LITTLE ROCK, Ark., Jan. 21, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the fourth quarter of 2020 was $120.5 million, a 19.5% increase from $100.8 million for the fourth quarter of 2019. Diluted earnings per common share for the fourth quarter of 2020 were $0.93, a 19.2% increase from $0.78 for the fourth quarter of 2019.

For the full year of 2020, net income was $291.9 million, a 31.5% decrease from $425.9 million for the full year of 2019. Diluted earnings per common share for the full year of 2020 were $2.26, a 31.5% decrease from $3.30 for the full year of 2019.

Pre-tax pre-provision net revenue (“PPNR”) was $162.9 million for the fourth quarter of 2020, a 15.5% increase from $141.0 million for the fourth quarter of 2019. PPNR was $579.8 million for the full year of 2020, a 1.8% decrease from $590.6 million for the full year of 2019. The calculation of PPNR and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

The COVID-19 pandemic significantly affected the global economy in 2020. The sudden and severe economic downturn, combined with the implementation of the current expected credit losses (“CECL”) method to calculate the Bank’s allowance for credit losses (“ACL”) and uncertain future economic projections, resulted in the Bank incurring significant provision for credit losses in the first and second quarters of 2020. The Bank’s provision for credit losses was $203.6 million for the full year of 2020, and the Bank’s ACL was $377.3 million at December 31, 2020.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the fourth quarter of 2020 were 1.79%, 11.36% and 13.53%, respectively, compared to 1.74%, 9.73% and 11.68%, respectively, for the fourth quarter of 2019. The Bank’s returns on average assets, average common stockholder’s equity and average tangible common stockholders’ equity for the full year of 2020 were 1.13%, 7.04% and 8.41%, respectively, compared to 1.87%, 10.72%, and 12.98%, respectively, for the full year of 2019. 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 one of our best quarters ever, highlighted by record quarterly net interest income, our second highest quarterly net income in company history, excellent asset quality and an efficiency ratio among the best in the industry.  It was a strong finish to a challenging year. Our strong capital and liquidity, our disciplined credit culture and our exceptional team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $19.21 billion at December 31, 2020, a 9.6% increase from $17.53 billion at December 31, 2019, but a 0.8% decrease from $19.36 billion at September 30, 2020. Non-purchased loans were $18.40 billion at December 31, 2020, a 13.4% increase from $16.22 billion at December 31, 2019, but a 0.1% decrease from $18.42 billion at September 30, 2020.  Purchased loans, which consist of loans acquired in previous acquisitions, were $0.81 billion at December 31, 2020, a 38.2% decrease from $1.31 billion at December 31, 2019.

Deposits were $21.45 billion at December 31, 2020, a 16.1% increase from $18.47 billion at December 31, 2019. Total assets were $27.16 billion at December 31, 2020, a 15.3% increase from $23.56 billion at December 31, 2019.

Common stockholders’ equity was $4.27 billion at December 31, 2020, a 2.9% increase from $4.15 billion at December 31, 2019. Tangible common stockholders’ equity was $3.60 billion at December 31, 2020, a 3.8% increase from $3.47 billion at December 31, 2019. Book value per common share was $33.03 at December 31, 2020, a 2.6% increase from $32.19 at December 31, 2019. Tangible book value per common share was $27.81 at December 31, 2020, a 3.5% increase from $26.88 at December 31, 2019. 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 15.73% at December 31, 2020 compared to 17.62% at December 31, 2019. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.59% at December 31, 2020 compared to 15.15% at December 31, 2019. 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 January 22, 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 passcode for this playback is 7995612. 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.”

STATEMENT REGARDING IMPACT OF COVID-19 PANDEMIC

The Bank prioritizes the health and safety of its employees and customers, and it will continue to do so throughout the duration of the COVID-19 pandemic. At the same time, the Bank remains focused on increasing shareholder value, managing credit exposure, managing expenses, enhancing the customer experience and supporting the communities it serves.

In management’s comments on its quarterly results (released simultaneously with this news release) and in its earnings conference call, the Bank has sought and will seek to describe the historical and future impact of the COVID-19 pandemic on the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations, including the information and discussions regarding its provision and ACL and the discussion regarding its net interest margin. Although the Bank believes that the statements that pertain to future events, results and trends and their impact on the Bank’s business are reasonable at the present time, those statements are not historical facts and are based upon current assumptions, expectations, estimates and projections, many of which, by their nature, are beyond the Bank’s control. Accordingly, all discussions regarding future events, results and trends and their impact on the Bank’s business, even in the near term, are necessarily uncertain given the evolving nature of the COVID-19 pandemic.

If the health, logistical or economic effects of the COVID-19 pandemic worsen, or if the assumptions, expectations, estimates or projections that underlie the Bank’s statements regarding future effects or trends prove to be incorrect, then the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations may be materially and adversely impacted in ways that the Bank cannot reasonably forecast. Accordingly, when reading this release and the accompanying prepared remarks from management on its quarterly results and when listening to the earnings conference call, undue reliance should not be placed upon any statement pertaining to future events, results and trends and their impact on the Bank’s business in future periods.

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 and any similar or related rules and regulations; changes in U.S. Government monetary and fiscal policy, including any changes that result from the recent U.S. elections; 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 ongoing global COVID-19 pandemic, including the magnitude and 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, including the effects from the adoption of the CECL methodology on January 1, 2020, 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, 2019 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, South 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

 December 31, 
 2020  2019 
      
 (Dollars in thousands, except per share amounts) 
ASSETS       
Cash and cash equivalents$2,393,662  $1,495,757 
Investment securities ― available for sale ("AFS") 3,405,351   2,277,389 
Federal Home Loan Bank of Dallas and other bankers' bank stocks 38,486   21,855 
Non-purchased loans 18,401,495   16,224,539 
Purchased loans 807,673   1,307,504 
Allowance for loan losses (295,824)  (108,525)
Net loans 18,913,344   17,423,518 
Premises and equipment, net 738,842   711,541 
Foreclosed assets 11,085   19,096 
Accrued interest receivable 88,077   75,208 
Bank owned life insurance (“BOLI”) 758,071   738,860 
Goodwill and other intangible assets, net 675,458   684,542 
Other, net 140,220   107,962 
Total assets$27,162,596  $23,555,728 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Deposits:       
Demand non-interest bearing$3,996,546  $2,795,251 
Savings and interest bearing transaction 8,160,982   8,307,607 
Time 9,292,828   7,371,401 
Total deposits 21,450,356   18,474,259 
Repurchase agreements with customers 8,013   11,249 
Other borrowings 750,928   351,387 
Subordinated notes 224,047   223,663 
Subordinated debentures 120,475   119,916 
Reserve for losses on unfunded loan commitments 81,481    
Accrued interest payable and other liabilities 251,940   221,786 
Total liabilities 22,887,240   19,402,260 
        
Commitments and contingencies       
        
Stockholders’ equity:       
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares
issued or outstanding at December 31, 2020 or 2019
     
Common stock; $0.01 par value; 300,000,000 shares authorized;
129,350,448 and 128,951,024 shares issued and outstanding at
December 31, 2020 and 2019, respectively
 1,294   1,289 
Additional paid-in capital 2,265,850   2,251,824 
Retained earnings 1,946,875   1,869,983 
Accumulated other comprehensive income 58,252   27,255 
Total stockholders’ equity before noncontrolling interest 4,272,271   4,150,351 
Noncontrolling interest 3,085   3,117 
Total stockholders’ equity 4,275,356   4,153,468 
Total liabilities and stockholders’ equity$27,162,596  $23,555,728 
        

Bank OZK
Consolidated Statements of Income
Unaudited

 Three Months Ended  Year Ended 
 December 31,  December 31, 
 2020  2019  2020  2019 
            
 (Dollars in thousands, except per share amounts) 
Interest income:               
Non-purchased loans$243,064  $240,912  $944,354  $981,811 
Purchased loans 16,069   22,152   70,812   106,908 
Investment securities:               
Taxable 9,066   11,820   40,547   52,812 
Tax-exempt 4,767   3,323   19,403   14,252 
Deposits with banks and federal funds sold 428   2,756   5,665   6,758 
Total interest income 273,394   280,963   1,080,781   1,162,541 
                
Interest expense:               
Deposits 30,607   61,631   171,813   258,358 
Repurchase agreements with customers 6   11   23   50 
Other borrowings 1,011   34   3,179   1,531 
Subordinated notes 3,207   3,216   12,758   12,757 
Subordinated debentures 963   1,094   4,384   5,664 
Total interest expense 35,794   65,986   192,157   278,360 
                
Net interest income 237,600   214,977   888,624   884,181 
Provision for credit losses 6,750   4,938   203,639   26,241 
Net interest income after provision for credit losses 230,850   210,039   684,985   857,940 
                
Non-interest income:               
Service charges on deposit accounts 9,983   10,933   37,699   41,774 
Trust income 1,909   2,010   7,544   7,554 
BOLI income:               
Increase in cash surrender value 5,034   5,167   20,239   20,715 
Death benefits    2,989   608   3,194 
Loan service, maintenance and other fees 3,797   4,282   14,257   17,917 
Other income from purchased loans    759      3,684 
Gains on sales of other assets 5,189   1,358   6,863   2,233 
Net gains on investment securities       4,467   713 
Other 2,749   2,908   12,931   9,743 
Total non-interest income 28,661   30,406   104,608   107,527 
                
Non-interest expense:               
Salaries and employee benefits 53,832   52,050   206,834   192,851 
Net occupancy and equipment 15,617   14,855   63,379   59,018 
Other operating expenses 33,945   37,501   143,200   149,261 
Total non-interest expense 103,394   104,406   413,413   401,130 
                
Income before taxes 156,117   136,039   376,180   564,337 
Provision for income taxes 35,607   35,240   84,314   138,429 
Net income 120,510   100,799   291,866   425,908 
Earnings attributable to noncontrolling interest 3   7   32   (2)
Net income available to common stockholders$120,513  $100,806  $291,898  $425,906 
                
Basic earnings per common share$0.93  $0.78  $2.26  $3.30 
                
Diluted earnings per common share$0.93  $0.78  $2.26  $3.30 
                

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) 
Three months ended December 31, 2020:                       
Balances – September 30, 2020$1,293  $2,261,864  $1,862,012  $61,116  $3,088  $4,189,373 
Net income       120,510         120,510 
Earnings attributable to noncontrolling
interest
       3      (3)   
Total other comprehensive loss          (2,864)     (2,864)
Common stock dividends,
$0.275 per share
       (35,650)        (35,650)
Issuance of 39,900 shares of common
stock for exercise of stock options
    991            991 
Stock-based compensation expense    2,996            2,996 
Forfeitures of 31,525 shares of unvested
restricted common stock
 1   (1)            
Balances – December 31, 2020$1,294  $2,265,850  $1,946,875  $58,252  $3,085  $4,275,356 
                        
Year ended December 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       291,866         291,866 
Earnings attributable to noncontrolling
interest
       32      (32)   
Total other comprehensive income          30,997      30,997 
Common stock dividends,
$1.0775 per share
       (139,662)        (139,662)
Issuance of 44,200 shares of common
stock for exercise of stock options
    1,036            1,036 
Issuance of 493,761 shares of unvested
restricted common stock
 5   (5)            
Repurchase and cancellation of 61,873
shares of common stock
 (1)  (1,852)           (1,853)
Stock-based compensation expense    14,848            14,848 
Forfeitures of 76,664 shares of unvested
restricted common stock
 1   (1)            
Balances – December 31, 2020$1,294  $2,265,850  $1,946,875  $58,252  $3,085  $4,275,356 
                        

Bank OZK
Consolidated Statements of Stockholders’ Equity (Continued)
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) 
                        
Three months ended December 31, 2019:                       
Balances – September 30, 2019$1,289  $2,247,973  $1,801,414  $27,648  $3,124  $4,081,448 
Net income       100,799         100,799 
Earnings attributable to noncontrolling interest       7      (7)   
Total other comprehensive loss          (393)     (393)
Common stock dividends, $0.25 per
share
       (32,237)        (32,237)
Issuance of 16,150 shares of common
stock for exercise of stock options
    266            266 
Stock-based compensation expense    3,585            3,585 
Forfeitures of 11,485 shares of unvested
restricted common stock
                 
Balances – December 31, 2019$1,289  $2,251,824  $1,869,983  $27,255  $3,117  $4,153,468 
                        
Year ended December 31, 2019:                       
Balances – December 31, 2018$1,286  $2,237,948  $1,565,201  $(34,105) $3,035  $3,773,365 
Net income       425,908         425,908 
Earnings attributable to noncontrolling
interest
       (2)     2    
Total other comprehensive income          61,360      61,360 
Common stock dividends, $0.94
per share
       (121,124)        (121,124)
Noncontrolling interest cash contribution             80   80 
Issuance of 83,500 shares of common
stock for exercise of stock options
 1   1,384            1,385 
Issuance of 406,074 shares of unvested
restricted common stock
 4   (4)            
Repurchase and cancellation of 63,716
shares of common stock
 (1)  (1,674)           (1,675)
Stock-based compensation expense    14,169            14,169 
Forfeiture of 85,883 shares of unvested
restricted common stock
 (1)  1             
Balances – December 31, 2019$1,289  $2,251,824  $1,869,983  $27,255  $3,117  $4,153,468 
                        

Bank OZK
Summary of Non-Interest Expense
Unaudited

 Three Months Ended  Year Ended 
 December 31,  December 31, 
 2020  2019  2020  2019 
            
 (Dollars in thousands) 
Salaries and employee benefits$53,832  $52,050  $206,834  $192,851 
Net occupancy and equipment 15,617   14,855   63,379   59,018 
Other operating expenses:               
Professional and outside services 7,345   7,156   30,974   33,030 
Software and data processing 5,729   4,974   21,279   19,535 
Deposit insurance and assessments 3,647   3,780   15,247   13,425 
Telecommunication services 2,296   2,335   9,159   10,583 
Postage and supplies 1,709   2,483   7,462   8,684 
Advertising and public relations 1,086   1,822   6,050   7,242 
ATM expense 1,490   1,263   5,256   4,626 
Travel and meals 835   2,845   4,336   11,230 
Loan collection and repossession expense 481   600   3,062   2,818 
Writedowns of foreclosed and other assets 1,582   910   3,669   2,419 
Amortization of intangibles 1,794   2,854   9,085   11,918 
Other 5,951   6,479   27,621   23,751 
Total non-interest expense$103,394  $104,406  $413,413  $401,130 
                

Bank OZK
Summary of Total Loans Outstanding
Unaudited

 December 31, 
 2020  2019 
      
 (Dollars in thousands) 
Real estate:               
Residential 1-4 family$911,115   4.7% $998,632   5.7%
Non-farm/non-residential 4,213,636   21.9   3,956,579   22.6 
Construction/land development 8,046,978   41.9   6,391,429   36.4 
Agricultural 204,868   1.1   230,076   1.3 
Multifamily residential 856,297   4.5   1,194,192   6.8 
Total real estate 14,232,894   74.1   12,770,908   72.8 
Commercial and industrial 842,206   4.4   661,952   3.8 
Consumer 2,393,964   12.5   2,934,534   16.8 
Other 1,740,104   9.0   1,164,649   6.6 
Total loans 19,209,168   100.0%  17,532,043   100.0%
Allowance for loan losses (295,824)      (108,525)    
Net loans$18,913,344      $17,423,518     
                

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 December 31, 2020:           
Balances – September 30, 2020$308,847  $68,426  $377,273 
Net charge-offs (6,718)     (6,718)
Provision for credit losses (6,305)  13,055   6,750 
Balances – December 31, 2020$295,824  $81,481  $377,305 
            
Year ended December 31, 2020:           
Balances – December 31, 2019$108,525  $  $108,525 
Adoption of Current Expected Credit Loss (CECL) methodology 39,588   54,924   94,512 
Balances – January 1, 2020 148,113   54,924   203,037 
Net charge-offs (29,371)     (29,371)
Provision for credit losses 177,082   26,557   203,639 
Balances – December 31, 2020$295,824  $81,481  $377,305 
            
Three months ended December 31, 2019:           
Balances – September 30, 2019$109,001  $  $109,001 
Net charge-offs (5,414)     (5,414)
Provision for credit losses 4,938      4,938 
Balances – December 31, 2019$108,525  $  $108,525 
            
Year ended December 31, 2019:           
Balances – December 31, 2018$102,264  $  $102,264 
Net charge-offs (19,980)     (19,980)
Provision for credit losses 26,241      26,241 
Balances – December 31, 2019$108,525  $  $108,525 
            

Bank OZK
Summary of Deposits – By Account Type
Unaudited

 December 31, 
 2020  2019 
      
 (Dollars in thousands) 
Non-interest bearing$3,996,546   18.6% $2,795,251   15.1%
Interest bearing:               
Transaction (NOW) 3,124,007   14.6   2,706,426   14.7 
Savings and money market 5,036,975   23.5   5,601,181   30.3 
Time deposits less than $100 3,075,845   14.3   3,321,446   18.0 
Time deposits of $100 or more 6,216,983   29.0   4,049,955   21.9 
Total deposits$21,450,356   100.0% $18,474,259   100.0%
                

Summary of Deposits – By Customer Type
Unaudited

 December 31, 
 2020  2019 
      
 (Dollars in thousands) 
Consumer$11,165,603   52.1% $7,526,014   40.7%
Commercial 6,056,536   28.2   4,334,366   23.5 
Public Funds 2,111,971   9.8   3,782,415   20.5 
Brokered 1,600,116   7.5   2,115,193   11.4 
Reciprocal 516,130   2.4   716,271   3.9 
Total deposits$21,450,356   100.0% $18,474,259   100.0%
                

Bank OZK
Selected Consolidated Financial Data
Unaudited

 Three Months Ended  Year Ended 
 December 31,  December 31, 
 2020  2019  % Change  2020  2019  % Change 
                  
 (Dollars in thousands, except per share amounts) 
Income statement data:                       
Net interest income$237,600  $214,977   10.5% $888,624  $884,181   0.5%
Provision for credit losses 6,750   4,938   36.7   203,639   26,241   676.0 
Non-interest income 28,661   30,406   (5.7)  104,608   107,527   (2.7)
Non-interest expense 103,394   104,406   (1.0)  413,413   401,130   3.1 
Net income available to common stockholders 120,513   100,806   19.5   291,898   425,906   (31.5)
Pre-tax pre-provision net revenue(1) 162,867   140,977   15.5   579,819   590,578   (1.8)
Common share and per common share data:                       
Net income per share − diluted$0.93  $0.78   19.2% $2.26  $3.30   (31.5)%
Net income per share − basic 0.93   0.78   19.2   2.26   3.30   (31.5)
Dividends per share 0.275   0.25   10.0   1.0775   0.94   14.6 
Book value per share 33.03   32.19   2.6   33.03   32.19   2.6 
Tangible book value per share(1) 27.81   26.88   3.5   27.81   26.88   3.5 
Weighted-average diluted shares outstanding (thousands) 129,523   129,036       129,435   129,006     
End of period shares outstanding (thousands) 129,350   128,951       129,350   128,951     
Balance sheet data at period end:                       
Total assets$27,162,596  $23,555,728   15.3% $27,162,596  $23,555,728   15.3%
Total loans 19,209,168   17,532,043   9.6   19,209,168   17,532,043   9.6 
Non-purchased loans 18,401,495   16,224,539   13.4   18,401,495   16,224,539   13.4 
Purchased loans 807,673   1,307,504   (38.2)  807,673   1,307,504   (38.2)
Allowance for loan losses 295,824   108,525   172.6   295,824   108,525   172.6 
Foreclosed assets 11,085   19,096   (42.0)  11,085   19,096   (42.0)
Investment securities − AFS 3,405,351   2,277,389   49.5   3,405,351   2,277,389   49.5 
Goodwill and other intangible assets, net 675,458   684,542   (1.3)  675,458   684,542   (1.3)
Deposits 21,450,356   18,474,259   16.1   21,450,356   18,474,259   16.1 
Other borrowings 750,928   351,387   113.7   750,928   351,387   113.7 
Subordinated notes 224,047   223,663   0.2   224,047   223,663   0.2 
Subordinated debentures 120,475   119,916   0.5   120,475   119,916   0.5 
Unfunded balance of closed loans 11,847,117   11,325,598   4.6   11,847,117   11,325,598   4.6 
Reserve for losses on unfunded loan commitments 81,481     NM   81,481     NM 
Total common stockholders’ equity 4,272,271   4,150,351   2.9   4,272,271   4,150,351   2.9 
Net unrealized gains on investment securities AFS
included in common stockholders' equity
 58,252   27,255       58,252   27,255     
Loan (including purchased loans) to deposit ratio 89.55%  94.90%      89.55%  94.90%    
Selected ratios:                       
Return on average assets(2) 1.79%  1.74%      1.13%  1.87%    
Return on average common stockholders’ equity(2) 11.36   9.73       7.04   10.72     
Return on average tangible common stockholders’ equity(1) (2) 13.53   11.68       8.41   12.98     
Average common equity to total average assets 15.74   17.86       16.10   17.45     
Net interest margin – FTE(2) 3.88   4.15       3.81   4.34     
Efficiency ratio 38.61   42.37       41.37   40.27     
Net charge-offs to average non-purchased loans(2) (3) 0.14   0.10       0.09   0.09     
Net charge-offs to average total loans(2) 0.14   0.12       0.16   0.11     
Nonperforming loans to total loans(4) 0.25   0.15       0.25   0.15     
Nonperforming assets to total assets(4) 0.21   0.18       0.21   0.18     
Allowance for loan losses to total loans(5) 1.54   0.62       1.54  0.62     
Other information:                       
Non-accrual loans(4)$45,162  $23,221      $45,162  $23,221     
Accruing loans − 90 days past due(4)                   
Troubled and restructured non-purchased loans − accruing(4) 1,483   656       1,483   656     
                        


(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.
NM – Not meaningful
 

Selected Consolidated Financial Data (continued)
Unaudited

 Three Months Ended 
 December 31,  September 30,     
 2020  2020  % Change 
         
 (Dollars in thousands, except per share amounts) 
Income statement data:           
Net interest income$237,600  $224,657   5.8%
Provision for credit losses 6,750   7,200   (6.3)
Non-interest income 28,661   26,676   7.4 
Non-interest expense 103,394   105,641   (2.1)
Net income available to common stockholders 120,513   109,253   10.3 
Pre-tax pre-provision net revenue(1) 162,867   145,692   11.8 
Common share and per common share data:           
Net income per share − diluted$0.93  $0.84   10.7%
Net income per share − basic 0.93   0.84   10.7 
Dividends per share 0.275   0.2725   0.9 
Book value per share 33.03   32.37   2.0 
Tangible book value per share(1) 27.81   27.13   2.5 
Weighted-average diluted shares outstanding (thousands) 129,523   129,470     
End of period shares outstanding (thousands) 129,350   129,342     
Balance sheet data at period end:           
Total assets$27,162,596  $26,888,308   1.0%
Total loans 19,209,168   19,358,443   (0.8)
Non-purchased loans 18,401,495   18,419,958   (0.1)
Purchased loans 807,673   938,485   (13.9)
Allowance for loan losses 295,824   308,847   (4.2)
Foreclosed assets 11,085   16,543   (33.0)
Investment securities − AFS 3,405,351   3,468,243   (1.8)
Goodwill and other intangible assets, net 675,458   677,251   (0.3)
Deposits 21,450,356   21,287,405   0.8 
Other borrowings 750,928   750,949   0.1 
Subordinated notes 224,047   223,950   0.1 
Subordinated debentures 120,475   120,335   0.1 
Unfunded balance of closed loans 11,847,117   11,604,614   2.1 
Reserve for losses on unfunded loan commitments 81,481   68,426   19.1 
Total common stockholders’ equity 4,272,271   4,186,285   2.1 
Net unrealized gains on investment securities AFS
included in common stockholders' equity
 58,252   61,116     
Loan (including purchased loans) to deposit ratio 89.55%  90.94%    
Selected ratios:           
Return on average assets(2) 1.79%  1.63%    
Return on average common stockholders’ equity(2) 11.36   10.48     
Return on average tangible common stockholders’ equity(1) (2) 13.53   12.52     
Average common equity to total average assets 15.74   15.56     
Net interest margin – FTE(2) 3.88   3.69     
Efficiency ratio 38.61   41.77     
Net charge-offs to average non-purchased loans(2) (3) 0.14   0.09     
Net charge-offs to average total loans(2) 0.14   0.09     
Nonperforming loans to total loans(4) 0.25   0.15     
Nonperforming assets to total assets(4) 0.21   0.17     
Allowance for loan losses to total loans(5) 1.54   1.60     
Other information:           
Non-accrual loans(4)$45,162  $27,181     
Accruing loans − 90 days past due(4)         
Troubled and restructured non-purchased loans − accruing(4) 1,483   1,251     
            


 (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

 3/31/19  6/30/19  9/30/19  12/31/19  3/31/20  6/30/20  9/30/20  12/31/20 
                        
 (Dollars in thousands, except per share amounts) 
Earnings Summary:                               
Net interest income$225,888  $224,536  $218,780  $214,977  $209,775  $216,593  $224,657  $237,600 
Federal tax (FTE) adjustment 1,207   1,136   1,038   1,028   1,133   1,753   1,605   1,533 
Net interest income (FTE) 227,095   225,672   219,818   216,005   210,908   218,346   226,262   239,133 
Provision for credit losses (6,681)  (6,769)  (7,854)  (4,938)  (117,663)  (72,026)  (7,200)  (6,750)
Non-interest income 24,072   26,603   26,446   30,406   27,680   21,591   26,676   28,661 
Non-interest expense (96,678)  (99,131)  (100,914)  (104,406)  (103,425)  (100,953)  (105,641)  (103,394)
Pretax income (FTE) 147,808   146,375   137,496   137,067   17,500   66,958   140,097   157,650 
FTE adjustment (1,207)  (1,136)  (1,038)  (1,028)  (1,133)  (1,753)  (1,605)  (1,533)
Provision for income taxes (35,889)  (34,726)  (32,574)  (35,240)  (4,509)  (14,948)  (29,251)  (35,607)
Noncontrolling interest (6)  (10)  7   7   8   9   12   3 
Net income available to common stockholders$110,706  $110,503  $103,891  $100,806  $11,866  $50,266  $109,253  $120,513 
Earnings per common share – diluted$0.86  $0.86  $0.81  $0.78  $0.09  $0.39  $0.84  $0.93 
Non-interest Income:                               
Service charges on deposit accounts$9,722  $10,291  $10,827  $10,933  $10,009  $8,281  $9,427  $9,983 
Trust income 1,730   1,839   1,975   2,010   1,939   1,759   1,936   1,909 
BOLI income:                               
Increase in cash surrender value 5,162   5,178   5,208   5,167   5,067   5,057   5,081   5,034 
Death benefits       206   2,989   608          
Loan service, maintenance and other fees 4,874   4,565   4,197   4,282   3,716   3,394   3,351   3,797 
Other income from purchased loans 795   1,455   674   759             
Gains on sales of other assets 284   402   189   1,358   161   621   891   5,189 
Net gains on investment securities    713         2,223      2,244    
Other 1,505   2,160   3,170   2,908   3,957   2,479   3,746   2,749 
Total non-interest income$24,072  $26,603  $26,446  $30,406  $27,680  $21,591  $26,676  $28,661 
Non-interest Expense:                               
Salaries and employee benefits$44,868  $47,558  $48,376  $52,050  $51,473  $48,410  $53,119  $53,832 
Net occupancy and equipment 14,750   14,587   14,825   14,855   15,330   15,756   16,676   15,617 
Other operating expenses 37,060   36,986   37,713   37,501   36,622   36,787   35,846   33,945 
Total non-interest expense$96,678  $99,131  $100,914  $104,406  $103,425  $100,953  $105,641  $103,394 
Balance Sheet Data:                               
Total assets$23,005,652  $22,960,731  $23,402,679  $23,555,728  $24,565,810  $26,380,409  $26,888,308  $27,162,596 
Non-purchased loans 15,610,681   15,786,809   16,307,621   16,224,539   17,030,378   18,247,431   18,419,958   18,401,495 
Purchased loans 1,864,715   1,698,396   1,427,230   1,307,504   1,197,826   1,063,647   938,485   807,673 
Investment securities – AFS 2,769,602   2,548,489   2,414,722   2,277,389   2,816,556   3,299,944   3,468,243   3,405,351 
Deposits 18,476,868   18,186,215   18,440,078   18,474,259   18,809,190   20,723,598   21,287,405   21,450,356 
Unfunded balance of closed loans 11,544,218   11,167,055   11,429,918   11,325,598   11,334,737   11,411,441   11,604,614   11,847,117 
Common stockholders' equity 3,882,643   3,993,247   4,078,324   4,150,351   4,083,150   4,110,666   4,186,285   4,272,271 
                                

Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

 3/31/19  6/30/19  9/30/19  12/31/19  3/31/20  6/30/20  9/30/20  12/31/20 
                        
 (Dollars in thousands, except per share amounts) 
Allowance for Credit Losses:                               
Balance at beginning of period$102,264  $105,954  $106,642  $109,001  $108,525  $316,409  $374,494  $377,273 
Adoption of CECL(1) methodology             94,512          
Net charge-offs (2,991)  (6,081)  (5,495)  (5,414)  (4,291)  (13,941)  (4,421)  (6,718)
Provision for credit losses 6,681   6,769   7,854   4,938   117,663   72,026   7,200   6,750 
Balance at end of period$105,954  $106,642  $109,001  $108,525  $316,409  $374,494  $377,273  $377,305 
Allowance for loan losses$105,954  $106,642  $109,001  $108,525  $238,737  $306,196  $308,847  $295,824 
                                
Reserve for losses on unfunded loan commitments             77,672   68,298   68,426   81,481 
Total allowance for credit losses$105,954  $106,642  $109,001  $108,525  $316,409  $374,494  $377,273  $377,305 
Selected Ratios:                               
Net interest margin – FTE(2) 4.53%  4.45%  4.26%  4.15%  3.96%  3.74%  3.69%  3.88%
Efficiency ratio 38.49   39.30   40.98   42.37   43.35   42.07   41.77   38.61 
Net charge-offs to average non-purchased loans(2) (3) 0.05   0.12   0.07   0.10   0.08   0.05   0.09   0.14 
Net charge-offs to average total loans(2) 0.07   0.14   0.12   0.12   0.10   0.29   0.09   0.14 
Nonperforming loans to total loans(4) 0.22   0.15   0.17   0.15   0.16   0.18   0.15   0.25 
Nonperforming assets to total assets(4) 0.21   0.25   0.26   0.18   0.19   0.19   0.17   0.21 
Allowance for loan losses to total loans (5) 0.61   0.61   0.61   0.62   1.31   1.59   1.60   1.54 
Loans past due 30 days or more, including
past due non-accrual loans, to total loans(4)
 0.28   0.13   0.14   0.19   0.18   0.13   0.13   0.16 
                                


 (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 December 31,  Year Ended December 31, 
 2020  2019  2020  2019 
 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
$1,762,810  $428   0.10% $668,403  $2,756   1.64% $1,535,977  $5,665   0.37% $353,528  $6,758   1.91%
Investment securities:                                               
Taxable 2,036,253   9,066   1.77   1,892,693   11,820   2.48   1,993,667   40,547   2.03   2,099,522   52,812   2.52 
Tax-exempt – FTE 1,485,224   6,034   1.62   457,026   4,207   3.65   1,080,459   24,561   2.27   485,946   18,041   3.71 
Non-purchased loans – FTE 18,378,050   243,330   5.27   16,260,467   241,056   5.88   17,797,684   945,222   5.31   15,861,797   982,430   6.19 
Purchased loans 881,372   16,069   7.25   1,365,846   22,152   6.43   1,069,250   70,812   6.62   1,661,205   106,908   6.44 
Total earning assets – FTE 24,543,709   274,927   4.46   20,644,435   281,991   5.42   23,477,037   1,086,807   4.63   20,461,998   1,166,949   5.70 
Non-interest earning assets 2,258,105           2,370,753           2,291,135           2,297,372         
Total assets$26,801,814          $23,015,188          $25,768,172          $22,759,370         
LIABILITIES AND STOCKHOLDERS’ EQUITY                                               
Interest bearing liabilities:                                               
Deposits:                                               
Savings and interest bearing
transaction
$7,669,913  $4,483   0.23% $8,212,286  $22,964   1.11% $7,724,528  $37,428   0.48% $9,039,984  $126,685   1.40%
Time deposits of $100 or more 6,314,394   17,144   1.08   3,914,548   21,281   2.16   5,524,751   83,956   1.52   3,449,197   73,336   2.13 
Other time deposits 3,294,323   8,980   1.08   3,392,019   17,386   2.03   3,511,220   50,429   1.44   2,872,676   58,337   2.03 
Total interest bearing deposits 17,278,630   30,607   0.70   15,518,853   61,631   1.58   16,760,499   171,813   1.03   15,361,857   258,358   1.68 
Repurchase agreements with customers 8,239   6   0.29   11,840   11   0.37   7,825   23   0.29   13,502   50   0.37 
Other borrowings (1) 750,961   1,011   0.54   11,742   34   1.16   721,350   3,179   0.44   94,399   1,531   1.62 
Subordinated notes 223,996   3,207   5.70   223,615   3,216   5.71   223,850   12,758   5.70   223,469   12,757   5.71 
Subordinated debentures (1) 120,400   963   3.18   119,842   1,094   3.62   120,190   4,384   3.65   119,629   5,664   4.73 
Total interest bearing liabilities 18,382,226   35,794   0.77   15,885,892   65,986   1.65   17,833,714   192,157   1.08   15,812,856   278,360   1.76 
Non-interest bearing liabilities:                                               
Non-interest bearing deposits 3,907,955           2,804,919           3,521,066           2,753,634         
Other non-interest bearing liabilities 289,298           210,936           261,169           217,809         
Total liabilities 22,579,479           18,901,747           21,615,949           18,784,299         
Common stockholders’ equity 4,219,249           4,110,322           4,149,123           3,971,952         
Noncontrolling interest 3,086           3,119           3,100           3,119         
Total liabilities and stockholders’
equity
$26,801,814          $23,015,188          $25,768,172          $22,759,370         
Net interest income – FTE    $239,133          $216,005          $894,650          $888,589     
Net interest margin – FTE         3.88%          4.15%          3.81%          4.34%
                                                


(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 fourth quarter and $0.68 million for the full year of 2020 compared to $0.04 million for the fourth quarter and $0.90 million for the full year of 2019. In the absence of this interest capitalization, the rates on other borrowings would have been 0.55% for the fourth quarter and 0.53% for the full year of 2020 and 2.64% for the fourth quarter and 2.58% for the full year of 2019. Capitalized interest included in subordinated debentures totaled $0.01 million for the fourth quarter and $0.18 million for the full year of 2020, compared to $0.45 million for the fourth quarter and $0.89 million for the full year of 2019. In the absence of this interest capitalization, the rates on subordinated debentures would have been 3.20% for the fourth quarter and 3.80% for the full year of 2020 and 5.10% for the fourth quarter and 5.48% for the full year of 2019.
  

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    
 December 31,  September 30,  Year Ended 
 2020  2019  2020  2020  2019 
               
 (Dollars in thousands) 
Net income available to common stockholders$120,513  $100,806  $109,253  $291,898  $425,906 
Average common stockholders’ equity before
noncontrolling interest
$4,219,249  $4,110,322  $4,148,409  $4,149,123  $3,971,952 
Less average intangible assets:                   
Goodwill (660,789)  (660,789)  (660,789)  (660,789)  (660,789)
Core deposit and other intangible assets, net of
accumulated amortization
 (15,578)  (25,315)  (17,461)  (18,741)  (29,784)
Total average intangibles (676,367)  (686,104)  (678,250)  (679,530)  (690,573)
Average tangible common stockholders’ equity$3,542,882  $3,424,218  $3,470,159  $3,469,593  $3,281,379 
Return on average common stockholders’ equity(1) 11.36%  9.73%  10.48%  7.04%  10.72%
Return on average tangible common stockholders'
equity(1)
 13.53%  11.68%  12.52%  8.41%  12.98%
                    


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

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

  December 31,  September 30, 
 2020  2019  2020 
         
 (In thousands, except per share amounts) 
Total common stockholders’ equity before noncontrolling interest$4,272,271  $4,150,351  $4,186,285 
Less intangible assets:           
Goodwill (660,789)  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated
amortization
 (14,669)  (23,753)  (16,462)
Total intangibles (675,458)  (684,542)  (677,251)
Total tangible common stockholders' equity$3,596,813  $3,465,809  $3,509,034 
Shares of common stock outstanding 129,350   128,951   129,342 
Book value per common share$33.03  $32.19  $32.37 
Tangible book value per common share$27.81  $26.88  $27.13 
            

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

  December 31, 
 2020  2019 
      
 (Dollars in thousands) 
Total common stockholders’ equity before noncontrolling interest$4,272,271  $4,150,351 
Less intangible assets:       
Goodwill (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization (14,669)  (23,753)
Total intangibles (675,458)  (684,542)
Total tangible common stockholders' equity$3,596,813  $3,465,809 
Total assets$27,162,596  $23,555,728 
Less intangible assets:       
Goodwill (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization (14,669)  (23,753)
Total intangibles (675,458)  (684,542)
Total tangible assets$26,487,138  $22,871,186 
Ratio of total common stockholders’ equity to total assets 15.73%  17.62%
Ratio of total tangible common stockholders’ equity to total
tangible assets
 13.58%  15.15%
        

Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited

 Three Months Ended  Year Ended 
 December 31,  September 30,  December 31, 
 2020  2019  2020  2020  2019 
               
 (Dollars in thousands) 
Income before taxes$156,117  $136,039  $138,492  $376,180  $564,337 
Provision for credit losses 6,750   4,938   7,200   203,639   26,241 
Pre-tax pre-provision net revenue$162,867  $140,977  $145,692  $579,819  $590,578