Press Release

Bank OZK Announces Second Quarter 2019 Earnings

7/18/2019 at 4:01 PM EDT

LITTLE ROCK, Ark., July 18, 2019 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the second quarter of 2019 was $110.5 million, a 3.7% decrease from $114.8 million for the second quarter of 2018.  Diluted earnings per common share for the second quarter of 2019 were $0.86, a 3.4% decrease from $0.89 for the second quarter of 2018.

For the six months ended June 30, 2019, net income totaled $221.2 million, a 2.9% decrease from $227.9 million for the first six months of 2018.  Diluted earnings per common share for the first six months of 2019 were $1.71, a 3.4% decrease from $1.77 for the first six months of 2018.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the second quarter of 2019 were 1.95%, 11.29% and 13.70%, respectively, compared to 2.10%, 12.90% and 16.08%, respectively, for the second quarter of 2018.  The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first six months of 2019 were 1.97%, 11.52%, and 14.04%, respectively, compared to 2.13%, 13.03%, and 16.30%, respectively, for the first six months of 2018.  The calculation of the Bank’s annualized return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release. 

George Gleason, Chairman and Chief Executive Officer, stated, “Our strong credit culture and consistent discipline have been important ingredients in our long term success, and we are not wavering from those principles in today’s challenging competitive and interest rate environment.  We are pleased that we continue to deliver financial metrics among the best in the industry, including the 1.95% annualized return on average assets, 4.45% net interest margin and 39.3% efficiency ratio for the quarter just ended.  We will remain disciplined and focused on delivering long-term value for our shareholders.”

KEY BALANCE SHEET METRICS

Total loans were $17.49 billion at June 30, 2019, a 4.3% increase from $16.76 billion at June 30, 2018.  Non-purchased loans, which exclude loans acquired in previous acquisitions, were $15.79 billion at June 30, 2019, an 11.3% increase from $14.18 billion at June 30, 2018.  Purchased loans, which consist of loans acquired in previous acquisitions, were $1.70 billion at June 30, 2019, a 34.2% decrease from $2.58 billion at June 30, 2018.  The unfunded balance of closed loans was $11.17 billion at June 30, 2019, a 6.9% decrease from $12.00 billion at June 30, 2018.

Deposits were $18.19 billion at June 30, 2019, a 1.6% increase from $17.90 billion at June 30, 2018, but a 1.6% decrease from March 31, 2019.  Total assets were $22.96 billion at June 30, 2019, a 3.3% increase from $22.22 billion at June 30, 2018, but a 0.2% decrease from March 31, 2019.

Common stockholders’ equity was $3.99 billion at June 30, 2019, a 10.5% increase from $3.61 billion at June 30, 2018.  Tangible common stockholders’ equity was $3.30 billion at June 30, 2019, a 13.5% increase from $2.91 billion at June 30, 2018.  Book value per common share was $30.97 at June 30, 2019, a 10.2% increase from $28.10 at June 30, 2018.  Tangible book value per common share was $25.61 at June 30, 2019, a 13.2% increase from $22.63 at June 30, 2018.  The calculations of the Bank’s tangible common stockholders’ equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.

The Bank’s ratio of total common stockholders’ equity to total assets increased to 17.39% at June 30, 2019 compared to 16.26% at June 30, 2018.  Its ratio of total tangible common stockholders’ equity to total tangible assets increased to 14.83% at June 30, 2019 compared to 13.53% at June 30, 2018.  The calculation of the Bank’s ratio of total tangible common stockholders’ equity to total tangible assets and the reconciliation to GAAP are included in the schedules accompanying this release. 

MANAGEMENT’S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS

In connection with this release, the Bank released management’s comments on the results for the quarter just ended, which are available at http://ir.ozk.com.  This release should be read in conjunction with management’s comments on the results for the second quarter of 2019. 

Management will conduct a conference call to take questions on these quarterly results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on July 19, 2019.  Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call.  A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally).  The passcode for this playback is 4369463.  The call will be available live or in a recorded version on the Bank’s Investor Relations website at ir.ozk.com under “Company News/Webcasts.”  The Bank will also provide a transcript of the conference call on its Investor Relations website.

The Bank files annual, quarterly and current reports, proxy materials and other information required by the Securities Exchange Act of 1934 with the Federal Deposit Insurance Corporation (“FDIC”), copies of which are available electronically at the FDIC’s website at https://efr.fdic.gov/fcxweb/efr/index.html and are also available on the Bank’s Investor Relations website at http://ir.ozk.com.  To receive automated email alerts for these materials, please visit http://ir.ozk.com/EmailNotification to sign up.

NON-GAAP FINANCIAL MEASURES

This release contains certain non-GAAP financial measures.  The Bank uses these non-GAAP financial measures, specifically return on average tangible common stockholders’ equity, tangible book value per common share, total tangible common stockholders’ equity and the ratio of total tangible common stockholders’ equity to total tangible assets, as important measures of the strength of its capital and its ability to generate earnings on its tangible capital invested by its shareholders. These measures typically adjust GAAP financial measures to exclude intangible assets.  Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks.  Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

FORWARD-LOOKING STATEMENTS

This release and other communications by the Bank include certain “forward-looking statements” regarding the Bank’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time.  Those statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.  These risks, uncertainties and other factors include, but are not limited to: potential delays or other problems implementing the Bank’s growth, expansion and acquisition strategies, including delays in identifying sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices; the ability to enter into and/or close additional acquisitions; problems with, or additional expenses relating to, integrating acquisitions; the inability to realize expected cost savings and/or synergies from acquisitions; problems with managing acquisitions; the effect of the announcements of any future acquisition on customer relationships and operating results; the availability of and access to capital; possible downgrades in the Bank’s credit ratings or outlook which could increase the costs or availability of funding from capital markets; the ability to attract new or retain existing or acquired deposits or to retain or grow loans, including growth from unfunded closed loans; the ability to generate future revenue growth or to control future growth in non-interest expense; interest rate fluctuations, including changes in the yield curve between short-term and long-term interest rates or changes in the relative relationships of various interest rate indices; competitive factors and pricing pressures, including their effect on the Bank’s net interest margin or core spread; general economic, unemployment, credit market and real estate market conditions, and the effect of such conditions on the creditworthiness of borrowers, collateral values, the value of investment securities and asset recovery values; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing legislation and regulatory actions; changes in U.S. government monetary and fiscal policy; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, the Bank’s operational or security systems or infrastructure, or those of third parties with whom it does business, including as a result of cyber attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank or its customers; adoption of new accounting standards or changes in existing standards; and adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions or rulings as well as other factors identified in this press release or as detailed from time to time in the other public reports the Bank files with the FDIC, including those factors included in the disclosures under the headings “Forward-Looking Information” and “Item 1A. Risk Factors” in the Bank’s most recent Annual Report on Form 10-K for the year ended December 31, 2018 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements.  The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

GENERAL INFORMATION

Bank OZK (Nasdaq: OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence.  Bank OZK has been recognized as the top performing bank in the nation in its asset size 13 times in the past eight years. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through 254 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.  Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 

Media Contact:  Susan Blair (501) 978-2217
Investor Contact:  Tim Hicks (501) 978-2336

Bank OZK
Consolidated Balance Sheets

Unaudited

                  
    June 30,     December 31,  
    2019     2018  
    (Dollars in thousands, except per share amounts)  
ASSETS                
Cash and cash equivalents   $ 738,566     $ 290,672  
Investment securities - available for sale ("AFS")     2,548,489       2,862,340  
Federal Home Loan Bank of Dallas and other banker's bank stocks     11,607       25,941  
Non-purchased loans     15,786,809       15,073,791  
Purchased loans     1,698,396       2,044,032  
Allowance for loan losses     (106,642 )     (102,264 )
Net loans     17,378,563       17,015,559  
Premises and equipment, net     662,082       567,189  
Foreclosed assets     33,467       16,171  
Accrued interest receivable     81,003       81,968  
Bank owned life insurance (“BOLI”)     730,871       721,238  
Goodwill and other intangible assets, net     690,304       696,461  
Other, net     85,779       110,491  
Total assets   $ 22,960,731     $ 22,388,030  
                 
LIABILITIES AND STOCKHOLDERS EQUITY                
Deposits:                
Demand non-interest bearing   $ 2,777,066     $ 2,748,273  
Savings and interest bearing transaction     9,226,197       9,682,713  
Time     6,182,952       5,507,429  
Total deposits     18,186,215       17,938,415  
Repurchase agreements with customers     10,909       20,564  
Other borrowings     201,455       96,692  
Subordinated notes     223,471       223,281  
Subordinated debentures     119,635       119,358  
Accrued interest payable and other liabilities     222,668       216,355  
Total liabilities     18,964,353       18,614,665  
                 
Commitments and contingencies                
                 
Stockholders’ equity:                
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares
  issued or outstanding at June 30, 2019 or December 31, 2018
           
Common stock; $0.01 par value; 300,000,000 shares authorized;
  128,946,716 and 128,611,049 shares issued and outstanding at
  June 30, 2019 and December 31, 2018, respectively
    1,289       1,286  
Additional paid-in capital     2,243,779       2,237,948  
Retained earnings     1,728,486       1,565,201  
Accumulated other comprehensive income (loss)     19,693       (34,105 )
Total stockholders’ equity before noncontrolling interest     3,993,247       3,770,330  
Noncontrolling interest     3,131       3,035  
Total stockholders’ equity     3,996,378       3,773,365  
Total liabilities and stockholders’ equity   $ 22,960,731     $ 22,388,030  

 

Bank OZK
Consolidated Statements of Income

Unaudited

     Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2019     2018     2019     2018  
    (Dollars in thousands, except per share amounts)  
Interest income:                                
Non-purchased loans   $ 250,081     $ 210,385     $ 495,946     $ 400,812  
Purchased loans     28,519       46,862       58,714       97,839  
Investment securities:                                
Taxable     13,585       11,476       28,481       22,907  
Tax-exempt     3,693       4,102       7,567       8,262  
Deposits with banks and federal funds sold     941       839       1,354       1,336  
Total interest income     296,819       273,664       592,062       531,156  
                                 
Interest expense:                                
Deposits     67,392       43,832       130,479       78,224  
Repurchase agreements with customers     11       385       33       544  
Other borrowings     19       46       1,408       679  
Subordinated notes     3,181       3,180       6,326       6,326  
Subordinated debentures     1,680       1,560       3,392       2,946  
Total interest expense     72,283       49,003       141,638       88,719  
                                 
Net interest income     224,536       224,661       450,424       442,437  
Provision for loan losses     6,769       9,610       13,450       15,177  
Net interest income after provision for loan losses     217,767       215,051       436,974       427,260  
                                 
Non-interest income:                                
Service charges on deposit accounts     10,291       9,704       20,014       19,229  
Trust income     1,839       1,591       3,569       3,384  
BOLI income     5,178       5,259       10,340       12,839  
Other income from purchased loans     1,455       2,744       2,251       3,995  
Loan service, maintenance and other fees     4,565       5,641       9,438       10,384  
Net gains on investment securities     713             713       17  
Gains on sales of other assets     402       844       686       2,270  
Other     2,160       1,603       3,664       3,976  
Total non-interest income     26,603       27,386       50,675       56,094  
                                 
Non-interest expense:                                
Salaries and employee benefits     47,558       41,665       92,425       87,164  
Net occupancy and equipment     14,587       13,827       29,338       27,977  
Other operating expenses     36,986       33,615       74,046       67,776  
Total non-interest expense     99,131       89,107       195,809       182,917  
                                 
Income before taxes     145,239       153,330       291,840       300,437  
Provision for income taxes     34,726       38,589       70,615       72,563  
Net income     110,513       114,741       221,225       227,874  
Earnings attributable to noncontrolling interest     (10 )     10       (16 )     21  
Net income available to common stockholders   $ 110,503     $ 114,751     $ 221,209     $ 227,895  
                                 
Basic earnings per common share   $ 0.86     $ 0.89     $ 1.72     $ 1.77  
                                 
Diluted earnings per common share   $ 0.86     $ 0.89     $ 1.71     $ 1.77  

Bank OZK
Consolidated Statements of Stockholders’ Equity

Unaudited

     Common
Stock
    Additional
Paid-In
Capital
    Retained
Earnings
    Accumulated
Other
Comprehensive
Income (Loss)
    Non-
Controlling
Interest
    Total  
    (Dollars in thousands, except per share amounts)  
                                                 
Balances – December 31, 2017   $ 1,283     $ 2,221,844     $ 1,250,313     $ (12,712 )   $ 3,060     $ 3,463,788  
Net income                 227,874                   227,874  
Earnings attributable to noncontrolling interest                 21             (21 )      
Total other comprehensive loss                       (34,201 )           (34,201 )
Common stock dividends paid, $0.385 per
  share
                (49,487 )                 (49,487 )
Issuance of 210,890 shares of common
  stock for exercise of stock options
    2       5,585                         5,587  
Issuance of 214,591 shares of unvested
  restricted common stock
    2       (2 )                        
Repurchase and cancellation of 71,750 shares
  of common stock
    (1 )     (3,769 )                       (3,770 )
Stock-based compensation expense           7,151                         7,151  
Forfeitures of 24,864 shares of unvested
  restricted common stock
                                   
Balances – June 30, 2018   $ 1,286     $ 2,230,809     $ 1,428,721     $ (46,913 )   $ 3,039     $ 3,616,942  
                                                 
Balances – December 31, 2018   $ 1,286     $ 2,237,948     $ 1,565,201     $ (34,105 )   $ 3,035     $ 3,773,365  
Net income                 221,225                   221,225  
Earnings attributable to noncontrolling
  interest
                (16 )           16        
Total other comprehensive income                       53,798             53,798  
Common stock dividends paid, $0.45
  per share
                (57,924 )                 (57,924 )
Noncontrolling interest cash contribution                             80       80  
Issuance of 56,550 shares of common
  stock for exercise of stock options
    1       876                         877  
Issuance of 406,074 shares of unvested
  restricted common stock
    4       (4 )                        
Repurchase and cancellation of 62,742
  shares of common stock
    (1 )     (1,646 )                       (1,647 )
Stock-based compensation expense           6,604                         6,604  
Forfeiture of 64,215 shares of unvested
  restricted common stock
    (1 )     1                          
Balances – June 30, 2019   $ 1,289     $ 2,243,779     $ 1,728,486     $ 19,693     $ 3,131     $ 3,996,378  

 

Bank OZK
Summary of Non-Interest Expense

Unaudited

     Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2019     2018     2019     2018  
    (Dollars in thousands)  
Salaries and employee benefits   $ 47,558     $ 41,665     $ 92,425     $ 87,164  
Net occupancy and equipment     14,587       13,827       29,338       27,977  
Other operating expenses:                                
Professional and outside services     8,105       9,112       16,669       17,817  
Software and data processing     4,757       3,110       9,466       6,450  
Deposit insurance and assessments     3,488       3,558       7,140       7,120  
Telecommunication services     2,810       3,487       6,154       6,683  
Travel and meals     2,939       2,498       5,608       4,651  
Postage and supplies     2,058       2,218       4,161       4,412  
Advertising and public relations     1,671       1,777       3,353       3,107  
ATM expense     1,099       1,118       2,086       2,481  
Loan collection and repossession expense     918       503       1,901       1,293  
Writedowns of foreclosed and other assets     594       460       1,155       611  
Amortization of intangibles     3,012       3,145       6,157       6,290  
Other     5,535       2,629       10,196       6,861  
Total non-interest expense   $ 99,131     $ 89,107     $ 195,809     $ 182,917  

 

Bank OZK
Summary of Total Loans Outstanding

Unaudited

                        
    June 30, 2019     December 31, 2018  
    (Dollars in thousands)  
Real estate:                                
Residential 1-4 family   $ 1,017,698       5.8 %   $ 1,049,460       6.1 %
Non-farm/non-residential     3,953,882       22.6       4,319,388       25.2  
Construction/land development     6,662,921       38.1       6,562,185       38.4  
Agricultural     190,348       1.1       165,088       1.0  
Multifamily residential     1,411,584       8.1       1,116,026       6.5  
Total real estate     13,236,433       75.7       13,212,147       77.2  
Commercial and industrial     746,990       4.3       823,417       4.8  
Consumer     2,740,344       15.7       2,345,863       13.7  
Other     761,438       4.3       736,396       4.3  
Total loans   $ 17,485,205       100.0 %   $ 17,117,823       100.0 %

Summary of Deposits
Unaudited

              
    June 30, 2019     December 31, 2018  
    (Dollars in thousands)  
Non-interest bearing   $ 2,777,066       15.3 %   $ 2,748,273       15.3 %
Interest bearing:                                
Transaction (NOW)     2,605,606       14.3       2,359,299       13.2  
Savings and money market     6,620,591       36.4       7,323,414       40.8  
Time deposits less than $100     2,807,587       15.4       2,297,101       12.8  
Time deposits of $100 or more     3,375,365       18.6       3,210,328       17.9  
Total deposits   $ 18,186,215       100.0 %   $ 17,938,415       100.0 %

Bank OZK
Selected Consolidated Financial Data
Unaudited

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2019     2018     % Change     2019     2018     % Change  
    (Dollars in thousands, except per share amounts)  
Income statement data:                                                
Net interest income   $ 224,536     $ 224,661       (0.1 )%   $ 450,424     $ 442,437       1.8 %
Provision for loan losses     6,769       9,610       (29.6 )     13,450       15,177       (11.4 )
Non-interest income     26,603       27,386       (2.9 )     50,675       56,094       (9.7 )
Non-interest expense     99,131       89,107       11.2       195,809       182,917       7.0  
Net income available to common stockholders     110,503       114,751       (3.7 )     221,209       227,895       (2.9 )
Common stock data:                                                
Net income per share - diluted   $ 0.86     $ 0.89       (3.4 )%   $ 1.71     $ 1.77       (3.4 )%
Net income per share - basic     0.86       0.89       (3.4 )     1.72       1.77       (2.8 )
Cash dividends per share     0.23       0.195       17.9       0.45       0.385       16.9  
Book value per share     30.97       28.10       10.2       30.97       28.10       10.2  
Tangible book value per share (1)     25.61       22.63       13.2       25.61       22.63       13.2  
Diluted shares outstanding (thousands)     129,079       128,804               129,022       128,783          
End of period shares outstanding (thousands)     128,947       128,616               128,947       128,616          
Balance sheet data at period end:                                                
Total assets   $ 22,960,731     $ 22,220,380       3.3 %   $ 22,960,731     $ 22,220,380       3.3 %
Total loans     17,485,205       16,763,874       4.3       17,485,205       16,763,874       4.3  
Non-purchased loans     15,786,809       14,183,533       11.3       15,786,809       14,183,533       11.3  
Purchased loans     1,698,396       2,580,341       (34.2 )     1,698,396       2,580,341       (34.2 )
Allowance for loan losses     106,642       104,638       1.9       106,642       104,638       1.9  
Foreclosed assets     33,467       20,662       62.0       33,467       20,662       62.0  
Investment securities     2,560,096       2,617,859       (2.2 )     2,560,096       2,617,859       (2.2 )
Goodwill and other intangible assets, net     690,304       702,751       (1.8 )     690,304       702,751       (1.8 )
Deposits     18,186,215       17,897,085       1.6       18,186,215       17,897,085       1.6  
Repurchase agreements with customers     10,909       179,851       (93.9 )     10,909       179,851       (93.9 )
Other borrowings     201,455       1,766       11,307.4       201,455       1,766       11,307.4  
Subordinated notes     223,471       223,088       0.2       223,471       223,088       0.2  
Subordinated debentures     119,635       119,077       0.5       119,635       119,077       0.5  
Unfunded balance of closed loans     11,167,055       11,999,661       (6.9 )     11,167,055       11,999,661       (6.9 )
Total common stockholders’ equity     3,993,247       3,613,903       10.5       3,993,247       3,613,903       10.5  
Net unrealized gains (losses) on investment securities AFS
  included in common stockholders' equity
    19,693       (46,913 )             19,693       (46,913 )        
Loan, including purchased loans, to deposit ratio     96.15 %     93.67 %             96.15 %     93.67 %        
Selected ratios:                                                
Return on average assets(2)     1.95 %     2.10 %             1.97 %     2.13 %        
Return on average common stockholders’ equity(2)     11.29       12.90               11.52       13.03          
Return on average tangible common stockholders’ equity(1) (2)     13.70       16.08               14.04       16.30          
Average common equity to total average assets     17.31       16.30               17.12       16.34          
Net interest margin – FTE(2)     4.45       4.66               4.49       4.68          
Efficiency ratio     39.30       35.19               38.89       36.52          
Net charge-offs to average non-purchased loans(2) (3)     0.12       0.05               0.09       0.04          
Net charge-offs to average total loans(2)     0.14       0.07               0.10       0.06          
Nonperforming loans to total loans(4)     0.15       0.10               0.15       0.10          
Nonperforming assets to total assets(4)     0.25       0.15               0.25       0.15          
Allowance for loan losses to non-purchased loans(5)     0.67       0.73             0.67     0.73          
Other information:                                                
Non-accrual loans(4)   $ 22,860     $ 13,543             $ 22,860     $ 13,543          
Accruing loans - 90 days past due(4)                                        
Troubled and restructured non-purchased loans - accruing(4)     1,399                     1,399                
Impaired purchased loans     15,440       6,577               15,440       6,577          

 

(1)Calculations of tangible book value per common share and return on average tangible common stockholders’ equity and the reconciliations to GAAP are
  included in the schedules accompanying this release.
(2)Ratios for interim periods annualized based on actual days.
(3)Excludes purchased loans and net charge-offs related to such loans.
(4)Excludes purchased loans, except for their inclusion in total assets.
(5)Excludes purchased loans and any allowance for such loans.

Bank OZK
Supplemental Quarterly Financial Data
Unaudited

     9/30/17     12/31/17     3/31/18     6/30/18     9/30/18     12/31/18     3/31/19     6/30/19  
    (Dollars in thousands, except per share amount)  
Earnings Summary:                                                                
Net interest income   $ 209,722     $ 214,831     $ 217,776     $ 224,661     $ 220,614     $ 228,382     $ 225,888     $ 224,536  
Federal tax (FTE) adjustment     3,014       2,450       1,166       1,151       1,132       1,219       1,207       1,136  
Net interest income (FTE)     212,736       217,281       218,942       225,812       221,746       229,601       227,095       225,672  
Provision for loan losses     (7,777 )     (9,279 )     (5,567 )     (9,610 )     (41,949 )     (7,271 )     (6,681 )     (6,769 )
Non-interest income     32,747       30,213       28,707       27,386       24,121       27,560       24,072       26,603  
Non-interest expense     (84,399 )     (86,177 )     (93,810 )     (89,107 )     (102,942 )     (94,893 )     (96,678 )     (99,131 )
Pretax income (FTE)     153,307       152,038       148,272       154,481       100,976       154,997       147,808       146,375  
FTE adjustment     (3,014 )     (2,450 )     (1,166 )     (1,151 )     (1,132 )     (1,219 )     (1,207 )     (1,136 )
Provision for income taxes     (54,246 )     (3,434 )     (33,973 )     (38,589 )     (25,665 )     (38,750 )     (35,889 )     (34,726 )
Noncontrolling interest     (40 )     10       11       10       1       3       (6 )     (10 )
Net income available to
  common stockholders
  $ 96,007     $ 146,164     $ 113,144     $ 114,751     $ 74,180     $ 115,031     $ 110,706     $ 110,503  
Earnings per common share – diluted   $ 0.75     $ 1.14     $ 0.88     $ 0.89     $ 0.58     $ 0.89     $ 0.86     $ 0.86  
Non-interest Income:                                                                
Service charges on deposit accounts   $ 9,729     $ 10,058     $ 9,525     $ 9,704     $ 9,730     $ 10,585     $ 9,722     $ 10,291  
Trust income     1,755       1,729       1,793       1,591       1,730       1,821       1,730       1,839  
BOLI income     4,453       5,166       7,580       5,259       5,321       5,751       5,162       5,178  
Other income from purchased loans     2,933       2,009       1,251       2,744       1,418       2,370       795       1,455  
Loan service, maintenance and other
  fees
    5,274       4,289       4,743       5,641       4,724       5,245       4,874       4,565  
Net gains on investment securities     2,429       1,201       17                               713  
Gains (losses) on sales of other assets     1,363       1,899       1,426       844       (518 )     465       284       402  
Other     4,811       3,862       2,372       1,603       1,716       1,323       1,505       2,160  
Total non-interest income   $ 32,747     $ 30,213     $ 28,707     $ 27,386     $ 24,121     $ 27,560     $ 24,072     $ 26,603  
Non-interest Expense:                                                                
Salaries and employee benefits   $ 35,331     $ 38,417     $ 45,499     $ 41,665     $ 41,477     $ 41,837     $ 44,868     $ 47,558  
Net occupancy expense     13,595       13,474       14,150       13,827       14,358       14,027       14,750       14,587  
Other operating expenses     35,473       34,286       34,161       33,615       47,107       39,029       37,060       36,986  
Total non-interest expense   $ 84,399     $ 86,177     $ 93,810     $ 89,107     $ 102,942     $ 94,893     $ 96,678     $ 99,131  
Balance Sheet Data:                                                                
Total assets   $ 20,768,493     $ 21,275,647     $ 22,039,439     $ 22,220,380     $ 22,086,539     $ 22,388,030     $ 23,005,652     $ 22,960,731  
Non-purchased loans     12,047,094       12,733,937       13,674,561       14,183,533       14,440,623       15,073,791       15,610,681       15,786,809  
Purchased loans     3,731,536       3,309,092       2,934,535       2,580,341       2,285,168       2,044,032       1,864,715       1,698,396  
Investment securities     1,975,102       2,622,796       2,612,961       2,617,859       2,706,156       2,888,281       2,781,691       2,560,096  
Deposits     16,823,359       17,192,345       17,833,672       17,897,085       17,822,915       17,938,415       18,476,868       18,186,215  
Unfunded balance of closed loans     12,519,839       13,192,439       12,551,032       11,999,661       11,891,247       11,364,975       11,544,218       11,167,055  
Common stockholders' equity     3,334,740       3,460,728       3,526,605       3,613,903       3,653,596       3,770,330       3,882,643       3,993,247  
Allowance for Loan Losses:                                                                
Balance at beginning of period   $ 82,320     $ 86,784     $ 94,120     $ 98,097     $ 104,638     $ 98,200     $ 102,264     $ 105,954  
Net charge-offs     (3,313 )     (1,943 )     (1,590 )     (3,069 )     (48,387 )     (3,207 )     (2,991 )     (6,081 )
Provision for loan losses     7,777       9,279       5,567       9,610       41,949       7,271       6,681       6,769  
Balance at end of period   $ 86,784     $ 94,120     $ 98,097     $ 104,638     $ 98,200     $ 102,264     $ 105,954     $ 106,642  
Selected Ratios:                                                                
Net interest margin – FTE(1)     4.84 %     4.72 %     4.69 %     4.66 %     4.47 %     4.55 %     4.53 %     4.45 %
Efficiency ratio     34.38       34.82       37.88       35.19       41.87       36.90       38.49       39.30  
Net charge-offs to average
  non-purchased loans(1) (2)
    0.08       0.08       0.04       0.05       1.32       0.06       0.05       0.12  
Net charge-offs to average
  total loans(1)
    0.09       0.05       0.04       0.07       1.14       0.07       0.07       0.14  
Nonperforming loans
  to total loans(3)
    0.11       0.10       0.09       0.10       0.23       0.23       0.22       0.15  
Nonperforming assets to total assets(3)     0.20       0.18       0.16       0.15       0.23       0.23       0.21       0.25  
Allowance for loan losses to
  total non-purchased loans(4)
    0.71       0.73       0.71       0.73       0.67       0.67       0.67       0.67  
Loans past due 30 days or
  more, including past due non-
  accrual loans, to total loans(3)
    0.12       0.15       0.14       0.12       0.17       0.28       0.28       0.13  

 

(1)Ratios for interim periods annualized based on actual days.
(2)Excludes purchased loans and net charge-offs related to such loans.
(3)Excludes purchased loans, except for their inclusion in total assets.
(4)Excludes purchased loans and any allowance for such loans.

 

Bank OZK
Average Consolidated Balance Sheets and Net Interest Analysis – FTE
Unaudited

     Three Months Ended June 30,     Six Months Ended June 30,  
    2019     2018     2019     2018  
    Average
Balance
    Income/
Expense
    Yield/
Rate
    Average
Balance
    Income/
Expense
    Yield/
Rate
    Average
Balance
    Income/
Expense
    Yield/
Rate
    Average
Balance
    Income/
Expense
    Yield/
Rate
 
    (Dollars in thousands)  
ASSETS                                                                                                
Earning assets:                                                                                                
Interest earning deposits and federal funds sold   $ 118,761     $ 941       3.18 %   $ 186,103     $ 839       1.81 %   $ 93,031     $ 1,354       2.94 %   $ 148,304     $ 1,336       1.82 %
Investment securities:                                                                                                
Taxable     2,172,732       13,585       2.51       2,055,737       11,476       2.24       2,241,370       28,481       2.56       2,058,995       22,907       2.24  
Tax-exempt – FTE     509,119       4,675       3.68       545,173       5,192       3.82       512,348       9,579       3.77       550,942       10,458       3.83  
Non-purchased loans – FTE     15,760,582       250,235       6.37       13,892,522       210,446       6.08       15,622,442       496,276       6.41       13,453,745       400,933       6.01  
Purchased loans     1,785,374       28,519       6.41       2,757,235       46,862       6.82       1,866,130       58,714       6.34       2,968,315       97,839       6.65  
Total earning assets – FTE     20,346,568       297,955       5.87       19,436,770       274,815       5.67       20,335,321       594,404       5.89       19,180,301       533,473       5.61  
Non-interest earning assets     2,342,995                       2,446,188                       2,280,063                       2,403,283                  
Total assets   $ 22,689,563                     $ 21,882,958                     $ 22,615,384                     $ 21,583,584                  
LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                
Interest bearing liabilities:                                                                                                
Deposits:                                                                                                
Savings and interest bearing transaction   $ 9,640,727     $ 37,510       1.56 %   $ 10,248,619     $ 29,249       1.14 %   $ 9,586,233     $ 73,613       1.55 %   $ 10,054,064     $ 51,818       1.04 %
Time deposits of $100 or more     3,137,419       16,698       2.13       3,182,463       11,027       1.39       3,153,873       32,252       2.06       3,109,697       19,808       1.28  
Other time deposits     2,580,584       13,184       2.05       1,449,406       3,556       0.98       2,508,405       24,614       1.98       1,447,687       6,598       0.92  
Total interest bearing deposits     15,358,730       67,392       1.76       14,880,488       43,832       1.18       15,248,511       130,479       1.73       14,611,448       78,224       1.08  
Repurchase agreements with customers     11,101       11       0.41       161,246       385       0.96       16,616       33       0.40       136,975       544       0.80  
Other borrowings     70,390       19       0.11       35,573       46       0.52       169,439       1,408       1.68       100,398       679       1.36  
Subordinated notes     223,419       3,181       5.71       223,041       3,180       5.72       223,370       6,326       5.71       222,994       6,326       5.72  
Subordinated debentures     119,559       1,680       5.64       119,006       1,560       5.26       119,486       3,392       5.72       118,935       2,946       5.00  
Total interest bearing liabilities     15,783,199       72,283       1.84       15,419,354       49,003       1.27       15,777,422       141,638       1.81       15,190,750       88,719       1.18  
Non-interest bearing liabilities:                                                                                                
Non-interest bearing deposits     2,723,657                       2,717,316                       2,740,291                       2,691,855                  
Other non-interest bearing liabilities     252,062                       176,302                       223,491                       172,081                  
Total liabilities     18,758,918                       18,312,972                       18,741,204                       18,054,686                  
Common stockholders’ equity     3,927,522                       3,566,944                       3,871,065                       3,525,849                  
Noncontrolling interest     3,123                       3,042                       3,115                       3,049                  
Total liabilities and stockholders’ equity   $ 22,689,563                     $ 21,882,958                     $ 22,615,384                     $ 21,583,584                  
Net interest income – FTE           $ 225,672                     $ 225,812                     $ 452,766                     $ 444,754          
Net interest margin – FTE                     4.45 %                     4.66 %                     4.49 %                     4.68 %

 

Bank OZK
Reconciliation of Non-GAAP Financial Measures

Calculation of Average Tangible Common
Stockholders’ Equity and the Annualized Return on
Average Tangible Common Stockholders’ Equity
Unaudited

     Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2019     2018     2019     2018  
    (Dollars in thousands)  
Net income available to common stockholders   $ 110,503     $ 114,751     $ 221,209     $ 227,895  
Average common stockholders’ equity before
  noncontrolling interest
  $ 3,927,522     $ 3,566,944     $ 3,871,065     $ 3,525,849  
Less average intangible assets:                                
Goodwill     (660,789 )     (660,789 )     (660,789 )     (660,789 )
Core deposit and other intangibles, net of
  accumulated amortization
    (31,225 )     (43,862 )     (32,822 )     (45,483 )
Total average intangibles     (692,014 )     (704,651 )     (693,611 )     (706,272 )
Average tangible common stockholders’ equity   $ 3,235,508     $ 2,862,293     $ 3,177,454     $ 2,819,577  
Return on average common stockholders’ equity(1)     11.29 %     12.90 %     11.52 %     13.03 %
Return on average tangible common stockholders’ equity(1)     13.70 %     16.08 %     14.04 %     16.30 %

(1)Ratios for interim periods annualized based on actual days.

Calculation of Total Tangible Common
Stockholders’ Equity and Tangible
Book Value per Common Share
Unaudited

     June 30,  
    2019     2018  
    (In thousands, except per share amounts)  
Total common stockholders’ equity before noncontrolling interest   $ 3,993,247     $ 3,613,903  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (29,515 )     (41,962 )
Total intangibles     (690,304 )     (702,751 )
Total tangible common stockholders’ equity   $ 3,302,943     $ 2,911,152  
Shares of common stock outstanding     128,947       128,616  
Book value per common share   $ 30.97     $ 28.10  
Tangible book value per common share   $ 25.61     $ 22.63  

Calculation of Total Tangible Common Stockholders’
Equity and the Ratio of Total Tangible Common
Stockholders’ Equity to Total Tangible Assets
Unaudited

     June 30,  
    2019     2018  
    (Dollars in thousands)  
Total common stockholders’ equity before noncontrolling interest   $ 3,993,247     $ 3,613,903  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (29,515 )     (41,962 )
Total intangibles     (690,304 )     (702,751 )
Total tangible common stockholders’ equity   $ 3,302,943     $ 2,911,152  
Total assets   $ 22,960,731     $ 22,220,380  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (29,515 )     (41,962 )
Total intangibles     (690,304 )     (702,751 )
Total tangible assets   $ 22,270,427     $ 21,517,629  
Ratio of total common stockholders’ equity to total assets     17.39 %     16.26 %
Ratio of total tangible common stockholders’ equity to total
  tangible assets
    14.83 %     13.53 %

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Source: Bank OZK