Bank OZK third quarter net income declines, revenue up 9.65%

Despite revenue gains driven in part by real estate sales, Little Rock-based Bank OZK posted a third quarter net income decline and missed the consensus estimate. Earnings per share of $1.08 in the third quarter missed the estimate of $1.17.

Net income in the quarter was $128.3 million, below the $130.3 million in the same quarter of 2021. Revenue in the quarter was $352.45 million, up 9.65% compared with the same quarter of 2021 and well above the consensus estimate of $304.83 million.

Net income in the first three quarters of 2022 was $388.7 million, down 9.4% from the $$429.2 million in the same period of 2021. Revenue in the first nine months of 2022 was $954.105 million, up 8.83% compared with the same period of 2021.

Bank officials noted in the earnings report posted Thursday (Oct. 20) after the markets closed, that higher provisions for credit losses reduced net income.

“The growth in both funded and unfunded loan balances during the quarter contributed to the higher provision for credit losses, which impacted net income. The Bank’s total allowance for credit losses (“ACL”) was $335.6 million at September 30, 2022,” the bank noted in the report.

George Gleason, bank chairman and CEO, said the bank’s Real Estate Specialties Group helped drive revenue higher.

“We are pleased to report our strong results for the third quarter of 2022. Our results were highlighted by our fourth consecutive quarter of record RESG loan originations and solid growth in RESG’s funded loans, along with meaningful contributions to growth from our Community Banking and other lending teams,” Gleason noted in a statement. “This reflects our dual focus on both organic loan growth and increased portfolio diversification. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the current environment and the longer term.”

Following are other financial metrics noted in the earnings report.
• During the first nine months of 2022, the bank spent $326.7 million to repurchase 7.8 million shares of its common stock.
• Total assets as of Sept. 30 were $26.232 billion, up from $26.143 billion as of Sept. 30, 2021.
• Total loans as of Sept. 30 were $19.513 billion, up from $18.305 billion as of Sept. 30, 2021.
• Total deposits as of Sept. 30 were $20.401 billion, up from $20.102 billion as of Sept. 30, 2021.
• The bank’s return on assets, a closely watched metric in the banking industry, was 1.99% as of Sept. 30, down from 2.15% as of Sept. 30, 2021.

Bank OZK was stablished in 1903 and conducts banking operations with more than 240 offices in Arkansas, California, Florida, Georgia, Mississippi, New York, North Carolina and Texas. The bank’s shares (NASDAQ: OZK) closed Thursday at $41.37, down $2.02. During the past 52 weeks the share price has ranged between $51.39 and $34.79.