Bank OZK released its 2022 Q3 earnings. Here are the key points that you don't want to miss for Bank OZK from this earnings!
Bank OZK released its earnings for 2022 Q3 on 21 October 2022. Overall, despite the reported net profit seeing a 2% decrease y/y, the bank continued to grow well, with no material unexpected developments, and with its pre-provision net revenue (PPNR) growing fast, at 27% y/y.
In summary, in 2022 Q3:
Total interest income grew by 23% y/y (to USD 323m), driven mainly by higher loan yield in the rising rates environment (with non-purchase loan yield growing to 6.32%, from 5.39% a year ago or 5.55% a quarter ago), and also partly by higher average loan balance (up 4.3% y/y).
Net interest income grew by 19% y/y (to USD 295m), due mainly to higher net interest margin (NIM) of 5.03% (versus 4.16% a year ago, or 4.52% a quarter ago), as the average loan yield increased more than the average cost of interest bearing deposits (COIBD). However, the management thinks that this increase in NIM would not be sustainable, and would probably last for only another quarter, as the increase in COIBD would eventually catch up with the increase in loan yield soon.
Non-interest expense grew by only 4.8% y/y (to USD 116m), leading to a record low efficiency ratio of 35.5% (versus 40.1% a year ago, or 37.3% a quarter ago).
As net interest income grew faster than non-interest expenses, the pre-tax pre-provision net revenue (PPNR) grew even faster, at 27% y/y (to USD 208m).
However, during the quarter, Bank OZK recorded a credit loss provision expense of USD 40m, compared to a negative provision of USD 8m a year ago, in view of the higher loan balances and the risks and uncertainties in the current macroeconomic environment. Thus, the reported net profit actually decreased by 2% (to USD 128m). However, as mentioned before, we should focus more on the PPNR growth, as the reported net profit growth in recent times is distorted by the fluctuations in provisions.
Book value per share was USD 35.67 at the end of the quarter (slightly higher than the USD 35.35 a year ago, but slightly lower than the USD 35.87 a quarter ago). Tangible book value decreased slightly to USD 30.02 at the end of the quarter (versus USD 30.14 a year ago or USD 30.27 a quarter ago).
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