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Bank OZK (NASDAQ:) reported its Q3 2023 earnings on Friday, highlighting a year-over-year increase of 38% in earnings per share (EPS) which stood at $1.49, surpassing the Zacks Consensus Estimate of $1.44. The net income available to common shareholders rose by 32.3% to reach $169.7 million, beating the estimate of $160.6 million. This surge was driven by an improvement in net interest income (NII) due to higher rates and robust loan and deposit balances.
Non-interest income for the bank declined by 11.7% to $25.7 million due to reduced service charges on deposit accounts and other fees. Meanwhile, non-interest expenses rose by 11.5% to $129 million, attributable to an increase in all cost components except net occupancy and equipment costs.
As of September 30, 2023, the bank’s total loans were at $25.3 billion, up by 7.3%, and total deposits were at $25.5 billion, up by 6.5%. The bank’s credit quality deteriorated as the ratio of net charge-offs to average total loans increased from 0.09% to 0.15%. The provision for credit losses rose by 10.7% from the year-ago quarter to $44 million, due to better-than-expected loan growth and an anticipated economic slowdown.
The bank’s efficiency ratio improved to 32.60%, down from 35.50% in the prior year quarter, indicating enhanced profitability. Profitability ratios also improved with return on average assets reaching 2.13%, up from 1.97%, and return on average common equity increasing to 14.81%, up from 11.85%.
Bank OZK did not perform any share repurchase during the reported quarter, despite management’s aggressive approach to share buybacks, according to InvestingPro Tips. The bank’s strong loan balance, branch consolidation efforts, and higher rates are projected to continue bolstering revenues. Nevertheless, rising operating expenses and credit costs remain significant concerns for the bank moving forward.
In terms of real-time metrics, InvestingPro Data shows that Bank OZK has a market cap of 4010M USD and a P/E ratio of 6.69, which is relatively low compared to near-term earnings growth. The bank’s revenue for LTM2023.Q2 stands at 1272.05M USD, reflecting a growth of 12.66%. The bank’s dividend yield as of Y2023.D293 is 4.18%, and it has maintained dividend payments for 27 consecutive years, a testament to its financial stability and commitment to shareholder returns.
These metrics, along with the bank’s continued revenue growth and consistent increase in earnings per share, as highlighted by InvestingPro Tips, suggest that Bank OZK is positioned to remain profitable despite the challenges ahead. For more insights into the bank’s performance and further investing tips, visit InvestingPro. With over 13 additional tips listed, InvestingPro offers a comprehensive guide to making informed investment decisions.
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