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Bank OZK Announces Second Quarter 2019 Earnings
Globe Newswire 18-Jul-2019 4:01 PM
LITTLE ROCK, Ark., July 18, 2019 (GLOBE NEWSWIRE) -- Bank OZK (the "Bank") (NASDAQ:OZK) today announced that net income for the second quarter of 2019 was $110.5 million, a 3.7% decrease from $114.8 million for the second quarter of 2018. Diluted earnings per common share for the second quarter of 2019 were $0.86, a 3.4% decrease from $0.89 for the second quarter of 2018.
For the six months ended June 30, 2019, net income totaled $221.2 million, a 2.9% decrease from $227.9 million for the first six months of 2018. Diluted earnings per common share for the first six months of 2019 were $1.71, a 3.4% decrease from $1.77 for the first six months of 2018.
The Bank's annualized returns on average assets, average common stockholders' equity and average tangible common stockholders' equity for the second quarter of 2019 were 1.95%, 11.29% and 13.70%, respectively, compared to 2.10%, 12.90% and 16.08%, respectively, for the second quarter of 2018. The Bank's annualized returns on average assets, average common stockholders' equity and average tangible common stockholders' equity for the first six months of 2019 were 1.97%, 11.52%, and 14.04%, respectively, compared to 2.13%, 13.03%, and 16.30%, respectively, for the first six months of 2018. The calculation of the Bank's annualized return on average tangible common stockholders' equity and the reconciliation to generally accepted accounting principles ("GAAP") are included in the schedules accompanying this release.
George Gleason, Chairman and Chief Executive Officer, stated, "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 are pleased that we continue to deliver financial metrics among the best in the industry, including the 1.95% annualized return on average assets, 4.45% net interest margin and 39.3% efficiency ratio for the quarter just ended. We will remain disciplined and focused on delivering long-term value for our shareholders."
KEY BALANCE SHEET METRICS
Total loans were $17.49 billion at June 30, 2019, a 4.3% increase from $16.76 billion at June 30, 2018. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $15.79 billion at June 30, 2019, an 11.3% increase from $14.18 billion at June 30, 2018. Purchased loans, which consist of loans acquired in previous acquisitions, were $1.70 billion at June 30, 2019, a 34.2% decrease from $2.58 billion at June 30, 2018. The unfunded balance of closed loans was $11.17 billion at June 30, 2019, a 6.9% decrease from $12.00 billion at June 30, 2018.
Deposits were $18.19 billion at June 30, 2019, a 1.6% increase from $17.90 billion at June 30, 2018, but a 1.6% decrease from March 31, 2019. Total assets were $22.96 billion at June 30, 2019, a 3.3% increase from $22.22 billion at June 30, 2018, but a 0.2% decrease from March 31, 2019.
Common stockholders' equity was $3.99 billion at June 30, 2019, a 10.5% increase from $3.61 billion at June 30, 2018. Tangible common stockholders' equity was $3.30 billion at June 30, 2019, a 13.5% increase from $2.91 billion at June 30, 2018. Book value per common share was $30.97 at June 30, 2019, a 10.2% increase from $28.10 at June 30, 2018. Tangible book value per common share was $25.61 at June 30, 2019, a 13.2% increase from $22.63 at June 30, 2018. The calculations of the Bank's tangible common stockholders' equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.
The Bank's ratio of total common stockholders' equity to total assets increased to 17.39% at June 30, 2019 compared to 16.26% at June 30, 2018. Its ratio of total tangible common stockholders' equity to total tangible assets increased to 14.83% at June 30, 2019 compared to 13.53% at June 30, 2018. The calculation of the Bank's ratio of total tangible common stockholders' equity to total tangible assets and the reconciliation to GAAP are included in the schedules accompanying this release.
MANAGEMENT'S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS
In connection with this release, the Bank released management's comments on the results for the quarter just ended, which are available at http://ir.ozk.com. This release should be read in conjunction with management's comments on the results for the second quarter of 2019.
Management will conduct a conference call to take questions on these quarterly results and management's comments at 10:00 a.m. CT (11:00 a.m. ET) on July 19, 2019. Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call. A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally). The passcode for this playback is 4369463. 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 sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices; the ability to enter into and/or close additional acquisitions; problems with, or additional expenses relating to, integrating acquisitions; the inability to realize expected cost savings and/or synergies from acquisitions; problems with managing acquisitions; the effect of the announcements of any future acquisition on customer relationships and operating results; 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; competitive factors and pricing pressures, including their effect on the Bank's net interest margin or core spread; general economic, unemployment, credit market and real estate market conditions, and the effect of such conditions on the creditworthiness of borrowers, collateral values, the value of investment securities and asset recovery values; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing legislation and regulatory actions; changes in U.S. government monetary and fiscal policy; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, the Bank's operational or security systems or infrastructure, or those of third parties with whom it does business, including as a result of cyber attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank or its customers; adoption of new accounting standards 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 included in the disclosures under the headings "Forward-Looking Information" and "Item 1A. Risk Factors" in the Bank's most recent Annual Report on Form 10-K for the year ended December 31, 2018 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements. The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.
GENERAL INFORMATION
Bank OZK (NASDAQ:OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence. Bank OZK has been recognized as the top performing bank in the nation in its asset size 13 times in the past eight years. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through 254 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.
Media Contact: Susan Blair (501) 978-2217 Investor Contact: Tim Hicks (501) 978-2336
Bank OZK Consolidated Balance Sheets Unaudited
June 30,
December31,
2019
2018
(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents
$
738,566
$
290,672
Investment securities - available for sale ("AFS")
2,548,489
2,862,340
Federal Home Loan Bank of Dallas and other banker's bank stocks
11,607
25,941
Non-purchased loans
15,786,809
15,073,791
Purchased loans
1,698,396
2,044,032
Allowance for loan losses
(106,642
)
(102,264
)
Net loans
17,378,563
17,015,559
Premises and equipment, net
662,082
567,189
Foreclosed assets
33,467
16,171
Accrued interest receivable
81,003
81,968
Bank owned life insurance ("BOLI")
730,871
721,238
Goodwill and other intangible assets, net
690,304
696,461
Other, net
85,779
110,491
Total assets
$
22,960,731
$
22,388,030
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand non-interest bearing
$
2,777,066
$
2,748,273
Savings and interest bearing transaction
9,226,197
9,682,713
Time
6,182,952
5,507,429
Total deposits
18,186,215
17,938,415
Repurchase agreements with customers
10,909
20,564
Other borrowings
201,455
96,692
Subordinated notes
223,471
223,281
Subordinated debentures
119,635
119,358
Accrued interest payable and other liabilities
222,668
216,355
Total liabilities
18,964,353
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 June 30, 2019 or December 31, 2018
—
—
Common stock; $0.01 par value; 300,000,000 shares authorized; 128,946,716 and 128,611,049 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
1,289
1,286
Additional paid-in capital
2,243,779
2,237,948
Retained earnings
1,728,486
1,565,201
Accumulated other comprehensive income (loss)
19,693
(34,105
)
Total stockholders' equity before noncontrolling interest
3,993,247
3,770,330
Noncontrolling interest
3,131
3,035
Total stockholders' equity
3,996,378
3,773,365
Total liabilities and stockholders' equity
$
22,960,731
$
22,388,030
Bank OZK Consolidated Statements of Income Unaudited
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans
$
250,081
$
210,385
$
495,946
$
400,812
Purchased loans
28,519
46,862
58,714
97,839
Investment securities:
Taxable
13,585
11,476
28,481
22,907
Tax-exempt
3,693
4,102
7,567
8,262
Deposits with banks and federal funds sold
941
839
1,354
1,336
Total interest income
296,819
273,664
592,062
531,156
Interest expense:
Deposits
67,392
43,832
130,479
78,224
Repurchase agreements with customers
11
385
33
544
Other borrowings
19
46
1,408
679
Subordinated notes
3,181
3,180
6,326
6,326
Subordinated debentures
1,680
1,560
3,392
2,946
Total interest expense
72,283
49,003
141,638
88,719
Net interest income
224,536
224,661
450,424
442,437
Provision for loan losses
6,769
9,610
13,450
15,177
Net interest income after provision for loan losses
217,767
215,051
436,974
427,260
Non-interest income:
Service charges on deposit accounts
10,291
9,704
20,014
19,229
Trust income
1,839
1,591
3,569
3,384
BOLI income
5,178
5,259
10,340
12,839
Other income from purchased loans
1,455
2,744
2,251
3,995
Loan service, maintenance and other fees
4,565
5,641
9,438
10,384
Net gains on investment securities
713
—
713
17
Gains on sales of other assets
402
844
686
2,270
Other
2,160
1,603
3,664
3,976
Total non-interest income
26,603
27,386
50,675
56,094
Non-interest expense:
Salaries and employee benefits
47,558
41,665
92,425
87,164
Net occupancy and equipment
14,587
13,827
29,338
27,977
Other operating expenses
36,986
33,615
74,046
67,776
Total non-interest expense
99,131
89,107
195,809
182,917
Income before taxes
145,239
153,330
291,840
300,437
Provision for income taxes
34,726
38,589
70,615
72,563
Net income
110,513
114,741
221,225
227,874
Earnings attributable to noncontrolling interest
(10
)
10
(16
)
21
Net income available to common stockholders
$
110,503
$
114,751
$
221,209
$
227,895
Basic earnings per common share
$
0.86
$
0.89
$
1.72
$
1.77
Diluted earnings per common share
$
0.86
$
0.89
$
1.71
$
1.77
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)
Balances – December 31, 2017
$
1,283
$
2,221,844
$
1,250,313
$
(12,712
)
$
3,060
$
3,463,788
Net income
—
—
227,874
—
—
227,874
Earnings attributable to noncontrolling interest
—
—
21
—
(21
)
—
Total other comprehensive loss
—
—
—
(34,201
)
—
(34,201
)
Common stock dividends paid, $0.385 per share
—
—
(49,487
)
—
—
(49,487
)
Issuance of 210,890 shares of common stock for exercise of stock options
2
5,585
—
—
—
5,587
Issuance of 214,591 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
—
7,151
—
—
—
7,151
Forfeitures of 24,864 shares of unvested restricted common stock
—
—
—
—
—
—
Balances – June 30, 2018
$
1,286
$
2,230,809
$
1,428,721
$
(46,913
)
$
3,039
$
3,616,942
Balances – December 31, 2018
$
1,286
$
2,237,948
$
1,565,201
$
(34,105
)
$
3,035
$
3,773,365
Net income
—
—
221,225
—
—
221,225
Earnings attributable to noncontrolling interest
—
—
(16
)
—
16
—
Total other comprehensive income
—
—
—
53,798
—
53,798
Common stock dividends paid, $0.45 per share
—
—
(57,924
)
—
—
(57,924
)
Noncontrolling interest cash contribution
—
—
—
—
80
80
Issuance of 56,550 shares of common stock for exercise of stock options
1
876
—
—
—
877
Issuance of 406,074 shares of unvested restricted common stock
4
(4
)
—
—
—
—
Repurchase and cancellation of 62,742 shares of common stock
(1
)
(1,646
)
—
—
—
(1,647
)
Stock-based compensation expense
—
6,604
—
—
—
6,604
Forfeiture of 64,215 shares of unvested restricted common stock
(1
)
1
—
—
—
—
Balances – June 30, 2019
$
1,289
$
2,243,779
$
1,728,486
$
19,693
$
3,131
$
3,996,378
Bank OZK Summary of Non-Interest Expense Unaudited
Three Months Ended
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
(Dollars in thousands)
Salaries and employee benefits
$
47,558
$
41,665
$
92,425
$
87,164
Net occupancy and equipment
14,587
13,827
29,338
27,977
Other operating expenses:
Professional and outside services
8,105
9,112
16,669
17,817
Software and data processing
4,757
3,110
9,466
6,450
Deposit insurance and assessments
3,488
3,558
7,140
7,120
Telecommunication services
2,810
3,487
6,154
6,683
Travel and meals
2,939
2,498
5,608
4,651
Postage and supplies
2,058
2,218
4,161
4,412
Advertising and public relations
1,671
1,777
3,353
3,107
ATM expense
1,099
1,118
2,086
2,481
Loan collection and repossession expense
918
503
1,901
1,293
Writedowns of foreclosed and other assets
594
460
1,155
611
Amortization of intangibles
3,012
3,145
6,157
6,290
Other
5,535
2,629
10,196
6,861
Total non-interest expense
$
99,131
$
89,107
$
195,809
$
182,917
Bank OZK Summary of Total Loans Outstanding Unaudited
June 30, 2019
December 31, 2018
(Dollars in thousands)
Real estate:
Residential 1-4 family
$
1,017,698
5.8
%
$
1,049,460
6.1
%
Non-farm/non-residential
3,953,882
22.6
4,319,388
25.2
Construction/land development
6,662,921
38.1
6,562,185
38.4
Agricultural
190,348
1.1
165,088
1.0
Multifamily residential
1,411,584
8.1
1,116,026
6.5
Total real estate
13,236,433
75.7
13,212,147
77.2
Commercial and industrial
746,990
4.3
823,417
4.8
Consumer
2,740,344
15.7
2,345,863
13.7
Other
761,438
4.3
736,396
4.3
Total loans
$
17,485,205
100.0
%
$
17,117,823
100.0
%
Summary of Deposits Unaudited
June 30, 2019
December 31, 2018
(Dollars in thousands)
Non-interest bearing
$
2,777,066
15.3
%
$
2,748,273
15.3
%
Interest bearing:
Transaction (NOW)
2,605,606
14.3
2,359,299
13.2
Savings and money market
6,620,591
36.4
7,323,414
40.8
Time deposits less than $100
2,807,587
15.4
2,297,101
12.8
Time deposits of $100 or more
3,375,365
18.6
3,210,328
17.9
Total deposits
$
18,186,215
100.0
%
$
17,938,415
100.0
%
Bank OZK Selected Consolidated Financial Data Unaudited
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
% Change
2019
2018
% Change
(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income
$
224,536
$
224,661
(0.1
)%
$
450,424
$
442,437
1.8
%
Provision for loan losses
6,769
9,610
(29.6
)
13,450
15,177
(11.4
)
Non-interest income
26,603
27,386
(2.9
)
50,675
56,094
(9.7
)
Non-interest expense
99,131
89,107
11.2
195,809
182,917
7.0
Net income available to common stockholders
110,503
114,751
(3.7
)
221,209
227,895
(2.9
)
Common stock data:
Net income per share - diluted
$
0.86
$
0.89
(3.4
)%
$
1.71
$
1.77
(3.4
)%
Net income per share - basic
0.86
0.89
(3.4
)
1.72
1.77
(2.8
)
Cash dividends per share
0.23
0.195
17.9
0.45
0.385
16.9
Book value per share
30.97
28.10
10.2
30.97
28.10
10.2
Tangible book value per share (1)
25.61
22.63
13.2
25.61
22.63
13.2
Diluted shares outstanding (thousands)
129,079
128,804
129,022
128,783
End of period shares outstanding (thousands)
128,947
128,616
128,947
128,616
Balance sheet data at period end:
Total assets
$
22,960,731
$
22,220,380
3.3
%
$
22,960,731
$
22,220,380
3.3
%
Total loans
17,485,205
16,763,874
4.3
17,485,205
16,763,874
4.3
Non-purchased loans
15,786,809
14,183,533
11.3
15,786,809
14,183,533
11.3
Purchased loans
1,698,396
2,580,341
(34.2
)
1,698,396
2,580,341
(34.2
)
Allowance for loan losses
106,642
104,638
1.9
106,642
104,638
1.9
Foreclosed assets
33,467
20,662
62.0
33,467
20,662
62.0
Investment securities
2,560,096
2,617,859
(2.2
)
2,560,096
2,617,859
(2.2
)
Goodwill and other intangible assets, net
690,304
702,751
(1.8
)
690,304
702,751
(1.8
)
Deposits
18,186,215
17,897,085
1.6
18,186,215
17,897,085
1.6
Repurchase agreements with customers
10,909
179,851
(93.9
)
10,909
179,851
(93.9
)
Other borrowings
201,455
1,766
11,307.4
201,455
1,766
11,307.4
Subordinated notes
223,471
223,088
0.2
223,471
223,088
0.2
Subordinated debentures
119,635
119,077
0.5
119,635
119,077
0.5
Unfunded balance of closed loans
11,167,055
11,999,661
(6.9
)
11,167,055
11,999,661
(6.9
)
Total common stockholders' equity
3,993,247
3,613,903
10.5
3,993,247
3,613,903
10.5
Net unrealized gains (losses) on investment securities AFS included in common stockholders' equity
19,693
(46,913
)
19,693
(46,913
)
Loan, including purchased loans, to deposit ratio
96.15
%
93.67
%
96.15
%
93.67
%
Selected ratios:
Return on average assets(2)
1.95
%
2.10
%
1.97
%
2.13
%
Return on average common stockholders' equity(2)
11.29
12.90
11.52
13.03
Return on average tangible common stockholders' equity(1) (2)
13.70
16.08
14.04
16.30
Average common equity to total average assets
17.31
16.30
17.12
16.34
Net interest margin – FTE(2)
4.45
4.66
4.49
4.68
Efficiency ratio
39.30
35.19
38.89
36.52
Net charge-offs to average non-purchased loans(2) (3)
0.12
0.05
0.09
0.04
Net charge-offs to average total loans(2)
0.14
0.07
0.10
0.06
Nonperforming loans to total loans(4)
0.15
0.10
0.15
0.10
Nonperforming assets to total assets(4)
0.25
0.15
0.25
0.15
Allowance for loan losses to non-purchased loans(5)
0.67
0.73
0.67
0.73
Other information:
Non-accrual loans(4)
$
22,860
$
13,543
$
22,860
$
13,543
Accruing loans - 90 days past due(4)
—
—
—
—
Troubled and restructured non-purchased loans - accruing(4)
1,399
—
1,399
—
Impaired purchased loans
15,440
6,577
15,440
6,577
(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
9/30/17
12/31/17
3/31/18
6/30/18
9/30/18
12/31/18
3/31/19
6/30/19
(Dollars in thousands, except per share amount)
Earnings Summary:
Net interest income
$
209,722
$
214,831
$
217,776
$
224,661
$
220,614
$
228,382
$
225,888
$
224,536
Federal tax (FTE) adjustment
3,014
2,450
1,166
1,151
1,132
1,219
1,207
1,136
Net interest income (FTE)
212,736
217,281
218,942
225,812
221,746
229,601
227,095
225,672
Provision for loan losses
(7,777
)
(9,279
)
(5,567
)
(9,610
)
(41,949
)
(7,271
)
(6,681
)
(6,769
)
Non-interest income
32,747
30,213
28,707
27,386
24,121
27,560
24,072
26,603
Non-interest expense
(84,399
)
(86,177
)
(93,810
)
(89,107
)
(102,942
)
(94,893
)
(96,678
)
(99,131
)
Pretax income (FTE)
153,307
152,038
148,272
154,481
100,976
154,997
147,808
146,375
FTE adjustment
(3,014
)
(2,450
)
(1,166
)
(1,151
)
(1,132
)
(1,219
)
(1,207
)
(1,136
)
Provision for income taxes
(54,246
)
(3,434
)
(33,973
)
(38,589
)
(25,665
)
(38,750
)
(35,889
)
(34,726
)
Noncontrolling interest
(40
)
10
11
10
1
3
(6
)
(10
)
Net income available to common stockholders
$
96,007
$
146,164
$
113,144
$
114,751
$
74,180
$
115,031
$
110,706
$
110,503
Earnings per common share – diluted
$
0.75
$
1.14
$
0.88
$
0.89
$
0.58
$
0.89
$
0.86
$
0.86
Non-interest Income:
Service charges on deposit accounts
$
9,729
$
10,058
$
9,525
$
9,704
$
9,730
$
10,585
$
9,722
$
10,291
Trust income
1,755
1,729
1,793
1,591
1,730
1,821
1,730
1,839
BOLI income
4,453
5,166
7,580
5,259
5,321
5,751
5,162
5,178
Other income from purchased loans
2,933
2,009
1,251
2,744
1,418
2,370
795
1,455
Loan service, maintenance and other fees
5,274
4,289
4,743
5,641
4,724
5,245
4,874
4,565
Net gains on investment securities
2,429
1,201
17
—
—
—
—
713
Gains (losses) on sales of other assets
1,363
1,899
1,426
844
(518
)
465
284
402
Other
4,811
3,862
2,372
1,603
1,716
1,323
1,505
2,160
Total non-interest income
$
32,747
$
30,213
$
28,707
$
27,386
$
24,121
$
27,560
$
24,072
$
26,603
Non-interest Expense:
Salaries and employee benefits
$
35,331
$
38,417
$
45,499
$
41,665
$
41,477
$
41,837
$
44,868
$
47,558
Net occupancy expense
13,595
13,474
14,150
13,827
14,358
14,027
14,750
14,587
Other operating expenses
35,473
34,286
34,161
33,615
47,107
39,029
37,060
36,986
Total non-interest expense
$
84,399
$
86,177
$
93,810
$
89,107
$
102,942
$
94,893
$
96,678
$
99,131
Balance Sheet Data:
Total assets
$
20,768,493
$
21,275,647
$
22,039,439
$
22,220,380
$
22,086,539
$
22,388,030
$
23,005,652
$
22,960,731
Non-purchased loans
12,047,094
12,733,937
13,674,561
14,183,533
14,440,623
15,073,791
15,610,681
15,786,809
Purchased loans
3,731,536
3,309,092
2,934,535
2,580,341
2,285,168
2,044,032
1,864,715
1,698,396
Investment securities
1,975,102
2,622,796
2,612,961
2,617,859
2,706,156
2,888,281
2,781,691
2,560,096
Deposits
16,823,359
17,192,345
17,833,672
17,897,085
17,822,915
17,938,415
18,476,868
18,186,215
Unfunded balance of closed loans
12,519,839
13,192,439
12,551,032
11,999,661
11,891,247
11,364,975
11,544,218
11,167,055
Common stockholders' equity
3,334,740
3,460,728
3,526,605
3,613,903
3,653,596
3,770,330
3,882,643
3,993,247
Allowance for Loan Losses:
Balance at beginning of period
$
82,320
$
86,784
$
94,120
$
98,097
$
104,638
$
98,200
$
102,264
$
105,954
Net charge-offs
(3,313
)
(1,943
)
(1,590
)
(3,069
)
(48,387
)
(3,207
)
(2,991
)
(6,081
)
Provision for loan losses
7,777
9,279
5,567
9,610
41,949
7,271
6,681
6,769
Balance at end of period
$
86,784
$
94,120
$
98,097
$
104,638
$
98,200
$
102,264
$
105,954
$
106,642
Selected Ratios:
Net interest margin – FTE(1)
4.84
%
4.72
%
4.69
%
4.66
%
4.47
%
4.55
%
4.53
%
4.45
%
Efficiency ratio
34.38
34.82
37.88
35.19
41.87
36.90
38.49
39.30
Net charge-offs to average non-purchased loans(1) (2)
0.08
0.08
0.04
0.05
1.32
0.06
0.05
0.12
Net charge-offs to average total loans(1)
0.09
0.05
0.04
0.07
1.14
0.07
0.07
0.14
Nonperforming loans to total loans(3)
0.11
0.10
0.09
0.10
0.23
0.23
0.22
0.15
Nonperforming assets to total assets(3)
0.20
0.18
0.16
0.15
0.23
0.23
0.21
0.25
Allowance for loan losses to total non-purchased loans(4)
0.71
0.73
0.71
0.73
0.67
0.67
0.67
0.67
Loans past due 30 days or more, including past due non- accrual loans, to total loans(3)
0.12
0.15
0.14
0.12
0.17
0.28
0.28
0.13
(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 June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
Average Balance
Income/ Expense
Yield/ Rate
(Dollars in thousands)
ASSETS
Earning assets:
Interest earning deposits and federal funds sold
$
118,761
$
941
3.18
%
$
186,103
$
839
1.81
%
$
93,031
$
1,354
2.94
%
$
148,304
$
1,336
1.82
%
Investment securities:
Taxable
2,172,732
13,585
2.51
2,055,737
11,476
2.24
2,241,370
28,481
2.56
2,058,995
22,907
2.24
Tax-exempt – FTE
509,119
4,675
3.68
545,173
5,192
3.82
512,348
9,579
3.77
550,942
10,458
3.83
Non-purchased loans – FTE
15,760,582
250,235
6.37
13,892,522
210,446
6.08
15,622,442
496,276
6.41
13,453,745
400,933
6.01
Purchased loans
1,785,374
28,519
6.41
2,757,235
46,862
6.82
1,866,130
58,714
6.34
2,968,315
97,839
6.65
Total earning assets – FTE
20,346,568
297,955
5.87
19,436,770
274,815
5.67
20,335,321
594,404
5.89
19,180,301
533,473
5.61
Non-interest earning assets
2,342,995
2,446,188
2,280,063
2,403,283
Total assets
$
22,689,563
$
21,882,958
$
22,615,384
$
21,583,584
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction
$
9,640,727
$
37,510
1.56
%
$
10,248,619
$
29,249
1.14
%
$
9,586,233
$
73,613
1.55
%
$
10,054,064
$
51,818
1.04
%
Time deposits of $100 or more
3,137,419
16,698
2.13
3,182,463
11,027
1.39
3,153,873
32,252
2.06
3,109,697
19,808
1.28
Other time deposits
2,580,584
13,184
2.05
1,449,406
3,556
0.98
2,508,405
24,614
1.98
1,447,687
6,598
0.92
Total interest bearing deposits
15,358,730
67,392
1.76
14,880,488
43,832
1.18
15,248,511
130,479
1.73
14,611,448
78,224
1.08
Repurchase agreements with customers
11,101
11
0.41
161,246
385
0.96
16,616
33
0.40
136,975
544
0.80
Other borrowings
70,390
19
0.11
35,573
46
0.52
169,439
1,408
1.68
100,398
679
1.36
Subordinated notes
223,419
3,181
5.71
223,041
3,180
5.72
223,370
6,326
5.71
222,994
6,326
5.72
Subordinated debentures
119,559
1,680
5.64
119,006
1,560
5.26
119,486
3,392
5.72
118,935
2,946
5.00
Total interest bearing liabilities
15,783,199
72,283
1.84
15,419,354
49,003
1.27
15,777,422
141,638
1.81
15,190,750
88,719
1.18
Non-interest bearing liabilities:
Non-interest bearing deposits
2,723,657
2,717,316
2,740,291
2,691,855
Other non-interest bearing liabilities
252,062
176,302
223,491
172,081
Total liabilities
18,758,918
18,312,972
18,741,204
18,054,686
Common stockholders' equity
3,927,522
3,566,944
3,871,065
3,525,849
Noncontrolling interest
3,123
3,042
3,115
3,049
Total liabilities and stockholders' equity
$
22,689,563
$
21,882,958
$
22,615,384
$
21,583,584
Net interest income – FTE
$
225,672
$
225,812
$
452,766
$
444,754
Net interest margin – FTE
4.45
%
4.66
%
4.49
%
4.68
%
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
Six Months Ended
June 30,
June 30,
2019
2018
2019
2018
(Dollars in thousands)
Net income available to common stockholders
$
110,503
$
114,751
$
221,209
$
227,895
Average common stockholders' equity before noncontrolling interest
$
3,927,522
$
3,566,944
$
3,871,065
$
3,525,849
Less average intangible assets:
Goodwill
(660,789
)
(660,789
)
(660,789
)
(660,789
)
Core deposit and other intangibles, net of accumulated amortization
(31,225
)
(43,862
)
(32,822
)
(45,483
)
Total average intangibles
(692,014
)
(704,651
)
(693,611
)
(706,272
)
Average tangible common stockholders' equity
$
3,235,508
$
2,862,293
$
3,177,454
$
2,819,577
Return on average common stockholders' equity(1)
11.29
%
12.90
%
11.52
%
13.03
%
Return on average tangible common stockholders' equity(1)
13.70
%
16.08
%
14.04
%
16.30
%
(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
June 30,
2019
2018
(In thousands, except per share amounts)
Total common stockholders' equity before noncontrolling interest
$
3,993,247
$
3,613,903
Less intangible assets:
Goodwill
(660,789
)
(660,789
)
Core deposit and other intangible assets, net of accumulated amortization
(29,515
)
(41,962
)
Total intangibles
(690,304
)
(702,751
)
Total tangible common stockholders' equity
$
3,302,943
$
2,911,152
Shares of common stock outstanding
128,947
128,616
Book value per common share
$
30.97
$
28.10
Tangible book value per common share
$
25.61
$
22.63
Calculation of Total Tangible Common Stockholders' Equity and the Ratio of Total Tangible Common Stockholders' Equity to Total Tangible Assets Unaudited
June 30,
2019
2018
(Dollars in thousands)
Total common stockholders' equity before noncontrolling interest
$
3,993,247
$
3,613,903
Less intangible assets:
Goodwill
(660,789
)
(660,789
)
Core deposit and other intangible assets, net of accumulated amortization
(29,515
)
(41,962
)
Total intangibles
(690,304
)
(702,751
)
Total tangible common stockholders' equity
$
3,302,943
$
2,911,152
Total assets
$
22,960,731
$
22,220,380
Less intangible assets:
Goodwill
(660,789
)
(660,789
)
Core deposit and other intangible assets, net of accumulated amortization
(29,515
)
(41,962
)
Total intangibles
(690,304
)
(702,751
)
Total tangible assets
$
22,270,427
$
21,517,629
Ratio of total common stockholders' equity to total assets
17.39
%
16.26
%
Ratio of total tangible common stockholders' equity to total tangible assets
