3Q net income climbs 40% at Bank OZK

$103.9M profit compares with $74.2M in ’18; earnings per share jump to 81 cents

Little Rock-based Bank OZK reported strong increases of 40% in net income and 39.7% in earnings per share in its third quarter earnings release Thursday.

Net income for the quarter ending Sept. 30 was $103.9 million, up from $74.2 million a year ago. Earnings per share were 81 cents, rising from 58 cents in the third quarter of 2018. Total assets were up 6% to $23.4 billion, compared with $22.1 billion in the 2018 third quarter.

"We are very pleased to have once again delivered financial metrics among the best in the industry for the quarter just ended," said George Gleason, chairman and chief executive officer. "We continue to maintain our focus on our strong credit culture and consistent discipline, which are paramount in this interest rate and competitive environment."

Earnings per share of 81 cents fell short of consensus analysts' projections of 83 cents per share for the quarter. The bank released earnings after market close on Thursday and has a regularly scheduled call with analysts this morning.

Stockholders are scheduled to receive a quarterly cash dividend of 25 cents per share payable today. That's a 19% increase over the dividend paid in October 2018.

Chief Administrative Officer Tim Hicks was pleased with the quarterly report, noting Bank OZK performed well in a period that suffered through two interest rate drops by the Federal Reserve.

"Even with those challenges we've continued with our long-term track record of having excellent financial results," Hicks said.

The current target range for the federal funds rate is 1.75-2%. Interest rates that banks charge consumers on credit cards, mortgages and bank loans reflects the federal funds rate.

Net interest income in the quarter dropped by less than 1% to $218.8 million. Bank OZK recorded $220.6 million in net interest income in the third quarter of 2018. Net interest margin was 4.26% in the quarter, a 21-point decrease from a year ago.

Deposits were $18.44 billion in the quarter, a 3.5% increase compared with deposits of $17.82 billion a year ago. Total loans were $17.73 billion, up 6% from $16.73 billion in 2018.

Credit quality is strong and loan growth has been solid for Bank OZK, Hicks said. "We are very pleased that we continue to deliver financial metrics among the best in the industry," the bank said in management comments release in conjunction with earnings. "We will remain disciplined and focused on delivering long-term value for our shareholders."

Little Rock banking attorney Garland Binns said the bank had a good quarter.

"Bank OZK continues to control its overhead expenses," he said. "Bank OZK continues to perform well in the banking sector."

The stock closed Thursday at $28.36, down about 18% from a year ago.

Bank OZK operates through more than 250 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.

Business on 10/18/2019

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