OZK Bank sees its net profit fall in the first quarter

Little Rock-based OZK Bank reported first-quarter net profit of $128 million on Thursday (April 21), down 13.7% from a year ago. Diluted earnings per common share for the first quarter of 2022 was $1.02, down 10.5% from $1.14 for the first quarter of 2021.

“We are pleased to report our excellent results for the first quarter of 2022. Our results were highlighted by our second consecutive quarter of record RESG [real estate services group] loan originations, reflecting the importance of organic growth in our long-term strategy. Our strong capital and liquidity, disciplined credit culture and outstanding team position us well for the future,” said George Gleason, Chairman and CEO of Bank OZK.

Key metrics for the quarter include:

  • Non-interest income for the first quarter of 2022 included gains on the sale of other assets of $7.0 million, of which $1.8 million was from a gain on the sale of the branch of the Bank in Magnolia, Arkansas.
  • Interest income topped $262,371, down 0.6% from $264,064 a year ago.
  • Total loans were $18.93 billion as of March 31, 2022, an increase of 1.2% from $18.72 billion as of March 31, 2021.
  • Deposits were $20.33 billion as of March 31, 2022, down 4.5% from $21.30 billion as of March 31, 2021.
  • Total assets stood at $26.56 billion as of March 31, 2022, down 2.6% from $27.28 billion a year ago.

The bank’s provision for credit losses was $4.2 million for the first quarter of 2022, compared to a negative provision for credit losses of $31.6 million for the first quarter of 2021. Its total provision for credit losses was $293.5 million as of March 31, 2022.

“The prospect of further hikes in the target federal funds rate, coupled with our substantial volume of floating rate loans, should have a positive impact on the yields of our unpurchased loans. However, we have seen for several quarters that most of our recently contracted loans have initial contractual interest rates lower than our current yield on unpurchased loans. This will tend to offset, to some extent, our benefit from the impact of increases in the target fed funds rate. The actual impact of these opposing forces on the future returns of our unpurchased loans will depend on a variety of factors, including the speed and magnitude of any increase in the target federal funds rate and the competitive environment,” said the bank in a statement.