Bank OZK Announces Record First Quarter 2021 Earnings

Thursday, 22. April 2021 22:01

LITTLE ROCK, Ark., April 22, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the first quarter of 2021 was a record $148.4 million compared to $11.9 million for the first quarter of 2020. Diluted earnings per common share for the first quarter of 2021 were $1.14 compared to $0.09 for the first quarter of 2020.

As a result of improving economic conditions, management recorded negative provision for credit losses of $31.6 million during the first quarter of 2021, reducing the Bank’s total allowance for credit losses (“ACL”) from $377.3 million at December 31, 2020 to $342.3 million at March 31, 2021. The Bank’s provision for credit losses was $117.7 million during the first quarter of 2020, reflecting significant economic uncertainty at that time. The Bank’s results for the first quarter of 2021 also included pretax gains of $4.4 million from the sale of its South Carolina branches and $1.4 million of tax-exempt bank-owned life insurance (“BOLI”) death benefits. The Bank had no gains from branch sales and had $0.6 million of tax-exempt BOLI death benefits during the first quarter of 2020.

Pre-tax pre-provision net revenue (“PPNR”) was $160.7 million for the first quarter of 2021, a 19.9% increase from $134.0 million for the first quarter of 2020, but a decrease of 1.3% from $162.9 million for the fourth quarter of 2020. The calculation of PPNR and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first quarter of 2021 were 2.23%, 13.97% and 16.57%, respectively, compared to 0.20%, 1.16% and 1.39%, respectively, for the first quarter of 2020. The calculation of the Bank’s return on average tangible common stockholders’ equity and the reconciliation to GAAP are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer stated, “We are pleased to report excellent results for the first quarter of 2021, including record quarterly net income, strong net interest income, continued improvement in our core spread, excellent asset quality and an efficiency ratio among the best in the industry. Our combination of strong earnings, robust capital and an exceptional team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $18.72 billion at March 31, 2021, a 2.7% increase from $18.23 billion at March 31, 2020, but a decrease of 2.6% from $19.21 billion at December 31, 2020. Non-purchased loans were $17.98 billion at March 31, 2021, a 5.6% increase from $17.03 billion at March 31, 2020, but a decrease of 2.3% from $18.40 billion at December 31, 2020. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.74 billion at March 31, 2021, a 38.6% decrease from $1.20 billion at March 31, 2020.

Deposits were $21.30 billion at March 31, 2021, a 13.2% increase from $18.81 billion at March 31, 2020, but a decrease of 0.7% from $21.45 billion at December 31, 2020. Total assets were $27.28 billion at March 31, 2021, an 11.0% increase from $24.57 billion at March 31, 2020.

Common stockholders’ equity was $4.38 billion at March 31, 2021, a 7.5% increase from $4.08 billion at March 31, 2020. Tangible common stockholders’ equity was $3.71 billion at March 31, 2021, a 9.1% increase from $3.40 billion at March 31, 2020. Book value per common share was $33.79 at March 31, 2021, a 7.0% increase from $31.57 at March 31, 2020. Tangible book value per common share was $28.60 at March 31, 2021, an 8.7% increase from $26.30 at March 31, 2020. 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 16.07% at March 31, 2021 compared to 16.62% at March 31, 2020. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.94% at March 31, 2021 compared to 14.24% at March 31, 2020. 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 23, 2021. Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call. A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally). The conference ID for this playback is 4472527. The call will be available live or in a recorded version on the Bank’s Investor Relations website at ir.ozk.com under “Company News/Webcasts.” The Bank will also provide a transcript of the conference call on its Investor Relations website.

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

NON-GAAP FINANCIAL MEASURES

This release contains certain non-GAAP financial measures. The Bank uses these non-GAAP financial measures, specifically return on average tangible common stockholders’ equity, tangible book value per common share, total tangible common stockholders’ equity, the ratio of total tangible common stockholders’ equity to total tangible assets and PPNR, to assess the strength of its capital, its ability to generate earnings on tangible capital invested by its shareholders and trends in its net revenue. These measures typically adjust GAAP financial measures to exclude intangible assets or provision for credit losses. Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP performance measures that may be presented by other banks. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

FORWARD-LOOKING STATEMENTS

This release and other communications by the Bank include certain “forward-looking statements” regarding the Bank’s plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time. Those statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: potential delays or other problems implementing the Bank’s growth, expansion and acquisition strategies, including delays in identifying satisfactory sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices or relocating, selling or closing existing offices; the ability to enter into and/or close additional acquisitions; the availability of and access to capital; possible downgrades in the Bank’s credit ratings or outlook which could increase the costs or availability of funding from capital markets; the ability to attract new or retain existing or acquired deposits or to retain or grow loans, including growth from unfunded closed loans; the ability to generate future revenue growth or to control future growth in non-interest expense; interest rate fluctuations, including changes in the yield curve between short-term and long-term interest rates or changes in the relative relationships of various interest rate indices; the potential impact of the proposed phase-out of the London Interbank Offered Rate (“LIBOR”) or other changes involving LIBOR; competitive factors and pricing pressures, including their effect on the Bank’s net interest margin or core spread; general economic, unemployment, credit market and real estate market conditions, and the effect of such conditions on the creditworthiness of borrowers, collateral values, the value of investment securities and asset recovery values; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing legislation and regulatory actions, including those in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief and Economic Security Act, the Consolidated Appropriations Act of 2021, the American Rescue Plan Act of 2021, and any similar or related laws, 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 COVID-19 pandemic, including the duration of the pandemic and actions taken to contain or treat COVID-19, on the Bank, the Bank’s customers, the Bank’s staff, the global economy and financial markets; national, international or political instability; impairment of the Bank’s goodwill or other intangible assets; adoption of new accounting standards, or changes in existing standards; and adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions or rulings as well as other factors identified in this 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, 2020 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements. The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

GENERAL INFORMATION

Bank OZK (Nasdaq: OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 branches, loan production offices and other offices in Arkansas, Georgia, Florida, North Carolina, Texas, California, New York and Mississippi. Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 

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

Bank OZK
Consolidated Balance Sheets
Unaudited

  March 31,  December 31, 
  2021  2020 
  (Dollars in thousands, except per share amounts) 
ASSETS        
Cash and cash equivalents $2,216,336  $2,393,662 
Investment securities ― available for sale ("AFS")  4,162,479   3,405,351 
Federal Home Loan Bank of Dallas and other bankers' bank stocks  38,578   38,486 
Non-purchased loans  17,979,435   18,401,495 
Purchased loans  735,630   807,673 
Allowance for loan losses  (268,077)  (295,824)
Net loans  18,446,988   18,913,344 
Premises and equipment, net  729,433   738,842 
Foreclosed assets  8,436   11,085 
Accrued interest receivable  94,265   88,077 
Bank owned life insurance (“BOLI”)  761,680   758,071 
Goodwill and other intangible assets, net  673,728   675,458 
Other, net  144,969   140,220 
Total assets $27,276,892  $27,162,596 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Deposits:        
Demand non-interest bearing $4,196,603  $3,996,546 
Savings and interest bearing transaction  8,529,229   8,160,982 
Time  8,570,610   9,292,828 
Total deposits  21,296,442   21,450,356 
Repurchase agreements with customers  5,936   8,013 
Other borrowings  750,361   750,928 
Subordinated notes  224,141   224,047 
Subordinated debentures  120,613   120,475 
Reserve for losses on unfunded loan commitments  74,230   81,481 
Accrued interest payable and other liabilities  418,860   251,940 
Total liabilities  22,890,583   22,887,240 
         
Commitments and contingencies        
         
Stockholders’ equity:        
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares
issued or outstanding at March 31, 2021 or December 31, 2020
      
Common stock; $0.01 par value; 300,000,000 shares authorized;
129,718,906 and 129,350,448 shares issued and outstanding at
March 31, 2021 and December 31, 2020, respectively
  1,297   1,294 
Additional paid-in capital  2,272,046   2,265,850 
Retained earnings  2,059,398   1,946,875 
Accumulated other comprehensive income  50,464   58,252 
Total stockholders’ equity before noncontrolling interest  4,383,205   4,272,271 
Noncontrolling interest  3,104   3,085 
Total stockholders’ equity  4,386,309   4,275,356 
Total liabilities and stockholders’ equity $27,276,892  $27,162,596 


Bank OZK
Consolidated Statements of Income
Unaudited

 Three Months Ended March 31, 
 2021  2020 
 (Dollars in thousands, except per share amounts) 
Interest income:       
Non-purchased loans$239,827  $231,853 
Purchased loans 11,935   21,387 
Investment securities:       
Taxable 8,083   10,760 
Tax-exempt 3,681   3,597 
Deposits with banks and federal funds sold 538   4,376 
   Total interest income 264,064   271,973 
        
Interest expense:       
Deposits 24,350   57,682 
Repurchase agreements with customers 4   6 
Other borrowings 986   50 
Subordinated notes 3,146   3,172 
Subordinated debentures 942   1,288 
Total interest expense 29,428   62,198 
        
Net interest income 234,636   209,775 
Provision for credit losses (31,559)  117,663 
Net interest income after provision for credit losses 266,195   92,112 
        
Non-interest income:       
Service charges on deposit accounts 9,665   10,009 
Trust income 2,206   1,939 
BOLI income:       
Increase in cash surrender value 4,881   5,067 
Death benefits 1,409   608 
Loan service, maintenance and other fees 3,551   3,716 
Gains on sales of other assets 5,828   161 
Net gains on investment securities    2,223 
Other 4,577   3,957 
Total non-interest income 32,117   27,680 
        
Non-interest expense:       
Salaries and employee benefits 53,645   51,473 
Net occupancy and equipment 16,468   15,330 
Other operating expenses 35,946   36,622 
Total non-interest expense 106,059   103,425 
        
Income before taxes 192,253   16,367 
Provision for income taxes 43,818   4,509 
Net income 148,435   11,858 
Earnings attributable to noncontrolling interest (19)  8 
Net income available to common stockholders$148,416  $11,866 
        
Basic earnings per common share$1.15  $0.09 
        
Diluted earnings per common share$1.14  $0.09 


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, 2021:                        
Balances – December 31, 2020 $1,294  $2,265,850  $1,946,875  $58,252  $3,085  $4,275,356 
Net income        148,435         148,435 
Earnings attributable to noncontrolling interest        (19)     19    
Total other comprehensive loss           (7,788)     (7,788)
Common stock dividends, $0.2775 per
share
        (35,893)        (35,893)
Issuance of 128,100 shares of common
stock for exercise of stock options
  1   4,492            4,493 
Issuance of 312,503 shares of unvested
restricted common stock
  3   (3)            
Repurchase and cancellation of 55,740
shares of common stock
  (1)  (1,970)           (1,971)
Stock-based compensation expense     3,677            3,677 
Forfeitures of 16,405 shares of unvested
restricted common stock
                  
Balances – March 31, 2021 $1,297  $2,272,046  $2,059,398  $50,464  $3,104  $4,386,309 
                         
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, $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
Summary of Non-Interest Expense
Unaudited

  Three Months Ended
March 31,
 
  2021  2020 
  (Dollars in thousands) 
Salaries and employee benefits $53,645  $51,473 
Net occupancy and equipment  16,468   15,330 
Other operating expenses:        
Professional and outside services  6,326   6,764 
Software and data processing  5,792   4,974 
Deposit insurance and assessments  3,520   3,420 
Telecommunication services  2,232   2,177 
Postage and supplies  1,645   2,053 
Writedowns of foreclosed and other assets  1,363   879 
ATM expense  1,283   1,160 
Travel and meals  774   2,102 
Loan collection and repossession expense  509   694 
Advertising and public relations  308   1,703 
Amortization of intangibles  1,730   2,795 
Amortization of CRA and tax credit investments  4,125   2,740 
Other  6,339   5,161 
Total non-interest expense $106,059  $103,425 


Bank OZK
Summary of Total Loans Outstanding
Unaudited

  March 31, 2021  December 31, 2020 
  (Dollars in thousands) 
                 
Real estate:                
Residential 1-4 family $869,585   4.6% $911,115   4.7%
Non-farm/non-residential  4,406,692   23.5   4,213,636   21.9 
Construction/land development  7,733,670   41.3   8,046,978   41.9 
Agricultural  212,681   1.1   204,868   1.1 
Multifamily residential  797,847   4.3   856,297   4.5 
Total real estate  14,020,475   74.8   14,232,894   74.1 
Commercial and industrial  790,568   4.2   842,206   4.4 
Consumer  2,275,011   12.2   2,393,964   12.5 
Other  1,629,011   8.8   1,740,104   9.0 
Total loans  18,715,065   100.0%  19,209,168   100.0%
Allowance for loan losses  (268,077)      (295,824)    
Net loans $18,446,988      $18,913,344     


Bank OZK
Allowance for Credit Losses
Unaudited

             
  Allowance for Loan Losses  Reserve for Losses on Unfunded Loan Commitments  Total Allowance for Credit Losses 
  (Dollars in thousands) 
Three months ended March 31, 2021:            
Balances – December 31, 2020 $295,824  $81,481  $377,305 
Net charge-offs  (3,439)     (3,439)
Provision  (24,308)  (7,251)  (31,559)
Balances – March 31, 2021 $268,077  $74,230  $342,307 
             
Three months ended March 31, 2020:            
Balances – December 31, 2019 $108,525  $  $108,525 
Adoption of CECL methodology  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, 2021  December 31, 2020 
  (Dollars in thousands) 
Non-interest bearing $4,196,603   19.7% $3,996,546   18.6%
Interest bearing:                
Transaction (NOW)  3,253,715   15.3   3,124,007   14.6 
Savings and money market  5,275,514   24.8   5,036,975   23.5 
Time deposits less than $100  2,657,568   12.5   3,075,845   14.3 
Time deposits of $100 or more  5,913,042   27.7   6,216,983   29.0 
Total deposits $21,296,442   100.0% $21,450,356   100.0%


Summary of Deposits – By Customer Type
Unaudited

  March 31, 2021  December 31, 2020 
  (Dollars in thousands) 
Consumer $11,252,744   52.8% $11,165,603   52.1%
Commercial  6,259,409   29.4   6,056,536   28.2 
Public Funds  2,048,909   9.6   2,111,971   9.8 
Brokered  1,210,155   5.7   1,600,116   7.5 
Reciprocal  525,225   2.5   516,130   2.4 
Total deposits $21,296,442   100.0% $21,450,356   100.0%


Bank OZK
Selected Consolidated Financial Data
Unaudited

  Three Months Ended
March 31,
 
  2021  2020  % Change 
  (Dollars in thousands, except per share amounts) 
Income statement data:            
Net interest income $234,636  $209,775   11.9%
Provision for credit losses  (31,559)  117,663   (126.8)
Non-interest income  32,117   27,680   16.0 
Non-interest expense  106,059   103,425   2.5 
Net income available to common stockholders  148,416   11,866   1,150.8 
Pre-tax pre-provision net revenue(1)  160,694   134,030   19.9 
Common share and per common share data:            
Net income per share − diluted $1.14  $0.09   1,166.7%
Net income per share − basic  1.15   0.09   1,177.8 
Dividends per share  0.2775   0.26   6.7 
Book value per share  33.79   31.57   7.0 
Tangible book value per share(1)  28.60   26.30   8.7 
Weighted-average diluted shares outstanding (thousands)  129,816   129,307   0.4 
End of period shares outstanding (thousands)  129,719   129,324   0.3 
Balance sheet data at period end:            
Total assets $27,276,892  $24,565,810   11.0%
Total loans  18,715,065   18,228,204   2.7 
Non-purchased loans  17,979,435   17,030,378   5.6 
Purchased loans  735,630   1,197,826   (38.6)
Allowance for loan losses  268,077   238,737   12.3 
Foreclosed assets  8,436   20,616   (59.1)
Investment securities − AFS  4,162,479   2,816,556   47.8 
Goodwill and other intangible assets, net  673,728   681,747   (1.2)
Deposits  21,296,442   18,809,190   13.2 
Other borrowings  750,361   1,051,353   (28.6)
Subordinated notes  224,141   223,759   0.2 
Subordinated debentures  120,613   120,055   0.5 
Unfunded balance of closed loans  11,780,099   11,334,737   3.9 
Reserve for losses on unfunded loan commitments  74,230   77,672   (4.4)
Total common stockholders’ equity  4,383,205   4,083,150   7.3 
Net unrealized gains on investment securities AFS
included in common stockholders' equity
  50,464   54,888     
Loan (including purchased loans) to deposit ratio  87.88%  96.91%    
Selected ratios:            
Return on average assets(2)  2.23%  0.20%    
Return on average common stockholders’ equity(2)  13.97   1.16     
Return on average tangible common stockholders’ equity(1) (2)  16.57   1.39     
Average common equity to total average assets  15.93   17.31     
Net interest margin – FTE(2)  3.86   3.96     
Efficiency ratio  39.57   43.35     
Net charge-offs to average non-purchased loans(2) (3)  0.08   0.08     
Net charge-offs to average total loans(2)  0.07   0.10     
Nonperforming loans to total loans(4)  0.25   0.16     
Nonperforming assets to total assets(4)  0.19   0.19     
Allowance for loan losses to total loans(5)  1.43   1.31     
Other information:            
Non-accrual loans(4) $43,059  $25,681     
Accruing loans − 90 days past due(4)          
Troubled and restructured non-purchased loans − accruing(4)  1,380   757     


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


Selected Consolidated Financial Data (continued)
Unaudited

  Three Months Ended 
  March 31,  December 31,     
  2021  2020  % Change 
 (Dollars in thousands, except per share amounts) 
Income statement data:            
Net interest income $234,636  $237,600   (1.2)%
Provision for credit losses  (31,559)  6,750   (567.5)
Non-interest income  32,117   28,661   12.1 
Non-interest expense  106,059   103,394   2.6 
Net income available to common stockholders  148,416   120,513   23.2 
Pre-tax pre-provision net revenue(1)  160,694   162,867   (1.3)
Common share and per common share data:            
Net income per share − diluted $1.14  $0.93   22.6%
Net income per share − basic  1.15   0.93   23.7 
Dividends per share  0.2775   0.275   0.9 
Book value per share  33.79   33.03   2.3 
Tangible book value per share(1)  28.60   27.81   2.8 
Weighted-average diluted shares outstanding (thousands)  129,816   129,523   0.2 
End of period shares outstanding (thousands)  129,719   129,350   0.3 
Balance sheet data at period end:            
Total assets $27,276,892  $27,162,596   0.4%
Total loans  18,715,065   19,209,168   (2.6)
Non-purchased loans  17,979,435   18,401,495   (2.3)
Purchased loans  735,630   807,673   (8.9)
Allowance for loan losses  268,077   295,824   (9.4)
Foreclosed assets  8,436   11,085   (23.9)
Investment securities − AFS  4,162,479   3,405,351   22.2 
Goodwill and other intangible assets, net  673,728   675,458   (0.3)
Deposits  21,296,442   21,450,356   (0.7)
Other borrowings  750,361   750,928   (0.1)
Subordinated notes  224,141   224,047   0.1 
Subordinated debentures  120,613   120,475   0.1 
Unfunded balance of closed loans  11,780,099   11,847,117   (0.6)
Reserve for losses on unfunded loan commitments  74,230   81,481   (8.9)
Total common stockholders’ equity  4,383,205   4,272,271   2.6 
Net unrealized gains on investment securities AFS
included in common stockholders' equity
  50,464   58,252     
Loan (including purchased loans) to deposit ratio  87.88%  89.55%    
Selected ratios:            
Return on average assets(2)  2.23%  1.79%    
Return on average common stockholders’ equity(2)  13.97   11.36     
Return on average tangible common stockholders’ equity(1) (2)  16.57   13.53     
Average common equity to total average assets  15.93   15.74     
Net interest margin – FTE(2)  3.86   3.88     
Efficiency ratio  39.57   38.61     
Net charge-offs to average non-purchased loans(2) (3)  0.08   0.14     
Net charge-offs to average total loans(2)  0.07   0.14     
Nonperforming loans to total loans(4)  0.25   0.25     
Nonperforming assets to total assets(4)  0.19   0.21     
Allowance for loan losses to total loans(5)  1.43   1.54     
Other information:            
Non-accrual loans(4) $43,059  $44,402     
Accruing loans − 90 days past due(4)          
Troubled and restructured non-purchased loans − accruing(4)  1,380   1,483     

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


Bank OZK
Supplemental Quarterly Financial Data
Unaudited

  6/30/19  9/30/19  12/31/19  3/31/20  6/30/20  9/30/20  12/31/20  3/31/21 
  (Dollars in thousands, except per share amounts) 
Earnings Summary:                                
Net interest income $224,536  $218,780  $214,977  $209,775  $216,593  $224,657  $237,600  $234,636 
Federal tax (FTE) adjustment  1,136   1,038   1,028   1,133   1,753   1,605   1,533   1,275 
Net interest income (FTE)  225,672   219,818   216,005   210,908   218,346   226,262   239,133   235,911 
Provision for credit losses  (6,769)  (7,854)  (4,938)  (117,663)  (72,026)  (7,200)  (6,750)  31,559 
Non-interest income  26,603   26,446   30,406   27,680   21,591   26,676   28,661   32,117 
Non-interest expense  (99,131)  (100,914)  (104,406)  (103,425)  (100,953)  (105,641)  (103,394)  (106,059)
Pretax income (FTE)  146,375   137,496   137,067   17,500   66,958   140,097   157,650   193,528 
FTE adjustment  (1,136)  (1,038)  (1,028)  (1,133)  (1,753)  (1,605)  (1,533)  (1,275)
Provision for income taxes  (34,726)  (32,574)  (35,240)  (4,509)  (14,948)  (29,251)  (35,607)  (43,818)
Noncontrolling interest  (10)  7   7   8   9   12   3   (19)
Net income available to common stockholders $110,503  $103,891  $100,806  $11,866  $50,266  $109,253  $120,513  $148,416 
Earnings per common share – diluted $0.86  $0.81  $0.78  $0.09  $0.39  $0.84  $0.93  $1.14 
Non-interest Income:                                
Service charges on deposit accounts $10,291  $10,827  $10,933  $10,009  $8,281  $9,427  $9,983  $9,665 
Trust income  1,839   1,975   2,010   1,939   1,759   1,936   1,909   2,206 
BOLI income:                                
Increase in cash surrender value  5,178   5,208   5,167   5,067   5,057   5,081   5,034   4,881 
Death benefits     206   2,989   608            1,409 
Loan service, maintenance and other fees  4,565   4,197   4,282   3,716   3,394   3,351   3,797   3,551 
Gains on sales of other assets  402   189   1,358   161   621   891   5,189   5,828 
Net gains on investment securities  713         2,223      2,244       
Other  3,615   3,844   3,667   3,957   2,479   3,746   2,749   4,577 
Total non-interest income $26,603  $26,446  $30,406  $27,680  $21,591  $26,676  $28,661  $32,117 
Non-interest Expense:                                
Salaries and employee benefits $47,558  $48,376  $52,050  $51,473  $48,410  $53,119  $53,832  $53,645 
Net occupancy and equipment  14,587   14,825   14,855   15,330   15,756   16,676   15,617   16,468 
Other operating expenses  36,986   37,713   37,501   36,622   36,787   35,846   33,945   35,946 
Total non-interest expense $99,131  $100,914  $104,406  $103,425  $100,953  $105,641  $103,394  $106,059 
Balance Sheet Data:                                
Total assets $22,960,731  $23,402,679  $23,555,728  $24,565,810  $26,380,409  $26,888,308  $27,162,596  $27,276,892 
Non-purchased loans  15,786,809   16,307,621   16,224,539   17,030,378   18,247,431   18,419,958   18,401,495   17,979,435 
Purchased loans  1,698,396   1,427,230   1,307,504   1,197,826   1,063,647   938,485   807,673   735,630 
Investment securities – AFS  2,548,489   2,414,722   2,277,389   2,816,556   3,299,944   3,468,243   3,405,351   4,162,479 
Deposits  18,186,215   18,440,078   18,474,259   18,809,190   20,723,598   21,287,405   21,450,356   21,296,442 
Unfunded balance of closed loans  11,167,055   11,429,918   11,325,598   11,334,737   11,411,441   11,604,614   11,847,117   11,780,099 
Common stockholders' equity  3,993,247   4,078,324   4,150,351   4,083,150   4,110,666   4,186,285   4,272,271   4,383,205 


Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

  6/30/19  9/30/19  12/31/19  3/31/20  6/30/20  9/30/20  12/31/20  3/31/21 
  (Dollars in thousands, except per share amounts) 
Allowance for Credit Losses:                                
Balance at beginning of period $105,954  $106,642  $109,001  $108,525  $316,409  $374,494  $377,273  $377,305 
Adoption of CECL(1) methodology           94,512             
Net charge-offs  (6,081)  (5,495)  (5,414)  (4,291)  (13,941)  (4,421)  (6,718)  (3,439)
Provision for credit losses  6,769   7,854   4,938   117,663   72,026   7,200   6,750   (31,559)
Balance at end of period $106,642  $109,001  $108,525  $316,409  $374,494  $377,273  $377,305  $342,307 
Allowance for loan losses $106,642  $109,001  $108,525  $238,737  $306,196  $308,847  $295,824  $268,077 
Reserve for losses on unfunded loan commitments           77,672   68,298   68,426   81,481   74,230 
Total allowance for credit losses $106,642  $109,001  $108,525  $316,409  $374,494  $377,273  $377,305  $342,307 
Selected Ratios:                                
Net interest margin – FTE(2)  4.45%  4.26%  4.15%  3.96%  3.74%  3.69%  3.88%  3.86%
Efficiency ratio  39.30   40.98   42.37   43.35   42.07   41.77   38.61   39.57 
Net charge-offs to average non-purchased loans(2) (3)  0.12   0.07   0.10   0.08   0.05   0.09   0.14   0.08 
Net charge-offs to average total loans(2)  0.14   0.12   0.12   0.10   0.29   0.09   0.14   0.07 
Nonperforming loans to total loans(4)  0.15   0.17   0.15   0.16   0.18   0.15   0.25   0.25 
Nonperforming assets to total assets(4)  0.25   0.26   0.18   0.19   0.19   0.17   0.21   0.19 
Allowance for loan losses to total loans (5)  0.61   0.61   0.62   1.31   1.59   1.60   1.54   1.43 
Loans past due 30 days or more, including
past due non-accrual loans, to total loans(4)
  0.13   0.14   0.19   0.18   0.13   0.13   0.16   0.13 

(1) Current Expected Credit Loss.
(2) Ratios for interim periods annualized based on actual days.
(3) Excludes purchased loans and net charge-offs related to such loans.
(4) Excludes purchased loans, except for their inclusion in total assets.
(5) Excludes reserve for losses on unfunded loan commitments.


Bank OZK
Average Consolidated Balance Sheets and Net Interest Analysis – FTE
Unaudited

  Three Months Ended March 31, 
  2021  2020 
  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 $2,212,680  $538   0.10% $1,367,297  $4,376   1.29%
Investment securities:                        
Taxable  2,422,127   8,083   1.35   1,796,061   10,760   2.41 
Tax-exempt – FTE  1,167,827   4,659   1.62   486,062   4,553   3.77 
Non-purchased loans – FTE  18,188,269   240,124   5.35   16,526,270   232,030   5.65 
Purchased loans  776,097   11,935   6.24   1,265,413   21,387   6.80 
Total earning assets – FTE  24,767,000   265,339   4.34   21,441,103   273,106   5.12 
Non-interest earning assets  2,279,477           2,353,330         
Total assets $27,046,477          $23,794,433         
LIABILITIES AND STOCKHOLDERS’ EQUITY                        
Interest bearing liabilities:                        
Deposits:                        
Savings and interest bearing transaction $8,337,990  $3,616   0.18% $8,131,400  $19,747   0.98%
Time deposits of $100 or more  6,095,614   13,913   0.93   4,388,337   22,190   2.03 
Other time deposits  2,900,579   6,821   0.95   3,333,529   15,745   1.90 
Total interest bearing deposits  17,334,183   24,350   0.57   15,853,266   57,682   1.46 
Repurchase agreements with customers  5,800   4   0.26   7,883   6   0.32 
Other borrowings(1)  750,384   986   0.53   296,969   50   0.07 
Subordinated notes  224,092   3,146   5.69   223,711   3,172   5.70 
Subordinated debentures(1)  120,540   942   3.17   119,984   1,288   4.31 
Total interest bearing liabilities  18,434,999   29,428   0.65   16,501,813   62,198   1.52 
Non-interest bearing liabilities:                        
Non-interest bearing deposits  3,972,815           2,927,296         
Other non-interest bearing liabilities  328,401           243,598         
Total liabilities  22,736,215           19,672,707         
Common stockholders’ equity  4,307,174           4,118,614         
Noncontrolling interest  3,088           3,112         
Total liabilities and stockholders’
equity
 $27,046,477          $23,794,433         
Net interest income – FTE     $235,911          $210,908     
Net interest margin – FTE          3.86%          3.96%
Core spread(2)          4.78%          4.19%

(1) The interest expense and the rates for “other borrowings” and for “subordinated debentures” were affected by capitalized interest. Capitalized interest included in other borrowings totaled $0.03 million for the first quarter of 2021 compared to $0.36 million for the first quarter of 2020. In the absence of this interest capitalization, the rates on other borrowings would have been 0.55% for the first quarter of 2021 and 0.55% for the first quarter of 2020. Capitalized interest included in subordinated debentures totaled $0.14 million for the first quarter of 2020 (none in the first quarter of 2021). In the absence of this interest capitalization, the rate on subordinated debentures would have been 4.80% for the first quarter of 2020.

(2) Core spread is the difference between the yield on the Bank’s non-purchased loans-FTE and the cost of its interest bearing deposits.


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, 
  2021  2020  2020 
  (Dollars in thousands) 
Net income available to common stockholders $148,416  $11,866  $120,513 
Average common stockholders’ equity before
noncontrolling interest
 $4,307,174  $4,118,614  $4,219,249 
Less average intangible assets:            
Goodwill  (660,789)  (660,789)  (660,789)
Core deposit and other intangible assets, net of
accumulated amortization
  (13,828)  (22,412)  (15,578)
Total average intangibles  (674,617)  (683,201)  (676,367)
Average tangible common stockholders’ equity $3,632,557  $3,435,413  $3,542,882 
Return on average common stockholders’ equity(1)  13.97%  1.16%  11.36%
Return on average tangible common stockholders'
equity(1)
  16.57%  1.39%  13.53%

(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, 
  2021  2020  2020 
  (In thousands, except per share amounts) 
Total common stockholders’ equity before noncontrolling interest $4,383,205  $4,083,150  $4,272,271 
Less intangible assets:            
Goodwill  (660,789)  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated
amortization
  (12,939)  (20,958)  (14,669)
Total intangibles  (673,728)  (681,747)  (675,458)
Total tangible common stockholders' equity $3,709,477  $3,401,403  $3,596,813 
Shares of common stock outstanding  129,719   129,324   129,350 
Book value per common share $33.79  $31.57  $33.03 
Tangible book value per common share $28.60  $26.30  $27.81 


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

   March 31, 
  2021  2020 
  (Dollars in thousands) 
Total common stockholders’ equity before noncontrolling interest $4,383,205  $4,083,150 
Less intangible assets:        
Goodwill  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization  (12,939)  (20,958)
Total intangibles  (673,728)  (681,747)
Total tangible common stockholders' equity $3,709,477  $3,401,403 
Total assets $27,276,892  $24,565,810 
Less intangible assets:        
Goodwill  (660,789)  (660,789)
Core deposit and other intangible assets, net of accumulated amortization  (12,939)  (20,958)
Total intangibles  (673,728)  (681,747)
Total tangible assets $26,603,164  $23,884,063 
Ratio of total common stockholders’ equity to total assets  16.07%  16.62%
Ratio of total tangible common stockholders’ equity to total
tangible assets
  13.94%  14.24%


Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited

  Three Months Ended 
  March 31,  December 31, 
  2021  2020  2020 
  (Dollars in thousands) 
Income before taxes $192,253  $16,367  $156,117 
Provision for credit losses  (31,559)  117,663   6,750 
Pre-tax pre-provision net revenue $160,694  $134,030  $162,867 

 


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