LITTLE ROCK, Ark., Oct. 17, 2019 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the third quarter of 2019 was $103.9 million, a 40.1% increase from $74.2 million for the third quarter of 2018, but a 6.0% decrease from $110.5 million for the second quarter of 2019.  Diluted earnings per common share for the third quarter of 2019 were $0.81, a 39.7% increase from $0.58 for the third quarter of 2018, but a 5.8% decrease from $0.86 for the second quarter of 2019.

The Bank’s results for the third quarter of 2018 included (i) pretax expenses of $10.8 million as a result of its name change and strategic rebranding and (ii) net charge-offs of $45.5 million on two unrelated credits.

For the first nine months of 2019, net income totaled $325.1 million, a 7.6% increase from $302.1 million for the first nine months of 2018.  Diluted earnings per common share for the first nine months of 2019 were $2.52, a 7.2% increase from $2.35 for the first nine months of 2018.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the third quarter of 2019 were 1.81%, 10.22% and 12.33%, respectively, compared to 1.33%, 8.07% and 9.99%, respectively, for the third quarter of 2018.  The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first nine months of 2019 were 1.92%, 11.07%, and 13.44%, respectively, compared to 1.85%, 11.32%, and 14.11%, respectively, for the first nine months of 2018. The calculation of the Bank’s annualized return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.  

George Gleason, Chairman and Chief Executive Officer, stated, “We are very pleased to have once again delivered financial metrics among the best in the industry for the quarter just ended.  We continue to maintain our focus on our strong credit culture and consistent discipline, which are paramount in this interest rate and competitive environment.  Our excellent team of bankers have us well positioned for continued success as we remain focused on delivering long-term value for our shareholders.”

KEY BALANCE SHEET METRICS

Total loans were $17.73 billion at September 30, 2019, a 6.0% increase from $16.73 billion at September 30, 2018.  Non-purchased loans, which exclude loans acquired in previous acquisitions, were $16.31 billion at September 30, 2019, a 12.9% increase from $14.44 billion at September 30, 2018.  Purchased loans, which consist of loans acquired in previous acquisitions, were $1.43 billion at September 30, 2019, a 37.5% decrease from $2.29 billion at September 30, 2018.  The unfunded balance of closed loans was $11.43 billion at September 30, 2019, a 3.9% decrease from $11.89 billion at September 30, 2018, but a 2.4% increase from $11.17 billion at June 30, 2019.

Deposits were $18.44 billion at September 30, 2019, a 3.5% increase from $17.82 billion at September 30, 2018.  Total assets were $23.40 billion at September 30, 2019, a 6.0% increase from $22.09 billion at September 30, 2018.

Common stockholders’ equity was $4.08 billion at September 30, 2019, an 11.6% increase from $3.65 billion at September 30, 2018.  Tangible common stockholders’ equity was $3.39 billion at September 30, 2019, a 14.8% increase from $2.95 billion at September 30, 2018.  Book value per common share was $31.63 at September 30, 2019, an 11.3% increase from $28.41 at September 30, 2018.  Tangible book value per common share was $26.30 at September 30, 2019, a 14.5% increase from $22.97 at September 30, 2018.  The calculations of the Bank’s tangible common stockholders’ equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.

The Bank’s ratio of total common stockholders’ equity to total assets increased to 17.43% at September 30, 2019 compared to 16.54% at September 30, 2018.  Its ratio of total tangible common stockholders’ equity to total tangible assets increased to 14.93% at September 30, 2019 compared to 13.81% at September 30, 2018.  The calculation of the Bank’s ratio of total tangible common stockholders’ equity to total tangible assets and the reconciliation to GAAP are included in the schedules accompanying this release. 

MANAGEMENT’S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS

In connection with this release, the Bank released management’s comments on the results for the quarter just ended, which are available at http://ir.ozk.com.  This release should be read in conjunction with management’s comments on the results for the third quarter of 2019. 

Management will conduct a conference call to take questions on these quarterly results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on October 18, 2019.  Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call.  A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally).  The passcode for this playback is 7188336.  The call will be available live or in a recorded version on the Bank’s Investor Relations website at ir.ozk.com under “Company News/Webcasts.”  The Bank will also provide a transcript of the conference call on its Investor Relations website.

The Bank files annual, quarterly and current reports, proxy materials and other information required by the Securities Exchange Act of 1934 with the Federal Deposit Insurance Corporation (“FDIC”), copies of which are available electronically at the FDIC’s website at https://efr.fdic.gov/fcxweb/efr/index.html and are also available on the Bank’s Investor Relations website at http://ir.ozk.com.  To receive automated email alerts for these materials, please visit http://ir.ozk.com/EmailNotification to sign up.

NON-GAAP FINANCIAL MEASURES

This release contains certain non-GAAP financial measures.  The Bank uses these non-GAAP financial measures, specifically return on average tangible common stockholders’ equity, tangible book value per common share, total tangible common stockholders’ equity and the ratio of total tangible common stockholders’ equity to total tangible assets, as important measures of the strength of its capital and its ability to generate earnings on its tangible capital invested by its shareholders. These measures typically adjust GAAP financial measures to exclude intangible assets.  Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks.  Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

FORWARD-LOOKING STATEMENTS

This release and other communications by the Bank include certain “forward-looking statements” regarding the Bank’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time.  Those statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements.  These risks, uncertainties and other factors include, but are not limited to: potential delays or other problems implementing the Bank’s growth, expansion and acquisition strategies, including delays in identifying satisfactory sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices or relocating 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 change in the method for determining 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; changes in U.S. government monetary and fiscal policy; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, the Bank’s operational or security systems or infrastructure, or those of third parties with whom it does business, including as a result of cyber attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank or its customers; adoption of new accounting standards, including the estimated effects from the adoption of the current expected credit loss (“CECL”) model 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, 2018 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements.  The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

GENERAL INFORMATION

Bank OZK (Nasdaq: OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence.  Bank OZK has been recognized as the top performing bank in the nation in its asset size 13 times in the past eight years. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.  Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 

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


Bank OZK
Consolidated Balance Sheets
Unaudited
      
  September 30,  December 31, 
  2019  2018 
         
  (Dollars in thousands, except per share amounts) 
ASSETS        
Cash and cash equivalents $1,029,946  $290,672 
Investment securities - available for sale ("AFS")  2,414,722   2,862,340 
Federal Home Loan Bank of Dallas and other banker's bank stocks  13,656   25,941 
Non-purchased loans  16,307,621   15,073,791 
Purchased loans  1,427,230   2,044,032 
Allowance for loan losses  (109,001)  (102,264)
Net loans  17,625,850   17,015,559 
Premises and equipment, net  687,511   567,189 
Foreclosed assets  33,319   16,171 
Accrued interest receivable  76,218   81,968 
Bank owned life insurance (“BOLI”)  735,531   721,238 
Goodwill and other intangible assets, net  687,397   696,461 
Other, net  98,529   110,491 
Total assets $23,402,679  $22,388,030 
         
LIABILITIES AND STOCKHOLDERS EQUITY        
Deposits:        
Demand non-interest bearing $2,793,369  $2,748,273 
Savings and interest bearing transaction  8,441,339   9,682,713 
Time  7,205,370   5,507,429 
Total deposits  18,440,078   17,938,415 
Repurchase agreements with customers  12,156   20,564 
Other borrowings  301,421   96,692 
Subordinated notes  223,567   223,281 
Subordinated debentures  119,775   119,358 
Accrued interest payable and other liabilities  224,234   216,355 
Total liabilities  19,321,231   18,614,665 
         
Commitments and contingencies        
         
Stockholders’ equity:        
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares
  issued or outstanding at September 30, 2019 or December 31, 2018
      
Common stock; $0.01 par value; 300,000,000 shares authorized;
  128,946,359 and 128,611,049 shares issued and outstanding at
  September 30, 2019 and December 31, 2018, respectively
  1,289   1,286 
Additional paid-in capital  2,247,973   2,237,948 
Retained earnings  1,801,414   1,565,201 
Accumulated other comprehensive income (loss)  27,648   (34,105)
Total stockholders’ equity before noncontrolling interest  4,078,324   3,770,330 
Noncontrolling interest  3,124   3,035 
Total stockholders’ equity  4,081,448   3,773,365 
Total liabilities and stockholders’ equity $23,402,679  $22,388,030 
         


Bank OZK
Consolidated Statements of Income
Unaudited
 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2019  2018  2019  2018 
                 
  (Dollars in thousands, except per share amounts) 
Interest income:                
Non-purchased loans $244,954  $219,847  $740,900  $620,659 
Purchased loans  26,042   40,173   84,756   138,012 
Investment securities:                
Taxable  12,511   12,472   40,992   35,380 
Tax-exempt  3,363   3,991   10,930   12,252 
Deposits with banks and federal funds sold  2,647   1,112   4,001   2,448 
Total interest income  289,517   277,595   881,579   808,751 
                 
Interest expense:                
Deposits  66,248   51,785   196,727   130,009 
Repurchase agreements with customers  5   215   39   759 
Other borrowings  90   144   1,497   824 
Subordinated notes  3,216   3,216   9,542   9,542 
Subordinated debentures  1,178   1,621   4,570   4,567 
Total interest expense  70,737   56,981   212,375   145,701 
                 
Net interest income  218,780   220,614   669,204   663,050 
Provision for loan losses  7,854   41,949   21,303   57,126 
Net interest income after provision for loan losses  210,926   178,665   647,901   605,924 
                 
Non-interest income:                
Service charges on deposit accounts  10,827   9,730   30,841   28,959 
Trust income  1,975   1,730   5,544   5,114 
BOLI income  5,414   5,321   15,753   18,160 
Other income from purchased loans  674   1,418   2,925   5,413 
Loan service, maintenance and other fees  4,197   4,724   13,636   15,108 
Gains (losses) on sales of other assets  189   (518)  875   1,753 
Net gains on investment securities        713   17 
Other  3,170   1,716   6,834   5,691 
Total non-interest income  26,446   24,121   77,121   80,215 
                 
Non-interest expense:                
Salaries and employee benefits  48,376   41,477   140,801   128,641 
Net occupancy and equipment  14,825   14,358   44,163   42,335 
Other operating expenses  37,713   47,107   111,760   114,883 
Total non-interest expense  100,914   102,942   296,724   285,859 
                 
Income before taxes  136,458   99,844   428,298   400,280 
Provision for income taxes  32,574   25,665   103,189   98,227 
Net income  103,884   74,179   325,109   302,053 
Earnings attributable to noncontrolling interest  7   1   (9)  22 
Net income available to common stockholders $103,891  $74,180  $325,100  $302,075 
                 
Basic earnings per common share $0.81  $0.58  $2.52  $2.35 
                 
Diluted earnings per common share $0.81  $0.58  $2.52  $2.35 
                 


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 September 30, 2019:                        
Balances – June 30, 2019 $1,289  $2,243,779  $1,728,486  $19,693  $3,131  $3,996,378 
Net income        103,884         103,884 
Earnings attributable to noncontrolling interest        7      (7)   
Total other comprehensive income           7,955      7,955 
Common stock dividends paid, $0.24 per
  share
        (30,963)        (30,963)
Issuance of 10,800 shares of common
  stock for exercise of stock options
     214            214 
Stock-based compensation expense     3,980            3,980 
Forfeitures of 11,157 shares of unvested
  restricted common stock
                  
Balances – September 30, 2019 $1,289  $2,247,973  $1,801,414  $27,648  $3,124  $4,081,448 
                         
Nine months ended September 30, 2019:                        
Balances – December 31, 2018 $1,286  $2,237,948  $1,565,201  $(34,105) $3,035  $3,773,365 
Net income        325,109         325,109 
Earnings attributable to noncontrolling
  interest
        (9)     9    
Total other comprehensive income           61,753      61,753 
Common stock dividends paid, $0.69
  per share
        (88,887)        (88,887)
Noncontrolling interest cash contribution              80   80 
Issuance of 67,350 shares of common
  stock for exercise of stock options
  1   1,090            1,091 
Issuance of 406,074 shares of unvested
  restricted common stock
  4   (4)            
Repurchase and cancellation of 62,742
  shares of common stock
  (1)  (1,646)           (1,647)
Stock-based compensation expense     10,584            10,584 
Forfeiture of 75,372 shares of unvested
  restricted common stock
  (1)  1             
Balances – September 30, 2019 $1,289  $2,247,973  $1,801,414  $27,648  $3,124  $4,081,448 
                         


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 September 30, 2018:                        
Balances – June 30, 2018 $1,286  $2,230,809  $1,428,721  $(46,913) $3,039  $3,616,942 
Net income        74,179         74,179 
Earnings attributable to noncontrolling interest        1      (1)   
Total other comprehensive loss           (12,338)     (12,338)
Common stock dividends paid, $0.20 per
  share
        (25,723)        (25,723)
Issuance of 6,100 shares of common
  stock for exercise of stock options
     92            92 
Issuance of 5,511 shares of unvested
  restricted common stock
                  
Stock-based compensation expense     3,482            3,482 
Forfeitures of 18,791 shares of unvested
  restricted common stock
                  
Balances – September 30, 2018 $1,286  $2,234,383  $1,477,178  $(59,251) $3,038  $3,656,634 
                         
Nine months ended September 30, 2018:                        
Balances – December 31, 2017 $1,283  $2,221,844  $1,250,313  $(12,712) $3,060  $3,463,788 
Net income        302,053         302,053 
Earnings attributable to noncontrolling interest        22      (22)   
Total other comprehensive loss           (46,539)     (46,539)
Common stock dividends paid, $0.585 per
  share
        (75,210)        (75,210)
Issuance of 216,990 shares of common
  stock for exercise of stock options
  2   5,677            5,679 
Issuance of 220,102 shares of unvested
  restricted common stock
  2   (2)            
Repurchase and cancellation of 71,750 shares
  of common stock
  (1)  (3,769)           (3,770)
Stock-based compensation expense     10,633            10,633 
Forfeitures of 43,655 shares of unvested
  restricted common stock
                  
Balances – September 30, 2018 $1,286  $2,234,383  $1,477,178  $(59,251) $3,038  $3,656,634 
                         


Bank OZK
Summary of Non-Interest Expense
Unaudited
 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2019  2018  2019  2018 
  (Dollars in thousands) 
Salaries and employee benefits $48,376  $41,477  $140,801  $128,641 
Net occupancy and equipment  14,825   14,358   44,163   42,335 
Other operating expenses:                
Professional and outside services  9,204   9,725   25,874   27,542 
Software and data processing  5,095   3,336   14,561   9,786 
Deposit insurance and assessments  2,505   3,948   9,645   11,068 
Travel and meals  2,777   2,517   8,385   7,168 
Telecommunication services  2,094   3,373   8,248   10,056 
Postage and supplies  2,040   2,517   6,201   6,930 
Advertising and public relations  2,067   6,977   5,421   10,084 
ATM expense  1,277   1,202   3,363   3,683 
Loan collection and repossession expense  317   932   2,218   2,225 
Writedowns of foreclosed and other assets  354   544   1,509   1,156 
Writedown of signage due to strategic rebranding     4,915      4,915 
Amortization of intangibles  2,907   3,145   9,064   9,435 
Other  7,076   3,976   17,271   10,835 
Total non-interest expense $100,914  $102,942  $296,724  $285,859 
                 


Bank OZK
Summary of Total Loans Outstanding
Unaudited
 
  September 30, 2019  December 31, 2018 
                 
  (Dollars in thousands) 
Real estate:                
Residential 1-4 family $1,016,834   5.7% $1,049,460   6.1%
Non-farm/non-residential  3,883,113   21.9   4,319,388   25.2 
Construction/land development  6,682,143   37.7   6,562,185   38.4 
Agricultural  207,801   1.2   165,088   1.0 
Multifamily residential  1,358,127   7.6   1,116,026   6.5 
Total real estate  13,148,018   74.1   13,212,147   77.2 
Commercial and industrial  706,048   4.0   823,417   4.8 
Consumer  2,921,307   16.5   2,345,863   13.7 
Other  959,478   5.4   736,396   4.3 
Total loans  17,734,851   100.0%  17,117,823   100.0%
Allowance for loan losses  (109,001)      (102,264)    
Net loans $17,625,850      $17,015,559     
                 


Summary of Deposits
Unaudited
 
  September 30, 2019  December 31, 2018 
                 
  (Dollars in thousands) 
Non-interest bearing $2,793,369   15.1% $2,748,273   15.3%
Interest bearing:                
Transaction (NOW)  2,730,018   14.8   2,359,299   13.2 
Savings and money market  5,711,321   31.0   7,323,414   40.8 
Time deposits less than $100  3,445,873   18.7   2,297,101   12.8 
Time deposits of $100 or more  3,759,497   20.4   3,210,328   17.9 
Total deposits $18,440,078   100.0% $17,938,415   100.0%
                 


Bank OZK
Selected Consolidated Financial Data
Unaudited
 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2019  2018  % Change  2019  2018  % Change 
                         
 (Dollars in thousands, except per share amounts) 
Income statement data:                        
Net interest income $218,780  $220,614   (0.8)% $669,204  $663,050   0.9%
Provision for loan losses  7,854   41,949   (81.3)  21,303   57,126   (62.7)
Non-interest income  26,446   24,121   9.6   77,121   80,215   (3.9)
Non-interest expense  100,914   102,942   (2.0)  296,724   285,859   3.8 
Net income available to common stockholders  103,891   74,180   40.1   325,100   302,075   7.6 
Common stock data:                        
Net income per share - diluted $0.81  $0.58   39.7% $2.52  $2.35   7.2%
Net income per share - basic  0.81   0.58   39.7   2.52   2.35   7.2 
Cash dividends per share  0.24   0.20   20.0   0.69   0.585   17.9 
Book value per share  31.63   28.41   11.3   31.63   28.41   11.3 
Tangible book value per share(1)  26.30   22.97   14.5   26.30   22.97   14.5 
Diluted shares outstanding (thousands)  129,012   128,744       128,995   128,771     
End of period shares outstanding (thousands)  128,946   128,609       128,946   128,609     
Balance sheet data at period end:                        
Total assets $23,402,679  $22,086,539   6.0% $23,402,679  $22,086,539   6.0%
Total loans  17,734,851   16,725,791   6.0   17,734,851   16,725,791   6.0 
Non-purchased loans  16,307,621   14,440,623   12.9   16,307,621   14,440,623   12.9 
Purchased loans  1,427,230   2,285,168   (37.5)  1,427,230   2,285,168   (37.5)
Allowance for loan losses  109,001   98,200   11.0   109,001   98,200   11.0 
Foreclosed assets  33,319   18,470   80.4   33,319   18,470   80.4 
Investment securities - AFS  2,414,722   2,669,877   (9.6)  2,414,722   2,669,877   (9.6)
Goodwill and other intangible assets, net  687,397   699,606   (1.7)  687,397   699,606   (1.7)
Deposits  18,440,078   17,822,915   3.5   18,440,078   17,822,915   3.5 
Repurchase agreements with customers  12,156   51,891   (76.6)  12,156   51,891   (76.6)
Other borrowings  301,421   1,729  NM   301,421   1,729  NM 
Subordinated notes  223,567   223,185   0.2   223,567   223,185   0.2 
Subordinated debentures  119,775   119,217   0.5   119,775   119,217   0.5 
Unfunded balance of closed loans  11,429,918   11,891,247   (3.9)  11,429,918   11,891,247   (3.9)
Total common stockholders’ equity  4,078,324   3,653,596   11.6   4,078,324   3,653,596   11.6 
Net unrealized gains (losses) on investment securities AFS
  included in common stockholders' equity
  27,648   (59,251)      27,648   (59,251)    
Loan (including purchased loans) to deposit ratio  96.18%  93.84%      96.18%  93.84%    
Selected ratios:                        
Return on average assets(2)  1.81%  1.33%      1.92%  1.85%    
Return on average common stockholders’ equity(2)  10.22   8.07       11.07   11.32     
Return on average tangible common stockholders’ equity(1) (2)  12.33   9.99       13.44   14.11     
Average common equity to total average assets  17.69   16.47       17.31   16.38     
Net interest margin – FTE(2)  4.26   4.47       4.41   4.60     
Efficiency ratio  40.98   41.87       39.58   38.28     
Net charge-offs to average non-purchased loans(2) (3)  0.07   1.32       0.08   0.49     
Net charge-offs to average total loans(2)  0.12   1.14       0.11   0.43     
Nonperforming loans to total loans(4)  0.17   0.23       0.17   0.23     
Nonperforming assets to total assets(4)  0.26   0.23       0.26   0.23     
Allowance for loan losses to non-purchased loans(5)  0.66   0.67      0.66  0.67     
Other information:                        
Non-accrual loans(4) $25,552  $32,960      $25,552  $32,960     
Accruing loans - 90 days past due(4)                    
Troubled and restructured non-purchased loans - accruing (4)  1,510          1,510        
Impaired purchased loans  12,969   5,064       12,969   5,064     

(1)Calculations of tangible book value per common share and return on average tangible common stockholders’ equity and the reconciliations to GAAP are included in the schedules accompanying this release.
(2)Ratios for interim periods annualized based on actual days.
(3)Excludes purchased loans and net charge-offs related to such loans.
(4)Excludes purchased loans, except for their inclusion in total assets.
(5)Excludes purchased loans and any allowance for such loans.
NM – Not meaningful

 
 
Bank OZK
Selected Consolidated Financial Data
Unaudited
 
  Three Months Ended     
  September 30,  June 30,     
  2019  2019  % Change 
             
 (Dollars in thousands, except per share amounts) 
Income statement data:            
Net interest income $218,780  $224,536   (2.6)%
Provision for loan losses  7,854   6,769   16.0 
Non-interest income  26,446   26,603   (0.6)
Non-interest expense  100,914   99,131   1.8 
Net income available to common stockholders  103,891   110,503   (6.0)
Common stock data:            
Net income per share - diluted $0.81  $0.86   (5.8)%
Net income per share - basic  0.81   0.86   (5.8)
Cash dividends per share  0.24   0.23   4.3 
Book value per share  31.63   30.97   2.1 
Tangible book value per share (1)  26.30   25.61   2.7 
Diluted shares outstanding (thousands)  129,012   129,079     
End of period shares outstanding (thousands)  128,946   128,947     
Balance sheet data at period end:            
Total assets $23,402,679  $22,960,731   1.9%
Total loans  17,734,851   17,485,205   1.4 
Non-purchased loans  16,307,621   15,786,809   3.3 
Purchased loans  1,427,230   1,698,396   (16.0)
Allowance for loan losses  109,001   106,642   2.2 
Foreclosed assets  33,319   33,467   (0.4)
Investment securities - AFS  2,414,722   2,548,489   (5.2)
Goodwill and other intangible assets, net  687,397   690,304   (0.4)
Deposits  18,440,078   18,186,215   1.4 
Repurchase agreements with customers  12,156   10,909   11.4 
Other borrowings  301,421   201,455   49.6 
Subordinated notes  223,567   223,471   0.1 
Subordinated debentures  119,775   119,635   0.1 
Unfunded balance of closed loans  11,429,918   11,167,055   2.4 
Total common stockholders’ equity  4,078,324   3,993,247   2.1 
Net unrealized gains on investment securities AFS
  included in common stockholders' equity
  27,648   19,693     
Loan (including purchased loans) to deposit ratio  96.18%  96.15%    
Selected ratios:            
Return on average assets(2)  1.81%  1.95%    
Return on average common stockholders’ equity(2)  10.22   11.29     
Return on average tangible common stockholders’ equity(1) (2)  12.33   13.70     
Average common equity to total average assets  17.69   17.31     
Net interest margin – FTE(2)  4.26   4.45     
Efficiency ratio  40.98   39.30     
Net charge-offs to average non-purchased loans(2) (3)  0.07   0.12     
Net charge-offs to average total loans(2)  0.12   0.14     
Nonperforming loans to total loans(4)  0.17   0.15     
Nonperforming assets to total assets(4)  0.26   0.25     
Allowance for loan losses to non-purchased loans(5)  0.66  0.67     
Other information:            
Non-accrual loans(4) $25,552  $22,860     
Accruing loans - 90 days past due(4)          
Troubled and restructured non-purchased loans - accruing(4)  1,510   1,399     
Impaired purchased loans  12,969   15,440     

(1)Calculations of tangible book value per common share and return on average tangible common stockholders’ equity and the reconciliations to GAAP are included in the schedules accompanying this release.
(2)Ratios for interim periods annualized based on actual days.
(3)Excludes purchased loans and net charge-offs related to such loans.
(4)Excludes purchased loans, except for their inclusion in total assets.
(5)Excludes purchased loans and any allowance for such loans

 
 
Bank OZK
Supplemental Quarterly Financial Data
Unaudited
 
   12/31/17  3/31/18  6/30/18  9/30/18  12/31/18  3/31/19  6/30/19  9/30/19 
                                 
  (Dollars in thousands, except per share amounts) 
Earnings Summary:                                
Net interest income $214,831  $217,776  $224,661  $220,614  $228,382  $225,888  $224,536  $218,780 
Federal tax (FTE) adjustment  2,450   1,166   1,151   1,132   1,219   1,207   1,136   1,038 
Net interest income (FTE)  217,281   218,942   225,812   221,746   229,601   227,095   225,672   219,818 
Provision for loan losses  (9,279)  (5,567)  (9,610)  (41,949)  (7,271)  (6,681)  (6,769)  (7,854)
Non-interest income  30,213   28,707   27,386   24,121   27,560   24,072   26,603   26,446 
Non-interest expense  (86,177)  (93,810)  (89,107)  (102,942)  (94,893)  (96,678)  (99,131)  (100,914)
Pretax income (FTE)  152,038   148,272   154,481   100,976   154,997   147,808   146,375   137,496 
FTE adjustment  (2,450)  (1,166)  (1,151)  (1,132)  (1,219)  (1,207)  (1,136)  (1,038)
Provision for income taxes  (3,434)  (33,973)  (38,589)  (25,665)  (38,750)  (35,889)  (34,726)  (32,574)
Noncontrolling interest  10   11   10   1   3   (6)  (10)  7 
Net income available to
  common stockholders
 $146,164  $113,144  $114,751  $74,180  $115,031  $110,706  $110,503  $103,891 
Earnings per common share – diluted $1.14  $0.88  $0.89  $0.58  $0.89  $0.86  $0.86  $0.81 
Non-interest Income:                                
Service charges on deposit accounts $10,058  $9,525  $9,704  $9,730  $10,585  $9,722  $10,291  $10,827 
Trust income  1,729   1,793   1,591   1,730   1,821   1,730   1,839   1,975 
BOLI income  5,166   7,580   5,259   5,321   5,751   5,162   5,178   5,414 
Other income from purchased loans  2,009   1,251   2,744   1,418   2,370   795   1,455   674 
Loan service, maintenance and
  other fees
  4,289   4,743   5,641   4,724   5,245   4,874   4,565   4,197 
Net gains on investment securities  1,201   17               713    
Gains (losses) on sales of other assets  1,899   1,426   844   (518)  465   284   402   189 
Other  3,862   2,372   1,603   1,716   1,323   1,505   2,160   3,170 
Total non-interest income $30,213  $28,707  $27,386  $24,121  $27,560  $24,072  $26,603  $26,446 
Non-interest Expense:                                
Salaries and employee benefits $38,417  $45,499  $41,665  $41,477  $41,837  $44,868  $47,558  $48,376 
Net occupancy expense  13,474   14,150   13,827   14,358   14,027   14,750   14,587   14,825 
Other operating expenses  34,286   34,161   33,615   47,107   39,029   37,060   36,986   37,713 
Total non-interest expense $86,177  $93,810  $89,107  $102,942  $94,893  $96,678  $99,131  $100,914 
Balance Sheet Data:                                
Total assets $21,275,647  $22,039,439  $22,220,380  $22,086,539  $22,388,030  $23,005,652  $22,960,731  $23,402,679 
Non-purchased loans  12,733,937   13,674,561   14,183,533   14,440,623   15,073,791   15,610,681   15,786,809   16,307,621 
Purchased loans  3,309,092   2,934,535   2,580,341   2,285,168   2,044,032   1,864,715   1,698,396   1,427,230 
Investment securities - AFS  2,593,873   2,603,600   2,608,439   2,669,877   2,862,340   2,769,602   2,548,489   2,414,722 
Deposits  17,192,345   17,833,672   17,897,085   17,822,915   17,938,415   18,476,868   18,186,215   18,440,078 
Unfunded balance of closed loans  13,192,439   12,551,032   11,999,661   11,891,247   11,364,975   11,544,218   11,167,055   11,429,918 
Common stockholders' equity  3,460,728   3,526,605   3,613,903   3,653,596   3,770,330   3,882,643   3,993,247   4,078,324 
Allowance for Loan Losses:                                
Balance at beginning of period $86,784  $94,120  $98,097  $104,638  $98,200  $102,264  $105,954  $106,642 
Net charge-offs  (1,943)  (1,590)  (3,069)  (48,387)  (3,207)  (2,991)  (6,081)  (5,495)
Provision for loan losses  9,279   5,567   9,610   41,949   7,271   6,681   6,769   7,854 
Balance at end of period $94,120  $98,097  $104,638  $98,200  $102,264  $105,954  $106,642  $109,001 
Selected Ratios:                                
Net interest margin – FTE(1)  4.72%  4.69%  4.66%  4.47%  4.55%  4.53%  4.45%  4.26%
Efficiency ratio  34.82   37.88   35.19   41.87   36.90   38.49   39.30   40.98 
Net charge-offs to average
  non-purchased loans(1) (2)
  0.08   0.04   0.05   1.32   0.06   0.05   0.12   0.07 
Net charge-offs to average
  total loans(1)
  0.05   0.04   0.07   1.14   0.07   0.07   0.14   0.12 
Nonperforming loans
  to total loans(3)
  0.10   0.09   0.10   0.23   0.23   0.22   0.15   0.17 
Nonperforming assets to total assets(3)  0.18   0.16   0.15   0.23   0.23   0.21   0.25   0.26 
Allowance for loan losses to
  total non-purchased loans(4)
  0.73   0.71   0.73   0.67   0.67   0.67   0.67   0.66 
Loans past due 30 days or
  more, including past due non-
  accrual loans, to total loans(3)
  0.15   0.14   0.12   0.17   0.28   0.28   0.13   0.14 

(1)Ratios for interim periods annualized based on actual days.
(2)Excludes purchased loans and net charge-offs related to such loans.
(3)Excludes purchased loans, except for their inclusion in total assets.
(4)Excludes purchased loans and any allowance for such loans.

 
 
Bank OZK
Average Consolidated Balance Sheets and Net Interest Analysis – FTE
Unaudited
 
  Three Months Ended September 30,  Nine Months Ended September 30, 
  2019  2018  2019  2018 
  Average
Balance
  Income/
Expense
 Yield/
Rate
  Average
Balance
 Income/
Expense
 Yield/
Rate
  Average
Balance
  Income/
Expense
 Yield/
Rate
  Average
Balance
 Income/
Expense
 Yield/
Rate
 
                                           
  (Dollars in thousands) 
ASSETS                                          
Earning assets:                                          
Interest earning deposits and federal funds sold $486,174  $2,647  2.16% $240,665 $1,112  1.83% $242,476  $4,001  2.21% $179,429 $2,448  1.82%
Investment securities:                                          
Taxable  2,027,267   12,511  2.45   2,117,498  12,472  2.34   2,169,218   40,992  2.53   2,078,710  35,380  2.28 
Tax-exempt – FTE  462,927   4,256  3.65   532,503  5,051  3.76   495,694   13,835  3.73   544,728  15,509  3.81 
Non-purchased loans – FTE  15,934,033   245,099  6.10   14,363,015  219,919  6.07   15,727,447   741,375  6.30   13,760,166  620,851  6.03 
Purchased loans  1,553,398   26,042  6.65   2,436,888  40,173  6.54   1,760,740   84,756  6.44   2,789,226  138,012  6.62 
Total earning assets – FTE  20,463,799   290,555  5.63   19,690,569  278,727  5.62   20,395,575   884,959  5.80   19,352,259  812,200  5.61 
Non-interest earning assets  2,323,028          2,457,577         2,277,584          2,421,623       
Total assets $22,786,827         $22,148,146        $22,673,159         $21,773,882       
LIABILITIES AND STOCKHOLDERS EQUITY                                          
Interest bearing liabilities:                                          
Deposits:                                          
Savings and interest bearing transaction $8,792,998  $30,108  1.36% $10,231,569 $33,753  1.31% $9,318,915  $103,721  1.49% $10,113,882 $85,571  1.13%
Time deposits of $100 or more  3,564,862   19,803  2.20   3,306,014  13,288  1.59   3,292,375   52,056  2.11   3,175,855  33,096  1.39 
Other time deposits  3,069,997   16,337  2.11   1,580,886  4,744  1.19   2,697,660   40,950  2.03   1,492,575  11,342  1.02 
Total interest bearing deposits  15,427,857   66,248  1.70   15,118,469  51,785  1.36   15,308,950   196,727  1.72   14,782,312  130,009  1.18 
Repurchase agreements with customers  9,037   5  0.24   97,249  215  0.88   14,062   39  0.37   123,587  759  0.82 
Other borrowings (1)  29,422   90  1.21   63,909  144  0.90   122,254   1,497  1.64   88,101  824  1.25 
Subordinated notes  223,516   3,216  5.71   223,135  3,216  5.72   223,419   9,542  5.71   223,042  9,542  5.72 
Subordinated debentures (1)  119,700   1,178  3.90   119,145  1,621  5.40   119,558   4,570  5.11   119,006  4,567  5.13 
Total interest bearing liabilities  15,809,532   70,737  1.78   15,621,907  56,981  1.45   15,788,243   212,375  1.80   15,336,048  145,701  1.27 
Non-interest bearing liabilities:                                          
Non-interest bearing deposits  2,728,596          2,685,802         2,736,350          2,689,818       
Other non-interest bearing liabilities  213,505          189,003         220,126          177,824       
Total liabilities  18,751,633          18,496,712         18,744,719          18,203,690       
Common stockholders’ equity  4,032,066          3,648,398         3,925,321          3,567,148       
Noncontrolling interest  3,128          3,036         3,119          3,044       
Total liabilities and stockholders’ equity $22,786,827         $22,148,146        $22,673,159         $21,773,882       
Net interest income – FTE     $219,818        $221,746         $672,584        $666,499    
Net interest margin – FTE         4.26%        4.47%         4.41%        4.60%

(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 $0.11 million for the third quarter and $0.86 million for the first nine months of 2019 and $0.20 million for the third quarter and $0.38 million for the first nine months of 2018.  In the absence of this interest capitalization, the rates on other borrowings would have been 2.69% for the third quarter and 2.57% for the first nine months of 2019 and 2.12% for the third quarter and 1.83% for the first nine months of 2018.  Capitalized interest included in subordinated debentures totaled $0.45 million for both the third quarter and the first nine months of 2019 and none in 2018.  In the absence of this interest capitalization, the rates on subordinated debentures would have been 5.39% for the third quarter and 5.61% for the first nine months 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  Nine Months Ended 
  September 30,  June 30,  September 30, 
  2019  2018  2019  2019  2018 
                     
  (Dollars in thousands) 
Net income available to common stockholders $103,891  $74,180  $110,503  $325,100  $302,075 
Average common stockholders’ equity before
  noncontrolling interest
 $4,032,066  $3,648,398  $3,927,522  $3,925,321  $3,567,148 
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
  (28,275)  (40,743)  (31,225)  (31,290)  (43,886)
Total average intangibles  (689,064)  (701,532)  (692,014)  (692,079)  (704,675)
Average tangible common stockholders’ equity $3,343,002  $2,946,866  $3,235,508  $3,233,242  $2,862,473 
Return on average common stockholders’ equity(1)  10.22%  8.07%  11.29%  11.07%  11.32%
Return on average tangible common stockholders’ equity(1)  12.33%  9.99%  13.70%  13.44%  14.11%

(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
 
  September 30,  June 30, 
  2019  2018  2019 
             
  (In thousands, except per share amounts) 
Total common stockholders’ equity before noncontrolling interest $4,078,324  $3,653,596  $3,993,247 
Less intangible assets:            
Goodwill  (660,789)  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization  (26,608)  (38,817)  (29,515)
Total intangibles  (687,397)  (699,606)  (690,304)
Total tangible common stockholders’ equity $3,390,927  $2,953,990  $3,302,943 
Shares of common stock outstanding  128,946   128,609   128,947 
Book value per common share $31.63  $28.41  $30.97 
Tangible book value per common share $26.30  $22.97  $25.61 
             
             


Calculation of Total Tangible Common Stockholders’
Equity and the Ratio of Total Tangible Common
Stockholders’ Equity to Total Tangible Assets
Unaudited
 
  September 30, 
  2019  2018 
         
         
  (Dollars in thousands) 
Total common stockholders’ equity before noncontrolling interest $4,078,324  $3,653,596 
Less intangible assets:        
Goodwill  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization  (26,608)  (38,817)
Total intangibles  (687,397)  (699,606)
Total tangible common stockholders’ equity $3,390,927  $2,953,990 
Total assets $23,402,679  $22,086,539 
Less intangible assets:        
Goodwill  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization  (26,608)  (38,817)
Total intangibles  (687,397)  (699,606)
Total tangible assets $22,715,282  $21,386,933 
Ratio of total common stockholders’ equity to total assets  17.43%  16.54%
Ratio of total tangible common stockholders’ equity to total
  tangible assets
  14.93%  13.81%