OZK Bank posts sharp rise in profit after good quarter

OZK Bank reported strong fourth-quarter results on Thursday, beating industry analysts’ forecasts with double-digit growth in net profit and earnings per share and setting a loan origination record for its commercial real estate portfolio.

Little Rock Bank reported net income up 24.3% for the quarter ended Dec. 31. Net income was $149.8 million, compared to $120.5 million in the same period a year ago.

Similarly, earnings per share jumped 25.8% to $1.17 — a quarterly high — from 93 cents a year ago. Wall Street analysts were expecting earnings per share of 98 cents for the quarter, according to Zacks Investment Research.

As with the broader industry, Bank OZK reported excess liquidity that has accumulated since the start of the pandemic in March 2020. Bank officials noted, in management comments filed with the announcement results, that the company has several options to increase shareholder value.

“Our combination of strong earnings and strong capital provides us with great opportunity to increase shareholder value,” the bank said in management comments. “Options to deploy our excess capital include organic loan growth, adding new lines of business, continuing to increase our common stock dividend, financially attractive acquisitions in cash, or a combination of cash and shares and continued share buybacks under our share buyback program.”

During the quarter, OZK repurchased 3.4 million shares worth $156.4 million.

For the full year, the bank reported record net income of $579 million, up 98.4% from the $291.9 million reported in 2020. Earnings per share were also down. a record high of $4.47 – beating analyst forecasts of $4.28 – and up 97.8% from the $2.26 per share reported in 2020.

OZK also set a record for net interest income for the quarter, reaching $266.4 million, a 12.1% increase from $237.6 million in the same period last year. Net interest income for the year increased 11.4% to $989.7 million from $888.6 million in 2020.

OZK Bank also continues to increase its net interest margin, a move that has challenged other banks. Net interest margin increased to 4.41% for the quarter from 3.88% a year ago. For the year, the net interest margin climbed to 4.09% from 3.81% in 2020.

In 2020, banks began to increase their loan loss provisions to meet new regulatory obligations and also to prepare for the uncertainty created by the raging pandemic.

On Thursday, OZK Bank said “improving economic conditions and an improving outlook for the U.S. economy” led it to record negative provisions for credit losses of $8 million in the fourth quarter and $77.9 million for the full 12 months. The bank had set aside $217.4 million in loan loss provisions as of Dec. 31.

“We built our [loan] portfolio with the goal of it performing well in adverse economic conditions, and that discipline has shown through in our results,” said management’s comments.

Lending activity is gaining momentum at OZK and the bank reported that its Real Estate Specialty Group (RESG), which focuses on commercial real estate and major land development projects, hit a new record high loans in the fourth quarter, reaching $2.99 ​​billion. This compares to creations of $1.77 billion in the same period last year.

“We are very pleased with the work done by our RESG team to find good loan opportunities in an extremely competitive environment,” management noted. “We currently have a strong pipeline, which makes us cautiously optimistic about our potential loan origination volume in 2022.”

In other key metrics, OZK reported that total loans fell 4.7% to $18.3 billion from $19.2 billion in the same quarter a year ago. Deposits also fell, falling 5.8% to $20.2 billion from $21.5 billion in the fourth quarter of 2020. Total assets fell 2.3% from 27.2 billion to $26.5 billion.

Bank OZK has 240 branches in Arkansas, California, Florida, Georgia, Mississippi, New York, North Carolina and Texas.

Bank executives are scheduled to hold a conference call at 10 a.m. today to discuss fourth quarter results. The number to dial for the call is (844)-818-5110. A recorded version of the call will be available for one week and can be viewed at (855)-859-2056 or through the company’s website at ir.ozk.com.

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