Press Release

Bank OZK Announces Fourth Quarter and Full Year 2018 Earnings

Company Release - 1/17/2019 4:01 PM ET

LITTLE ROCK, Ark., Jan. 17, 2019 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the fourth quarter of 2018 was $115.0 million, a 21.3% decrease from net income of $146.2 million for the fourth quarter of 2017.  Diluted earnings per common share for the fourth quarter of 2018 were $0.89, a 21.9% decrease from $1.14 for the fourth quarter of 2017.

For the full year of 2018, net income totaled $417.1 million, a 1.1% decrease from net income of $421.9 million for the full year of 2017.  Diluted earnings per common share for the full year of 2018 were $3.24, a 3.3% decrease from $3.35 for the full year of 2017.

During the fourth quarter of 2017, the Bank recognized a one-time income tax benefit of $49.8 million as a result of the revaluation, in the fourth quarter of 2017, of the Bank’s net deferred tax liability position to reflect the reduction in its federal corporate income tax rate from 35% to 21% due to the Tax Cuts and Jobs Act enacted on December 22, 2017.  Additionally, the Bank incurred pre-tax expenses of approximately $0.3 million for the fourth quarter and $11.7 million for the full year of 2018 (none in 2017) related to its name change and related strategic rebranding.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the fourth quarter of 2018 were 2.04%, 12.36% and 15.24%, respectively, compared to 2.81%, 17.23% and 21.84%, respectively, for the fourth quarter of 2017.  The Bank’s returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the full year of 2018 were 1.90%, 11.59% and 14.41%, respectively, compared to 2.15%, 13.49% and 17.49%, respectively, for the full year of 2017.  The calculation of the Bank’s return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release. 

“We had excellent fourth quarter results, achieving our most profitable quarter of the year with net income of $115.0 million and an annualized return on average assets of 2.04%,” stated George Gleason, Chairman and Chief Executive Officer. “For the full year of 2018, our net income was $417.1 million and our return on average assets was 1.90%.  Our strong net income in 2018 resulted in meaningful increases in our already strong risked based capital ratios and allowed us to increase our cash dividends each quarter.  In 2018 we completed our strategic rebranding and continued our efforts to enhance our team of industry and technology professionals, which is key to our competitive advantage.  We believe we are well positioned for success in 2019.”

KEY BALANCE SHEET METRICS

Total loans, including purchased loans, were $17.12 billion at December 31, 2018, a 6.7% increase from $16.04 billion at December 31, 2017.  Non-purchased loans, which exclude loans acquired in previous acquisitions, were $15.07 billion at December 31, 2018, an 18.4% increase from $12.73 billion at December 31, 2017.  Purchased loans, which consist of loans acquired in previous acquisitions, were $2.04 billion at December 31, 2018, a 38.2% decrease from $3.31 billion at December 31, 2017.  The unfunded balance of closed loans totaled $11.36 billion at December 31, 2018, a 13.9% decrease from $13.19 billion at December 31, 2017.

Deposits were $17.94 billion at December 31, 2018, a 4.3% increase from $17.19 billion at December 31, 2017.  Total assets were $22.39 billion at December 31, 2018, a 5.2% increase from $21.28 billion at December 31, 2017.

Common stockholders’ equity was $3.77 billion at December 31, 2018, an 8.9% increase from $3.46 billion at December 31, 2017.  Tangible common stockholders’ equity was $3.07 billion at December 31, 2018, an 11.7% increase from $2.75 billion at December 31, 2017.  Book value per common share was $29.32 at December 31, 2018, an 8.7% increase from $26.98 at December 31, 2017.  Tangible book value per common share was $23.90 at December 31, 2018, an 11.4% increase from $21.45 at December 31, 2017.  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 was 16.84% at December 31, 2018 compared to 16.27% at December 31, 2017.  Its ratio of total tangible common stockholders’ equity to total tangible assets was 14.17% at December 31, 2018 compared to 13.38% at December 31, 2017.  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. 

NET INTEREST INCOME

Net interest income for the fourth quarter of 2018 was $228.4 million, a 6.3% increase from $214.8 million for the fourth quarter of 2017.  Net interest margin, on a fully taxable equivalent (“FTE”) basis, was 4.55% for the fourth quarter of 2018, a decrease of 17 basis points from 4.72% for the fourth quarter of 2017.  Average earning assets were $20.00 billion for the fourth quarter of 2018, a 9.4% increase from $18.28 billion for the fourth quarter of 2017.  

Net interest income for the full year of 2018 was $891.4 million, a 9.1% increase from $817.4 million for the full year of 2017.  Net interest margin, on a FTE basis, was 4.59% for the full year of 2018, a decrease of 26 basis points from 4.85% for the full year of 2017.  Average earning assets were $19.52 billion for the full year of 2018, a 14.1% increase from $17.11 billion for the full year of 2017.

NON-INTEREST INCOME

Non-interest income for the fourth quarter of 2018 decreased 8.8% to $27.6 million compared to $30.2 million for the fourth quarter of 2017.  Non-interest income for the full year of 2018 decreased 13.0% to $107.8 million compared to $123.9 million for the full year of 2017. 

The Bank’s service charges on deposit accounts decreased from $42.9 million in 2017 to $39.5 million in 2018 primarily due to the Durbin Amendment’s impact on the Bank’s interchange revenue effective July 1, 2017.  The Bank’s mortgage lending income decreased from $6.4 million in 2017 to $0.5 million in 2018 as a result of the Bank’s decision in December 2017 to exit secondary market mortgage lending and the wind down of that business in early 2018. 

NON-INTEREST EXPENSE

Non-interest expense for the fourth quarter of 2018 increased 10.1% to $94.9 million compared to $86.2 million for the fourth quarter of 2017.  Non-interest expense for the full year of 2018 increased 14.5% to $380.8 million compared to $332.7 million for the full year of 2017.  Non-interest expense included approximately $0.3 million for the fourth quarter and $11.7 million for the full year of 2018 (none in 2017) related to the name change and the related strategic rebranding. 

The Bank’s efficiency ratio (non-interest expense divided by the sum of net interest income FTE and non-interest income) for the fourth quarter of 2018 was 36.9% compared to 34.8% for the fourth quarter of 2017.  The Bank’s efficiency ratio for the full year of 2018 was 37.9% compared to 34.9% for the full year of 2017.

ASSET QUALITY, CHARGE-OFFS, PROVISIONS AND ALLOWANCE

Excluding purchased loans, the Bank’s ratio of nonperforming loans as a percent of total loans was 0.23% at December 31, 2018 compared to 0.10% at December 31, 2017, and its ratio of nonperforming assets as a percent of total assets was 0.23% at December 31, 2018 compared to 0.18% at December 31, 2017.

Excluding purchased loans, the Bank’s ratio of loans past due 30 days or more, including past due non-accrual loans, to total loans was 0.28% at December 31, 2018 compared to 0.15% at December 31, 2017.

The Bank’s annualized net charge-off ratio for non-purchased loans was 0.06% for the fourth quarter of 2018 compared to 0.08% for the fourth quarter of 2017, and it was 0.38% for the full year of 2018 compared to 0.06% for the full year of 2017.  The Bank’s annualized net charge-off ratio for all loans was 0.07% for the fourth quarter of 2018 compared to 0.05% for the fourth quarter of 2017, and it was 0.34% for the full year of 2018 compared to 0.07% for the full year of 2017. 

The Bank’s provision for loan losses totaled $7.3 million for the fourth quarter and $64.4 million for the full year of 2018 compared to $9.3 million for the fourth quarter and $28.1 million for the full year of 2017. 

The increases in the Bank’s net charge-off ratios and provision expense for the full year of 2018 compared to 2017 were primarily due to the charge-offs totaling $45.5 million during the third quarter of 2018 on two Real Estate Specialties Group credits.

The Bank’s allowance for loan losses for its non-purchased loans was $100.7 million, or 0.67% of total non-purchased loans, at December 31, 2018 compared to $92.5 million, or 0.73% of total non-purchased loans, at December 31, 2017.  The Bank had $1.6 million of allowance for loan losses for its purchased loans at both December 31, 2018 and 2017.

MANAGEMENT’S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS

In connection with this release, the Bank released management’s comments on its quarterly and year end results.  Management will conduct a conference call to take questions on the quarterly and year end results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on Friday, January 18, 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 4759034.  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 ir.ozk.com.

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; future 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, our operational or security systems or infrastructure, or those of third parties with whom we do 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 Bank’s public filings, 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, 2017 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 #1 bank in the nation in its asset size for eight consecutive years. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through 253 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. 

  
Bank OZK 
Consolidated Balance Sheets 
Unaudited 
  
 December 31, 
 2018  2017 
   
 (Dollars in thousands, except per share amounts) 
   
ASSETS       
Cash and cash equivalents$290,672  $440,388 
Investment securities - available for sale 2,862,340   2,593,873 
Federal Home Loan Bank of Dallas and other banker's bank stocks 25,941   28,923 
Non-purchased loans 15,073,791   12,733,937 
Purchased loans 2,044,032   3,309,092 
Allowance for loan losses (102,264)  (94,120)
Net loans 17,015,559   15,948,909 
Premises and equipment, net 567,189   519,811 
Foreclosed assets 16,171   25,357 
Accrued interest receivable 81,968   64,608 
Bank owned life insurance (“BOLI”) 721,238   658,147 
Intangible assets, net 696,461   709,040 
Other, net 110,491   286,591 
Total assets$22,388,030  $21,275,647 
        
LIABILITIES AND STOCKHOLDERS EQUITY       
Deposits:       
Demand non-interest bearing$2,748,273  $2,726,623 
Savings and interest bearing transaction 9,682,713   10,051,122 
Time 5,507,429   4,414,600 
Total deposits 17,938,415   17,192,345 
Repurchase agreements with customers 20,564   69,331 
Other borrowings 96,692   22,320 
Subordinated notes 223,281   222,899 
Subordinated debentures 119,358   118,800 
Accrued interest payable and other liabilities 216,355   186,164 
Total liabilities 18,614,665   17,811,859 
        
Commitments and contingencies       
        
Stockholders’ equity:       
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares     
  issued or outstanding at December 31, 2018 or December 31, 2017
Common stock; $0.01 par value; 300,000,000 shares authorized; 1,286   1,283 
  128,611,049 and 128,287,550 shares issued and outstanding at
 December 31, 2018 and 2017, respectively
Additional paid-in capital 2,237,948   2,221,844 
Retained earnings 1,565,201   1,250,313 
Accumulated other comprehensive loss (34,105)  (12,712)
Total stockholders’ equity before noncontrolling interest 3,770,330   3,460,728 
Noncontrolling interest 3,035   3,060 
Total stockholders’ equity 3,773,365   3,463,788 
Total liabilities and stockholders’ equity$22,388,030  $21,275,647 
 

 

  
Bank OZK 
Consolidated Statements of Income 
Unaudited 
  
  Three Months Ended  Year Ended 
December 31,December 31,
 2018  2017  2018  2017 
   
 (Dollars in thousands, except per share amounts) 
Interest income:               
Non-purchased loans$237,443  $178,525  $858,102  $607,548 
Purchased loans 35,453   56,303   173,465   276,499 
Investment securities:               
Taxable 14,642   9,661   50,021   25,460 
Tax-exempt 3,941   4,343   16,193   22,430 
Deposits with banks and federal funds sold 590   268   3,039   656 
Total interest income 292,069   249,100   1,100,820   932,593 
                
Interest expense:               
Deposits 56,608   29,150   186,617   96,083 
Repurchase agreements with customers 26   38   785   132 
Other borrowings 2,193   574   3,017   1,305 
Subordinated notes 3,216   3,190   12,757   12,620 
Subordinated debentures 1,644   1,317   6,211   5,024 
Total interest expense 63,687   34,269   209,387   115,164 
                
Net interest income 228,382   214,831   891,433   817,429 
Provision for loan losses 7,271   9,279   64,398   28,092 
Net interest income after provision for loan losses 221,111   205,552   827,035   789,337 
                
Non-interest income:               
Service charges on deposit accounts 10,585   10,058   39,544   42,853 
Mortgage lending income 20   1,294   538   6,399 
Trust income 1,821   1,729   6,935   6,691 
BOLI income 5,751   5,166   23,911   18,677 
Other income from purchased loans 2,370   2,009   7,784   13,456 
Loan service, maintenance and other fees 5,245   4,289   20,354   15,696 
Gains on sales of other assets 465   1,899   2,219   5,553 
Net gains on investment securities    1,201   17   4,033 
Other 1,303   2,568   6,473   10,500 
Total non-interest income 27,560   30,213   107,775   123,858 
                
Non-interest expense:               
Salaries and employee benefits 41,837   38,417   170,478   152,194 
Net occupancy and equipment 14,027   13,474   56,362   53,198 
Other operating expenses 39,029   34,286   153,912   127,280 
Total non-interest expense 94,893   86,177   380,752   332,672 
                
Income before taxes 153,778   149,588   554,058   580,523 
Provision for income taxes 38,750   3,434   136,977   158,586 
Net income 115,028   146,154   417,081   421,937 
Earnings attributable to noncontrolling interest 3   10   25   (46)
Net income available to common stockholders$115,031  $146,164  $417,106  $421,891 
                
Basic earnings per common share$0.89  $1.14  $3.24  $3.36 
                
Diluted earnings per common share$0.89  $1.14  $3.24  $3.35 
                
Dividends declared per common share$0.21  $0.185  $0.795  $0.71 
 


  
Bank OZK 
Consolidated Statements of Stockholders’ Equity 
Unaudited 
  
           Accumulated     Total 
 Additional OtherNon-
 CommonPaid-In RetainedComprehensiveControlling 
 Stock Capital EarningsLoss Interest
   
 (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       417,081         417,081 
Earnings attributable to noncontrolling interest       25      (25)   
Total other comprehensive loss          (21,393)     (21,393)
Common stock dividends paid, $0.795 per share       (102,218)        (102,218)
Issuance of 223,840 shares of common stock for exercise of stock options 2   5,740            5,742 
Issuance of 220,326 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    14,135            14,135 
Forfeiture of 48,917 shares of unvested restricted common stock                 
Balances – December 31, 2018$1,286  $2,237,948  $1,565,201  $(34,105) $3,035  $3,773,365 
  
  

 

 
Bank OZK
Summary of Non-Interest Expense
Unaudited
 
 Three Months Ended  Year Ended
December 31,December 31,
 2018  2017  2018  2017
  
 (Dollars in thousands)
Salaries and employee benefits$41,837  $38,417  $170,478  $152,194
Net occupancy and equipment 14,027   13,474   56,362   53,198
Other operating expenses:              
Professional and outside services 8,325   10,269   35,867   32,441
Telecommunication services 3,023   3,537   13,080   13,935
Software and data processing 3,943   2,382   13,729   10,126
Postage and supplies 2,214   2,063   9,144   7,769
Advertising and public relations 1,472   1,634   11,557   5,989
ATM expense 544   1,644   4,227   5,725
Travel and meals 2,482   2,338   9,650   8,477
FDIC insurance 3,100   2,700   11,800   9,700
FDIC and state assessments 572   883   2,940   3,414
Loan collection and repossession expense 1,077   949   3,302   5,303
Writedowns of foreclosed assets 1,841   994   2,996   3,488
Writedown of signage due to strategic rebranding       4,915   
Amortization of intangibles 3,144   3,145   12,579   12,580
Other 7,292   1,748   18,126   8,333
Total non-interest expense$94,893  $86,177  $380,752  $332,672
 

 

 
Bank OZK
Summary of Total Loans Outstanding
Unaudited
 
  December 31,
 2018  2017
  
 (Dollars in thousands)
Real estate:      
Residential 1-4 family$1,049,460  $1,174,427
Non-farm/non-residential 4,319,388   4,478,876
Construction/land development 6,562,185   6,648,061
Agricultural 165,088   150,003
Multifamily residential 1,116,026   508,514
Total real estate 13,212,147   12,959,881
Commercial and industrial 823,417   738,225
Consumer 2,345,863   1,472,593
Other 736,396   872,330
Total loans$17,117,823  $16,043,029
 

 

  
Bank OZK 
Selected Consolidated Financial Data 
(Dollars in thousands, except per share amounts) 
Unaudited 
  
  Three Months Ended  Year Ended 
December 31,December 31,
 2018  2017  % Change  2018  2017  % Change 
Income statement data:                       
Net interest income$228,382  $214,831   6.3% $891,433  $817,429   9.1%
Provision for loan losses 7,271   9,279   (21.6)  64,398   28,092   129.2 
Non-interest income 27,560   30,213   (8.8)  107,775   123,858   (13.0)
Non-interest expense 94,893   86,177   10.1   380,752   332,672   14.5 
Net income available to common stockholders 115,031   146,164   (21.3)  417,106   421,891   (1.1)
Common stock data:                       
Net income per share - diluted$0.89  $1.14   (21.9)% $3.24  $3.35   (3.3)%
Net income per share - basic 0.89   1.14   (21.9)  3.24   3.36   (3.6)
Cash dividends per share 0.21   0.185   13.5   0.795   0.71   12 
Book value per share 29.32   26.98   8.7   29.32   26.98   8.7 
Tangible book value per share(1) 23.9   21.45   11.4   23.9   21.45   11.4 
Diluted shares outstanding (thousands) 128,666   128,510       128,740   125,809     
End of period shares outstanding (thousands) 128,611   128,288       128,611   128,288     
Balance sheet data at period end:                       
Assets$22,388,030  $21,275,647   5.2% $22,388,030  $21,275,647   5.2%
Total loans 17,117,823   16,043,029   6.7   17,117,823   16,043,029   6.7 
Non-purchased loans 15,073,791   12,733,937   18.4   15,073,791   12,733,937   18.4 
Purchased loans 2,044,032   3,309,092   (38.2)  2,044,032   3,309,092   (38.2)
Allowance for loan losses 102,264   94,120   8.7   102,264   94,120   8.7 
Foreclosed assets 16,171   25,357   (36.2)  16,171   25,357   (36.2)
Investment securities 2,888,281   2,622,796   10.1   2,888,281   2,622,796   10.1 
Goodwill and other intangible assets 696,461   709,040   (1.8)  696,461   709,040   (1.8)
Deposits 17,938,415   17,192,345   4.3   17,938,415   17,192,345   4.3 
Repurchase agreements with customers 20,564   69,331   (70.3)  20,564   69,331   (70.3)
Other borrowings 96,692   22,320   333.2   96,692   22,320   333.2 
Subordinated notes 223,281   222,899   0.2   223,281   222,899   0.2 
Subordinated debentures 119,358   118,800   0.5   119,358   118,800   0.5 
Unfunded balance of closed loans 11,364,975   13,192,439   (13.9)  11,364,975   13,192,439   (13.9)
Common stockholders’ equity 3,770,330   3,460,728   8.9   3,770,330   3,460,728   8.9 
Net unrealized losses on investment securities AFS included in common stockholders' equity (34,105)  (12,712)      (34,105)  (12,712)    
Loan (including purchased loans) to deposit ratio 95.43%  93.31%      95.43%  93.31%    
Selected ratios:                       
Return on average assets(2) 2.04%  2.81%      1.9%  2.15%    
Return on average common stockholders’ equity(2) 12.36   17.23       11.59   13.49     
Return on average tangible common stockholders’ equity(1) (2) 15.24   21.84       14.41   17.49     
Average common equity to total average assets 16.54   16.32       16.42   15.91     
Net interest margin – FTE(2) 4.55   4.72       4.59   4.85     
Efficiency ratio 36.9   34.82       37.93   34.88     
Net charge-offs to average non-purchased loans(2) (3) 0.06   0.08       0.38   0.06     
Net charge-offs to average total loans(2) 0.07   0.05       0.34   0.07     
Nonperforming loans to total loans(4) 0.23   0.1       0.23   0.1     
Nonperforming assets to total assets(4) 0.23   0.18       0.23   0.18     
Allowance for loan losses to non-purchased loans(5) 0.67   0.73      0.67   0.73     
Other information:                       
Non-accrual loans(4)$34,762  $12,899      $34,762  $12,899     
Accruing loans - 90 days past due(4)                   
Troubled and restructured non-purchased loans - accruing(4) 627          627        
Impaired purchased loans 7,801   10,019       7,971   10,019     
                        
(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 
(Dollars in thousands, except per share amounts) 
Unaudited 
  
  3/31/2017  6/30/2017  9/30/2017  12/31/2017  3/31/2018  6/30/2018  9/30/2018  12/31/2018 
Earnings Summary:                               
Net interest income$190,771  $202,105  $209,722  $214,831  $217,776  $224,661  $220,614  $228,382 
Federal tax (FTE) adjustment 3,594   3,396   3,014   2,450   1,166   1,151   1,132   1,219 
Net interest income (FTE) 194,365   205,501   212,736   217,281   218,942   225,812   221,746   229,601 
Provision for loan losses (4,933)  (6,103)  (7,777)  (9,279)  (5,567)  (9,610)  (41,949)  (7,271)
Non-interest income 29,058   31,840   32,747   30,213   28,707   27,386   24,121   27,560 
Non-interest expense (78,268)  (83,828)  (84,399)  (86,177)  (93,810)  (89,107)  (102,942)  (94,893)
Pretax income (FTE) 140,222   147,410   153,307   152,038   148,272   154,481   100,976   154,997 
FTE adjustment (3,594)  (3,396)  (3,014)  (2,450)  (1,166)  (1,151)  (1,132)  (1,219)
Provision for income taxes (47,417)  (53,488)  (54,246)  (3,434)  (33,973)  (38,589)  (25,665)  (38,750)
Noncontrolling interest (23)  6   (40)  10   11   10   1   3 
Net income available to common stockholders$89,188  $90,532  $96,007  $146,164  $113,144  $114,751  $74,180  $115,031 
Earnings per common share – diluted$0.73  $0.73  $0.75  $1.14  $0.88  $0.89  $0.58  $0.89 
Non-interest Income:                               
Service charges on deposit accounts$11,301  $11,764  $9,729  $10,058  $9,525  $9,704  $9,730  $10,585 
Mortgage lending income 1,574   1,910   1,620   1,294   492   1   24   20 
Trust income 1,631   1,577   1,755   1,729   1,793   1,591   1,730   1,821 
BOLI income 4,464   4,594   4,453   5,166   7,580   5,259   5,321   5,751 
Other income from purchased loans 3,737   4,777   2,933   2,009   1,251   2,744   1,418   2,370 
Loan service, maintenance and other  fees 2,706   3,427   5,274   4,289   4,743   5,641   4,724   5,245 
Gains (losses) on sales of other assets 1,619   672   1,363   1,899   1,426   844   (518)  465 
Net gains on investment securities    404   2,429   1,201   17          
Other 2,026   2,715   3,191   2,568   1,880   1,602   1,692   1,303 
Total non-interest income$29,058  $31,840  $32,747  $30,213  $28,707  $27,386  $24,121  $27,560 
Non-interest Expense:                               
Salaries and employee benefits$38,554  $39,892  $35,331  $38,417  $45,499  $41,665  $41,477  $41,837 
Net occupancy expense 13,192   12,937   13,595   13,474   14,150   13,827   14,358   14,027 
Other operating expenses 26,522   30,999   35,473   34,286   34,161   33,615   47,107   39,029 
Total non-interest expense$78,268  $83,828  $84,399  $86,177  $93,810  $89,107  $102,942  $94,893 
Balance Sheet Data:                               
Total assets$19,152,212  $20,064,589  $20,768,493  $21,275,647  $22,039,439  $22,220,380  $22,086,539  $22,388,030 
Non-purchased loans 10,216,875   11,025,203   12,047,094   12,733,937   13,674,561   14,183,533   14,440,623   15,073,791 
Purchased loans 4,580,047   4,159,139   3,731,536   3,309,092   2,934,535   2,580,341   2,285,168   2,044,032 
Investment securities 1,470,568   2,101,751   1,975,102   2,622,796   2,612,961   2,617,859   2,706,156   2,888,281 
Deposits 15,713,427   16,241,440   16,823,359   17,192,345   17,833,672   17,897,085   17,822,915   17,938,415 
Unfunded balance of closed loans 11,258,762   11,883,679   12,519,839   13,192,439   12,551,032   11,999,661   11,891,247   11,364,975 
Common stockholders' equity 2,873,317   3,260,123   3,334,740   3,460,728   3,526,605   3,613,903   3,653,596   3,770,330 
Allowance for Loan Losses:                               
Balance at beginning of period$76,541  $78,224  $82,320  $86,784  $94,120  $98,097  $104,638  $98,200 
Net charge-offs (3,250)  (2,007)  (3,313)  (1,943)  (1,590)  (3,069)  (48,387)  (3,207)
Provision for loan losses 4,933   6,103   7,777   9,279   5,567   9,610   41,949   7,271 
Balance at end of period$78,224  $82,320  $86,784  $94,120  $98,097  $104,638  $98,200  $102,264 
Selected Ratios:                               
Net interest margin – FTE(1) 4.88%  4.99%  4.84%  4.72%  4.69%  4.66%  4.47%  4.55%
Efficiency ratio 35.03   35.32   34.38   34.82   37.88   35.19   41.87   36.9 
Net charge-offs to average non-purchased loans(1) (2) 0.05   0.03   0.08   0.08   0.04   0.05   1.32   0.06 
Net charge-offs to average total loans(1) 0.09   0.05   0.09   0.05   0.04   0.07   1.14   0.07 
Nonperforming loans to total loans(3) 0.11   0.11   0.11   0.1   0.09   0.1   0.23   0.23 
Nonperforming assets to total assets(3) 0.25   0.23   0.2   0.18   0.16   0.15   0.23   0.23 
Allowance for loan losses to total non-purchased loans(4) 0.75   0.73   0.71   0.73   0.71   0.73   0.67   0.67 
Loans past due 30 days or more, including past due non-accrual loans, to total loans(3) 0.16   0.15   0.12   0.15   0.14   0.12   0.17   0.28 
  
(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 December 31,  Year Ended December 31, 
 2018  2017  2018  2017 
 Average Income/Yield/  Average Income/ Yield/  Average Income/ Yield/  Average Income/ Yield/ 
BalanceExpenseRateBalanceExpenseRateBalanceExpenseRateBalanceExpenseRate
   
 (Dollars in thousands) 
ASSETS                                      
Earning assets:                                      
Interest earning deposits and federal funds sold$102,931 $590 2.27% $56,500 $268  1.88% $160,148 $3,039  1.9% $81,504 $656  0.81%
Investment securities:                                      
Taxable 2,335,512  14,642 2.49   1,818,633  9,661  2.11   2,143,455  50,021  2.33   1,158,519  25,460  2.2 
Tax-exempt – FTE 516,512  4,988 3.83   577,614  6,680  4.59   537,616  20,497  3.81   714,329  34,508  4.83 
Non-purchased loans – FTE 14,874,156  237,615 6.34   12,293,725  178,638  5.76   14,040,952  858,466  6.11   10,979,369  607,925  5.54 
Purchased loans 2,170,489  35,453 6.48   3,528,823  56,303  6.33   2,633,271  173,465  6.59   4,175,146  276,499  6.62 
Total earning assets – FTE 19,999,600  293,288 5.82   18,275,295  251,550  5.46   19,515,442  1,105,488  5.66   17,108,867  945,048  5.52 
Non-interest earning assets 2,319,305        2,345,373         2,395,813         2,545,797       
Total assets$22,318,905       $20,620,668        $21,911,255        $19,654,664       
LIABILITIES AND STOCKHOLDERS EQUITY                                      
Interest bearing liabilities:                                      
Deposits:                                      
Savings and interest bearing transaction$9,594,919 $33,200 1.37% $9,409,297 $18,052  0.76% $9,983,075 $118,771  1.19% $8,587,404 $53,496  0.62%
Time deposits of $100 or more 3,204,627  14,595 1.81   3,043,311  8,218  1.07   3,183,108  47,691  1.5   3,164,843  31,222  0.99 
Other time deposits 2,124,920  8,813 1.65   1,452,325  2,880  0.79   1,651,960  20,155  1.22   1,560,035  11,365  0.73 
Total interest bearing deposits 14,924,466  56,608 1.5   13,904,933  29,150  0.83   14,818,143  186,617  1.26   13,312,282  96,083  0.72 
Repurchase agreements with customers 36,680  26 0.29   74,233  38  0.21   101,682  785  0.77   75,915  132  0.17 
Other borrowings 400,874  2,193 2.17   124,340  574  1.83   166,937  3,017  1.81   62,988  1,305  2.07 
Subordinated notes 223,230  3,216 5.71   222,846  3,190  5.68   223,089  12,757  5.72   222,705  12,620  5.67 
Subordinated debentures 119,284  1,644 5.47   118,723  1,317  4.4   119,076  6,211  5.22   118,515  5,024  4.24 
Total interest bearing liabilities 15,704,534  63,687 1.61   14,445,075  34,269  0.94   15,428,927  209,387  1.36   13,792,405  115,164  0.83 
Non-interest bearing liabilities:                                      
Non-interest bearing deposits 2,712,858        2,729,090         2,695,623         2,652,895       
Other non-interest bearing liabilities 206,434        77,588         185,035         78,684       
Total liabilities 18,623,826        17,251,753         18,309,585         16,523,984       
Common stockholders’ equity 3,692,044        3,365,848         3,598,628         3,127,576       
Noncontrolling interest 3,035        3,067         3,042         3,104       
Total liabilities and stockholders’ equity$22,318,905       $20,620,668        $21,911,255        $19,654,664       
Net interest income – FTE   $229,601       $217,281        $896,101        $829,884    
Net interest margin – FTE      4.55%        4.72%        4.59%        4.85%
  

 

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  Year Ended 
December 31,December 31,
 2018  2017  2018  2017 
   
 (Dollars in thousands) 
Net income available to common stockholders$115,031  $146,164  $417,106  $421,891 
Average common stockholders’ equity before noncontrolling interest$3,692,044  $3,365,848  $3,598,628  $3,127,576 
Less average intangible assets:               
Goodwill (660,789)  (660,789)  (660,789)  (660,632)
Core deposit and other intangibles, net of accumulated amortization (37,654)  (49,927)  (42,315)  (54,702)
Total average intangibles (698,443)  (710,716)  (703,104)  (715,334)
Average tangible common stockholders’ equity$2,993,601  $2,655,132  $2,895,524  $2,412,242 
Return on average common stockholders’ equity(1) 12.36%  17.23%  11.59%  13.49%
Return on average tangible common stockholders’ equity(1) 15.24%  21.84%  14.41%  17.49%
 
(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 
  
  December 31, 
 2018  2017 
   
 (In thousands, except per share amounts) 
Total common stockholders’ equity before noncontrolling interest$3,770,330  $3,460,728 
Less intangible assets:       
Goodwill (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization (35,672)  (48,251)
Total intangibles (696,461)  (709,040)
Total tangible common stockholders’ equity$3,073,869  $2,751,688 
Shares of common stock outstanding 128,611   128,288 
Book value per common share$29.32  $26.98 
Tangible book value per common share$23.9  $21.45 
 

 

  
 Calculation of Total Tangible Common Stockholders’ 
Equity and the Ratio of Total Tangible Common 
Stockholders’ Equity to Total Tangible Assets 
Unaudited 
  
  December 31, 
 2018  2017 
   
 (Dollars in thousands) 
Total common stockholders’ equity before noncontrolling interest$3,770,330  $3,460,728 
Less intangible assets:       
Goodwill (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization (35,672)  (48,251)
Total intangibles (696,461)  (709,040)
Total tangible common stockholders’ equity$3,073,869  $2,751,688 
Total assets$22,388,030  $21,275,647 
Less intangible assets:       
Goodwill (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization (35,672)  (48,251)
Total intangibles (696,461)  (709,040)
Total tangible assets$21,691,569  $20,566,607 
Ratio of total common stockholders’ equity to total assets 16.84%  16.27%
Ratio of total tangible common stockholders’ equity to total 14.17%  13.38%
  tangible assets
 

 

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

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Source: Bank OZK