Fourth quarter and yearly earnings for Bank OZK topped Wall Street expectations as the state’s largest banking group enters the New Year with a new name and high expectations following several years of acquisitions.

For the period ended Dec. 31, the Little Rock bank formerly known as Bank of the Ozarks reported fourth quarter profit of $115 million or 89 cents per share, down a 21.3% from earnings of $146.2 million or $1.14 per share for the fourth quarter of 2017. The Arkansas regional bank posted revenue of $319.6 million for the three-month period, up 30.4% from revenues of $245 million a year ago.

During the fourth quarter of 2017, Bank OZK recognized a one-time income tax benefit of $49.8 million to reflect a reduction in its federal corporate income tax rate from 35% to 21% due to the omnibus tax cut package enacted by Congress more than a year ago. The Arkansas regional bank also incurred pre-tax expenses of approximately $300,000 for the fourth quarter and $11.7 million for the full year of 2018 related to its name change to Bank OZK and related strategic rebranding.

A survey of financial analysts had forecasted the Arkansas publicly-traded concern to report fourth quarter profits of 83 cents per share on revenue of $245.9 million, according to Thomson Reuters. For the full year of 2018, net income totaled $417.1 million or $3.24 per share, a 1.1% decrease from net income of $421.9 million, or $3.35 per share, for the full year of 2017. Yearly revenue was just short of $1 billion at $999.2 million, up nearly 30% from 2017.

Longtime Bank OZK Chairman and CEO George Gleason said the fourth quarter results represented the bank’s most profitable quarter of the year and an annualized return on average assets of 2.04%. He said the strong fourth quarter and yearly results puts the company in a strong position entering 2019.

“For the full year of 2018, our net income was $417.1 million and our return on average assets was 1.90%. Our strong net income in 2018 resulted in meaningful increases in our already strong risked-based capital ratios and allowed us to increase our cash dividends each quarter,” said Gleason. “In 2018 we completed our strategic rebranding and continued our efforts to enhance our team of industry and technology professionals, which is key to our competitive advantage. We believe we are well-positioned for success in 2019.”

Later, in a conference with Wall Street analysts and investors after the close of market, Gleason said the bank’s loan portfolio continued to perform well even after the disappointing third quarter results when the company noted “significant unusual items” within the company’s Real Estate Specialties Group (RSEG) portfolio, including two unrelated projects in South Carolina and North Carolina that incurred a total debt of $45.5 million.

“Our non-purchased loans grew $633 million during the quarter, and we had $1.1 billion of RESG originations, while continuing to adhere to our high standards of lending,” Gleason said during the conference call. “Our deep industry and market knowledge and relationships with our sponsors gives us a unique ability to win business based on our service and expertise without sacrificing our standards.”

The Bank OZK chairman added: “RESG continues to be a leader in commercial real estate finance nationally, and the discipline we demonstrated in 2018 suggests that we will continue to be a strong leader in that field.”

In a third quarter explainer, Bank OZK officials said the South Carolina credit was originated in 2007, a time when RESG was originating a higher proportion of its loans on stabilized and transitional properties, including a regional mall that suffered from both declining property performance and high-interest rates. Company officials said the project’s debt service coverage ratio fell below the bank’s benchmark as the project was negatively impacted by uncertainty related to Sears and J.C. Penney anchor tenants.

Bank officials, however, have not publicly disclosed how much of its RSEG portfolio is tied to aging mall locations anchored by Sears and J.C. Penney stores. In the third quarter, Sears filed for bankruptcy protection and announced plans to close hundreds of stores. Rival J.C. Penney has also shuttered more than 130 mall locations over the last 18 months as the ailing brick-and-mortar retailer seeks to stay afloat.

Still, Bank OZK saw near-across the board improvements in the fourth quarter among its key financial metrics. Deposits were $17.94 billion for the period ended Dec. 31, a 4.3% increase from $17.19 billion in the same period a year ago. Total assets grew by 5.2% to $22.39 billion in the fourth quarter of 2018, compared to $21.28 billion in December 2017.

Net interest income for the fourth quarter of 2018 was $228.4 million, a 6.3% increase from $214.8 million for the fourth quarter of 2017. Non-interest income for the fourth quarter of 2018 decreased 8.8% to $27.6 million compared to $30.2 million for the fourth quarter of 2017. Non-interest income for the full year of 2018 decreased 13% to $107.8 million compared to $123.9 million for the full year of 2017.

Total loans, including purchased loans, were $17.12 billion for the fourth quarter of 2018, a 6.7% increase from $16.04 billion a year ago. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $15.07 billion at the end of the three-month period, an 18.4% increase from $12.73 billion in the fourth quarter of 2017. Purchased loans, which consist of loans acquired in previous acquisitions, were $2.04 billion for the quarter, a 38.2% decrease from $3.31 billion at the close of 2017.

Common stockholders’ equity was $3.77 billion in the fourth quarter, an 8.9% increase from $3.46 billion compared to a year ago. Tangible common stockholders’ equity rose 11.7% to $3.07 billion, up from $2.75 billion at December 31, 2017.

Bank OZK is expected to move into its new headquarters in west Little Rock in 2019, where it conducts operations through 253 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.

At the close of business Thursday, the Arkansas bank’s stock ended up 15 cents at $27.60. In after-hours trading on the Nasdaq stock exchange, Bank OZK was up nearly 15%, or $4 at $31.60 per share. In the past year, the Arkansas bank’s shares have hit a low at $21.02 and a 52-week high of $53.70.

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