Bank OZK’s OZK fourth-quarter 2024 earnings per share of $1.56 handily surpassed the Zacks Consensus Estimate of $1.45. The bottom line reflects a rise of 4% from the prior-year quarter’s actual.

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Results benefited from a rise in net interest income (NII), driven by improvement in loans and deposit balances. Lower non-interest expenses and provisions were also positives. However, lower non-interest income and rising funding costs were the undermining factors.

The net income available to common shareholders was $178.1 million, up 4.1% from the year-ago quarter. Our estimate for the metric was $160.9 million.

In 2024, earnings of $6.14 per share beat the consensus estimate of $6.03 and rose 4.6% year over year. Net income available to common shareholders was $700.3 million, up 3.8%.

OZK’s Revenues Improve, Expenses Decline

Net revenues were $412.3 million, up 1.2% year over year. The top line beat the Zacks Consensus Estimate of $408 million.

For 2024, net revenues increased 6.2% to $1.66 billion. The top line also outpaced the consensus estimate of $1.65 billion.

NII was $379.3 million, up 2.4% year over year. Our estimate for the metric was $387.3 million.

Net interest margin (NIM), on a fully-taxable-equivalent basis, contracted 49 basis points (bps) year over year to 4.33%. Our estimate for NIM was 4.40%.

Non-interest income was $32.9 million, down 11% on a year-over-year basis. This decline was mainly due to lower gains on sales of other assets, a fall in death benefits income, lower net gains on investment securities and the absence of NSF fees. Our estimate for non-interest income was $30.8 million.

Non-interest expenses were $140.1 million, down 3.4% from the prior-year quarter’s level. This decline was driven by lower other operating expenses. We expected this metric to be $144.3 million.

Bank OZK’s efficiency ratio was 33.71%, down from 35.33% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.

As of Dec. 31, 2024, total loans were $30 billion, up 2.6% sequentially. As of the same date, total deposits amounted to $31 billion, up 1.5%.

OZK’s Credit Quality Deteriorates

Net charge-offs to average total loans were 0.16%, up 10 bps year over year. On the other hand, provision for credit losses was $37.2 million, down 15.2%. We projected a provision of $47.8 million.

The ratio of non-performing loans, as a percentage of total loans, increased 19 bps to 0.44% as of Dec. 31, 2024.

Profitability Ratios Worsen for Bank OZK

At the end of the fourth quarter, the return on average assets was 1.87%, down from 2.04% in the year-earlier quarter. Return on average common equity was 13.33%, down from 14.58%.

OZK’s Share Repurchase Update

Bank OZK did not repurchase any shares during the quarter.

Our Take on Bank OZK

Bank OZK’s solid loan balance, branch consolidation efforts, fee income growth, and lower deposit costs on interest rate cuts are expected to aid revenues. However, elevated operating expenses and deteriorating asset quality are major near-term concerns.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates of Other Banks

Hancock Whitney Corp HWC is scheduled to report fourth-quarter and full-year 2024 results on Jan. 21.

Over the past seven days, the Zacks Consensus Estimate for HWC’s quarterly earnings has remained unchanged at $1.28. This indicates a 1.6% rise from the prior-year quarter.

Zions Bancorporation ZION is slated to announce fourth-quarter and full-year 2024 results on Jan. 21.

Over the past seven days, the Zacks Consensus Estimate for ZION’s quarterly earnings has remained unchanged at $1.26, implying a fall of 2.3% from the prior-year quarter.

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