Bank OZK posts record annual earnings

Little Rock-based Bank OZK on Thursday (Jan. 20) reported higher net income for the quarter and the year as its real estate services group (RESG) performed extremely well in multiple markets across the company’s large U.S. footprint.

For the fourth quarter, Bank OZK net income was $149.76 million, a 24.3% increase from $120.51 million a year ago. Diluted earnings per common share for the fourth quarter of 2021 were a quarterly record $1.17, a 25.8% increase from $0.93 for the fourth quarter of 2020.

For the full year of 2021, net income for the bank was a record $579 million, a 98.4% increase from $291.9 million for the full year of 2020. Diluted earnings per common share for the full year of 2021 were a record $4.47, a 97.8% increase from $2.26 for the full year of 2020.

“We are pleased to report our excellent results for the fourth quarter and full year of 2021 – results that were record setting in many respects. We were particularly pleased to report our highest ever level of quarterly RESG loan originations, as organic growth is an important component of our long-term strategy to increase shareholder value. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the future,” said George Gleason, Bank OZK chairman and CEO.

Financial highlights for the year included:

• Total loans were $18.31 billion at Dec. 31, 2021, a 4.7% decrease from $19.21 billion at Dec. 31, 2020.
• Deposits were $20.21 billion at Dec. 31, 2021, a 5.8% decrease from $21.45 billion at Dec. 31, 2020.
• Total assets were $26.53 billion at Dec. 31, 2021, a 2.3% decrease from $27.16 billion at Dec. 31, 2020.

An improving economy and credit conditions resulted in Bank OZK shrinking its provision for credit losses by $8 million in the quarter and $77.9 million for the full year to $289 million as of December 31, 2021.

Net interest income, Bank OZK’s largest category of revenue, also entered record territory. Net interest income for the fourth quarter of 2021 was a record $266.4 million, a $28.8 million, or 12.1%, increase from the fourth quarter of 2020.

“Our net interest income for the quarter just ended benefitted from unusually high levels of minimum interest and other interest income from loan repayments and short-term extensions, favorable levels of accretion income from collections on previously charged-off and non-accrual purchased loans, recognition of net deferred fees on loans originated under the Small Business Administration’s Paycheck Protection Program that received forgiveness or paid off, and reductions in our COIBD,” Bank OZK said in a management note.

Bank leaders were optimistic about opportunities in its real estate division.

“We expect RESG loan repayments in 2022 will be substantial and will probably exceed the record level of 2021. Notwithstanding the headwinds from expected loan repayments, we expect to achieve positive loan growth for RESG and total loans during 2022. The level of loan repayments may vary substantially from quarter to quarter and may have an outsized impact in one or more quarters,” the bank said.

Bank OZK (NASDAQ: OZK) shares closed trading Thursday at $47.23. The company’s stock has traded as low as $33.90 per share and as high as $51.39 over the past year.