Bank OZK of Little Rock (Nasdaq: OZK) on Thursday reported record quarterly income of $180.5 million, up 1.9% from $177.1 million in the third quarter of 2024.
Per share, earnings came to a record $1.59 but fell short of Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.67 per share.
The bank posted revenue of $731.1 million in the period. Its revenue net of interest expense was $449.9 million, which beat Street forecasts. Four analysts surveyed by Zacks expected $444.1 million.
Shares of the company closed at $47.02 on Thursday, falling nearly 7% as the broader U.S. market was rattled by credit stress in the banking sector. In after-hours trading, Bank OZK stock slipped another 1%.
Over the past 12 months, the stock is up about 3%
‘Too Many Lenders’
Real estate loan originations fell sharply to $700 million in the quarter, down from $1.23 billion a year ago. The bank attributed the decrease in part to continued efforts to diversify its loan portfolio.
Another factor is an environment with “too many lenders chasing too few deals,” the bank said. Many project sponsors have faced challenges raising equity capital due to macroeconomic uncertainty and tight monetary policy. At the same time, a surge in liquidity available for debt financing has created significant competition for the new deals that do raise equity.
Strong growth from the bank’s corporate and institutional banking (CIB) segment, as well as its RV and marine segment, was offset by a record $2.44 billion in loan repayments in its real estate segment.
Total loans came to $32.85 billion, a decrease of $160 million, or 0.5%, from the second quarter of 2025 but 12.42% higher than a year ago. The year-over-year increase helped fuel a 6.3% rise in net interest income, which climbed to a record $413.9 million.
Offloading Assets and Managing Risk
Bank OZK reported deals to sell two foreclosed real estate assets: a $55.45 million tract of land in Los Angeles and a $9.35 million office building in Boston.
Both deals are expected to close in November. The bank expects the sale of the L.A. property to result in a small gain. On the Boston property, the bank expects to break even.
Bank OZK in the third quarter also closed on the $83.95 million sale of land it seized from a stalled mixed-use development in Chicago.
The bank also set aside $14 million to cover bad loans.
Bank OZK’s loan loss reserves have grown over the past 13 quarters from $300 million to $680 million. The bank said the build-up has been a “prudent and appropriate response to the shifting mix of risk factors that have driven the challenging and uncertain macroeconomic environment.”
Growing Footprint
The bank opened seven retail branches in the third quarter, bringing its total to 248 branches in Arkansas, Georgia, Florida, Texas, North Carolina and Tennessee.
The growth contributed to a 13.5% increase in non-interest expense, totaling $159.3 million.
Retail branches account for a substantial portion of Bank OZK’s deposits, which in the third quarter grew to a record $33.98 billion, an increase of 11.16%.
Net interest expense was $281.2 million, down 3.9% from $292.7 million.
The bank finished the quarter with $41.6 billion in total assets, up 8.8% from a year ago.
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