Bank OZK’s third-quarter net profit drops, revenue rises 9.65%

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

Net profit for the quarter was $128.3 million, below the $130.3 million for the same quarter of 2021. Revenue for the quarter was $352.45 million, up 9.65% from compared to the same quarter of 2021 and well above the consensus estimate of $304.83 million.

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

Bank officials noted in the earnings report released Thursday (October 20) after markets closed that higher provisions for credit losses were reducing net income.

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

George Gleason, the bank’s president and chief executive, said the bank’s real estate specialty group helped boost revenue.

“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 issuances and solid growth in loans funded by RESG, as well as contributions significant to the growth of our community banking and other lending teams,” Gleason noted in a statement. “This reflects our dual objectives of both organic loan growth and increased portfolio diversification. Our strong capital and liquidity, disciplined credit culture and outstanding team position us well for the current and longer-term environment.

Here are other financial measures noted in the results report.
• In the first nine months of 2022, the bank spent $326.7 million to repurchase 7.8 million common shares.
• Total assets as of September 30 were $26.232 billion, compared to $26.143 billion as of September 30, 2021.
• Total loans as of September 30 were $19.513 billion, compared to $18.305 billion as of September 30, 2021.
• Total deposits as of September 30 were $20.401 billion, compared to $20.102 billion as of September 30, 2021.
• The bank’s return on assets, a closely watched measure in the banking industry, was 1.99% as of September 30, down from 2.15% as of September 30, 2021.

Bank OZK was established in 1903 and conducts banking operations with over 240 offices in Arkansas, California, Florida, Georgia, Mississippi, New York, North Carolina and Texas. Shares of the bank (NASDAQ:OZK) closed Thursday at $41.37, down $2.02. Over the past 52 weeks, the stock price has fluctuated between $51.39 and $34.79.

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