Bank OZK
Bank OZK (NASDAQ:OZK) Q4 earnings came in stronger than expected on Thursday as net interest income topped the consensus estimate and its provision for credit losses stayed roughly stable with the prior quarter.
Q4 GAAP EPS of $1.50, beating the average analyst estimate of $1.45, rose from $1.49 in Q3 and $1.34 in Q4 2022.
Bank OZK (OZK) is often watched for its large proportion of commercial real estate loans in its portfolio. Excluding loans for one- to four-family residences, the banks' real estate loans amounted to $19.3B at the end of Q4 vs. its total loans of $26.5B. The real estate loans are for construction/land development, agricultural, non-farm/non-residential, and multifamily residential uses.
Q4 provision for credit losses were roughly stable at $43.8M compared with $44.0M in the previous quarter and climbed from $32.5M in the year-ago period.
Net interest income of $370.5M, topping the Visible Alpha estimate of $367.8M, increased from $367.3M in Q3 and $332.5M in Q4 2022. The most recent quarter's NII was the company's sixth straight quarterly record, driven by increased revenue from growth in average earning assets more than offsetting the impact of the decrease in its net interest margin.
"In 2024, we expect further growth in average earning assets and further decreases in our net interest margin, with the interplay between these two metrics, along with Fed interest rate decisions, primarily determining whether net interest income increases or decreases in each quarter from the level achieved in the quarter just ended," management said in a statement.
Pretax preprovision net revenue of $262.6M dropped from $264.0M in the prior quarter and climbed from $241.0M a year ago.
Total noninterest expense of $145.0M rose from $129.0M in the previous quarter and $119.0M in the year-ago period. Salaries and employee benefits expense of $66.3M increased from $64.1M in Q3 and $59.9M in Q4 2022. During Q4 2023, Bank OZK (OZK) fully accrued and expensed $9.9M for its share of the FDIC special assessment, that was imposed to replenish the FDIC's Deposit Insurance Fund after last March's failures of Silicon Valley Bank and Signature Bank.
Deposits rose to $27.4B at Dec. 31, 2023 from $25.6B at Sept. 30.
Total loans of $26.5B increased from $25.3B at Sept. 30.
Bank OZK's (OZK) Real Estate Specialties Group (RESG) originated $2.05B of loans during the quarter, its highest of the year, and $7.22B for the full year. The company expects RESG's orgination volume in 2024 to be "at or somewhat above" the $7.22B achieved in 2023.
"Given the typical lag between RESG originations and the funding of such loans, the record 2022 origination volume should continue to contribute meaningfully to funded loan growth in 2024," management said.
Conference call on Jan. 19 at 11:00 AM ET.
Bank OZK (OZK) stock rose 0.4% in Thursday after-hours trading.
Earlier, Bank OZK (OZK) GAAP EPS of $1.50 beats by $0.05, revenue of $410.5M beats by $13.96M