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Bank OZK (OZK) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
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Bank OZK’s (OZK - Free Report) first-quarter 2021 adjusted earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 87 cents. In the year-earlier quarter, the company recorded earnings per share of 9 cents.
Results were aided by an improvement in revenues, partly offset by higher expenses. Moreover, the company recorded provision benefits in the quarter, which was a major positive.
Notably, the reported quarter’s results excluded pretax gains from the sale of South Carolina branches and tax-exempt bank-owned life insurance death benefits. After considering these, net income available to common shareholders was $148.4 million or $1.14 per share, up from $11.9 million or 9 cents per share reported in the year-ago quarter.
Revenues Improve, Expenses Rise
Net revenues were $266.8 million, up 12.3% year over year. Also, the top line outpaced the Zacks Consensus Estimate of $258.4 million.
Net interest income was $234.6 million, up 11.9% year over year. Net interest margin, on a fully-taxable equivalent basis, declined 10 basis points (bps) to 3.86%.
Non-interest income was $32.1 million, up 16% on a year-over-year basis. The rise was driven primarily by an improvement in gains on sales of other assets.
Non-interest expenses were $106.1 million, up 2.5% year over year. The rise was due to an increase in salaries and employee benefit costs, and net occupancy and equipment costs.
Bank OZK’s efficiency ratio was 39.57%, down from 43.35% in the prior-year quarter. A fall in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2021, net loans were $18.4 billion, down from $18.9 billion recorded as of Dec 31, 2020. As of the same date, total deposits amounted to $21.3 billion, down from $21.5 billion.
Credit Quality: A Mixed Bag
The ratio of non-performing loans, as a percentage of total loans, rose 9 bps year over year to 0.25% as of Mar 31, 2021.
However, in the reported quarter, the company recorded a provision benefit of $31.6 million against provision for credit losses of $117.7 million in the year-ago quarter. Annualized net charge-off ratio to average total loans decreased 3 bps year over year to 0.07%.
Profitability Ratios Improve
At the end of the first quarter, return on average assets was 2.23%, up from 0.20% in the year-earlier quarter. Return on average common equity was 13.97%, up from 1.16%.
Our Take
Bank OZK’s steadily improving loan balances along with its growth initiatives are expected to support revenues. However, owing to near-zero interest rates, the company’s margins are expected to remain under pressure in the near term.
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2021 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 96 cents. Also, the bottom line surged significantly from 42 cents earned in the prior-year quarter.
Zions Bancorporation’s (ZION - Free Report) first-quarter 2021 net earnings per share of $1.90 surpassed the Zacks Consensus Estimate of $1.15. Also, the bottom line marks a significant improvement from 4 cents earned in the year-ago quarter.
Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2021 (ended Mar 31) earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Further, the figure reflects a year-over-year rise of 19.1%.
Zacks Top 10 Stocks for 2021
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Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Bank OZK (OZK) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Bank OZK’s (OZK - Free Report) first-quarter 2021 adjusted earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 87 cents. In the year-earlier quarter, the company recorded earnings per share of 9 cents.
Results were aided by an improvement in revenues, partly offset by higher expenses. Moreover, the company recorded provision benefits in the quarter, which was a major positive.
Notably, the reported quarter’s results excluded pretax gains from the sale of South Carolina branches and tax-exempt bank-owned life insurance death benefits. After considering these, net income available to common shareholders was $148.4 million or $1.14 per share, up from $11.9 million or 9 cents per share reported in the year-ago quarter.
Revenues Improve, Expenses Rise
Net revenues were $266.8 million, up 12.3% year over year. Also, the top line outpaced the Zacks Consensus Estimate of $258.4 million.
Net interest income was $234.6 million, up 11.9% year over year. Net interest margin, on a fully-taxable equivalent basis, declined 10 basis points (bps) to 3.86%.
Non-interest income was $32.1 million, up 16% on a year-over-year basis. The rise was driven primarily by an improvement in gains on sales of other assets.
Non-interest expenses were $106.1 million, up 2.5% year over year. The rise was due to an increase in salaries and employee benefit costs, and net occupancy and equipment costs.
Bank OZK’s efficiency ratio was 39.57%, down from 43.35% in the prior-year quarter. A fall in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2021, net loans were $18.4 billion, down from $18.9 billion recorded as of Dec 31, 2020. As of the same date, total deposits amounted to $21.3 billion, down from $21.5 billion.
Credit Quality: A Mixed Bag
The ratio of non-performing loans, as a percentage of total loans, rose 9 bps year over year to 0.25% as of Mar 31, 2021.
However, in the reported quarter, the company recorded a provision benefit of $31.6 million against provision for credit losses of $117.7 million in the year-ago quarter. Annualized net charge-off ratio to average total loans decreased 3 bps year over year to 0.07%.
Profitability Ratios Improve
At the end of the first quarter, return on average assets was 2.23%, up from 0.20% in the year-earlier quarter. Return on average common equity was 13.97%, up from 1.16%.
Our Take
Bank OZK’s steadily improving loan balances along with its growth initiatives are expected to support revenues. However, owing to near-zero interest rates, the company’s margins are expected to remain under pressure in the near term.
Bank OZK Price, Consensus and EPS Surprise
Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote
Bank OZK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) first-quarter 2021 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 96 cents. Also, the bottom line surged significantly from 42 cents earned in the prior-year quarter.
Zions Bancorporation’s (ZION - Free Report) first-quarter 2021 net earnings per share of $1.90 surpassed the Zacks Consensus Estimate of $1.15. Also, the bottom line marks a significant improvement from 4 cents earned in the year-ago quarter.
Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2021 (ended Mar 31) earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 49 cents. Further, the figure reflects a year-over-year rise of 19.1%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>