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Bank OZK (OZK) Gains on Q4 Earnings Beat, Revenues Rise Y/Y
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Bank OZK’s (OZK - Free Report) shares gained 2.1% in after-market trading, following the release of its fourth-quarter and 2022 results. Quarterly earnings per share of $1.34 surpassed the Zacks Consensus Estimate by a penny. The bottom line reflects a rise of 14.5% from the year-earlier quarter.
Results were primarily aided by an increase in net interest income, driven by higher loan balances and rising rates. However, lower non-interest income, higher expenses and a rise in provision for credit losses were headwinds.
Net income available to common shareholders was $158.8 million, up 6.1% from the year-ago quarter.
For 2022, earnings per share of $4.54 surpassed the Zacks Consensus Estimate of $4.50. The bottom line reflects a rise of 1.6% from the prior year. Net income available to common shareholders was $547.5 million, down 5.4% year over year.
Revenues Improve, Expenses Rise
Quarterly net revenues were $360 million, which grew 21.6% year over year. The top line also beat the Zacks Consensus Estimate of $338.4 million.
For 2022, net revenues were $1.26 billion, which grew 13.7% year over year. The top line also beat the Zacks Consensus Estimate of $1.24 billion.
Quarterly net interest income was $332.5 million, jumping 24.8% year over year. Net interest margin, on a fully-taxable-equivalent basis, expanded 105 basis points (bps) to 5.46%.
Non-interest income was $27.5 million, which declined 7.2% from the prior-year quarter. The decline was primarily due to a fall in trust income, gains on sales of other assets, death benefits and other income.
Non-interest expenses were $119 million, up 8.1%. The rise was due to an increase in all cost components.
Bank OZK’s efficiency ratio was 32.84%, down from 37.06% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2022, total loans were $20.8 billion, up 6.5% from the end of September 2022. As of the same date, total deposits amounted to $21.5 billion, up from $20.4 billion as of Sep 30, 2022.
Credit Quality Worsens
The ratio of non-performing loans, as a percentage of total loans, expanded 3 bps year over year to 0.22% as of Dec 31, 2022. Net charge-offs to average total loans were 0.06%, up 2 bps from the prior-year quarter.
In the reported quarter, the company recorded a provision for credit losses of $32.5 million against a provision benefit of $8 million in the year-ago quarter.
Profitability Ratios Solid
At the end of the fourth quarter, the return on average assets was 2.35%, up from 2.25% in the year-earlier quarter. Return on average common equity was 14.76%, up from 13.08%.
Share Repurchase Update
In 2022, Bank OZK repurchased 8.37 million shares for $350 million.
Our Take
Bank OZK’s solid loan balance, business restructuring and branch consolidation efforts, and higher rates are expected to continue aiding revenues. However, elevated operating expenses and rising credit costs are major near-term concerns.
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
HWC’s results benefited from higher net interest income, supported by a rise in loan balance and increasing interest rates. However, lower non-interest income mainly due to higher mortgage rates was an undermining factor. Higher expenses and a rise in provisions were other concerns for HWC.
The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2022 adjusted earnings per share of $3.49 lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
PNC’s results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds for PNC.
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Bank OZK (OZK) Gains on Q4 Earnings Beat, Revenues Rise Y/Y
Bank OZK’s (OZK - Free Report) shares gained 2.1% in after-market trading, following the release of its fourth-quarter and 2022 results. Quarterly earnings per share of $1.34 surpassed the Zacks Consensus Estimate by a penny. The bottom line reflects a rise of 14.5% from the year-earlier quarter.
Results were primarily aided by an increase in net interest income, driven by higher loan balances and rising rates. However, lower non-interest income, higher expenses and a rise in provision for credit losses were headwinds.
Net income available to common shareholders was $158.8 million, up 6.1% from the year-ago quarter.
For 2022, earnings per share of $4.54 surpassed the Zacks Consensus Estimate of $4.50. The bottom line reflects a rise of 1.6% from the prior year. Net income available to common shareholders was $547.5 million, down 5.4% year over year.
Revenues Improve, Expenses Rise
Quarterly net revenues were $360 million, which grew 21.6% year over year. The top line also beat the Zacks Consensus Estimate of $338.4 million.
For 2022, net revenues were $1.26 billion, which grew 13.7% year over year. The top line also beat the Zacks Consensus Estimate of $1.24 billion.
Quarterly net interest income was $332.5 million, jumping 24.8% year over year. Net interest margin, on a fully-taxable-equivalent basis, expanded 105 basis points (bps) to 5.46%.
Non-interest income was $27.5 million, which declined 7.2% from the prior-year quarter. The decline was primarily due to a fall in trust income, gains on sales of other assets, death benefits and other income.
Non-interest expenses were $119 million, up 8.1%. The rise was due to an increase in all cost components.
Bank OZK’s efficiency ratio was 32.84%, down from 37.06% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Dec 31, 2022, total loans were $20.8 billion, up 6.5% from the end of September 2022. As of the same date, total deposits amounted to $21.5 billion, up from $20.4 billion as of Sep 30, 2022.
Credit Quality Worsens
The ratio of non-performing loans, as a percentage of total loans, expanded 3 bps year over year to 0.22% as of Dec 31, 2022. Net charge-offs to average total loans were 0.06%, up 2 bps from the prior-year quarter.
In the reported quarter, the company recorded a provision for credit losses of $32.5 million against a provision benefit of $8 million in the year-ago quarter.
Profitability Ratios Solid
At the end of the fourth quarter, the return on average assets was 2.35%, up from 2.25% in the year-earlier quarter. Return on average common equity was 14.76%, up from 13.08%.
Share Repurchase Update
In 2022, Bank OZK repurchased 8.37 million shares for $350 million.
Our Take
Bank OZK’s solid loan balance, business restructuring and branch consolidation efforts, and higher rates are expected to continue aiding revenues. However, elevated operating expenses and rising credit costs are major near-term concerns.
Bank OZK Price, Consensus and EPS Surprise
Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote
Bank OZK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Hancock Whitney Corporation’s (HWC - Free Report) fourth-quarter 2022 earnings of $1.65 per share surpassed the Zacks Consensus Estimate of $1.63. The bottom line rose 6.5% from the prior-year quarter’s earnings of $1.55.
HWC’s results benefited from higher net interest income, supported by a rise in loan balance and increasing interest rates. However, lower non-interest income mainly due to higher mortgage rates was an undermining factor. Higher expenses and a rise in provisions were other concerns for HWC.
The PNC Financial Services Group, Inc.’s (PNC - Free Report) fourth-quarter 2022 adjusted earnings per share of $3.49 lagged the Zacks Consensus Estimate of $3.95. Also, the bottom line declined 5.2% year over year.
PNC’s results were primarily hurt by a decline in non-interest income and higher provisions. However, an increase in net interest income, supported by higher rates and loan growth, and a decline in expenses were tailwinds for PNC.