Little Rock-based Bank OZK posted third quarter net income of $109.253 million, better than last year’s third quarter profit of $103.891 million, with income and revenue also beating market expectations. The company posted the gain even with a $7.2 million reduction during the quarter for credit losses.
The quarterly net income of 84 cents per share was well ahead of the consensus estimate of 58 cents per share, according to the earnings report posted Thursday (Oct. 22) after the markets closed.
Third quarter revenue was $251.333 million, better than the $245.226 million during the same quarter of 2019 and above the consensus estimate of $244.3 million.
Credit losses partially related to COVID-19 impacts on the economy resulted in significant credit loss allowances during the quarter and the first nine months of 2020.
“The COVID-19 pandemic significantly affected the global economy in the first nine months of 2020. The sudden and severe economic downturn, combined with the implementation of the current expected credit losses (“CECL”) method to calculate the Bank’s allowance for credit losses (“ACL”) and uncertain future economic projections, resulted in the Bank incurring provision for credit losses of $7.2 million in the third quarter and $196.9 million in the first nine months of 2020, resulting in a total ACL of $377.3 million at September 30, 2020,” the company noted in the earnings report.
Net income in the first nine months of the year was $171.385 million, well below the $325.1 million during the same period of 2019 – a decline related primarily to the credit loss allowance. Revenue during the first nine months of the year was $726.771 million, just below the $746.325 million during the same period in 2019.
Following are other key metrics in the third quarter earnings report.
• Total assets as of Sept. 30 were $26.888 billion, up compared with $23.555 billion at the same time in 2019.
• Total deposits as of Sept. 30 were $21.287 billion, up compared with $18.474 billion at the same time in 2019.
• Total loans were $19.36 billion as of Sept. 30, 2020, a 9.2% increase from $17.73 billion at Sept. 30, 2019.
• Non-purchased loans, which exclude loans acquired in previous acquisitions, were $18.42 billion as of Sept. 30, 2020, a 13% increase from $16.31 billion at Sept. 30, 2019. Purchased loans, which consist of loans acquired in previous acquisitions, were $940 million at Sept. 30, 2020, a 34.2% decrease from $1.43 billion at Sept. 30, 2019.
• Return on assets, a closely watched metric in the banking industry, was 0.9% as of Sept. 30, below the 1.92% reported Sept. 30, 2019.
Bank OZK has operations in more then 250 offices in Alabama, Arkansas, California, Florida, Georgia, Mississippi, New York, North Carolina, South Carolina and Texas. Bank shares (NASDAQ: OZK) closed Thursday at $24.08, up $1.13. During the past 52 weeks the share price has ranged between $31.76 and $14.20.