Bank OZK of Little Rock (Nasdaq: OZK) on Thursday reported its third consecutive quarter of record profit as net income surged 32% from the same period a year ago.
“We have been well positioned for rising interest rates and the turbulent environment of the last six quarters, and our preparation has been reflected in our record results,” George Gleason, chair and CEO, said in a statement. “We believe we are well positioned for the coming quarters, and we look forward to capitalizing on new opportunities.”
Net income was $169.7 million, compared to $128.3 million in the third quarter of 2022. Earnings per share came to a record $1.49, up from $1.08 a year ago.
The results beat Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.44 per share.
The bank posted revenue of $591.2 million in the period. Its revenue net of interest expense was $393 million, also topping Street forecasts. Six analysts surveyed by Zacks expected $384.4 million.
Loans in the quarter grew by nearly 30% on annual basis to $25.33 billion, up from $19.51 billion.
A high concentration of those loans are in commercial real estate and construction, which has drawn concern from credit rating company Moody’s. The company in August shifted its outlook for the bank from stable to negative, pointing to risks from high interest rates, a slowing economy and reduced demand for office space.
More than 42% of Bank OZK’s loans for the period ending Sept. 30 were in construction and land development. Non-farm and non-residential projects accounted for about 21% of its loans, and multifamily residential projects accounted for 8%.
The quality of those loans could deteriorate in the weakened operating environment, Moody’s said, despite the bank’s “very strong track record” and conservative structuring and underwriting.
Bank OZK said its ratio of nonperforming non-purchased loans to total loans was 0.25% in the third quarter, up from 0.14% a year ago. The Bank’s ratio of nonperforming assets to total assets also increased to 0.4%, compared to 0.13% a year ago.
While other Arkansas banks have seen deposits slide, Bank OZK continues to see growth in the category. Deposits increased for a fifth straight quarter, totaling $25.55 billion. That’s up more than 25% from $20.4 billion a year ago.
The bank finished the quarter with $32.77 billion in total assets, a 24.9% increase from $26.23 billion in the same quarter last year.
Bank OZK has more than 240 offices in eight states including Arkansas, Georgia, Florida, North Carolina, Texas, New York, California and Mississippi.
Shares of the company rose about 2% on Friday to $36.13. Year to date, shares were down more than 8%.
The Associated Press contributed information to this report.
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