We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bank OZK (OZK) Q3 Earnings Lag Estimates, Expenses Decline
Read MoreHide Full Article
Bank OZK’s (OZK - Free Report) third-quarter 2019 earnings per share of 81 cents lagged the Zacks Consensus Estimate of 83 cents. The bottom line was higher than the prior-year quarter figure of 58 cents.
Results were adversely impacted by marginally lower net interest income. However, rise in non-interest income, lower operating expenses and a decline in provisions supported results to some extent. Moreover, growth in loans and deposit balances was a positive for the company.
Net income available to common shareholders was $103.9 million, up 40.1% from the year-ago quarter.
Revenues Improve Marginally, Costs Decline
Net revenues were $245.2 million, up marginally year over year. However, the figure missed the Zacks Consensus Estimate of $250.1 million.
Net interest income was $218.8 million, down marginally on a year-over-year basis. Net interest margin, on a fully-taxable equivalent basis, declined 21 basis points (bps) to 4.26%.
Non-interest income totaled $26.4 million, up 9.6% from the year-ago quarter. The rise was due to an increase in almost all components, except for other income from purchased loans, and loan service, maintenance and other fees. The quarter also included gains on sale of other assets.
Non-interest expenses were $100.9 million, down 2% year over year. The decline resulted from lower other operating expenses.
Bank OZK’s efficiency ratio was 40.98%, down from 41.87% in the prior-year quarter. A fall in efficiency ratio indicates higher profitability.
As of Sep 30, 2019, total loans were $17.73 billion, up 1.4% on a sequential basis. As of the same date, total deposits amounted to $18.44 billion, up 1.4% from the prior quarter.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, decreased 6 bps year over year to 0.17% as of Sep 30, 2019. Further, annualized net charge off ratio to average total loans declined from 1.14% to 0.12%.
Moreover, provision for loan losses declined 81.3% from the year-earlier quarter to $7.9 million.
Profitability Ratios Improve
At the end of the third quarter, return on average assets was 1.81%, up from 1.33% in the year-earlier quarter. Moreover, return on average common equity rose to 10.22% from 8.07%.
Our Viewpoint
Bank OZK is well-poised for organic growth on the back of continued improvement in loan demand. However, declining net interest margin mainly due to reduction of the high-yielding purchased loans portfolio remains a major near-term concern. Lower margins are expected to hurt the company's top-line growth.
Among other banks, BankUnited, Inc (BKU - Free Report) is scheduled to report quarterly results on Oct 23. Huntington Bancshares Incorporated (HBAN - Free Report) and Associated Banc-Corp (ASB - Free Report) are slated to report results on Oct 24.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Bank OZK (OZK) Q3 Earnings Lag Estimates, Expenses Decline
Bank OZK’s (OZK - Free Report) third-quarter 2019 earnings per share of 81 cents lagged the Zacks Consensus Estimate of 83 cents. The bottom line was higher than the prior-year quarter figure of 58 cents.
Results were adversely impacted by marginally lower net interest income. However, rise in non-interest income, lower operating expenses and a decline in provisions supported results to some extent. Moreover, growth in loans and deposit balances was a positive for the company.
Net income available to common shareholders was $103.9 million, up 40.1% from the year-ago quarter.
Revenues Improve Marginally, Costs Decline
Net revenues were $245.2 million, up marginally year over year. However, the figure missed the Zacks Consensus Estimate of $250.1 million.
Net interest income was $218.8 million, down marginally on a year-over-year basis. Net interest margin, on a fully-taxable equivalent basis, declined 21 basis points (bps) to 4.26%.
Non-interest income totaled $26.4 million, up 9.6% from the year-ago quarter. The rise was due to an increase in almost all components, except for other income from purchased loans, and loan service, maintenance and other fees. The quarter also included gains on sale of other assets.
Non-interest expenses were $100.9 million, down 2% year over year. The decline resulted from lower other operating expenses.
Bank OZK’s efficiency ratio was 40.98%, down from 41.87% in the prior-year quarter. A fall in efficiency ratio indicates higher profitability.
As of Sep 30, 2019, total loans were $17.73 billion, up 1.4% on a sequential basis. As of the same date, total deposits amounted to $18.44 billion, up 1.4% from the prior quarter.
Credit Quality Improves
The ratio of non-performing loans, as a percentage of total loans, decreased 6 bps year over year to 0.17% as of Sep 30, 2019. Further, annualized net charge off ratio to average total loans declined from 1.14% to 0.12%.
Moreover, provision for loan losses declined 81.3% from the year-earlier quarter to $7.9 million.
Profitability Ratios Improve
At the end of the third quarter, return on average assets was 1.81%, up from 1.33% in the year-earlier quarter. Moreover, return on average common equity rose to 10.22% from 8.07%.
Our Viewpoint
Bank OZK is well-poised for organic growth on the back of continued improvement in loan demand. However, declining net interest margin mainly due to reduction of the high-yielding purchased loans portfolio remains a major near-term concern. Lower margins are expected to hurt the company's top-line growth.
Bank OZK Price, Consensus and EPS Surprise
Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote
Bank OZK currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Banks
Among other banks, BankUnited, Inc (BKU - Free Report) is scheduled to report quarterly results on Oct 23. Huntington Bancshares Incorporated (HBAN - Free Report) and Associated Banc-Corp (ASB - Free Report) are slated to report results on Oct 24.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>