Bank OZK Shares Fall as Q4 Earnings Miss Estimates, Provisions Rise

Core Insights - Bank OZK reported a fourth-quarter 2025 earnings per share (EPS) of $1.53, a decrease of 1.9% year over year, and missed the Zacks Consensus Estimate of $1.56 [1][9] - The decline in EPS was attributed to higher provisions for credit losses and increased operating expenses, despite growth in net interest income (NII) and non-interest income [1][11] Financial Performance - Net income available to common shareholders was $171.9 million, down 3.5% from $178.1 million in the same quarter last year [2] - For the full year 2025, EPS was $6.18, slightly up from $6.14 in 2024, but below the Zacks Consensus Estimate of $6.20 [2] - Net revenues for the fourth quarter were $440.6 million, reflecting a 6.9% year-over-year increase and exceeding the Zacks Consensus Estimate of $432.6 million [3] - Total net revenues for 2025 reached $1.72 billion, up from $1.66 billion in 2024, meeting the Zacks Consensus Estimate [3] Income and Expenses - Fourth-quarter net interest income was $407 million, a 7.3% increase year over year, surpassing the estimate of $402 million [3] - Non-interest income totaled $33.6 million, up 2% from the previous year, but below the estimate of $34.5 million [4] - Non-interest expenses rose to $161.6 million, a 15.4% increase from the prior year, driven by higher salaries, employee benefits, and other operating costs [5] - The efficiency ratio increased to 36.36%, up from 33.71% a year ago, indicating reduced profitability [5] Asset Quality - As of December 31, 2025, net loans increased to $31.8 billion from $29.5 billion a year earlier, while total deposits rose to $33.4 billion, reflecting a 7.5% increase [6] - The net charge-offs to average total loans rose significantly to 1.18% from 0.16% in the previous year [7] - Provisions for credit losses increased by 36% year over year to $50.6 million, exceeding the projected $40.1 million [7] - The ratio of non-performing loans to total loans increased to 1.06% from 0.44% a year ago, indicating pressure on asset quality [7] Profitability Metrics - Return on average assets decreased to 1.67% from 1.87% in the prior year [10] - Return on average common equity also declined to 11.80% from 13.33% [10] Overall Assessment - Bank OZK continues to benefit from steady loan growth and solid net interest income generation, but faces challenges from elevated operating expenses, higher credit costs, and worsening asset quality metrics [11]