Press Release

Bank OZK Announces Second Quarter 2019 Earnings

Company Release - 7/18/2019 4:01 PM ET

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