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Bank of the Ozarks' (OZRK) Q4 Earnings In Line, Costs Up
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Bank of the Ozarks, Inc. released fourth-quarter and full-year 2017 results. Adjusted earnings per share for the quarter came in at 75 cents, which was in line with the Zacks Consensus Estimate. The figure represents improvement of 4.2% on a year-over-year basis.
Results benefited from an improvement in net interest income and lower provisions. Also, loans and deposit balances improved, which supported results to some extent. However, higher expenses and lower non-interest income were the undermining factors.
After considering the income tax benefit of $49.8 million or 39 cents per share related to the Tax Act, net income available to common shareholders for the quarter came in at $146.2 million or $1.14 per share.
For 2017, the company reported net income available to shareholders of $421.9 million or $3.35 per share, up from $270 million or $2.58 per share registered in the prior year.
Revenues Improve, Costs Rise
Net revenues for the quarter came in at $245 million, up 8.7% year over year. However, the figure missed the Zacks Consensus Estimate of $249.8 million.
For 2017, net revenues were $941.3 million, increasing 33.7% year over year. However, it missed the Zacks Consensus Estimate of $951.2 million.
Quarterly net interest income jumped 10.3% year over year to $214.8 million. Nonetheless, net interest margin, on a fully taxable equivalent basis, decreased 30 basis points (bps) to 4.72%.
Non-interest income totaled $30.2 million, down 1.2% from the year-ago quarter. The fall primarily reflected lower service charge on deposit accounts, mortgage lending income and other income from purchased loans.
Non-interest expenses were $86.2 million, up 10% year over year. The increase was primarily due to higher salaries and employee benefits expense, and other operating expenses.
Bank of the Ozarks’ efficiency ratio was 34.82% compared with 34.27% in the prior-year quarter. A rise in efficiency ratio indicates lower profitability.
Strong Balance Sheet
As of Dec 31, 2017, total loans and leases (including purchased loans) were $16.04 billion, up 10.2% year over year, while total deposits surged 10.4% year over year to $17.19 billion.
Further, as of the same date, the company had total assets of $21.28 billion, while shareholders’ equity was $3.46 billion.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, decreased 5 bps year over year to 0.10% as of Dec 31, 2017. Also, provision for loan and lease losses decreased 5.8% from the prior-year quarter to $9.3 million.
Further, annualized net charge-off ratio to average total loans decreased 4 bps year over year to 0.05%.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 2.81%, up from 1.92% in the year-ago quarter. Also, return on average common equity increased from 12.62% to 17.23%.
Our Take
Bank of the Ozarks is well positioned for organic growth given its consistent improvement in loans and deposit balances. Also, the company’s inorganic growth strategy remains impressive. However, escalating costs are likely to hurt bottom-line growth, going forward.
Bank of the Ozarks Price, Consensus and EPS Surprise
Among other Southeast banking stocks, results are expected from First Horizon National Corporation (FHN - Free Report) and Regions Financial Corporation (RF - Free Report) on Jan 19, while BancorpSouth, Inc. is slated to report its numbers on Jan 24.
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Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Bank of the Ozarks' (OZRK) Q4 Earnings In Line, Costs Up
Bank of the Ozarks, Inc. released fourth-quarter and full-year 2017 results. Adjusted earnings per share for the quarter came in at 75 cents, which was in line with the Zacks Consensus Estimate. The figure represents improvement of 4.2% on a year-over-year basis.
Results benefited from an improvement in net interest income and lower provisions. Also, loans and deposit balances improved, which supported results to some extent. However, higher expenses and lower non-interest income were the undermining factors.
After considering the income tax benefit of $49.8 million or 39 cents per share related to the Tax Act, net income available to common shareholders for the quarter came in at $146.2 million or $1.14 per share.
For 2017, the company reported net income available to shareholders of $421.9 million or $3.35 per share, up from $270 million or $2.58 per share registered in the prior year.
Revenues Improve, Costs Rise
Net revenues for the quarter came in at $245 million, up 8.7% year over year. However, the figure missed the Zacks Consensus Estimate of $249.8 million.
For 2017, net revenues were $941.3 million, increasing 33.7% year over year. However, it missed the Zacks Consensus Estimate of $951.2 million.
Quarterly net interest income jumped 10.3% year over year to $214.8 million. Nonetheless, net interest margin, on a fully taxable equivalent basis, decreased 30 basis points (bps) to 4.72%.
Non-interest income totaled $30.2 million, down 1.2% from the year-ago quarter. The fall primarily reflected lower service charge on deposit accounts, mortgage lending income and other income from purchased loans.
Non-interest expenses were $86.2 million, up 10% year over year. The increase was primarily due to higher salaries and employee benefits expense, and other operating expenses.
Bank of the Ozarks’ efficiency ratio was 34.82% compared with 34.27% in the prior-year quarter. A rise in efficiency ratio indicates lower profitability.
Strong Balance Sheet
As of Dec 31, 2017, total loans and leases (including purchased loans) were $16.04 billion, up 10.2% year over year, while total deposits surged 10.4% year over year to $17.19 billion.
Further, as of the same date, the company had total assets of $21.28 billion, while shareholders’ equity was $3.46 billion.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, decreased 5 bps year over year to 0.10% as of Dec 31, 2017. Also, provision for loan and lease losses decreased 5.8% from the prior-year quarter to $9.3 million.
Further, annualized net charge-off ratio to average total loans decreased 4 bps year over year to 0.05%.
Profitability Ratios Improve
At the end of the reported quarter, return on average assets was 2.81%, up from 1.92% in the year-ago quarter. Also, return on average common equity increased from 12.62% to 17.23%.
Our Take
Bank of the Ozarks is well positioned for organic growth given its consistent improvement in loans and deposit balances. Also, the company’s inorganic growth strategy remains impressive. However, escalating costs are likely to hurt bottom-line growth, going forward.
Bank of the Ozarks Price, Consensus and EPS Surprise
Bank of the Ozarks Price, Consensus and EPS Surprise | Bank of the Ozarks Quote
Bank of the Ozarks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other Southeast banking stocks, results are expected from First Horizon National Corporation (FHN - Free Report) and Regions Financial Corporation (RF - Free Report) on Jan 19, while BancorpSouth, Inc. is slated to report its numbers on Jan 24.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>