the first quarter of 2018 was a record $217.8 million, up 14.2% compared with $190.8 million for the first quarter of 2017. Non-interest income for the first quarter of 2018 fell 1.2% to $28.7 million compared with $29.1 million for the first quarter of 2017.
“We are very pleased to report our results for the first quarter of 2018, including record net interest income, an annualized return on average assets of 2.16%, $941 million growth in the funded balance of non-purchased loans, a 4.69% net interest margin and excellent asset quality metrics,” George Gleason, chairman and CEO, said in the earnings report.
The company also reported that it continues to grow its earning assets even as it works through some of the bad loans acquired in recent acquisitions.
“Our average earning assets for the quarter just ended totaled $18.92 billion, an increase of 17.2% compared to the first quarter of 2017 and an increase of 3.5% compared to the immediately preceding fourth quarter of 2017,” the company noted in its “Management Comments” issued with the earnings report. “That is a healthy growth rate in average earning assets, even though it was tempered by the ongoing pay-downs in our portfolio of purchased loans, which consists of the remaining loans from our 15 acquisitions since 2010.”
The bank’s mortgage lending income was just $500,000 in the first quarter, down from $1.6 million for the first quarter of 2017. The decline results from the bank’s move to exit the secondary market mortgage lending business. The bank noted in the earnings report that it expects “only a nominal amount of mortgage lending income in the second quarter of 2018 and none thereafter.”
A corporate name change to “Bank OZK” is still set for a May 7 shareholders vote. Bank officials estimate the name change will cost between $15 million and $25 million “primarily related to marketing, rebranding and other related expenses.”
Following are other items from the first quarter report.
• Total loans, including purchased loans, were $16.61 billion as of March 31, 2018, up 12.2% from $14.8 billion at March 31, 2017.
• Deposits were $17.83 billion at March 31, 2018, up 13.5% from $15.71 billion at March 31, 2017. Total assets were $22.04 billion at March 31, 2018, up 15.1% from $19.15 billion at March 31, 2017.
• Excluding purchased loans, the Bank’s ratio of nonperforming loans as a percent of total loans was 0.09% at March 31, 2018 compared with 0.11% at March 31, 2017.
The strong first quarter showing follows a record financial finish to 2017. 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 in January that a revaluation of the bank’s net deferred tax liability position due to the federal 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.