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Bank OZK (OZK) Q4 Earnings Beat Estimates as Revenues Rise
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Bank OZK’s (OZK - Free Report) fourth-quarter 2020 earnings per share of 93 cents surpassed the Zacks Consensus Estimate of 80 cents. Moreover, the bottom line jumped 19.2% on year-over-year basis.
Results were aided by an improvement in net interest income and lower expenses. However, decline in non-interest income and higher provision for credit losses acted as headwinds.
Net income available to common shareholders was $120.5 million, up 19.5% from the year-ago quarter.
In 2020, earnings of $2.26 per share beat the consensus estimate of $2.12 but fell 31.5% from the prior year. Net income available to common shareholders declined 31.5% to $291.9 million.
Revenues Improve, Expenses Fall
Net revenues in the reported quarter were $266.3 million, up 8.5% year over year. Also, the top line outpaced the Zacks Consensus Estimate of $250 million.
In 2020, net revenues rose marginally to $993.2 million. Also, it beat the consensus estimate of $977.6 million.
Net interest income was $237.6 million, up 10.5% year over year. Net interest margin, on a fully-taxable equivalent basis, declined 27 basis points (bps) to 3.88%.
Non-interest income was $28.7 million, down 5.7%. The fall was primarily due to decrease in all fee income components except gain on sale of other assets.
Non-interest expenses were $103.4 million, down 1%. The decline was largely due to lower other operating expenses.
Bank OZK’s efficiency ratio was 38.61%, down from 42.37% in the prior-year quarter. A fall in efficiency ratio indicates improvement in profitability.
As of Dec 31, 2020, total loans were $19.2 billion, up from $17.5 billion recorded as of Dec 31, 2019. As of the same date, total deposits amounted to $21.5 billion, up from $18.5 billion.
Credit Quality Worsens
The ratio of non-performing loans, as a percentage of total loans, rose 10 bps year over year to 0.25% as of Dec 31, 2020. Moreover, provision for credit losses increased 36.7% to $6.8 million.
Annualized net charge off ratio to average total loans increased 2 bps 0.14%.
Profitability Ratios Improve
At the end of the fourth quarter, return on average assets was 1.79%, up from 1.74% in the year-earlier quarter. Return on average common equity was 11.36%, up from 9.73%.
Our Take
Bank OZK’s steadily improving loan balances, along with its growth initiatives, are expected to support revenues. However, owing to near-zero interest rates, the company’s margins are expected to remain under pressure in the near term.
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2020 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 95 cents. Also, the bottom line came in 26.1% higher than the prior-year quarter.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2020 net earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.01. Moreover, the reported figure represents a rise of 71.1% from the year-ago quarter’s number.
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2021 (ended Dec 31) earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 42 cents. However, the figure reflects a year-over-year decline of 40.7%.
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Bank OZK (OZK) Q4 Earnings Beat Estimates as Revenues Rise
Bank OZK’s (OZK - Free Report) fourth-quarter 2020 earnings per share of 93 cents surpassed the Zacks Consensus Estimate of 80 cents. Moreover, the bottom line jumped 19.2% on year-over-year basis.
Results were aided by an improvement in net interest income and lower expenses. However, decline in non-interest income and higher provision for credit losses acted as headwinds.
Net income available to common shareholders was $120.5 million, up 19.5% from the year-ago quarter.
In 2020, earnings of $2.26 per share beat the consensus estimate of $2.12 but fell 31.5% from the prior year. Net income available to common shareholders declined 31.5% to $291.9 million.
Revenues Improve, Expenses Fall
Net revenues in the reported quarter were $266.3 million, up 8.5% year over year. Also, the top line outpaced the Zacks Consensus Estimate of $250 million.
In 2020, net revenues rose marginally to $993.2 million. Also, it beat the consensus estimate of $977.6 million.
Net interest income was $237.6 million, up 10.5% year over year. Net interest margin, on a fully-taxable equivalent basis, declined 27 basis points (bps) to 3.88%.
Non-interest income was $28.7 million, down 5.7%. The fall was primarily due to decrease in all fee income components except gain on sale of other assets.
Non-interest expenses were $103.4 million, down 1%. The decline was largely due to lower other operating expenses.
Bank OZK’s efficiency ratio was 38.61%, down from 42.37% in the prior-year quarter. A fall in efficiency ratio indicates improvement in profitability.
As of Dec 31, 2020, total loans were $19.2 billion, up from $17.5 billion recorded as of Dec 31, 2019. As of the same date, total deposits amounted to $21.5 billion, up from $18.5 billion.
Credit Quality Worsens
The ratio of non-performing loans, as a percentage of total loans, rose 10 bps year over year to 0.25% as of Dec 31, 2020. Moreover, provision for credit losses increased 36.7% to $6.8 million.
Annualized net charge off ratio to average total loans increased 2 bps 0.14%.
Profitability Ratios Improve
At the end of the fourth quarter, return on average assets was 1.79%, up from 1.74% in the year-earlier quarter. Return on average common equity was 11.36%, up from 9.73%.
Our Take
Bank OZK’s steadily improving loan balances, along with its growth initiatives, are expected to support revenues. However, owing to near-zero interest rates, the company’s margins are expected to remain under pressure in the near term.
Bank OZK Price, Consensus and EPS Surprise
Bank OZK price-consensus-eps-surprise-chart | Bank OZK Quote
Bank OZK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares Inc.’s (CBSH - Free Report) fourth-quarter 2020 earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 95 cents. Also, the bottom line came in 26.1% higher than the prior-year quarter.
Zions Bancorporation’s (ZION - Free Report) fourth-quarter 2020 net earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.01. Moreover, the reported figure represents a rise of 71.1% from the year-ago quarter’s number.
Washington Federal’s (WAFD - Free Report) first-quarter fiscal 2021 (ended Dec 31) earnings of 51 cents per share surpassed the Zacks Consensus Estimate of 42 cents. However, the figure reflects a year-over-year decline of 40.7%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>