Press Release

LITTLE ROCK, Ark., Oct. 20, 2022 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income available to common stockholders for the third quarter of 2022 was $128.3 million, a 1.5% decrease from $130.3 million for the third quarter of 2021. Diluted earnings per common share for the third quarter of 2022 were $1.08, an 8.0% increase from $1.00 for the third quarter of 2021.

For the nine months ended September 30, 2022, net income available to common stockholders was $388.7 million, a 9.4% decrease from $429.2 million for the first nine months of 2021. Diluted earnings per common share for the first nine months of 2022 were $3.20, a 3.0% decrease from $3.30 for the first nine months of 2021.

The Bank’s provision for credit losses was $39.8 million for the third quarter and $51.0 million for the first nine months of 2022 compared to negative provisions for credit losses of $7.5 million for the third quarter and $69.9 million for the first nine months of 2021. The growth in both funded and unfunded loan balances during the quarter contributed to the higher provision for credit losses, which impacted net income. The Bank’s total allowance for credit losses (“ACL”) was $335.6 million at September 30, 2022. The calculations of the Bank’s provision expense for the third quarter and first nine months of 2022 and its total ACL at September 30, 2022 were based on a number of key estimates, assumptions and economic forecasts and included certain qualitative adjustments to capture items not fully reflected in the modeled results.

Pre-tax pre-provision net revenue (“PPNR”) was $208.1 million for the third quarter of 2022, a 27.2% increase from $163.5 million for the third quarter of 2021. For the nine months ended September 30, 2022, PPNR was $564.0 million, a 15.3% increase from $489.0 million for the first nine months of 2021. 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 third quarter of 2022 were 1.97%, 11.85% and 14.02%, respectively, compared to 1.98%, 11.41% and 13.39%, respectively, for the third quarter of 2021. The Bank’s annualized returns on average assets, average common stockholder’s equity and average tangible common stockholders’ equity for the first nine months of 2022 were 1.99%, 11.97%, and 14.14%, respectively, compared to 2.15%, 12.98%, and 15.31%, respectively, for the first nine months of 2021. The calculation of the Bank’s returns on average common stockholders’ equity and average tangible common stockholders’ equity and the reconciliations to GAAP are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer stated, “We are pleased to report our strong results for the third quarter of 2022. Our results were highlighted by our fourth consecutive quarter of record RESG loan originations and solid growth in RESG’s funded loans, along with meaningful contributions to growth from our Community Banking and other lending teams. This reflects our dual focus on both organic loan growth and increased portfolio diversification. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the current environment and the longer term.”

KEY BALANCE SHEET METRICS

Total loans were $19.51 billion at September 30, 2022, a 6.6% increase from $18.31 billion at September 30, 2021. Non-purchased loans were $19.10 billion at September 30, 2022, a 7.9% increase from $17.71 billion at September 30, 2021. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.41 billion at September 30, 2022, a 31.4% decrease from $0.60 billion at September 30, 2021.

Deposits were $20.40 billion at September 30, 2022, a 1.5% increase from $20.10 billion at September 30, 2021. Total assets were $26.23 billion at September 30, 2022, a 0.3% increase from $26.14 billion at September 30, 2021.

Common stockholders’ equity was $4.20 billion at September 30, 2022, a 7.7% decrease from $4.55 billion at September 30, 2021. Tangible common stockholders’ equity was $3.54 billion at September 30, 2022, an 8.9% decrease from $3.88 billion at September 30, 2021. Book value per common share was $35.67 at September 30, 2022, a 0.9% increase from $35.35 at September 30, 2021. Tangible book value per common share was $30.02 at September 30, 2022, a 0.4% decrease from $30.14 at September 30, 2021. The calculations of the Bank’s common stockholders’ equity, 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 16.01% at September 30, 2022, compared to 17.42% at September 30, 2021. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.83% at September 30, 2022, compared to 15.24% at September 30, 2021. 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.

STOCK REPURCHASES

During the quarter just ended, the Bank repurchased approximately 1.23 million shares of its common stock at a weighted average price of $38.96, for a total of $47.7 million. During the first nine months of 2022, the Bank repurchased approximately 7.80 million shares of its common stock at a weighted average price of $41.90, for a total of $326.7 million. Our current stock repurchase program expires November 4, 2022. In evaluating any plans for stock repurchases after expiration of the current program, the Bank will consider a variety of factors including its capital position, expected growth, alternative uses of capital, liquidity, financial performance, stock price, current and expected macro economic environment, regulatory requirements and other factors.

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 October 21, 2022. Interested parties may access the conference call live via webcast on the Bank’s investor relations website at https://ir.ozk.com/news/event-calendar, or may participate via telephone by registering using this online form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the conference call webcast will be archived on the Bank's website for at least 30 days.

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. To receive automated email alerts for these materials please visit https://ir.ozk.com/other/email-alerts 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 common stockholders’ equity, average tangible common stockholders’ equity, tangible book value per common share, common stockholders’ equity, 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 presentation 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 in implementing the Bank’s growth, expansion and acquisition strategies, including hiring or retaining qualified personnel, obtaining regulatory or other approvals, delays in identifying satisfactory sites, 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 of or decrease the 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 transition from the London Interbank Offered Rate (“LIBOR”) as a reference rate; 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; recently enacted and potential laws and regulatory requirements, including those actions in response to the coronavirus (“COVID-19”) pandemic, or changes to existing laws and regulatory requirements, including changes affecting oversight of the financial services industry or changes in the interpretation and enforcement of such laws and requirements, and the costs and expenses to comply with new and/or existing legislation and regulatory requirements; 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, 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; natural disasters or acts of war or terrorism; the adverse effects of the ongoing global 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 the financial markets; the potential impact of continuing inflationary pressures; the potential impact of supply chain disruptions; national, international or political instability or military conflict, including the ongoing war in Ukraine; the competition and costs of recruiting and retaining human talent; impairment of our 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 communication or as detailed from time to time in our public filings, including those factors described in the disclosures under the headings “Forward-Looking Information” and “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 and our 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 described 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. Established in 1903, Bank OZK conducts banking operations with over 240 offices in eight states including Arkansas, Georgia, Florida, North Carolina, Texas, New York, California and Mississippi and had $26.23 billion in total assets as of September 30, 2022. 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.

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⁽¹⁾  Calculations of pre-tax pre-provision net revenue, total common stockholders’ equity, tangible book value per common share and returns on average common stockholders’ equity and 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.

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⁽¹⁾  Calculations of pre-tax pre-provision net revenue, total common stockholders’ equity, tangible book value per common share and returns on average common stockholders’ equity and 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.

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