Northwest Arkansas Democrat-Gazette
Lender reports profit of $74.2M
Bank OZK’s 3Q down 23 percent
Bank OZK, formerly known as Bank of the Ozarks, posted a profit of $74.2 million in the third quarter, a 23 percent drop from $96 million in the same period last year, the Little Rock bank reported Thursday.
The bank earned 58 cents a share in the period, a 23 percent drop from 75 cents a share in the third quarter last year.
That was below the expectations of 90 cents a share projected by 13 analysts surveyed by Thomson Reuters.
Shares of Bank OZK fell $1.58 to close Thursday at $34.85 in trading on the Nasdaq exchange. Bank OZK released its thirdquarter earnings after the market closed.
During the third quarter, Bank OZK said it incurred combined charge-offs of $45.5 million on two real estate specialties group loans, which focus on commercial real estate lending.
The two unrelated projects are in South Carolina and North Carolina and have been on Bank OZK’s books since 2007 and 2008. The loans were previously classified as substandard but continued to be performing credits until the
● third quarter this year, the bank said.
The combined balance of these credits, after the charge-offs, is $20.6 million, Bank OZK said.
Bank OZK’s problems with the two loans are detailed in the 38-page management comments concerning the third quarter.
The South Carolina loan was made in 2007. It is secured by a regional mall. Uncertainty related to anchor tenants Sears and J.C. Penney are weighing on the mall, Bank OZK said.
The North Carolina loan was made in 2008. It is secured by a multiphase land, residential lot and residential home project. In an effort to enhance the development, the borrower modified the business
plan in recent years to increase the construction of residential homes for sale.
But the newly built homes and the lots owned by the borrower have not sold well recently, resulting in the loan becoming past due in the third quarter.
“While our third quarter results did not meet our usual high standards for performance, we are very pleased with the continued enhancement of our team, technology and business capabilities,” George Gleason, chairman and chief executive officer of the bank, said in a statement. “[Real estate specialties group] continues to be a national leader in commercial real estate finance.”
Garland Binns, a Little Rock banking attorney, said, “One would suspect that
Bank OZK will rebound in the fourth quarter of this year and as it enters 2019.”
Bank OZK had total loans of $16.7 billion on Sept. 30, up from $15.8 billion for the same period last year. Deposits totaled $17.8 billion in the third quarter, up from $16.8 billion on Sept. 30 last year.
Bank OZK has 251 offices in Arkansas, Alabama, California, Florida, Georgia, Mississippi, New York, North Carolina, South Carolina and Texas.
Bank OZK will conduct a conference call to discuss the third-quarter results at 10 a.m. today. Interested parties may listen to the call by dialing (844) 818-5110 and asking for the Bank OZK conference call.