Bank OZK sees net income slip in Q1

Little Rock-based Bank OZK reported Thursday (April 21) first-quarter net income of $128 million, a 13.7% decrease from one year ago. Diluted earnings per common share for the first quarter of 2022 were $1.02, a 10.5% decrease from $1.14 for the first quarter of 2021.

“We are pleased to report our excellent results for the first quarter of 2022. Our results were highlighted by our second consecutive quarter of record RESG [real estate services group] loan originations, reflecting the importance of organic growth in our long-term strategy. 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.

Key metrics for the quarter include:

• Non-interest income for the first quarter of 2022 included gains on sales of other assets of $7.0 million, of which $1.8 million was a gain from the sale of the Bank’s Magnolia, Arkansas branch.
• Interest income topped $262,371, down 0.6% from $264,064 one year ago.
• Total loans were $18.93 billion on March 31, 2022, a 1.2% increase from $18.72 billion on March 31, 2021.
• Deposits were $20.33 billion on March 31, 2022, a 4.5% decrease from $21.30 billion on March 31, 2021.
• Total assets were $26.56 billion on March 31, 2022, a 2.6% decrease from $27.28 billion from one year ago.

The bank’s provision for credit losses was $4.2 million for the first quarter of 2022 compared to a negative provision for credit losses of $31.6 million for the first quarter of 2021. Its total allowance for credit losses was $293.5 million on March 31, 2022.

“The prospect for further increases in the Fed funds target rate, coupled with our substantial volume of variable rate loans, should have a positive impact on our non-purchased loan yields. However, we have noted for several quarters that most of our recently originated loans have had initial contractual interest rates that were lower than our current yield on non-purchased loans. This will tend to offset, to some degree, our benefit from the impact of increases in the Fed funds target rate. The actual impact of these counteracting forces on our future non-purchased loan yields will depend on a variety of factors, including the speed and magnitude of any increases in the Fed funds target rate and the competitive environment,” the bank said in a statement.