News Press Releases

Bank OZK Announces Fourth Quarter and Record Full Year 2019 Earnings

OZK | January 16, 2020

LITTLE ROCK, Ark., Jan. 16, 2020 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the fourth quarter of 2019 was $100.8 million, a 12.4% decrease from $115.0 million for the fourth quarter of 2018. Diluted earnings per common share for the fourth quarter of 2019 were $0.78, a 12.4% decrease from $0.89 for the fourth quarter of 2018.

For the full year of 2019, net income was $425.9 million, a 2.1% increase from $417.1 million for the full year of 2018. Diluted earnings per common share for the full year of 2019 were $3.30, a 1.9% increase from $3.24 for the full year of 2018.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the fourth quarter of 2019 were 1.74%, 9.73% and 11.68%, respectively, compared to 2.04%, 12.36% and 15.24%, respectively, for the fourth quarter of 2018. The Bank’s returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the full year of 2019 were 1.87%, 10.72% and 12.98%, respectively, compared to 1.90%, 11.59% and 14.41%, respectively, for the full year of 2018. The calculation of the Bank’s return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

“We are very pleased to have achieved record net income of $425.9 million in 2019 and a 1.87% return on average assets,” stated George Gleason, Chairman and Chief Executive Officer. “Our strong credit culture and consistent discipline have been important ingredients in our long term success, and we are not wavering from those principles in today’s challenging competitive and interest rate environment. We believe our competitive advantages will allow us to capitalize on opportunities throughout 2020 and beyond.”

KEY BALANCE SHEET METRICS

Total loans, including purchased loans, were $17.53 billion at December 31, 2019, a 2.4% increase from $17.12 billion at December 31, 2018. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $16.22 billion at December 31, 2019, a 7.6% increase from $15.07 billion at December 31, 2018, but a 0.5% decrease from $16.31 billion at September 30, 2019. Purchased loans, which consist of loans acquired in previous acquisitions, were $1.31 billion at December 31, 2019, a 36.0% decrease from $2.04 billion at December 31, 2018. The unfunded balance of closed loans totaled $11.33 billion at December 31, 2019, a 0.3% decrease from $11.36 billion at December 31, 2018.

Deposits were $18.47 billion at December 31, 2019, a 3.0% increase from $17.94 billion at December 31, 2018. Total assets were $23.56 billion at December 31, 2019, a 5.2% increase from $22.39 billion at December 31, 2018.

Common stockholders’ equity was $4.15 billion at December 31, 2019, a 10.1% increase from $3.77 billion at December 31, 2018. Tangible common stockholders’ equity was $3.47 billion at December 31, 2019, a 12.8% increase from $3.07 billion at December 31, 2018. Book value per common share was $32.19 at December 31, 2019, a 9.8% increase from $29.32 at December 31, 2018. Tangible book value per common share was $26.88 at December 31, 2019, a 12.5% increase from $23.90 at December 31, 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 was 17.62% at December 31, 2019 compared to 16.84% at December 31, 2018. Its ratio of total tangible common stockholders’ equity to total tangible assets was 15.15% at December 31, 2019 compared to 14.17% at December 31, 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 its quarterly and year-end results, which are available at http://ir.ozk.com. This release should be read in conjunction with management’s comments on the quarterly and year-end results.

Management will conduct a conference call to take questions on these quarterly and year-end results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on January 17, 2020. 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 2495839. 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; natural disasters or acts of war or terrorism; international or political instability; impairment of our goodwill or other intangible assets; 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 and in 2019 was named Best Bank in the South by Money, the personal finance news and advice brand. 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.


Bank OZK Consolidated Balance Sheets Unaudited

	December 31,
	2019			2018

	(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents	$	1,495,757		$	290,672
Investment securities - available for sale ("AFS")		2,277,389			2,862,340
Federal Home Loan Bank of Dallas and other banker's bank stocks		21,855			25,941
Non-purchased loans		16,224,539			15,073,791
Purchased loans		1,307,504			2,044,032
Allowance for loan losses		(108,525	)		(102,264	)
Net loans		17,423,518			17,015,559
Premises and equipment, net		711,541			567,189
Foreclosed assets		19,096			16,171
Accrued interest receivable		75,208			81,968
Bank owned life insurance (“BOLI”)		738,860			721,238
Goodwill and intangible assets, net		684,542			696,461
Other, net		111,634			110,491
Total assets	$	23,559,400		$	22,388,030

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand non-interest bearing	$	2,795,251		$	2,748,273
Savings and interest bearing transaction		8,307,607			9,682,713
Time		7,371,401			5,507,429
Total deposits		18,474,259			17,938,415
Repurchase agreements with customers		11,249			20,564
Other borrowings		351,387			96,692
Subordinated notes		223,663			223,281
Subordinated debentures		119,916			119,358
Accrued interest payable and other liabilities		225,458			216,355
Total liabilities		19,405,932			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 December 31, 2019 or 2018		—			—
Common stock; $0.01 par value; 300,000,000 shares authorized; 128,951,024 and 128,611,049 shares issued and outstanding at December 31, 2019 and 2018, respectively		1,289			1,286
Additional paid-in capital		2,251,824			2,237,948
Retained earnings		1,869,983			1,565,201
Accumulated other comprehensive income (loss)		27,255			(34,105	)
Total stockholders’ equity before noncontrolling interest		4,150,351			3,770,330
Noncontrolling interest		3,117			3,035
Total stockholders’ equity		4,153,468			3,773,365
Total liabilities and stockholders’ equity	$	23,559,400		$	22,388,030


Bank OZK Consolidated Statements of Income Unaudited

	Three Months Ended December 31,				Year Ended December 31,
	2019		2018		2019			2018

	(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans	$	240,912	$	237,443	$	981,811		$	858,102
Purchased loans		22,152		35,453		106,908			173,465
Investment securities:
Taxable		11,820		14,642		52,812			50,021
Tax-exempt		3,323		3,941		14,252			16,193
Deposits with banks and federal funds sold		2,756		590		6,758			3,039
Total interest income		280,963		292,069		1,162,541			1,100,820

Interest expense:
Deposits		61,631		56,608		258,358			186,617
Repurchase agreements with customers		11		26		50			785
Other borrowings		34		2,193		1,531			3,017
Subordinated notes		3,216		3,216		12,757			12,757
Subordinated debentures		1,094		1,644		5,664			6,211
Total interest expense		65,986		63,687		278,360			209,387

Net interest income		214,977		228,382		884,181			891,433
Provision for loan losses		4,938		7,271		26,241			64,398
Net interest income after provision for loan losses		210,039		221,111		857,940			827,035

Non-interest income:
Service charges on deposit accounts		10,933		10,585		41,774			39,544
Trust income		2,010		1,821		7,554			6,935
BOLI income:
Increase in cash surrender value		5,167		5,269		20,715			20,700
Death benefits		2,989		482		3,194			3,211
Other income from purchased loans		759		2,370		3,684			7,784
Loan service, maintenance and other fees		4,282		5,245		17,917			20,354
Gains on sales of other assets		1,358		465		2,233			2,219
Net gains on investment securities		—		—		713			17
Other		2,908		1,323		9,743			7,011
Total non-interest income		30,406		27,560		107,527			107,775

Non-interest expense:
Salaries and employee benefits		52,050		41,837		192,851			170,478
Net occupancy and equipment		14,855		14,027		59,018			56,362
Other operating expenses		37,501		39,029		149,261			153,912
Total non-interest expense		104,406		94,893		401,130			380,752

Income before taxes		136,039		153,778		564,337			554,058
Provision for income taxes		35,240		38,750		138,429			136,977
Net income		100,799		115,028		425,908			417,081
Earnings attributable to noncontrolling interest		7		3		(2	)		25
Net income available to common stockholders	$	100,806	$	115,031	$	425,906		$	417,106

Basic earnings per common share	$	0.78	$	0.89	$	3.30		$	3.24

Diluted earnings per common share	$	0.78	$	0.89	$	3.30		$	3.24


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, 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 paid, $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

Twelve months 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 paid, $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 Consolidated Statements of Stockholders’ Equity (continued) Unaudited

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Non- Controlling Interest			Total

	(Dollars in thousands, except per share amounts)
Three months ended December 31, 2018:
Balances – September 30, 2018	$	1,286		$	2,234,383		$	1,477,178		$	(59,251	)	$	3,038		$	3,656,634
Net income		—			—			115,028			—			—			115,028
Earnings attributable to noncontrolling interest		—			—			3			—			(3	)		—
Total other comprehensive income		—			—			—			25,146			—			25,146
Common stock dividends paid, $0.21 per share		—			—			(27,008	)		—			—			(27,008	)
Issuance of 6,850 shares of common stock for exercise of stock options		—			63			—			—			—			63
Issuance of 224 shares of unvested restricted common stock		—			—			—			—			—			—
Stock-based compensation expense		—			3,502			—			—			—			3,502
Forfeiture of 5,262 shares of unvested restricted common stock		—			—			—			—			—			—
Balances – December 31, 2018	$	1,286		$	2,237,948		$	1,565,201		$	(34,105	)	$	3,035		$	3,773,365

Twelve months ended December 31, 2018:
Balances – December 31, 2017	$	1,283		$	2,221,844		$	1,250,313		$	(12,712	)	$	3,060		$	3,463,788
Net income		—			—			417,081			—			—			417,081
Earnings attributable to noncontrolling interest		—			—			25			—			(25	)		—
Total other comprehensive loss		—			—			—			(21,393	)		—			(21,393	)
Common stock dividends paid, $0.795 per share		—			—			(102,218	)		—			—			(102,218	)
Issuance of 223,840 shares of common stock for exercise of stock options		2			5,740			—			—			—			5,742
Issuance of 220,326 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		—			14,135			—			—			—			14,135
Forfeitures of 48,917 shares of unvested restricted common stock		—			—			—			—			—			—
Balances – December 31, 2018	$	1,286		$	2,237,948		$	1,565,201		$	(34,105	)	$	3,035		$	3,773,365


Bank OZK Summary of Non-Interest Expense Unaudited

	Three Months Ended December 31,				Year Ended December 31,
	2019		2018		2019		2018

	(Dollars in thousands)
Salaries and employee benefits	$	52,050	$	41,837	$	192,851	$	170,478
Net occupancy and equipment		14,855		14,027		59,018		56,362
Other operating expenses:
Professional and outside services		7,156		8,325		33,030		35,867
Software and data processing		4,974		3,943		19,535		13,729
Deposit insurance and assessments		3,780		3,672		13,425		14,740
Travel and meals		2,845		2,482		11,230		9,650
Telecommunication services		2,335		3,023		10,583		13,080
Postage and supplies		2,483		2,214		8,684		9,144
Advertising and public relations		1,822		1,472		7,242		11,557
ATM expense		1,263		544		4,626		4,227
Loan collection and repossession expense		600		1,077		2,818		3,302
Writedowns of foreclosed assets		910		1,841		2,419		2,996
Writedown of signage due to strategic rebranding		—		—		—		4,915
Amortization of intangibles		2,854		3,144		11,918		12,579
Other		6,479		7,292		23,751		18,126
Total non-interest expense	$	104,406	$	94,893	$	401,130	$	380,752


Bank OZK Summary of Total Loans Outstanding Unaudited

	December 31,
	2019					2018

	(Dollars in thousands)
Real estate:
Residential 1-4 family	$	998,632		5.7	%	$	1,049,460		6.1	%
Non-farm/non-residential		3,956,579		22.6			4,319,388		25.2
Construction/land development		6,391,429		36.4			6,562,185		38.4
Agricultural		230,076		1.3			165,088		1.0
Multifamily residential		1,194,192		6.8			1,116,026		6.5
Total real estate		12,770,908		72.8			13,212,147		77.2
Commercial and industrial		661,952		3.8			823,417		4.8
Consumer		2,934,534		16.8			2,345,863		13.7
Other		1,164,649		6.6			736,396		4.3
Total loans		17,532,043		100.0	%		17,117,823		100.0	%
Allowance for loan losses		(108,525	)				(102,264	)
Net loans	$	17,423,518				$	17,015,559

Summary of Deposits Unaudited

	December 31,
	2019				2018

	(Dollars in thousands)
Non-interest bearing	$	2,795,251	15.1	%	$	2,748,273	15.3	%
Interest bearing:
Transaction (NOW)		2,706,426	14.7			2,359,299	13.2
Savings and money market		5,601,181	30.3			7,323,414	40.8
Time deposits less than $100		3,321,446	18.0			2,297,101	12.8
Time deposits of $100 or more		4,049,955	21.9			3,210,328	17.9
Total deposits	$	18,474,259	100.0	%	$	17,938,415	100.0	%


Bank OZK Selected Consolidated Financial Data Unaudited

	Three Months Ended December 31,									Year Ended December 31,
	2019			2018			% Change			2019			2018			% Change

	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income	$	214,977		$	228,382			(5.9	)%	$	884,181		$	891,433			(0.8	)%
Provision for loan losses		4,938			7,271			(32.1	)		26,241			64,398			(59.3	)
Non-interest income		30,406			27,560			10.3			107,527			107,775			(0.2	)
Non-interest expense		104,406			94,893			10.0			401,130			380,752			5.4
Net income available to common stockholders		100,806			115,031			(12.4	)		425,906			417,106			2.1
Common stock data:
Net income per share - diluted	$	0.78		$	0.89			(12.4	)%	$	3.30		$	3.24			1.9	%
Net income per share - basic		0.78			0.89			(12.4	)		3.30			3.24			1.9
Cash dividends per share		0.25			0.21			19.0			0.94			0.795			18.2
Book value per share		32.19			29.32			9.8			32.19			29.32			9.8
Tangible book value per share⁽¹⁾		26.88			23.90			12.5			26.88			23.90			12.5
Diluted shares outstanding (thousands)		129,036			128,666						129,006			128,740
End of period shares outstanding (thousands)		128,951			128,611						128,951			128,611
Balance sheet data at period end:
Total assets	$	23,559,400		$	22,388,030			5.2	%	$	23,559,400		$	22,388,030			5.2	%
Total loans		17,532,043			17,117,823			2.4			17,532,043			17,117,823			2.4
Non-purchased loans		16,224,539			15,073,791			7.6			16,224,539			15,073,791			7.6
Purchased loans		1,307,504			2,044,032			(36.0	)		1,307,504			2,044,032			(36.0	)
Allowance for loan losses		108,525			102,264			6.1			108,525			102,264			6.1
Foreclosed assets		19,096			16,171			18.1			19,096			16,171			18.1
Investment securities - AFS		2,277,389			2,862,340			(20.4	)		2,277,389			2,862,340			(20.4	)
Goodwill and other intangible assets, net		684,542			696,461			(1.7	)		684,542			696,461			(1.7	)
Deposits		18,474,259			17,938,415			3.0			18,474,259			17,938,415			3.0
Repurchase agreements with customers		11,249			20,564			(45.3	)		11,249			20,564			(45.3	)
Other borrowings		351,387			96,692			263.4			351,387			96,692			263.4
Subordinated notes		223,663			223,281			0.2			223,663			223,281			0.2
Subordinated debentures		119,916			119,358			0.5			119,916			119,358			0.5
Unfunded balance of closed loans		11,325,598			11,364,975			(0.3	)		11,325,598			11,364,975			(0.3	)
Total common stockholders’ equity		4,150,351			3,770,330			10.1			4,150,351			3,770,330			10.1
Net unrealized gains (losses) on investment securities AFS included in common stockholders' equity		27,255			(34,105	)					27,255			(34,105	)
Loan (including purchased loans) to deposit ratio		94.90	%		95.43	%					94.90	%		95.43	%
Selected ratios:
Return on average assets⁽²⁾		1.74	%		2.04	%					1.87	%		1.90	%
Return on average common stockholders’ equity⁽²⁾		9.73			12.36						10.72			11.59
Return on average tangible common stockholders’ equity^{(1) (2)}		11.68			15.24						12.98			14.41
Average common equity to total average assets		17.86			16.54						17.45			16.42
Net interest margin – FTE⁽²⁾		4.15			4.55						4.34			4.59
Efficiency ratio		42.37			36.90						40.27			37.93
Net charge-offs to average non-purchased loans^{(2) (3)}		0.10			0.06						0.09			0.38
Net charge-offs to average total loans⁽²⁾		0.12			0.07						0.11			0.34
Nonperforming loans to total loans⁽⁴⁾		0.15			0.23						0.15			0.23
Nonperforming assets to total assets⁽⁴⁾		0.18			0.23						0.18			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⁾	$	23,221		$	34,762					$	23,221		$	34,762
Accruing loans - 90 days past due⁽⁴⁾		—			—						—			—
Troubled and restructured non-purchased loans - accruing⁽⁴⁾		656			627						656			627
Impaired purchased loans		10,910			7,801						10,910			7,801

⁽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 Selected Consolidated Financial Data (continued) Unaudited

		Three Months Ended
		December 31,			September 30,
		2019			2019			% Change

	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income		$	214,997		$	218,780			(1.7	)%
Provision for loan losses			4,938			7,854			(37.1	)
Non-interest income			30,406			26,446			15.0
Non-interest expense			104,406			100,914			3.5
Net income available to common stockholders			100,806			103,891			(3.0	)
Common stock data:
Net income per share - diluted		$	0.78		$	0.81			(3.7	)%
Net income per share - basic			0.78			0.81			(3.7	)
Cash dividends per share			0.25			0.24			4.2
Book value per share			32.19			31.63			1.8
Tangible book value per share ⁽¹⁾			26.88			26.30			2.2
Diluted shares outstanding (thousands)			129,036			129,012
End of period shares outstanding (thousands)			128,951			128,946
Balance sheet data at period end:
Total assets		$	23,559,400		$	23,402,679			0.7	%
Total loans			17,532,043			17,734,851			(1.1	)
Non-purchased loans			16,224,539			16,307,621			(0.5	)
Purchased loans			1,307,504			1,427,230			(8.4	)
Allowance for loan losses			108,525			109,001			(0.4	)
Foreclosed assets			19,096			33,319			(42.7	)
Investment securities - AFS			2,277,389			2,414,722			(5.7	)
Goodwill and other intangible assets, net			684,542			687,397			(0.4	)
Deposits			18,474,259			18,440,078			0.2
Repurchase agreements with customers			11,249			12,156			(7.5	)
Other borrowings			351,387			301,421			16.6
Subordinated notes			223,663			223,567			0.1
Subordinated debentures			119,916			119,775			0.1
Unfunded balance of closed loans			11,325,598			11,429,918			(0.9	)
Total common stockholders’ equity			4,150,351			4,078,324			1.8
Net unrealized gains on investment securities AFS included in common stockholders' equity			27,255			27,648
Loan (including purchased loans) to deposit ratio			94.90	%		96.18	%
Selected ratios:
Return on average assets⁽²⁾			1.74	%		1.81	%
Return on average common stockholders’ equity⁽²⁾			9.73			10.22
Return on average tangible common stockholders’ equity^{(1) (2)}			11.68			12.33
Average common equity to total average assets			17.86			17.69
Net interest margin – FTE⁽²⁾			4.15			4.26
Efficiency ratio			42.37			40.98
Net charge-offs to average non-purchased loans^{(2) (3)}			0.10			0.07
Net charge-offs to average total loans⁽²⁾			0.12			0.12
Nonperforming loans to total loans⁽⁴⁾			0.15			0.17
Nonperforming assets to total assets⁽⁴⁾			0.18			0.26
Allowance for loan losses to non-purchased loans⁽⁵⁾			0.66			0.66
Other information:
Non-accrual loans⁽⁴⁾		$	23,221		$	25,552
Accruing loans - 90 days past due⁽⁴⁾			—			—
Troubled and restructured non-purchased loans - accruing⁽⁴⁾			656			1,510
Impaired purchased loans			10,910			12,969

⁽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

	3/31/18			6/30/18			9/30/18			12/31/18			3/31/19			6/30/19			9/30/19			12/31/19

	(Dollars in thousands, except per share amounts)
Earnings Summary:
Net interest income	$	217,776		$	224,661		$	220,614		$	228,382		$	225,888		$	224,536		$	218,780		$	214,977
Federal tax (FTE) adjustment		1,166			1,151			1,132			1,219			1,207			1,136			1,038			1,028
Net interest income (FTE)		218,942			225,812			221,746			229,601			227,095			225,672			219,818			216,005
Provision for loan losses		(5,567	)		(9,610	)		(41,949	)		(7,271	)		(6,681	)		(6,769	)		(7,854	)		(4,938	)
Non-interest income		28,707			27,386			24,121			27,560			24,072			26,603			26,446			30,406
Non-interest expense		(93,810	)		(89,107	)		(102,942	)		(94,893	)		(96,678	)		(99,131	)		(100,914	)		(104,406	)
Pretax income (FTE)		148,272			154,481			100,976			154,997			147,808			146,375			137,496			137,067
FTE adjustment		(1,166	)		(1,151	)		(1,132	)		(1,219	)		(1,207	)		(1,136	)		(1,038	)		(1,028	)
Provision for income taxes		(33,973	)		(38,589	)		(25,665	)		(38,750	)		(35,889	)		(34,726	)		(32,574	)		(35,240	)
Noncontrolling interest		11			10			1			3			(6	)		(10	)		7			7
Net income available to common stockholders	$	113,144		$	114,751		$	74,180		$	115,031		$	110,706		$	110,503		$	103,891		$	100,806
Earnings per common share – diluted	$	0.88		$	0.89		$	0.58		$	0.89		$	0.86		$	0.86		$	0.81		$	0.78
Non-interest Income:
Service charges on deposit accounts	$	9,525		$	9,704		$	9,730		$	10,585		$	9,722		$	10,291		$	10,827		$	10,933
Trust income		1,793			1,591			1,730			1,821			1,730			1,839			1,975			2,010
BOLI income:
Increase in cash surrender value		4,852			5,259			5,321			5,269			5,162			5,178			5,208			5,167
Death benefits		2,728			—			—			482			—			—			206			2,989
Other income from purchased loans		1,251			2,744			1,418			2,370			795			1,455			674			759
Loan service, maintenance and other fees		4,743			5,641			4,724			5,245			4,874			4,565			4,197			4,282
Gains (losses) on sales of other assets		1,426			844			(518	)		465			284			402			189			1,358
Net gains on investment securities		17			—			—			—			—			713			—			—
Other		2,372			1,603			1,716			1,323			1,505			2,160			3,170			2,908
Total non-interest income	$	28,707		$	27,386		$	24,121		$	27,560		$	24,072		$	26,603		$	26,446		$	30,406
Non-interest Expense:
Salaries and employee benefits	$	45,499		$	41,665		$	41,477		$	41,837		$	44,868		$	47,558		$	48,376		$	52,050
Net occupancy expense		14,150			13,827			14,358			14,027			14,750			14,587			14,825			14,855
Other operating expenses		34,161			33,615			47,107			39,029			37,060			36,986			37,713			37,501
Total non-interest expense	$	93,810		$	89,107		$	102,942		$	94,893		$	96,678		$	99,131		$	100,914		$	104,406
Balance Sheet Data:
Total assets	$	22,039,439		$	22,220,380		$	22,086,539		$	22,388,030		$	23,005,652		$	22,960,731		$	23,402,679		$	23,559,400
Non-purchased loans		13,674,561			14,183,533			14,440,623			15,073,791			15,610,681			15,786,809			16,307,621			16,224,539
Purchased loans		2,934,535			2,580,341			2,285,168			2,044,032			1,864,715			1,698,396			1,427,230			1,307,504
Investment securities - AFS		2,603,600			2,608,439			2,669,877			2,862,340			2,769,602			2,548,489			2,414,722			2,277,389
Deposits		17,833,672			17,897,085			17,822,915			17,938,415			18,476,868			18,186,215			18,440,078			18,474,259
Unfunded balance of closed loans		12,551,032			11,999,661			11,891,247			11,364,975			11,544,218			11,167,055			11,429,918			11,325,598
Common stockholders' equity		3,526,605			3,613,903			3,653,596			3,770,330			3,882,643			3,993,247			4,078,324			4,150,351
Allowance for Loan Losses:
Balance at beginning of period	$	94,120		$	98,097		$	104,638		$	98,200		$	102,264		$	105,954		$	106,642		$	109,001
Net charge-offs		(1,590	)		(3,069	)		(48,387	)		(3,207	)		(2,991	)		(6,081	)		(5,495	)		(5,414	)
Provision for loan losses		5,567			9,610			41,949			7,271			6,681			6,769			7,854			4,938
Balance at end of period	$	98,097		$	104,638		$	98,200		$	102,264		$	105,954		$	106,642		$	109,001		$	108,525
Selected Ratios:
Net interest margin – FTE⁽¹⁾		4.69	%		4.66	%		4.47	%		4.55	%		4.53	%		4.45	%		4.26	%		4.15	%
Efficiency ratio		37.88			35.19			41.87			36.90			38.49			39.30			40.98			42.37
Net charge-offs to average non-purchased loans^{(1) (2)}		0.04			0.05			1.32			0.06			0.05			0.12			0.07			0.10
Net charge-offs to average total loans⁽¹⁾		0.04			0.07			1.14			0.07			0.07			0.14			0.12			0.12
Nonperforming loans to total loans⁽³⁾		0.09			0.10			0.23			0.23			0.22			0.15			0.17			0.15
Nonperforming assets to total assets⁽³⁾		0.16			0.15			0.23			0.23			0.21			0.25			0.26			0.18
Allowance for loan losses to total non-purchased loans⁽⁴⁾		0.71			0.73			0.67			0.67			0.67			0.67			0.66			0.66
Loans past due 30 days or more, including past due non-accrual loans, to total loans⁽³⁾		0.14			0.12			0.17			0.28			0.28			0.13			0.14			0.19

⁽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 December 31,												Year Ended December 31,
	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	$	668,403	$	2,756	1.64	%	$	102,931	$	590	2.27	%	$	353,528	$	6,758	1.91	%	$	160,148	$	3,039	1.90	%
Investment securities:
Taxable		1,892,693		11,820	2.48			2,335,512		14,642	2.49			2,099,522		52,812	2.52			2,143,455		50,021	2.33
Tax-exempt – FTE		457,026		4,207	3.65			516,512		4,988	3.83			485,946		18,041	3.71			537,616		20,497	3.81
Non-purchased loans – FTE		16,260,467		241,056	5.88			14,874,156		237,615	6.34			15,861,797		982,430	6.19			14,040,952		858,466	6.11
Purchased loans		1,365,846		22,152	6.43			2,170,489		35,453	6.48			1,661,205		106,908	6.44			2,633,271		173,465	6.59
Total earning assets – FTE		20,644,435		281,991	5.42			19,999,600		293,288	5.82			20,461,998		1,166,949	5.70			19,515,442		1,105,488	5.66
Non-interest earning assets		2,370,753						2,319,305						2,297,372						2,395,813
Total assets	$	23,015,188					$	22,318,905					$	22,759,370					$	21,911,255
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction	$	8,212,286	$	22,964	1.11	%	$	9,594,919	$	33,200	1.37	%	$	9,039,984	$	126,685	1.40	%	$	9,983,075	$	118,771	1.19	%
Time deposits of $100 or more		3,914,548		21,281	2.16			3,204,627		14,595	1.81			3,449,197		73,336	2.13			3,183,108		47,691	1.50
Other time deposits		3,392,019		17,386	2.03			2,124,920		8,813	1.65			2,872,676		58,337	2.03			1,651,960		20,155	1.22
Total interest bearing deposits		15,518,853		61,631	1.58			14,924,466		56,608	1.50			15,361,857		258,358	1.68			14,818,143		186,617	1.26
Repurchase agreements with customers		11,840		11	0.37			36,680		26	0.29			13,502		50	0.37			101,682		785	0.77
Other borrowings ⁽¹⁾		11,742		34	1.16			400,874		2,193	2.17			94,399		1,531	1.62			166,937		3,017	1.81
Subordinated notes		223,615		3,216	5.71			223,230		3,216	5.71			223,469		12,757	5.71			223,089		12,757	5.72
Subordinated debentures ⁽¹⁾		119,842		1,094	3.62			119,284		1,644	5.47			119,629		5,664	4.73			119,076		6,211	5.22
Total interest bearing liabilities		15,885,892		65,986	1.65			15,704,534		63,687	1.61			15,812,856		278,360	1.76			15,428,927		209,387	1.36
Non-interest bearing liabilities:
Non-interest bearing deposits		2,804,919						2,712,858						2,753,634						2,695,623
Other non-interest bearing liabilities		210,936						206,434						217,809						185,035
Total liabilities		18,901,747						18,623,826						18,784,299						18,309,585
Common stockholders’ equity		4,110,322						3,692,044						3,971,952						3,598,628
Noncontrolling interest		3,119						3,035						3,119						3,042
Total liabilities and stockholders’ equity	$	23,015,188					$	22,318,905					$	22,759,370					$	21,911,255
Net interest income – FTE			$	216,005					$	229,601					$	888,589					$	896,101
Net interest margin – FTE					4.15	%					4.55	%					4.34	%					4.59	%

⁽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 $0.04 million for the fourth quarter and $0.90 million for the full year of 2019 and $0.25 million for the fourth quarter and $0.64 million for the full year of 2018. In the absence of this interest capitalization, the rates on other borrowings would have been 2.64% for the fourth quarter and 2.58% for the full year of 2019 and 2.42% for the fourth quarter and 2.19% for the full year of 2018. Capitalized interest included in subordinated debentures totaled $0.45 million for the fourth quarter and $0.89 million for the full year of 2019 (none in 2018). In the absence of this interest capitalization, the rates on subordinated debentures would have been 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									Year Ended
	December 31,						September 30,			December 31,
	2019			2018			2019			2019			2018

	(Dollars in thousands)
Net income available to common stockholders	$	100,806		$	115,031		$	103,891		$	425,906		$	417,106
Average common stockholders’ equity before noncontrolling interest	$	4,110,322		$	3,692,044		$	4,032,066		$	3,971,952		$	3,598,628
Less average intangible assets:
Goodwill		(660,789	)		(660,789	)		(660,789	)		(660,789	)		(660,789	)
Core deposit and other intangibles, net of accumulated amortization		(25,315	)		(37,654	)		(28,275	)		(29,784	)		(42,315	)
Total average intangibles		(686,104	)		(698,443	)		(689,064	)		(690,573	)		(703,104	)
Average tangible common stockholders’ equity	$	3,424,218		$	2,993,601		$	3,343,002		$	3,281,379		$	2,895,524
Return on average common stockholders’ equity⁽¹⁾		9.73	%		12.36	%		10.22	%		10.72	%		11.59	%
Return on average tangible common stockholders’ equity⁽¹⁾		11.68	%		15.24	%		12.33	%		12.98	%		14.41	%

⁽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,
	2019			2018			2019

	(In thousands, except per share amounts)
Total common stockholders’ equity before noncontrolling interest	$	4,150,351		$	3,770,330		$	4,078,324
Less intangible assets:
Goodwill		(660,789	)		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(23,753	)		(35,672	)		(26,608	)
Total intangibles		(684,542	)		(696,461	)		(687,397	)
Total tangible common stockholders’ equity	$	3,465,809		$	3,073,869		$	3,390,927
Shares of common stock outstanding		128,951			128,611			128,946
Book value per common share	$	32.19		$	29.32		$	31.63
Tangible book value per common share	$	26.88		$	23.90		$	26.30


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

	December 31,
	2019			2018

	(Dollars in thousands)
Total common stockholders’ equity before noncontrolling interest	$	4,150,351		$	3,770,330
Less intangible assets:
Goodwill		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(23,753	)		(35,672	)
Total intangibles		(684,542	)		(696,461	)
Total tangible common stockholders’ equity	$	3,465,809		$	3,073,869
Total assets	$	23,559,400		$	22,388,030
Less intangible assets:
Goodwill		(660,789	)		(660,789	)
Core deposit and other intangible assets, net of accumulated amortization		(23,753	)		(35,672	)
Total intangibles		(684,542	)		(696,461	)
Total tangible assets	$	22,874,858		$	21,691,569
Ratio of total common stockholders’ equity to total assets		17.62	%		16.84	%
Ratio of total tangible common stockholders’ equity to total tangible assets		15.15	%		14.17	%