It has been about a month since the last earnings report for Bank OZK (OZK). Shares have added about 3.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Bank OZK due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Bank OZK before we dive into how investors and analysts have reacted as of late.
Bank OZK Q4 Earnings Miss Estimates, Provisions Rise Y/Y
Bank OZK’s fourth-quarter 2025 earnings per share of $1.53 declined 1.9% year over year. The bottom line also missed the Zacks Consensus Estimate of $1.56.
Results were primarily hurt by higher provision for credit losses and a rise in operating expenses. Nevertheless, solid net interest income and non-interest income growth acted as tailwinds. Healthy year-over-year growth in loans and deposits was another positive.
Net income available to common shareholders was $171.9 million, down 3.5% from the year-ago quarter’s $178.1 million.
For 2025, earnings per share were $6.18, up from $6.14 in the year-ago period. However, the metric missed the Zacks Consensus Estimate of $6.20. Net income available to common shareholders was $699.3 million, down marginally from the year-ago quarter.
Revenues & Expenses Rise
Net revenues were $440.6 million, up 6.9% year over year. The top line beat the Zacks Consensus Estimate of $432.6 million.
For 2025, net revenues were $1.72 billion, up from $1.66 billion reported in 2024. The top line met the Zacks Consensus Estimate.
Fourth-quarter net interest income was $407 million, up 7.3% year over year. Our estimate for the metric was $402 million.
The net interest margin, on a fully-taxable-equivalent basis, contracted 3 basis points year over year to 4.30%. Our estimate for NIM was 4.31%.
Non-interest income totaled $33.6 million, up 2% from the year-ago quarter. Our estimate for the metric was $34.5 million.
Non-interest expenses were $161.6 million, up 15.4% from the prior-year quarter. The increase was driven by higher salaries and employee benefits, net occupancy and equipment costs, and other operating expenses. We expected this metric to be $159 million.
Bank OZK’s efficiency ratio was 36.36%, up from 33.71% in the year-ago quarter, indicating reduced profitability.
As of Dec. 31, 2025, net loans were $31.8 billion, up from $29.5 billion as of Dec. 31, 2024. Total deposits were $33.4 billion, reflecting a 7.5% increase from the prior-year level.
Credit Quality Weakens
Net charge-offs to average total loans jumped to 1.18% from 0.16% in the year-ago quarter. Provision for credit losses was $50.6 million, rising 36% year over year. We projected provisions of $40.1 million.
The ratio of non-performing loans to total loans increased to 1.06% as of Dec. 31, 2025, from 0.44% a year ago.
Profitability Ratios Decline
At the end of the fourth quarter, return on average assets was 1.67%, down from 1.87% in the year-earlier quarter. Return on average common equity also declined to 11.80% from 13.33%.
Outlook
Following rate cuts, the company’s loan yields are expected to decrease faster than its deposit costs, resulting in some decrease in NIM.
Considering two fewer days in the first quarter of 2026 and the full impact of the December Fed rate cut, management expects first-quarter 2026 NII to be $385-$390 million. NII is expected to be higher in each subsequent quarter of 2026 driven by increased days, loan growth and time deposit repricing catching up with earlier loan repricing.
During 2025, Bank OZK increased resources aimed at growing non-interest income, which includes increasing revenue from secondary market mortgage lending, trust and wealth, treasury management and CIB-related fee-generating businesses. These efforts are expected to contribute to a mid-to high-single digit percentage increase in non-interest income in 2026 and to contribute additional earnings growth in 2027 and subsequent years.
In 2026, non-interest expenses are expected to grow 8-9% compared to 2025, reflecting the company’s continued investments to support future growth and greater portfolio diversification.
RESG is expected to have elevated repayments in most quarters through 2026 and thus, RESG’s percentage of loans will likely continue to decline in 2026, going below 50% during the year.
Management expects origination volumes in 2026 to be similar to the levels achieved in 2024 and 2025.
For full-year 2026, management expects loan growth in the mid-single digit percentage rate, including strong CIB growth offset by significant RESG loan repayments. For full-year 2027, loan growth is expected to accelerate to 10-11% with headwinds from RESG repayments subsiding while CIB and other lending teams expected to grow significantly.
Depending on market conditions and available investment opportunities, the company expects to see some growth in the investment securities portfolio in 2026.
The effective tax rate is expected to be 23-24% for 2026.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Bank OZK has a poor Growth Score of F, a score with the same score on the momentum front. However, the stock was allocated a score of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Bank OZK has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Bank OZK (OZK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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