Bank OZK Q3 Earnings Miss Estimates Despite Y/Y Revenue Growth

Core Insights - Bank OZK reported a record third-quarter 2025 earnings per share (EPS) of $1.59, reflecting a year-over-year increase of 2.6%, but fell short of the Zacks Consensus Estimate of $1.67 [1][9] - The increase in expenses and provisions negatively impacted the bottom line, despite positive contributions from higher net interest income (NII) and non-interest income [1][9] - The bank experienced growth in loans and deposits, with net loans reaching $32.3 billion and total deposits at $34 billion, marking a 9.5% increase from December 2024 [5][9] Financial Performance - Net income available to common shareholders was $180.5 million, up 1.9% from the previous year, but below the estimate of $184 million [2] - Net revenues increased by 6.4% year over year to $449.9 million, surpassing the Zacks Consensus Estimate of $444.1 million [3] - NII rose to $413.9 million, a 6.3% increase year over year, exceeding the estimate of $410 million [3] - Non-interest income grew by 7.4% to $36.1 million, driven by increases in most components, except for BOLI income and net gains on investment securities [4] - Non-interest expenses increased by 13.5% to $159.3 million, attributed to a rise in all components, higher than the expected $156.1 million [4] Efficiency and Profitability - The efficiency ratio deteriorated to 35.11%, up from 32.95% in the prior-year quarter, indicating reduced profitability [5] - Return on average assets decreased to 1.74% from 1.90% year-over-year, while return on average common equity fell to 12.66% from 13.65% [7] Credit Quality - Net charge-offs to average total loans increased to 0.41%, up 5 basis points year over year, while provisions for credit losses rose by 4% to $48.3 million [6] - The ratio of non-performing loans decreased by 14 basis points to 0.41% as of September 30, 2025 [6] Future Outlook - The company anticipates that decent loan demand, diversification efforts, and fee income growth will support revenue growth, despite concerns over elevated operating expenses and significant exposure to real estate loans [10]