Postautor: slayer74 » 21 paź 2023 17:28
Bank OZK Reports Q3 Earnings, Beats Estimates Despite Rising Expenses
Bank OZK (NASDAQ:OZK) reported a robust third-quarter financial performance for 2023, with earnings per share (EPS) of $1.49, surpassing the Zacks Consensus Estimate of $1.44 and marking a 38% year-on-year increase. According to InvestingPro data, the bank's EPS (Continuing Operations) for the last twelve months stands at a solid $5.31. The rise in EPS was primarily driven by strong loan growth, which led to an increase in net interest income (NII) despite a lower net interest margin (NIM) of 5.05% due to rising deposit costs.
The bank's net income available for common shareholders increased by 32.3% year-on-year to $169.7 million. Net revenues saw a 21.4% rise from the previous year, reaching $393 million and beating the consensus estimate of $384.41 million. This aligns with an InvestingPro Tip that highlights the bank's accelerating revenue growth. In fact, InvestingPro data shows a revenue growth of 21.75% for the second quarter of 2023.
However, non-interest income fell by 11.7% to $25.7 million, mainly due to lower service charges on deposit accounts and other fees. Non-interest expenses also climbed by 11.5% to $129 million due to an increase in all cost components except net occupancy and equipment costs.
The bank's efficiency ratio improved from 35.50% to 32.60%, indicating enhanced profitability. As of September 30, 2023, total loans stood at $25.3 billion, up by 7.3% sequentially, while total deposits grew by 6.5% to $25.5 billion.
However, credit quality deteriorated with net charge-offs to average total loans increasing from 0.09% to 0.15%. The provision for credit losses rose by 10.7% to $44 million due to strong loan growth and anticipated economic slowdown, causing the ratio of non-performing loans to total loans to rise by 27 basis points to 0.40%.
Profitability ratios improved, with return on average assets increasing to 2.13% and return on average common equity rising to 14.81%. According to InvestingPro data, the bank's return on assets for the last twelve months stands at 2.25%. Bank OZK did not repurchase any shares during the quarter, a move that contradicts an InvestingPro Tip that states the bank's management has been aggressively buying back shares.
The bank's strong loan balance, branch consolidation efforts, and higher rates are expected to continue supporting revenues. However, escalating operating expenses and credit costs remain significant near-term concerns. The company currently holds a Zacks Rank #3 (Hold). Despite the recent price fall, InvestingPro's fair value estimate for Bank OZK stands at $49.06, suggesting a potential upside for investors. For more insights like these, you can access additional tips on the InvestingPro platform, which currently lists 13 other tips for Bank OZK.
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