Bank OZK Announces Record First Quarter 2021 Earnings

4/22/2021 at 4:01 PM EDT

LITTLE ROCK, Ark., April 22, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the first quarter of 2021 was a record $148.4 million compared to $11.9 million for the first quarter of 2020. Diluted earnings per common share for the first quarter of 2021 were $1.14 compared to $0.09 for the first quarter of 2020.

As a result of improving economic conditions, management recorded negative provision for credit losses of $31.6 million during the first quarter of 2021, reducing the Bank’s total allowance for credit losses (“ACL”) from $377.3 million at December 31, 2020 to $342.3 million at March 31, 2021. The Bank’s provision for credit losses was $117.7 million during the first quarter of 2020, reflecting significant economic uncertainty at that time. The Bank’s results for the first quarter of 2021 also included pretax gains of $4.4 million from the sale of its South Carolina branches and $1.4 million of tax-exempt bank-owned life insurance (“BOLI”) death benefits. The Bank had no gains from branch sales and had $0.6 million of tax-exempt BOLI death benefits during the first quarter of 2020.

Pre-tax pre-provision net revenue (“PPNR”) was $160.7 million for the first quarter of 2021, a 19.9% increase from $134.0 million for the first quarter of 2020, but a decrease of 1.3% from $162.9 million for the fourth quarter of 2020. The calculation of PPNR and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first quarter of 2021 were 2.23%, 13.97% and 16.57%, respectively, compared to 0.20%, 1.16% and 1.39%, respectively, for the first quarter of 2020. The calculation of the Bank’s return on average tangible common stockholders’ equity and the reconciliation to GAAP are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer stated, “We are pleased to report excellent results for the first quarter of 2021, including record quarterly net income, strong net interest income, continued improvement in our core spread, excellent asset quality and an efficiency ratio among the best in the industry. Our combination of strong earnings, robust capital and an exceptional team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $18.72 billion at March 31, 2021, a 2.7% increase from $18.23 billion at March 31, 2020, but a decrease of 2.6% from $19.21 billion at December 31, 2020. Non-purchased loans were $17.98 billion at March 31, 2021, a 5.6% increase from $17.03 billion at March 31, 2020, but a decrease of 2.3% from $18.40 billion at December 31, 2020. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.74 billion at March 31, 2021, a 38.6% decrease from $1.20 billion at March 31, 2020.

Deposits were $21.30 billion at March 31, 2021, a 13.2% increase from $18.81 billion at March 31, 2020, but a decrease of 0.7% from $21.45 billion at December 31, 2020. Total assets were $27.28 billion at March 31, 2021, an 11.0% increase from $24.57 billion at March 31, 2020.

Common stockholders’ equity was $4.38 billion at March 31, 2021, a 7.5% increase from $4.08 billion at March 31, 2020. Tangible common stockholders’ equity was $3.71 billion at March 31, 2021, a 9.1% increase from $3.40 billion at March 31, 2020. Book value per common share was $33.79 at March 31, 2021, a 7.0% increase from $31.57 at March 31, 2020. Tangible book value per common share was $28.60 at March 31, 2021, an 8.7% increase from $26.30 at March 31, 2020. 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 16.07% at March 31, 2021 compared to 16.62% at March 31, 2020. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.94% at March 31, 2021 compared to 14.24% at March 31, 2020. 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 its quarterly results, which are available at http://ir.ozk.com. This release should be read in conjunction with management’s comments on the quarterly results.

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 April 23, 2021. 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 conference ID for this playback is 4472527. 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, the ratio of total tangible common stockholders’ equity to total tangible assets and PPNR, to assess the strength of its capital, its ability to generate earnings on tangible capital invested by its shareholders and trends in its net revenue. These measures typically adjust GAAP financial measures to exclude intangible assets or provision for credit losses. 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, and they are not 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 satisfactory sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices or relocating, selling or closing existing offices; the ability to enter into and/or close additional acquisitions; 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; the potential impact of the proposed phase-out of the London Interbank Offered Rate (“LIBOR”) or other changes involving LIBOR; 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, including those in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief and Economic Security Act, the Consolidated Appropriations Act of 2021, the American Rescue Plan Act of 2021, and any similar or related laws, rules and regulations; 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; natural disasters or acts of war or terrorism; the adverse effects of the COVID-19 pandemic, including the duration of the pandemic and actions taken to contain or treat COVID-19, on the Bank, the Bank’s customers, the Bank’s staff, the global economy and financial markets; national, international or political instability; impairment of the Bank’s goodwill or other intangible assets; 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 described 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, 2020 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. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 branches, loan production offices and other offices in Arkansas, Georgia, Florida, North Carolina, Texas, 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.

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

Bank OZK
Consolidated Balance Sheets
Unaudited

	March 31,			December 31,
	2021			2020
	(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents	$	2,216,336		$	2,393,662
Investment securities ― available for sale ("AFS")		4,162,479			3,405,351
Federal Home Loan Bank of Dallas and other bankers' bank stocks		38,578			38,486
Non-purchased loans		17,979,435			18,401,495
Purchased loans		735,630			807,673
Allowance for loan losses		(268,077	)		(295,824	)
Net loans		18,446,988			18,913,344
Premises and equipment, net		729,433			738,842
Foreclosed assets		8,436			11,085
Accrued interest receivable		94,265			88,077
Bank owned life insurance (“BOLI”)		761,680			758,071
Goodwill and other intangible assets, net		673,728			675,458
Other, net		144,969			140,220
Total assets	$	27,276,892		$	27,162,596

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand non-interest bearing	$	4,196,603		$	3,996,546
Savings and interest bearing transaction		8,529,229			8,160,982
Time		8,570,610			9,292,828
Total deposits		21,296,442			21,450,356
Repurchase agreements with customers		5,936			8,013
Other borrowings		750,361			750,928
Subordinated notes		224,141			224,047
Subordinated debentures		120,613			120,475
Reserve for losses on unfunded loan commitments		74,230			81,481
Accrued interest payable and other liabilities		418,860			251,940
Total liabilities		22,890,583			22,887,240

Commitments and contingencies

Stockholders’ equity:
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares issued or outstanding at March 31, 2021 or December 31, 2020		—			—
Common stock; $0.01 par value; 300,000,000 shares authorized; 129,718,906 and 129,350,448 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		1,297			1,294
Additional paid-in capital		2,272,046			2,265,850
Retained earnings		2,059,398			1,946,875
Accumulated other comprehensive income		50,464			58,252
Total stockholders’ equity before noncontrolling interest		4,383,205			4,272,271
Noncontrolling interest		3,104			3,085
Total stockholders’ equity		4,386,309			4,275,356
Total liabilities and stockholders’ equity	$	27,276,892		$	27,162,596

Bank OZK
Consolidated Statements of Income
Unaudited

	Three Months Ended March 31,
	2021			2020
	(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans	$	239,827		$	231,853
Purchased loans		11,935			21,387
Investment securities:
Taxable		8,083			10,760
Tax-exempt		3,681			3,597
Deposits with banks and federal funds sold		538			4,376
Total interest income		264,064			271,973

Interest expense:
Deposits		24,350			57,682
Repurchase agreements with customers		4			6
Other borrowings		986			50
Subordinated notes		3,146			3,172
Subordinated debentures		942			1,288
Total interest expense		29,428			62,198

Net interest income		234,636			209,775
Provision for credit losses		(31,559	)		117,663
Net interest income after provision for credit losses		266,195			92,112

Non-interest income:
Service charges on deposit accounts		9,665			10,009
Trust income		2,206			1,939
BOLI income:
Increase in cash surrender value		4,881			5,067
Death benefits		1,409			608
Loan service, maintenance and other fees		3,551			3,716
Gains on sales of other assets		5,828			161
Net gains on investment securities		—			2,223
Other		4,577			3,957
Total non-interest income		32,117			27,680

Non-interest expense:
Salaries and employee benefits		53,645			51,473
Net occupancy and equipment		16,468			15,330
Other operating expenses		35,946			36,622
Total non-interest expense		106,059			103,425

Income before taxes		192,253			16,367
Provision for income taxes		43,818			4,509
Net income		148,435			11,858
Earnings attributable to noncontrolling interest		(19	)		8
Net income available to common stockholders	$	148,416		$	11,866

Basic earnings per common share	$	1.15		$	0.09

Diluted earnings per common share	$	1.14		$	0.09

Bank OZK
Consolidated Statements of Stockholders’ Equity
Unaudited

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Non- Controlling Interest			Total
	(Dollars in thousands, except per share amounts)
Three months ended March 31, 2021:
Balances – December 31, 2020	$	1,294		$	2,265,850		$	1,946,875		$	58,252		$	3,085		$	4,275,356
Net income		—			—			148,435			—			—			148,435
Earnings attributable to noncontrolling interest		—			—			(19	)		—			19			—
Total other comprehensive loss		—			—			—			(7,788	)		—			(7,788	)
Common stock dividends, $0.2775 per share		—			—			(35,893	)		—			—			(35,893	)
Issuance of 128,100 shares of common stock for exercise of stock options		1			4,492			—			—			—			4,493
Issuance of 312,503 shares of unvested restricted common stock		3			(3	)		—			—			—			—
Repurchase and cancellation of 55,740 shares of common stock		(1	)		(1,970	)		—			—			—			(1,971	)
Stock-based compensation expense		—			3,677			—			—			—			3,677
Forfeitures of 16,405 shares of unvested restricted common stock		—			—			—			—			—			—
Balances – March 31, 2021	$	1,297		$	2,272,046		$	2,059,398		$	50,464		$	3,104		$	4,386,309

Three months ended March 31, 2020:
Balances – December 31, 2019	$	1,289		$	2,251,824		$	1,869,983		$	27,255		$	3,117		$	4,153,468
Cumulative effect of change in accounting principle		—			—			(75,344	)		—			—			(75,344	)
Balances – January 1, 2020		1,289			2,251,824			1,794,639			27,255			3,117			4,078,124
Net income		—			—			11,858			—			—			11,858
Earnings attributable to noncontrolling interest		—			—			8			—			(8	)		—
Total other comprehensive income		—			—			—			27,633			—			27,633
Common stock dividends, $0.26 per share		—			—			(33,527	)		—			—			(33,527	)
Issuance of 4,300 shares of common stock for exercise of stock options		—			45			—			—			—			45
Issuance of 447,085 shares of unvested restricted common stock		4			(4	)		—			—			—			—
Repurchase and cancellation of 61,873 shares of common stock		—			(1,853	)		—			—			—			(1,853	)
Stock-based compensation expense		—			3,979			—			—			—			3,979
Forfeitures of 16,101 shares of unvested restricted common stock		—			—			—			—			—			—
Balances – March 31, 2020	$	1,293		$	2,253,991		$	1,772,978		$	54,888		$	3,109		$	4,086,259

Bank OZK
Summary of Non-Interest Expense
Unaudited

	Three Months Ended March 31,
	2021		2020
	(Dollars in thousands)
Salaries and employee benefits	$	53,645	$	51,473
Net occupancy and equipment		16,468		15,330
Other operating expenses:
Professional and outside services		6,326		6,764
Software and data processing		5,792		4,974
Deposit insurance and assessments		3,520		3,420
Telecommunication services		2,232		2,177
Postage and supplies		1,645		2,053
Writedowns of foreclosed and other assets		1,363		879
ATM expense		1,283		1,160
Travel and meals		774		2,102
Loan collection and repossession expense		509		694
Advertising and public relations		308		1,703
Amortization of intangibles		1,730		2,795
Amortization of CRA and tax credit investments		4,125		2,740
Other		6,339		5,161
Total non-interest expense	$	106,059	$	103,425

Bank OZK
Summary of Total Loans Outstanding
Unaudited

	March 31, 2021					December 31, 2020
	(Dollars in thousands)

Real estate:
Residential 1-4 family	$	869,585		4.6	%	$	911,115		4.7	%
Non-farm/non-residential		4,406,692		23.5			4,213,636		21.9
Construction/land development		7,733,670		41.3			8,046,978		41.9
Agricultural		212,681		1.1			204,868		1.1
Multifamily residential		797,847		4.3			856,297		4.5
Total real estate		14,020,475		74.8			14,232,894		74.1
Commercial and industrial		790,568		4.2			842,206		4.4
Consumer		2,275,011		12.2			2,393,964		12.5
Other		1,629,011		8.8			1,740,104		9.0
Total loans		18,715,065		100.0	%		19,209,168		100.0	%
Allowance for loan losses		(268,077	)				(295,824	)
Net loans	$	18,446,988				$	18,913,344

Bank OZK
Allowance for Credit Losses
Unaudited


	Allowance for Loan Losses			Reserve for Losses on Unfunded Loan Commitments			Total Allowance for Credit Losses
	(Dollars in thousands)
Three months ended March 31, 2021:
Balances – December 31, 2020	$	295,824		$	81,481		$	377,305
Net charge-offs		(3,439	)		—			(3,439	)
Provision		(24,308	)		(7,251	)		(31,559	)
Balances – March 31, 2021	$	268,077		$	74,230		$	342,307

Three months ended March 31, 2020:
Balances – December 31, 2019	$	108,525		$	—		$	108,525
Adoption of CECL methodology		39,588			54,924			94,512
Balances – January 1, 2020		148,113			54,924			203,037
Net charge-offs		(4,291	)		—			(4,291	)
Provision		94,915			22,748			117,663
Balances – March 31, 2020	$	238,737		$	77,672		$	316,409

Bank OZK
Summary of Deposits – By Account Type
Unaudited

	March 31, 2021				December 31, 2020
	(Dollars in thousands)
Non-interest bearing	$	4,196,603	19.7	%	$	3,996,546	18.6	%
Interest bearing:
Transaction (NOW)		3,253,715	15.3			3,124,007	14.6
Savings and money market		5,275,514	24.8			5,036,975	23.5
Time deposits less than $100		2,657,568	12.5			3,075,845	14.3
Time deposits of $100 or more		5,913,042	27.7			6,216,983	29.0
Total deposits	$	21,296,442	100.0	%	$	21,450,356	100.0	%

Summary of Deposits – By Customer Type
Unaudited

	March 31, 2021				December 31, 2020
	(Dollars in thousands)
Consumer	$	11,252,744	52.8	%	$	11,165,603	52.1	%
Commercial		6,259,409	29.4			6,056,536	28.2
Public Funds		2,048,909	9.6			2,111,971	9.8
Brokered		1,210,155	5.7			1,600,116	7.5
Reciprocal		525,225	2.5			516,130	2.4
Total deposits	$	21,296,442	100.0	%	$	21,450,356	100.0	%

Bank OZK
Selected Consolidated Financial Data
Unaudited

	Three Months Ended March 31,
	2021			2020			% Change
	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income	$	234,636		$	209,775			11.9	%
Provision for credit losses		(31,559	)		117,663			(126.8	)
Non-interest income		32,117			27,680			16.0
Non-interest expense		106,059			103,425			2.5
Net income available to common stockholders		148,416			11,866			1,150.8
Pre-tax pre-provision net revenue⁽¹⁾		160,694			134,030			19.9
Common share and per common share data:
Net income per share − diluted	$	1.14		$	0.09			1,166.7	%
Net income per share − basic		1.15			0.09			1,177.8
Dividends per share		0.2775			0.26			6.7
Book value per share		33.79			31.57			7.0
Tangible book value per share⁽¹⁾		28.60			26.30			8.7
Weighted-average diluted shares outstanding (thousands)		129,816			129,307			0.4
End of period shares outstanding (thousands)		129,719			129,324			0.3
Balance sheet data at period end:
Total assets	$	27,276,892		$	24,565,810			11.0	%
Total loans		18,715,065			18,228,204			2.7
Non-purchased loans		17,979,435			17,030,378			5.6
Purchased loans		735,630			1,197,826			(38.6	)
Allowance for loan losses		268,077			238,737			12.3
Foreclosed assets		8,436			20,616			(59.1	)
Investment securities − AFS		4,162,479			2,816,556			47.8
Goodwill and other intangible assets, net		673,728			681,747			(1.2	)
Deposits		21,296,442			18,809,190			13.2
Other borrowings		750,361			1,051,353			(28.6	)
Subordinated notes		224,141			223,759			0.2
Subordinated debentures		120,613			120,055			0.5
Unfunded balance of closed loans		11,780,099			11,334,737			3.9
Reserve for losses on unfunded loan commitments		74,230			77,672			(4.4	)
Total common stockholders’ equity		4,383,205			4,083,150			7.3
Net unrealized gains on investment securities AFS included in common stockholders' equity		50,464			54,888
Loan (including purchased loans) to deposit ratio		87.88	%		96.91	%
Selected ratios:
Return on average assets⁽²⁾		2.23	%		0.20	%
Return on average common stockholders’ equity⁽²⁾		13.97			1.16
Return on average tangible common stockholders’ equity^{(1) (2)}		16.57			1.39
Average common equity to total average assets		15.93			17.31
Net interest margin – FTE⁽²⁾		3.86			3.96
Efficiency ratio		39.57			43.35
Net charge-offs to average non-purchased loans^{(2) (3)}		0.08			0.08
Net charge-offs to average total loans⁽²⁾		0.07			0.10
Nonperforming loans to total loans⁽⁴⁾		0.25			0.16
Nonperforming assets to total assets⁽⁴⁾		0.19			0.19
Allowance for loan losses to total loans⁽⁵⁾		1.43			1.31
Other information:
Non-accrual loans⁽⁴⁾	$	43,059		$	25,681
Accruing loans − 90 days past due⁽⁴⁾		—			—
Troubled and restructured non-purchased loans − accruing⁽⁴⁾		1,380			757

⁽¹⁾Calculations of pre-tax pre-provision net revenue, 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 reserve for losses on unfunded loan commitments.

Selected Consolidated Financial Data (continued)
Unaudited

		Three Months Ended
		March 31,			December 31,
		2021			2020			% Change
	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income		$	234,636		$	237,600			(1.2	)%
Provision for credit losses			(31,559	)		6,750			(567.5	)
Non-interest income			32,117			28,661			12.1
Non-interest expense			106,059			103,394			2.6
Net income available to common stockholders			148,416			120,513			23.2
Pre-tax pre-provision net revenue⁽¹⁾			160,694			162,867			(1.3	)
Common share and per common share data:
Net income per share − diluted		$	1.14		$	0.93			22.6	%
Net income per share − basic			1.15			0.93			23.7
Dividends per share			0.2775			0.275			0.9
Book value per share			33.79			33.03			2.3
Tangible book value per share⁽¹⁾			28.60			27.81			2.8
Weighted-average diluted shares outstanding (thousands)			129,816			129,523			0.2
End of period shares outstanding (thousands)			129,719			129,350			0.3
Balance sheet data at period end:
Total assets		$	27,276,892		$	27,162,596			0.4	%
Total loans			18,715,065			19,209,168			(2.6	)
Non-purchased loans			17,979,435			18,401,495			(2.3	)
Purchased loans			735,630			807,673			(8.9	)
Allowance for loan losses			268,077			295,824			(9.4	)
Foreclosed assets			8,436			11,085			(23.9	)
Investment securities − AFS			4,162,479			3,405,351			22.2
Goodwill and other intangible assets, net			673,728			675,458			(0.3	)
Deposits			21,296,442			21,450,356			(0.7	)
Other borrowings			750,361			750,928			(0.1	)
Subordinated notes			224,141			224,047			0.1
Subordinated debentures			120,613			120,475			0.1
Unfunded balance of closed loans			11,780,099			11,847,117			(0.6	)
Reserve for losses on unfunded loan commitments			74,230			81,481			(8.9	)
Total common stockholders’ equity			4,383,205			4,272,271			2.6
Net unrealized gains on investment securities AFS included in common stockholders' equity			50,464			58,252
Loan (including purchased loans) to deposit ratio			87.88	%		89.55	%
Selected ratios:
Return on average assets⁽²⁾			2.23	%		1.79	%
Return on average common stockholders’ equity⁽²⁾			13.97			11.36
Return on average tangible common stockholders’ equity^{(1) (2)}			16.57			13.53
Average common equity to total average assets			15.93			15.74
Net interest margin – FTE⁽²⁾			3.86			3.88
Efficiency ratio			39.57			38.61
Net charge-offs to average non-purchased loans^{(2) (3)}			0.08			0.14
Net charge-offs to average total loans⁽²⁾			0.07			0.14
Nonperforming loans to total loans⁽⁴⁾			0.25			0.25
Nonperforming assets to total assets⁽⁴⁾			0.19			0.21
Allowance for loan losses to total loans⁽⁵⁾			1.43			1.54
Other information:
Non-accrual loans⁽⁴⁾		$	43,059		$	44,402
Accruing loans − 90 days past due⁽⁴⁾			—			—
Troubled and restructured non-purchased loans − accruing⁽⁴⁾			1,380			1,483

⁽¹⁾Calculations of pre-tax pre-provision net revenue, 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 reserve for losses on unfunded loan commitments.

Bank OZK
Supplemental Quarterly Financial Data
Unaudited

	6/30/19			9/30/19			12/31/19			3/31/20			6/30/20			9/30/20			12/31/20			3/31/21
	(Dollars in thousands, except per share amounts)
Earnings Summary:
Net interest income	$	224,536		$	218,780		$	214,977		$	209,775		$	216,593		$	224,657		$	237,600		$	234,636
Federal tax (FTE) adjustment		1,136			1,038			1,028			1,133			1,753			1,605			1,533			1,275
Net interest income (FTE)		225,672			219,818			216,005			210,908			218,346			226,262			239,133			235,911
Provision for credit losses		(6,769	)		(7,854	)		(4,938	)		(117,663	)		(72,026	)		(7,200	)		(6,750	)		31,559
Non-interest income		26,603			26,446			30,406			27,680			21,591			26,676			28,661			32,117
Non-interest expense		(99,131	)		(100,914	)		(104,406	)		(103,425	)		(100,953	)		(105,641	)		(103,394	)		(106,059	)
Pretax income (FTE)		146,375			137,496			137,067			17,500			66,958			140,097			157,650			193,528
FTE adjustment		(1,136	)		(1,038	)		(1,028	)		(1,133	)		(1,753	)		(1,605	)		(1,533	)		(1,275	)
Provision for income taxes		(34,726	)		(32,574	)		(35,240	)		(4,509	)		(14,948	)		(29,251	)		(35,607	)		(43,818	)
Noncontrolling interest		(10	)		7			7			8			9			12			3			(19	)
Net income available to common stockholders	$	110,503		$	103,891		$	100,806		$	11,866		$	50,266		$	109,253		$	120,513		$	148,416
Earnings per common share – diluted	$	0.86		$	0.81		$	0.78		$	0.09		$	0.39		$	0.84		$	0.93		$	1.14
Non-interest Income:
Service charges on deposit accounts	$	10,291		$	10,827		$	10,933		$	10,009		$	8,281		$	9,427		$	9,983		$	9,665
Trust income		1,839			1,975			2,010			1,939			1,759			1,936			1,909			2,206
BOLI income:
Increase in cash surrender value		5,178			5,208			5,167			5,067			5,057			5,081			5,034			4,881
Death benefits		—			206			2,989			608			—			—			—			1,409
Loan service, maintenance and other fees		4,565			4,197			4,282			3,716			3,394			3,351			3,797			3,551
Gains on sales of other assets		402			189			1,358			161			621			891			5,189			5,828
Net gains on investment securities		713			—			—			2,223			—			2,244			—			—
Other		3,615			3,844			3,667			3,957			2,479			3,746			2,749			4,577
Total non-interest income	$	26,603		$	26,446		$	30,406		$	27,680		$	21,591		$	26,676		$	28,661		$	32,117
Non-interest Expense:
Salaries and employee benefits	$	47,558		$	48,376		$	52,050		$	51,473		$	48,410		$	53,119		$	53,832		$	53,645
Net occupancy and equipment		14,587			14,825			14,855			15,330			15,756			16,676			15,617			16,468
Other operating expenses		36,986			37,713			37,501			36,622			36,787			35,846			33,945			35,946
Total non-interest expense	$	99,131		$	100,914		$	104,406		$	103,425		$	100,953		$	105,641		$	103,394		$	106,059
Balance Sheet Data:
Total assets	$	22,960,731		$	23,402,679		$	23,555,728		$	24,565,810		$	26,380,409		$	26,888,308		$	27,162,596		$	27,276,892
Non-purchased loans		15,786,809			16,307,621			16,224,539			17,030,378			18,247,431			18,419,958			18,401,495			17,979,435
Purchased loans		1,698,396			1,427,230			1,307,504			1,197,826			1,063,647			938,485			807,673			735,630
Investment securities – AFS		2,548,489			2,414,722			2,277,389			2,816,556			3,299,944			3,468,243			3,405,351			4,162,479
Deposits		18,186,215			18,440,078			18,474,259			18,809,190			20,723,598			21,287,405			21,450,356			21,296,442
Unfunded balance of closed loans		11,167,055			11,429,918			11,325,598			11,334,737			11,411,441			11,604,614			11,847,117			11,780,099
Common stockholders' equity		3,993,247			4,078,324			4,150,351			4,083,150			4,110,666			4,186,285			4,272,271			4,383,205

Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

	6/30/19			9/30/19			12/31/19			3/31/20			6/30/20			9/30/20			12/31/20			3/31/21
	(Dollars in thousands, except per share amounts)
Allowance for Credit Losses:
Balance at beginning of period	$	105,954		$	106,642		$	109,001		$	108,525		$	316,409		$	374,494		$	377,273		$	377,305
Adoption of CECL⁽¹⁾ methodology		—			—			—			94,512			—			—			—			—
Net charge-offs		(6,081	)		(5,495	)		(5,414	)		(4,291	)		(13,941	)		(4,421	)		(6,718	)		(3,439	)
Provision for credit losses		6,769			7,854			4,938			117,663			72,026			7,200			6,750			(31,559	)
Balance at end of period	$	106,642		$	109,001		$	108,525		$	316,409		$	374,494		$	377,273		$	377,305		$	342,307
Allowance for loan losses	$	106,642		$	109,001		$	108,525		$	238,737		$	306,196		$	308,847		$	295,824		$	268,077
Reserve for losses on unfunded loan commitments		—			—			—			77,672			68,298			68,426			81,481			74,230
Total allowance for credit losses	$	106,642		$	109,001		$	108,525		$	316,409		$	374,494		$	377,273		$	377,305		$	342,307
Selected Ratios:
Net interest margin – FTE⁽²⁾		4.45	%		4.26	%		4.15	%		3.96	%		3.74	%		3.69	%		3.88	%		3.86	%
Efficiency ratio		39.30			40.98			42.37			43.35			42.07			41.77			38.61			39.57
Net charge-offs to average non-purchased loans^{(2) (3)}		0.12			0.07			0.10			0.08			0.05			0.09			0.14			0.08
Net charge-offs to average total loans⁽²⁾		0.14			0.12			0.12			0.10			0.29			0.09			0.14			0.07
Nonperforming loans to total loans⁽⁴⁾		0.15			0.17			0.15			0.16			0.18			0.15			0.25			0.25
Nonperforming assets to total assets⁽⁴⁾		0.25			0.26			0.18			0.19			0.19			0.17			0.21			0.19
Allowance for loan losses to total loans ⁽⁵⁾		0.61			0.61			0.62			1.31			1.59			1.60			1.54			1.43
Loans past due 30 days or more, including past due non-accrual loans, to total loans⁽⁴⁾		0.13			0.14			0.19			0.18			0.13			0.13			0.16			0.13

⁽¹⁾ Current Expected Credit Loss.
⁽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 reserve for losses on unfunded loan commitments.

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

	Three Months Ended March 31,
	2021							2020
	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	$	2,212,680	$	538		0.10	%	$	1,367,297	$	4,376		1.29	%
Investment securities:
Taxable		2,422,127		8,083		1.35			1,796,061		10,760		2.41
Tax-exempt – FTE		1,167,827		4,659		1.62			486,062		4,553		3.77
Non-purchased loans – FTE		18,188,269		240,124		5.35			16,526,270		232,030		5.65
Purchased loans		776,097		11,935		6.24			1,265,413		21,387		6.80
Total earning assets – FTE		24,767,000		265,339		4.34			21,441,103		273,106		5.12
Non-interest earning assets		2,279,477							2,353,330
Total assets	$	27,046,477						$	23,794,433
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction	$	8,337,990	$	3,616		0.18	%	$	8,131,400	$	19,747		0.98	%
Time deposits of $100 or more		6,095,614		13,913		0.93			4,388,337		22,190		2.03
Other time deposits		2,900,579		6,821		0.95			3,333,529		15,745		1.90
Total interest bearing deposits		17,334,183		24,350		0.57			15,853,266		57,682		1.46
Repurchase agreements with customers		5,800		4		0.26			7,883		6		0.32
Other borrowings⁽¹⁾		750,384		986		0.53			296,969		50		0.07
Subordinated notes		224,092		3,146		5.69			223,711		3,172		5.70
Subordinated debentures⁽¹⁾		120,540		942		3.17			119,984		1,288		4.31
Total interest bearing liabilities		18,434,999		29,428		0.65			16,501,813		62,198		1.52
Non-interest bearing liabilities:
Non-interest bearing deposits		3,972,815							2,927,296
Other non-interest bearing liabilities		328,401							243,598
Total liabilities		22,736,215							19,672,707
Common stockholders’ equity		4,307,174							4,118,614
Noncontrolling interest		3,088							3,112
Total liabilities and stockholders’ equity	$	27,046,477						$	23,794,433
Net interest income – FTE			$	235,911						$	210,908
Net interest margin – FTE						3.86	%						3.96	%
Core spread⁽²⁾						4.78	%						4.19	%

⁽¹⁾The interest expense and the rates for “other borrowings” and for “subordinated debentures” were affected by capitalized interest. Capitalized interest included in other borrowings totaled $0.03 million for the first quarter of 2021 compared to $0.36 million for the first quarter of 2020. In the absence of this interest capitalization, the rates on other borrowings would have been 0.55% for the first quarter of 2021 and 0.55% for the first quarter of 2020. Capitalized interest included in subordinated debentures totaled $0.14 million for the first quarter of 2020 (none in the first quarter of 2021). In the absence of this interest capitalization, the rate on subordinated debentures would have been 4.80% for the first quarter of 2020.

⁽²⁾Core spread is the difference between the yield on the Bank’s non-purchased loans-FTE and the cost of its interest bearing deposits.

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
	March 31,						December 31,
	2021			2020			2020
	(Dollars in thousands)
Net income available to common stockholders	$	148,416		$	11,866		$	120,513
Average common stockholders’ equity before noncontrolling interest	$	4,307,174		$	4,118,614		$	4,219,249
Less average intangible assets:
Goodwill		(660,789	)		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(13,828	)		(22,412	)		(15,578	)
Total average intangibles		(674,617	)		(683,201	)		(676,367	)
Average tangible common stockholders’ equity	$	3,632,557		$	3,435,413		$	3,542,882
Return on average common stockholders’ equity⁽¹⁾		13.97	%		1.16	%		11.36	%
Return on average tangible common stockholders' equity⁽¹⁾		16.57	%		1.39	%		13.53	%

⁽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

	March 31,						December 31,
	2021			2020			2020
	(In thousands, except per share amounts)
Total common stockholders’ equity before noncontrolling interest	$	4,383,205		$	4,083,150		$	4,272,271
Less intangible assets:
Goodwill		(660,789	)		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(12,939	)		(20,958	)		(14,669	)
Total intangibles		(673,728	)		(681,747	)		(675,458	)
Total tangible common stockholders' equity	$	3,709,477		$	3,401,403		$	3,596,813
Shares of common stock outstanding		129,719			129,324			129,350
Book value per common share	$	33.79		$	31.57		$	33.03
Tangible book value per common share	$	28.60		$	26.30		$	27.81

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

	March 31,
	2021			2020
	(Dollars in thousands)
Total common stockholders’ equity before noncontrolling interest	$	4,383,205		$	4,083,150
Less intangible assets:
Goodwill		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(12,939	)		(20,958	)
Total intangibles		(673,728	)		(681,747	)
Total tangible common stockholders' equity	$	3,709,477		$	3,401,403
Total assets	$	27,276,892		$	24,565,810
Less intangible assets:
Goodwill		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(12,939	)		(20,958	)
Total intangibles		(673,728	)		(681,747	)
Total tangible assets	$	26,603,164		$	23,884,063
Ratio of total common stockholders’ equity to total assets		16.07	%		16.62	%
Ratio of total tangible common stockholders’ equity to total tangible assets		13.94	%		14.24	%

Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited

	Three Months Ended
	March 31,					December 31,
	2021			2020		2020
	(Dollars in thousands)
Income before taxes	$	192,253		$	16,367	$	156,117
Provision for credit losses		(31,559	)		117,663		6,750
Pre-tax pre-provision net revenue	$	160,694		$	134,030	$	162,867

Source: Bank OZK

Bank OZK Announces Record First Quarter 2021 Earnings

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Bank OZK Announces Record First Quarter 2021 Earnings

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