Bank OZK of Little Rock (Nasdaq: OZK) on Tuesday afternoon reported falling fourth-quarter profit as it wrote off a rising sum of debt it’s unlikely to collect.
The bank reported net income of $171.9 million, a decrease of 3.5% from the fourth quarter of 2024. Diluted earnings per share came to $1.53.
The results fell short of Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.56 per share.
The bank posted revenue of $704.6 million in the period, up 1.3% from $695.6 million a year ago. Its revenue net of interest expense was $440.7 million, surpassing Street forecasts. Four analysts surveyed by Zacks expected $432.6 million.
Revenue was boosted by a 4.2% increase in net interest income, which climbed to $356.5 million.
For the full year of 2025, Bank OZK posted income of $699.3 million, a slight decrease from the record $700.3 million the bank earned in 2024.
The bank reported record earnings per share of $6.18 in 2025, topping the bank’s record of $6.14 in 2024.
Bank OZK finished 2025 with $40.8 billion in total assets, up 6.6% from $38.26 billion in 2024.
Shares of the company fell 1.4% Tuesday, closing at $47.80. The decline continued in after-hours trading, with shares falling 3.74% to $46.01.
Over the past 12 months, shares were down nearly 4%.
Bad Loans
Bank OZK reported $98.3 million in net charge-offs in the fourth quarter, compared to $12.4 million a year ago.
For the full year, charge-offs totaled $160 million, which was up from $57.42 million in 2024.
In a statement, CEO George Gleason attributed the increase to commercial real estate customers struggling through the “later stages of a multi-year CRE cycle.” He said the bank still expects its loan recipients to support their projects through times of economic stress.
“While that expectation has been generally realized, a small number of sponsors have eventually become unable or unwilling to support their projects,” Gleason said.
Charge-offs listed in the bank’s earnings report include:
- A $72.4 million charge-off on an office development in Boston
- A $5.7 million charge-off on an office development in Santa Monica, California
- A $9 million charge-off on a life sciences project in Chicago
- A $4.6 million charge-off on a land development in Baltimore
Portfolio Diversification
Bank OZK’s total loans fell by 1.6% annually to $32.32 billion as the company continued to pass the “growth baton” from commercial real estate (CRE) to its corporate and institutional (CIB) banking segment.
The CIB segment at the end of 2025 accounted for 16.3% of all loans, up from 9% a year ago. The commercial real estate segment accounted for 54.4% of total loans, down 3.3% on a quarterly basis and well below its all-time high of 70%.
Bank OZK’s high exposure to commercial real estate has caused concern among investors in recent years.
The bank in the fourth quarter sold a $270 million loan for a life sciences campus in San Diego, recovering the $100 million principal, plus interest.
Bank OZK also foreclosed on a Los Angeles property valued at $54.45 million after the prospective buyer failed to close the purchase.
Deposit and Branch Growth
Deposits totaled $33.38 billion at the end of 2025, an increase of $2.34 billion, or 7.5%, from the fourth quarter of 2024.
Interest expense fell by 6.8% to just under $264 million, compared to $283.23 million a year ago. Total interest paid on deposits fell to 2.04% from 2.6%. Lower interest expense was offset by rising non-interest expense, which was $161.5 million, up 15.4% from $140.12 million.
Non-interest expense climbed primarily due to rising pay and employee benefits as Bank OZK opened six new branches in the quarter. For the full year, the company opened 24 new branches.
Bank OZK now has 265 branches in nine states: Arkansas, Georgia, Florida, North Carolina, Texas, Tennessee, New York, California and Mississippi.
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