Bank OZK’s fourth-quarter 2023 earnings per share of $1.50 exceeded the Zacks Consensus Estimate of $1.46, marking an increase of 11.9% from the year-earlier quarter. The results were positively impacted by higher net interest income and a surge in non-interest income.
The net income available to common shareholders rose to $171.1 million, up 7.7% from the year-ago quarter. The full-year earnings of $5.87 per share also beat the consensus estimate and experienced a substantial increase of 29.3% from the previous year.
Strong Revenue Growth
Bank OZK reported quarterly net revenues of $407.6 million, representing a 16.4% increase year over year. The full-year net revenues surged by 24.3% to $1.56 billion, exceeding the consensus estimate.
The company’s net interest income grew by 11.4% to $370.5 million, driven by higher rates and improved loan and deposit balance. However, the net interest margin declined by 64 basis points to 4.82%, reflecting substantially higher-than-expected deposit costs.
Concerns on Expenses and Credit Quality
Non-interest expenses were up 21.8% to $145 million, which included an FDIC special assessment charge. Additionally, the provision for credit losses increased by 34.8% from the year-ago quarter, indicating a worrying trend in credit quality.
Furthermore, the return on average assets and return on average common equity declined, signaling a deterioration in profitability.
Future Outlook
Bank OZK’s solid loan balance and efforts in branch consolidation, coupled with the impact of higher rates, are expected to continue aiding revenues. However, concerns persist over elevated operating expenses and rising credit costs, posing near-term challenges for the company.
Comparison with Peers’ Performance
In comparison with other banks, Bank OZK’s strong performance stands out, as evidenced by the company’s earnings exceeding the Zacks Consensus Estimate, in contrast to some of its peers.
The rebound in Bank OZK’s earnings, driven by robust NII and fee income, sends a clear signal to investors in the financial sector.
The company currently carries a Zacks Rank #3 (Hold), indicating a neutral stance for potential investors.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
