Credit loss provisions pare Bank OZK net income in Q2

by Roby Brock ([email protected]) 971 views 

The new Bank OZK headquarters in west Little Rock.

Little Rock-based Bank OZK, which is celebrating its 25th anniversary as a publicly traded company, announced lower profits on Thursday (July 21) versus a year ago, primarily due to an increase in its allowance for credit losses.

Banks typically boost their credit loss reserves when economic conditions such as rising interest rates or recessionary pressures bring additional risk to loan portfolios.

Bank OZK reported second quarter net income of $132.4 million, a 12% decrease from one year ago when the financial institution posted net income of $150.5 million in the second quarter. Diluted earnings per common share for the quarter ended June 30, 2022 were $1.10, a 5.2% decrease from $1.16 for the quarter ended June 30, 2021.

The bank’s provision for credit losses was $7.0 million for the second quarter and $11.2 million for the first six months of 2022 compared to negative provision for credit losses of $30.9 million for the second quarter and $62.5 million for the first six months of 2021.

“We are pleased to report our excellent results for the second quarter of 2022,” said Bank OZK Chairman and CEO George Gleason. “Our results were highlighted by our third consecutive quarter of record RESG [real estate services group] loan originations and solid contributions from community banking and other lending teams, reflecting the importance of organic growth and increased portfolio diversification in our long-term strategy. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the future.”

Other quarterly financial highlights included:

  • Total loans were $18.74 billion at June 30, 2022, a 2.6% increase from $18.27 billion at June 30, 2021;
  • Deposits were $19.98 billion at June 30, 2022, a 3.5% decrease from $20.71 billion at June 30, 2021; and
  • Total assets were $25.92 billion at June 30, 2022, a 2.6% decrease from $26.61 billion at June 30, 2021.

Shares of Bank OZK (NASDAQ: OZK) closed Thursday at $39.48. The company’s stock has traded between a 52-week low of $34.79 and a 52-week high of $51.39.