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Bank OZK (OZK) Q2 Earnings & Revenues Beat, Stock Up 1.5%

Bank OZK’s OZK shares gained 1.5% in the afterhours trading session in response to better-than-expected second-quarter 2021 results. Earnings per share of $1.16 easily surpassed the Zacks Consensus Estimate of 94 cents. In the year-earlier quarter, the company recorded earnings of 39 cents.

Results were aided by an improvement in revenues, partly offset by higher expenses. The company also recorded provision benefits in the quarter, which was a major tailwind.

Net income available to common shareholders was $150.5 million, up substantially from $50.3 million in the year-ago quarter.

Revenues Improve, Expenses Rise

Net revenues were $268.5 million, up 12.7% year over year. The top line beat the Zacks Consensus Estimate of $259.4 million.

Net interest income was $240.7 million, up 11.2% year over year. Net interest margin, on a fully-taxable equivalent basis, grew 21 basis points (bps) to 3.95%.

Non-interest income was $27.7 million, jumping 28.5%. The rise was driven primarily by an improvement in gains on sales of other assets and service charges on deposit accounts.

Non-interest expenses were $103.7 million, up 2.7%. The rise was due to increase in salaries and employee benefit costs, and net occupancy and equipment costs.

Bank OZK’s efficiency ratio was 38.43%, down from 42.07% in the prior-year quarter. A fall in efficiency ratio indicates an improvement in profitability.

As of Jun 30, 2021, total loans were $18.3 billion, down 2.4% sequentially. As of the same date, total deposits amounted to $20.7 billion, down 2.8%.

Credit Quality: A Mixed Bag

The ratio of non-performing loans, as a percentage of total loans, rose 4 bps year over year to 0.22% as of Jun 30, 2021.

However, in the reported quarter, the company recorded a provision benefit of $30.9 million against provision for credit losses of $72 million in the year-ago quarter. Net charge-off ratio to average total loans decreased 21 bps to 0.08%.

Profitability Ratios Improve

At the end of the second quarter, return on average assets was 2.24%, up from 0.78% in the year-earlier quarter. Return on average common equity was 13.65%, up from 4.92%.

Our Take

Bank OZK’s solid loan balances, along with its growth initiatives, are expected to support revenues. However, owing to near-zero interest rates, the company’s margins are likely to remain under pressure in the near term.

Bank OZK Price, Consensus and EPS Surprise

Bank OZK Price, Consensus and EPS Surprise
Bank OZK Price, Consensus and EPS Surprise

Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote

Bank OZK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Zions Bancorporation’s ZION second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.

Hancock Whitney Corporation’s HWC second-quarter 2021 adjusted earnings per share of $1.37 surpassed the Zacks Consensus Estimate of $1.15. The bottom line improved significantly from the prior-year quarter’s loss of $1.36.

First Horizon National Corporation’s FHN second-quarter 2021 adjusted earnings per share of 58 cents beat the Zacks Consensus Estimate of 43 cents. Further, the bottom line shows significant improvement from the prior-year quarter’s 20 cents.


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Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report

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