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Bank OZK Announces First Quarter 2020 Earnings

OZK

LITTLE ROCK, Ark., April 23, 2020 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the first quarter of 2020 was $11.9 million, an 89.3% decrease from $110.7 million for the first quarter of 2019. Diluted earnings per common share for the first quarter of 2020 were $0.09, an 89.5% decrease from $0.86 for the first quarter of 2019.

The COVID-19 pandemic significantly impacted the global economy in what was the first quarter of implementation of the current expected credit losses (“CECL”) method to calculate the Bank’s allowance for credit losses (“ACL”). During the quarter just ended, the sudden and severe economic downturn in tandem with the adoption of CECL resulted in the Bank incurring provision for credit losses of $117.7 million, resulting in a total ACL of $316.4 million at March 31, 2020.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first quarter of 2020 were 0.20%, 1.16% and 1.39%, respectively, compared to 1.99%, 11.77% and 14.40%, respectively, for the first quarter of 2019. 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.

George Gleason, Chairman and Chief Executive Officer stated, “During the first quarter of 2020, we continued our long-standing focus on our team members, meeting the needs of our customers, serving the communities in which we operate and delivering favorable returns for our shareholders. As we navigate the various challenges created by the current economic environment, we will continue to seek to capitalize on investment and other opportunities which may arise from such turbulent conditions. We believe our team of industry and technology professionals is well-positioned to lead the Bank to continued success.”

KEY BALANCE SHEET METRICS

Total loans were $18.23 billion at March 31, 2020, a 4.3% increase from $17.48 billion at March 31, 2019. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $17.03 billion at March 31, 2020, a 9.1% increase from $15.61 billion at March 31, 2019. Purchased loans, which consist of loans acquired in previous acquisitions, were $1.20 billion at March 31, 2020, a 35.8% decrease from $1.86 billion at March 31, 2019.

Deposits were $18.81 billion at March 31, 2020, a 1.8% increase from $18.48 billion at March 31, 2019. Total assets were $24.57 billion at March 31, 2020, a 6.8% increase from $23.01 billion at March 31, 2019.

Common stockholders’ equity was $4.08 billion at March 31, 2020, a 5.2% increase from $3.88 billion at March 31, 2019, but a 1.6% decrease from $4.15 billion at December 31, 2019. Tangible common stockholders’ equity was $3.40 billion at March 31, 2020, a 6.6% increase from $3.19 billion at March 31, 2019, but a 1.9% decrease from $3.47 billion at December 31, 2019. Book value per common share was $31.57 at March 31, 2020, a 4.8% increase from $30.11 at March 31, 2019, but a 1.9% decrease from $32.19 at December 31, 2019. Tangible book value per common share was $26.30 at March 31, 2020, a 6.3% increase from $24.73 at March 31, 2019, but a 2.2% decrease 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 16.62% at March 31, 2020 compared to 16.88% at March 31, 2019. Its ratio of total tangible common stockholders’ equity to total tangible assets was 14.24% at March 31, 2020 compared to 14.29% at March 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 April 24, 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 5272316. 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 proposed phase-out of 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 coronavirus (COVID-19) pandemic such as the Coronavirus Aid, Relief and Economic Security Act and any similar or related rules and regulations; changes in U.S. Government monetary and fiscal policy; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, the Bank’s operational or security systems or infrastructure, or those of third parties with whom it does business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank or its customers; natural disasters or acts of war or terrorism; the adverse effects of the 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 global economy and financial markets; international or political instability; impairment of our goodwill or other intangible assets; adoption of new accounting standards, including the effects from the adoption of the 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, 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. Bank OZK is the #1 capitalized bank among the nation’s top 100 banks by asset size, based on Tier 1 Leverage Capital Ratio at December 31, 2019, according to data obtained from S&P Global Market Intelligence. Bank OZK was named Best Bank in the South for 2019-2020 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
March 31, December 31,
2020 2019
(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents $ 1,347,729 $ 1,495,757
Investment securities - available for sale ("AFS") 2,816,556 2,277,389
Federal Home Loan Bank of Dallas and other banker's bank stocks 50,614 21,855
Non-purchased loans 17,030,378 16,224,539
Purchased loans 1,197,826 1,307,504
Allowance for loan losses (238,737 ) (108,525 )
Net loans 17,989,467 17,423,518
Premises and equipment, net 723,371 711,541
Foreclosed assets 20,616 19,096
Accrued interest receivable 82,827 75,208
Bank owned life insurance (“BOLI”) 743,406 738,860
Goodwill and intangible assets, net 681,747 684,542
Other, net 109,477 107,962
Total assets $ 24,565,810 $ 23,555,728
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits:
Demand non-interest bearing $ 3,003,305 $ 2,795,251
Savings and interest bearing transaction 7,465,757 8,307,607
Time 8,340,128 7,371,401
Total deposits 18,809,190 18,474,259
Repurchase agreements with customers 3,821 11,249
Other borrowings 1,051,353 351,387
Subordinated notes 223,759 223,663
Subordinated debentures 120,055 119,916
Reserve for losses on loan commitments 77,672
Accrued interest payable and other liabilities 193,701 221,786
Total liabilities 20,479,551 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 March 31, 2020 or December 31, 2019
Common stock; $0.01 par value; 300,000,000 shares authorized; 129,324,435 and 128,951,024 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively 1,293 1,289
Additional paid-in capital 2,253,991 2,251,824
Retained earnings 1,772,978 1,869,983
Accumulated other comprehensive income 54,888 27,255
Total stockholders’ equity before noncontrolling interest 4,083,150 4,150,351
Noncontrolling interest 3,109 3,117
Total stockholders’ equity 4,086,259 4,153,468
Total liabilities and stockholders’ equity $ 24,565,810 $ 23,555,728


Bank OZK
Consolidated Statements of Income
Unaudited
Three Months Ended March 31,
2020 2019
(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans $ 231,853 $ 245,864
Purchased loans 21,387 30,195
Investment securities:
Taxable 10,760 14,897
Tax-exempt 3,597 3,873
Deposits with banks and federal funds sold 4,376 414
Total interest income 271,973 295,243
Interest expense:
Deposits 57,682 63,087
Repurchase agreements with customers 6 22
Other borrowings 50 1,389
Subordinated notes 3,172 3,146
Subordinated debentures 1,288 1,711
Total interest expense 62,198 69,355
Net interest income 209,775 225,888
Provision for loan losses 117,663 6,681
Net interest income after provision for loan losses 92,112 219,207
Non-interest income:
Service charges on deposit accounts 10,009 9,722
Trust income 1,939 1,730
BOLI income:
Increase in cash surrender value 5,067 5,162
Death benefits 608
Other income from purchased loans 795
Loan service, maintenance and other fees 3,716 4,874
Gains on sales of other assets 161 284
Net gains on investment securities 2,223
Other 3,957 1,505
Total non-interest income 27,680 24,072
Non-interest expense:
Salaries and employee benefits 51,473 44,868
Net occupancy and equipment 15,330 14,750
Other operating expenses 36,622 37,060
Total non-interest expense 103,425 96,678
Income before taxes 16,367 146,601
Provision for income taxes 4,509 35,889
Net income 11,858 110,712
Earnings attributable to noncontrolling interest 8 (6 )
Net income available to common stockholders $ 11,866 $ 110,706
Basic earnings per common share $ 0.09 $ 0.86
Diluted earnings per common share $ 0.09 $ 0.86


Bank OZK
Consolidated Statements of Stockholders’ Equity
Unaudited
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Non-
Controlling
Interest
Total
(Dollars in thousands, except per share amounts)
Three months ended March 31, 2020:
Balances – December 31, 2019 $ 1,289 $ 2,251,824 $ 1,869,983 $ 27,255 $ 3,117 $ 4,153,468
Cumulative effect of change in accounting principle (75,344 ) (75,344 )
Balances – January 1, 2020 1,289 2,251,824 1,794,639 27,255 3,117 4,078,124
Net income 11,858 11,858
Earnings attributable to noncontrolling interest 8 (8 )
Total other comprehensive income 27,633 27,633
Common stock dividends paid, $0.26 per share (33,527 ) (33,527 )
Issuance of 4,300 shares of common stock for exercise of stock options 45 45
Issuance of 447,085 shares of unvested restricted common stock 4 (4 )
Repurchase and cancellation of 61,873 shares of common stock (1,853 ) (1,853 )
Stock-based compensation expense 3,979 3,979
Forfeitures of 16,101 shares of unvested restricted common stock
Balances – March 31, 2020 $ 1,293 $ 2,253,991 $ 1,772,978 $ 54,888 $ 3,109 $ 4,086,259


Bank OZK
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 March 31, 2019:
Balances – December 31, 2018 $ 1,286 $ 2,237,948 $ 1,565,201 $ (34,105 ) $ 3,035 $ 3,773,365
Net income 110,712 110,712
Earnings attributable to noncontrolling interest (6 ) 6
Total other comprehensive income 28,429 28,429
Common stock dividends paid, $0.22 per share (28,281 ) (28,281 )
Noncontrolling interest cash contribution 80 80
Issuance of 29,300 shares of common stock for exercise of stock options 387 387
Issuance of 383,874 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 2,719 2,719
Forfeiture of 13,953 shares of unvested restricted common stock
Balances – March 31, 2019 $ 1,289 $ 2,239,404 $ 1,647,626 $ (5,676 ) $ 3,121 $ 3,885,764


Bank OZK
Summary of Non-Interest Expense
Unaudited
Three Months Ended
March 31,
2020 2019
(Dollars in thousands)
Salaries and employee benefits $ 51,473 $ 44,868
Net occupancy and equipment expense 15,330 14,750
Other operating expenses:
Professional and outside services 7,043 8,564
Software and data processing 4,974 4,709
Deposit insurance and assessments 3,420 3,652
Telecommunication services 2,177 3,344
Travel and meals 2,102 2,669
Postage and supplies 2,053 2,103
Advertising and public relations 1,703 1,683
ATM expense 1,160 987
Loan collection and repossession expense 694 984
Writedowns of foreclosed assets 879 562
Amortization of intangibles 2,795 3,145
Other 7,622 4,658
Total non-interest expense $ 103,425 $ 96,678


Bank OZK
Summary of Total Loans Outstanding
Unaudited
March 31, 2020 December 31, 2019
(Dollars in thousands)
Real estate:
Residential 1-4 family $ 1,009,547 5.6 % $ 998,632 5.7 %
Non-farm/non-residential 4,510,484 24.7 3,956,579 22.6
Construction/land development 6,380,341 35.0 6,391,429 36.4
Agricultural 235,650 1.3 230,076 1.3
Multifamily residential 1,334,763 7.3 1,194,192 6.8
Total real estate 13,470,785 73.9 12,770,908 72.8
Commercial and industrial 690,396 3.8 661,952 3.8
Consumer 2,950,055 16.2 2,934,534 16.8
Other 1,116,968 6.1 1,164,649 6.6
Total loans 18,228,204 100.0 % 17,532,043 100.0 %
Allowance for loan losses (238,737 ) (108,525 )
Net loans $ 17,989,467 $ 17,423,518


Allowance for Credit Losses
Unaudited
Allowance for
Loan Losses
Reserve for
Losses on
Loan
Commitments
Total Allowance
for Credit
Losses
(Dollars in thousands)
Balances – December 31, 2019 $ 108,525 $ $ 108,525
Adoption of Current Expected Credit Loss (CECL) model 39,588 54,924 94,512
Balances – January 1, 2020 148,113 54,924 203,037
Net charge-offs (4,291 ) (4,291 )
Provision 94,915 22,748 117,663
Balances – March 31, 2020 $ 238,737 $ 77,672 $ 316,409


Bank OZK
Summary of Deposits – By Account Type
Unaudited
March 31, 2020 December 31, 2019
(Dollars in thousands)
Non-interest bearing $ 3,003,305 16.0 % $ 2,795,251 15.1 %
Interest bearing:
Transaction (NOW) 2,784,268 14.8 2,706,426 14.7
Savings and money market 4,681,489 24.9 5,601,181 30.3
Time deposits less than $100 3,574,062 19.0 3,321,446 18.0
Time deposits of $100 or more 4,766,066 25.3 4,049,955 21.9
Total deposits $ 18,809,190 100.0 % $ 18,474,259 100.0 %


Summary of Deposits – By Customer Type
Unaudited
March 31, 2020 December 31, 2019
(Dollars in thousands)
Consumer $ 8,535,172 45.4 % $ 7,526,014 40.7 %
Commercial 4,657,851 24.8 4,334,366 23.5
Public Funds 2,667,234 14.2 3,782,415 20.5
Brokered 2,233,240 11.8 2,115,193 11.4
Reciprocal 715,693 3.8 716,271 3.9
Total deposits $ 18,809,190 100.0 % $ 18,474,259 100.0 %


Bank OZK
Selected Consolidated Financial Data
Unaudited
Three Months Ended
March 31,
2020 2019 % Change
(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income $ 209,775 $ 225,888 (7.1 )%
Provision for loan losses 117,663 6,681 1,661.2
Non-interest income 27,680 24,072 15.0
Non-interest expense 103,425 96,678 7.0
Net income available to common stockholders 11,866 110,706 (89.3 )
Common share and per common share data:
Net income per share - diluted $ 0.09 $ 0.86 (89.5 )%
Net income per share - basic 0.09 0.86 (89.5 )
Cash dividends per share 0.26 0.22 18.2
Book value per share 31.57 30.11 4.8
Tangible book value per share(1) 26.30 24.73 6.3
Weighted-average diluted shares outstanding (thousands) 129,307 128,964
End of period shares outstanding (thousands) 129,324 128,948
Balance sheet data at period end:
Total assets $ 24,565,810 $ 23,005,652 6.8 %
Total loans 18,228,204 17,475,396 4.3
Non-purchased loans 17,030,378 15,610,681 9.1
Purchased loans 1,197,826 1,864,715 (35.8 )
Allowance for loan losses 238,737 105,954 125.3
Foreclosed assets 20,616 14,096 46.3
Investment securities - AFS 2,816,556 2,781,691 1.3
Goodwill and other intangible assets, net 681,747 693,316 (1.7 )
Deposits 18,809,190 18,476,868 1.8
Other borrowings 1,051,353 1,489 70,508.0
Subordinated notes 223,759 223,375 0.2
Subordinated debentures 120,055 119,496 0.5
Unfunded balance of closed loans 11,334,737 11,544,218 (1.8 )
Reserve for losses on loan commitments 77,672 NM
Total common stockholders’ equity 4,083,150 3,882,643 5.2
Net unrealized gains (losses) on investment securities AFS included in common stockholders' equity 54,888 (5,676 )
Loan (including purchased loans) to deposit ratio 96.91 % 94.58 %
Selected ratios:
Return on average assets(2) 0.20 % 1.99 %
Return on average common stockholders’ equity(2) 1.16 11.77
Return on average tangible common stockholders’ equity(1) (2) 1.39 14.40
Average common equity to total average assets 17.31 16.91
Net interest margin – FTE(2) 3.96 4.53
Efficiency ratio 43.35 38.49
Net charge-offs to average non-purchased loans(2) (3) 0.08 0.05
Net charge-offs to average total loans(2) 0.10 0.07
Nonperforming loans to total loans(4) 0.16 0.22
Nonperforming assets to total assets(4) 0.19 0.21
Allowance for loan losses to total loans 1.31 0.61
Other information:
Non-accrual loans(4) $ 25,681 $ 33,405
Accruing loans - 90 days past due(4)
Troubled and restructured non-purchased loans - accruing(4) 757 470
(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.
NM – Not meaningful


Bank OZK
Selected Consolidated Financial Data (continued)
Unaudited
Three Months Ended
March 31, December 31,
2020 2019 % Change
(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income $ 209,775 $ 214,977 (2.4 )%
Provision for loan losses 117,663 4,938 2,282.8
Non-interest income 27,680 30,406 (9.0 )
Non-interest expense 103,425 104,406 (0.9 )
Net income available to common stockholders 11,866 100,806 (88.2 )
Common share and per common share data:
Net income per share - diluted $ 0.09 $ 0.78 (88.5 )%
Net income per share - basic 0.09 0.78 (88.5 )
Cash dividends per share 0.26 0.25 4.0
Book value per share 31.57 32.19 (1.9 )
Tangible book value per share (1) 26.30 26.88 (2.2 )
Weighted-average diluted shares outstanding (thousands) 129,307 129,036
End of period shares outstanding (thousands) 129,324 128,951
Balance sheet data at period end:
Total assets $ 24,565,810 $ 23,555,728 4.3 %
Total loans 18,228,204 17,532,043 4.0
Non-purchased loans 17,030,378 16,224,539 5.0
Purchased loans 1,197,826 1,307,504 (8.4 )
Allowance for loan losses 238,737 108,525 120.0
Foreclosed assets 20,616 19,096 8.0
Investment securities - AFS 2,816,556 2,277,389 23.7
Goodwill and other intangible assets, net 681,747 684,542 (0.4 )
Deposits 18,809,190 18,474,259 1.8
Other borrowings 1,051,353 351,387 199.2
Subordinated notes 223,759 223,663 0.1
Subordinated debentures 120,055 119,916 0.1
Unfunded balance of closed loans 11,334,737 11,325,598 0.1
Reserve for losses on loan commitments 77,672 NM
Total common stockholders’ equity 4,083,150 4,150,351 (1.6 )
Net unrealized gains on investment securities AFS included in common stockholders' equity 54,888 27,255
Loan (including purchased loans) to deposit ratio 96.91 % 94.90 %
Selected ratios:
Return on average assets(2) 0.20 % 1.74 %
Return on average common stockholders’ equity(2) 1.16 9.73
Return on average tangible common stockholders’ equity(1) (2) 1.39 11.68
Average common equity to total average assets 17.31 17.86
Net interest margin – FTE(2) 3.96 4.15
Efficiency ratio 43.35 42.37
Net charge-offs to average non-purchased loans(2) (3) 0.08 0.10
Net charge-offs to average total loans(2) 0.10 0.12
Nonperforming loans to total loans(4) 0.16 0.15
Nonperforming assets to total assets(4) 0.19 0.18
Allowance for loan losses to total loans 1.31 0.62
Other information:
Non-accrual loans(4) $ 25,681 $ 23,221
Accruing loans - 90 days past due(4)
Troubled and restructured non-purchased loans - accruing(4) 757 656
(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.
NM – Not meaningful


Bank OZK
Supplemental Quarterly Financial Data
Unaudited
6/30/18 9/30/18 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20
(Dollars in thousands, except per share amounts)
Earnings Summary:
Net interest income $ 224,661 $ 220,614 $ 228,382 $ 225,888 $ 224,536 $ 218,780 $ 214,977 $ 209,775
Federal tax (FTE) adjustment 1,151 1,132 1,219 1,207 1,136 1,038 1,028 1,133
Net interest income (FTE) 225,812 221,746 229,601 227,095 225,672 219,818 216,005 210,908
Provision for loan losses (9,610 ) (41,949 ) (7,271 ) (6,681 ) (6,769 ) (7,854 ) (4,938 ) (117,663 )
Non-interest income 27,386 24,121 27,560 24,072 26,603 26,446 30,406 27,680
Non-interest expense (89,107 ) (102,942 ) (94,893 ) (96,678 ) (99,131 ) (100,914 ) (104,406 ) (103,425 )
Pretax income (FTE) 154,481 100,976 154,997 147,808 146,375 137,496 137,067 17,500
FTE adjustment (1,151 ) (1,132 ) (1,219 ) (1,207 ) (1,136 ) (1,038 ) (1,028 ) (1,133 )
Provision for income taxes (38,589 ) (25,665 ) (38,750 ) (35,889 ) (34,726 ) (32,574 ) (35,240 ) (4,509 )
Noncontrolling interest 10 1 3 (6 ) (10 ) 7 7 8
Net income available to common stockholders $ 114,751 $ 74,180 $ 115,031 $ 110,706 $ 110,503 $ 103,891 $ 100,806 $ 11,866
Earnings per common share – diluted $ 0.89 $ 0.58 $ 0.89 $ 0.86 $ 0.86 $ 0.81 $ 0.78 $ 0.09
Non-interest Income:
Service charges on deposit accounts $ 9,704 $ 9,730 $ 10,585 $ 9,722 $ 10,291 $ 10,827 $ 10,933 $ 10,009
Trust income 1,591 1,730 1,821 1,730 1,839 1,975 2,010 1,939
BOLI income:
Increase in cash surrender value 5,259 5,321 5,269 5,162 5,178 5,208 5,167 5,067
Death benefits 482 206 2,989 608
Other income from purchased loans 2,744 1,418 2,370 795 1,455 674 759
Loan service, maintenance and other fees 5,641 4,724 5,245 4,874 4,565 4,197 4,282 3,716
Gains (losses) on sales of other assets 844 (518 ) 465 284 402 189 1,358 161
Net gains on investment securities 713 2,223
Other 1,603 1,716 1,323 1,505 2,160 3,170 2,908 3,957
Total non-interest income $ 27,386 $ 24,121 $ 27,560 $ 24,072 $ 26,603 $ 26,446 $ 30,406 $ 27,680
Non-interest Expense:
Salaries and employee benefits $ 41,665 $ 41,477 $ 41,837 $ 44,868 $ 47,558 $ 48,376 $ 52,050 $ 51,473
Net occupancy expense 13,827 14,358 14,027 14,750 14,587 14,825 14,855 15,330
Other operating expenses 33,615 47,107 39,029 37,060 36,986 37,713 37,501 36,622
Total non-interest expense $ 89,107 $ 102,942 $ 94,893 $ 96,678 $ 99,131 $ 100,914 $ 104,406 $ 103,425
Balance Sheet Data:
Total assets $ 22,220,380 $ 22,086,539 $ 22,388,030 $ 23,005,652 $ 22,960,731 $ 23,402,679 $ 23,555,728 $ 24,565,810
Non-purchased loans 14,183,533 14,440,623 15,073,791 15,610,681 15,786,809 16,307,621 16,224,539 17,030,378
Purchased loans 2,580,341 2,285,168 2,044,032 1,864,715 1,698,396 1,427,230 1,307,504 1,197,826
Investment securities – AFS 2,608,439 2,669,877 2,862,340 2,769,602 2,548,489 2,414,722 2,277,389 2,816,556
Deposits 17,897,085 17,822,915 17,938,415 18,476,868 18,186,215 18,440,078 18,474,259 18,809,190
Unfunded balance of closed loans 11,999,661 11,891,247 11,364,975 11,544,218 11,167,055 11,429,918 11,325,598 11,334,737
Common stockholders' equity 3,613,903 3,653,596 3,770,330 3,882,643 3,993,247 4,078,324 4,150,351 4,083,150


Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited
6/30/18 9/30/18 12/31/18 3/31/19 6/30/19 9/30/19 12/31/19 3/31/20
(Dollars in thousands, except per share amounts)
Allowance for Credit Losses:
Balance at beginning of period $ 98,097 $ 104,638 $ 98,200 $ 102,264 $ 105,954 $ 106,642 $ 109,001 $ 108,525
Adoption of CECL(1) model 94,512
Net charge-offs (3,069 ) (48,387 ) (3,207 ) (2,991 ) (6,081 ) (5,495 ) (5,414 ) (4,291 )
Provision for loan losses 9,610 41,949 7,271 6,681 6,769 7,854 4,938 117,663
Balance at end of period $ 104,638 $ 98,200 $ 102,264 $ 105,954 $ 106,642 $ 109,001 $ 108,525 $ 316,409
Allowance for loan losses $ 104,638 $ 98,200 $ 102,264 $ 105,954 $ 106,642 $ 109,001 $ 108,525 $ 238,737
Reserve for unfunded balance of closed loans 77,672
Total allowance for credit losses $ 104,638 $ 98,200 $ 102,264 $ 105,954 $ 106,642 $ 109,001 $ 108,525 $ 316,409
Selected Ratios:
Net interest margin – FTE(2) 4.66 % 4.47 % 4.55 4.53 % 4.45 % 4.26 % 4.15 % 3.96 %
Efficiency ratio 35.19 41.87 36.90 % 38.49 39.30 40.98 42.37 43.35
Net charge-offs to average non-purchased loans(2) (3) 0.05 1.32 0.06 0.05 0.12 0.07 0.10 0.08
Net charge-offs to average total loans(2) 0.07 1.14 0.07 0.07 0.14 0.12 0.12 0.10
Nonperforming loans to total loans(4) 0.10 0.23 0.23 0.22 0.15 0.17 0.15 0.16
Nonperforming assets to total assets(4) 0.15 0.23 0.23 0.21 0.25 0.26 0.18 0.19
Allowance for loan losses to total loans 0.62 0.59 0.60 0.61 0.61 0.61 0.62 1.31
Loans past due 30 days or more, including past due non-accrual loans, to total loans(4) 0.12 0.17 0.28 0.28 0.13 0.14 0.19 0.18
(1) Current Expected Credit Loss model.
(2) Ratios for interim periods annualized based on actual days.
(3) Excludes purchased loans and net charge-offs related to such loss.
(4) Excludes purchased loans, except for their inclusion in total assets.


Bank OZK
Average Consolidated Balance Sheets and Net Interest Analysis – FTE
Unaudited
Three Months Ended March 31,
2020 2019
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 $ 1,367,297 $ 4,376 1.29 % $ 67,015 $ 414 2.50 %
Investment securities:
Taxable 1,796,061 10,760 2.41 2,310,770 14,897 2.61
Tax-exempt – FTE 486,062 4,553 3.77 515,613 4,903 3.86
Non-purchased loans – FTE 16,526,270 232,030 5.65 15,482,768 246,041 6.44
Purchased loans 1,265,413 21,387 6.80 1,947,783 30,195 6.29
Total earning assets – FTE 21,441,103 273,106 5.12 20,323,949 296,450 5.92
Non-interest earning assets 2,353,330 2,232,416
Total assets $ 23,794,433 $ 22,556,365
LIABILITIES AND STOCKHOLDERS EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction $ 8,131,400 $ 19,747 0.98 % $ 9,531,133 $ 36,103 1.54 %
Time deposits of $100 or more 4,388,337 22,190 2.03 3,170,510 15,555 1.99
Other time deposits 3,333,529 15,745 1.90 2,435,425 11,429 1.90
Total interest bearing deposits 15,853,266 57,682 1.46 15,137,068 63,087 1.69
Repurchase agreements with customers 7,883 6 0.32 22,192 22 0.40
Other borrowings (1) 296,969 50 0.07 269,588 1,389 2.09
Subordinated notes 223,711 3,172 5.70 223,321 3,146 5.71
Subordinated debentures (1) 119,984 1,288 4.31 119,412 1,711 5.81
Total interest bearing liabilities 16,501,813 62,198 1.52 15,771,581 69,355 1.78
Non-interest bearing liabilities:
Non-interest bearing deposits 2,927,296 2,757,110
Other non-interest bearing liabilities 243,598 210,588
Total liabilities 19,672,707 18,739,279
Common stockholders’ equity 4,118,614 3,813,979
Noncontrolling interest 3,112 3,107
Total liabilities and stockholders’ equity $ 23,794,433 $ 22,556,365
Net interest income – FTE $ 210,908 $ 227,095
Net interest margin – FTE 3.96 % 4.53 %
(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 $0.4 million for the first quarter of 2020 and $0.3 million for the first quarter of 2019. In the absence of this interest capitalization, the rates on other borrowings would have been 0.55% for the first quarter of 2020 and 2.62% for the first quarter of 2019. Capitalized interest included in subordinated debentures totaled $0.1 million for the first quarter of 2020 (none in the first quarter of 2019). In the absence of this interest capitalization, the rate on subordinated debentures would have been 4.80% for the first quarter of 2020.


Bank OZK
Reconciliation of Non-GAAP Financial Measures
Calculation of Average Tangible Common
Stockholders’ Equity and the Annualized Return on
Average Tangible Common Stockholders’ Equity
Unaudited
Three Months Ended
March 31, December 31,
2020 2019 2019
(Dollars in thousands)
Net income available to common stockholders $ 11,866 $ 110,706 $ 100,806
Average common stockholders’ equity before noncontrolling interest $ 4,118,614 $ 3,813,979 $ 4,110,322
Less average intangible assets:
Goodwill (660,789 ) (660,789 ) (660,789 )
Core deposit and other intangibles, net of accumulated amortization (22,412 ) (34,437 ) (25,315 )
Total average intangibles (683,201 ) (695,226 ) (686,104 )
Average tangible common stockholders’ equity $ 3,435,413 $ 3,118,753 $ 3,424,218
Return on average common stockholders’ equity(1) 1.16 % 11.77 % 9.73 %
Return on average tangible common stockholders’ equity(1) 1.39 % 14.40 % 11.68 %
(1) Ratios for interim periods annualized based on actual days.


Calculation of Total Tangible Common
Stockholders’ Equity and Tangible
Book Value per Common Share
Unaudited
March 31, December 31,
2020 2019 2019
(In thousands, except per share amounts)
Total common stockholders’ equity before noncontrolling interest $ 4,083,150 $ 3,882,643 $ 4,150,351
Less intangible assets:
Goodwill (660,789 ) (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (20,958 ) (32,527 ) (23,753 )
Total intangibles (681,747 ) (693,316 ) (684,542 )
Total tangible common stockholders’ equity $ 3,401,403 $ 3,189,327 $ 3,465,809
Shares of common stock outstanding 129,324 128,948 128,951
Book value per common share $ 31.57 $ 30.11 $ 32.19
Tangible book value per common share $ 26.30 $ 24.73 $ 26.88


Calculation of Total Tangible Common Stockholders’
Equity and the Ratio of Total Tangible Common
Stockholders’ Equity to Total Tangible Assets
Unaudited
March 31,
2020 2019
(Dollars in thousands)
Total common stockholders’ equity before noncontrolling interest $ 4,083,150 $ 3,882,643
Less intangible assets:
Goodwill (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (20,958 ) (32,527 )
Total intangibles (681,747 ) (693,316 )
Total tangible common stockholders’ equity $ 3,401,403 $ 3,189,327
Total assets $ 24,565,810 $ 23,005,652
Less intangible assets:
Goodwill (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (20,958 ) (32,527 )
Total intangibles (681,747 ) (693,316 )
Total tangible assets $ 23,884,063 $ 22,312,336
Ratio of total common stockholders’ equity to total assets 16.62 % 16.88 %
Ratio of total tangible common stockholders’ equity to total tangible assets 14.24 % 14.29 %


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

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