Bank OZK reported sagging profitability in the first quarter, with net income down by 13.7% and earnings per share decreasing by 10.5%, the Little Rock lender announced Thursday.
Net income for the quarter ended March 31 was $128 million, down from the $148.4 million that was achieved in last year's first quarter. Earnings per share fell to $1.02 from the $1.14 reported in 2021.
Gleason said the bank is happy with its positioning going forward. "We are pleased to report our excellent results for the first quarter of 2022," Gleason said in a news release Thursday. "Our results were highlighted by our second consecutive quarter of record RESG [Real Estate Specialties Group] originations, reflecting the importance of organic growth in our long-term strategy. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the future."
The bank's Real Estate Specialties Group, which is based in Dallas, is the primary arm for OZK to make commercial real estate, construction and land development loans. The group achieved record loan levels in the quarter with $3.14 billion in loan originations.
In management comments released in conjunction with earnings, bank officials noted that the Real Estate Specialties Group has loan originations of $9.08 billion over the last four quarters. "We are very pleased with the job our RESG team is doing in finding good loan opportunities in an intensely competitive environment," the comments said.
Net interest income remained strong in the quarter and is showing solid buoyancy. The bank recorded net interest income of $249.3 million, which was the second-highest quarterly level the bank has reached, behind only the fourth quarter of 2021.
Overall, bank officials noted in the management comments there is a strong foundation with multiple options for growth. "Our combination of strong earnings and robust capital gives us great optionality to increase shareholder value," the comments said. "Options for deploying our excess capital include organic loan growth, adding new business lines, continuing to increase the dividend on our common stock, financially attractive acquisitions for cash or some combination of cash and stock, and stock repurchases."
The company reported it repurchased about 2.9 million shares of stock for $131.6 million in the first quarter.
In the quarter, total loans at OZK reached $18.93 billion, a slight uptick from the $18.72 billion reported in last year's first quarter. Net interest margin was 4.24%, also up from 3.86% a year ago.
Deposits, however, were down by 4.5%, falling to $20.3 billion from $21.3 billion in the 2021 first quarter. Total assets also dropped, decreasing by 2.6% with a slight dip to $26.56 billion in the first quarter from $27.28 billion last year.
OZK, which announced results after the stock market shut down for the day, closed at $41.48, down 33 cents, less than 1%.