Bank OZK's profitability increased by 5.2% in the third quarter and its earnings per share increased by 3.7%, the bank reported Thursday.
Net income reached $109.3 million for the quarter that ended Sept. 30, up from $103.9 million in the same period last year. Earnings per share were 84 cents compared with 81 cents in 2019.
Net income and earnings per share beat the consensus forecast of banking analysts, who had projected net income of $75.5 million and earning per share of 58.5 cents.
The results reflected "solid fundamental performance," the bank said in management comments released Thursday afternoon in conjunction with the earnings announcement. The results were announced after the stock market closed.
"Our strong credit culture and consistent discipline are important ingredients in our long-term success and we believe they have positioned us well for the current economic environment and beyond," George Gleason, chairman and chief executive, said in a news release. "This is clearly evident in our excellent asset quality and earnings for the quarter just ended."
Net interest income, the Little Rock bank's largest revenue category, was up 2.7% in the third quarter, rising to $224.7 million from $218.8 million in the same period in 2019. That was the "first year-over-year increase in six quarters," the management comments noted.
"We are cautiously optimistic regarding the potential to continue to improve our core spread and to stabilize or improve our net interest margin in coming quarters," the comments added.
Net interest margin fell to 3.69% in the quarter from 4.26% in 2019. The bank said increased liquidity in the form of cash balances and short-term securities, along with rate cuts from the Federal Reserve that caused loan yields to drop, led to the net-margin change.
Little Rock banking analyst Garland Binns applauded the bank's performance. "The third quarter earnings release by Bank OZK reflected marked improvement in most areas including net income and growth in loans and deposits over the second quarter of 2020 and in comparison to the third quarter of 2019," Binns said Thursday.
Bank OZK also beat analysts' consensus forecast on revenue. The bank produced $251.3 million in revenue, up 2.5% from $245.2 million in 2019. Analysts expected revenue of $244.3 million.
The bank set aside an additional $7.2 million in the quarter as a provision for credit losses. Allowance for credit losses through the first nine months of the year is $196.9 million.
In other key metrics, OZK reported that pre-tax pre-provision net revenue was up 1% to $145.7 million from $144.3 million last year. Pre-tax pre-provision net revenue demonstrates net revenue before adjusting for loss provisions and is a key indicator of a bank's ability to perform under stressful economic conditions.
Total assets in the quarter increased 14.9%, rising to $26.9 billion from $23.4 billion in 2019. Total loans were $19.3 billion, up 9.2% from $17.7 billion a year ago. Deposits reached $21.3 billion, a 15.4% increase from $18.4 billion last year.
Bank OZK has 250 offices in 10 states: Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, New York, California and Mississippi.
OZK's management team is scheduled to hold a conference call at 10 a.m. today to discuss the results. Participants can dial in at (844) 818-5110 and ask for the Bank OZK conference call.