Bank OZK Announces Fourth Quarter and Full Year 2020 Earnings

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LITTLE ROCK, Ark., Jan. 21, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the fourth quarter of 2020 was $120.5 million, a 19.5% increase from $100.8 million for the fourth quarter of 2019. Diluted earnings per common share for the fourth quarter of 2020 were $0.93, a 19.2% increase from $0.78 for the fourth quarter of 2019.

For the full year of 2020, net income was $291.9 million, a 31.5% decrease from $425.9 million for the full year of 2019. Diluted earnings per common share for the full year of 2020 were $2.26, a 31.5% decrease from $3.30 for the full year of 2019.

Pre-tax pre-provision net revenue (“PPNR”) was $162.9 million for the fourth quarter of 2020, a 15.5% increase from $141.0 million for the fourth quarter of 2019. PPNR was $579.8 million for the full year of 2020, a 1.8% decrease from $590.6 million for the full year of 2019. The calculation of PPNR and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

The COVID-19 pandemic significantly affected the global economy in 2020. The sudden and severe economic downturn, combined with the implementation of the current expected credit losses (“CECL”) method to calculate the Bank’s allowance for credit losses (“ACL”) and uncertain future economic projections, resulted in the Bank incurring significant provision for credit losses in the first and second quarters of 2020. The Bank’s provision for credit losses was $203.6 million for the full year of 2020, and the Bank’s ACL was $377.3 million at December 31, 2020.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the fourth quarter of 2020 were 1.79%, 11.36% and 13.53%, respectively, compared to 1.74%, 9.73% and 11.68%, respectively, for the fourth quarter of 2019. The Bank’s returns on average assets, average common stockholder’s equity and average tangible common stockholders’ equity for the full year of 2020 were 1.13%, 7.04% and 8.41%, respectively, compared to 1.87%, 10.72%, and 12.98%, respectively, for the full year of 2019. 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 one of our best quarters ever, highlighted by record quarterly net interest income, our second highest quarterly net income in company history, excellent asset quality and an efficiency ratio among the best in the industry. It was a strong finish to a challenging year. Our strong capital and liquidity, our disciplined credit culture and our exceptional team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $19.21 billion at December 31, 2020, a 9.6% increase from $17.53 billion at December 31, 2019, but a 0.8% decrease from $19.36 billion at September 30, 2020. Non-purchased loans were $18.40 billion at December 31, 2020, a 13.4% increase from $16.22 billion at December 31, 2019, but a 0.1% decrease from $18.42 billion at September 30, 2020. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.81 billion at December 31, 2020, a 38.2% decrease from $1.31 billion at December 31, 2019.

Deposits were $21.45 billion at December 31, 2020, a 16.1% increase from $18.47 billion at December 31, 2019. Total assets were $27.16 billion at December 31, 2020, a 15.3% increase from $23.56 billion at December 31, 2019.

Common stockholders’ equity was $4.27 billion at December 31, 2020, a 2.9% increase from $4.15 billion at December 31, 2019. Tangible common stockholders’ equity was $3.60 billion at December 31, 2020, a 3.8% increase from $3.47 billion at December 31, 2019. Book value per common share was $33.03 at December 31, 2020, a 2.6% increase from $32.19 at December 31, 2019. Tangible book value per common share was $27.81 at December 31, 2020, a 3.5% increase 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 15.73% at December 31, 2020 compared to 17.62% at December 31, 2019. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.59% at December 31, 2020 compared to 15.15% at December 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 January 22, 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 passcode for this playback is 7995612. 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.”

STATEMENT REGARDING IMPACT OF COVID-19 PANDEMIC

The Bank prioritizes the health and safety of its employees and customers, and it will continue to do so throughout the duration of the COVID-19 pandemic. At the same time, the Bank remains focused on increasing shareholder value, managing credit exposure, managing expenses, enhancing the customer experience and supporting the communities it serves.

In management’s comments on its quarterly results (released simultaneously with this news release) and in its earnings conference call, the Bank has sought and will seek to describe the historical and future impact of the COVID-19 pandemic on the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations, including the information and discussions regarding its provision and ACL and the discussion regarding its net interest margin. Although the Bank believes that the statements that pertain to future events, results and trends and their impact on the Bank’s business are reasonable at the present time, those statements are not historical facts and are based upon current assumptions, expectations, estimates and projections, many of which, by their nature, are beyond the Bank’s control. Accordingly, all discussions regarding future events, results and trends and their impact on the Bank’s business, even in the near term, are necessarily uncertain given the evolving nature of the COVID-19 pandemic.

If the health, logistical or economic effects of the COVID-19 pandemic worsen, or if the assumptions, expectations, estimates or projections that underlie the Bank’s statements regarding future effects or trends prove to be incorrect, then the Bank’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations may be materially and adversely impacted in ways that the Bank cannot reasonably forecast. Accordingly, when reading this release and the accompanying prepared remarks from management on its quarterly results and when listening to the earnings conference call, undue reliance should not be placed upon any statement pertaining to future events, results and trends and their impact on the Bank’s business in future periods.

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 and any similar or related rules and regulations; changes in U.S. Government monetary and fiscal policy, including any changes that result from the recent U.S. elections; 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 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, including the effects from the adoption of the CECL methodology 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. 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, South 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

December 31,

2020

2019

(Dollars in thousands, except per share amounts)

ASSETS

Cash and cash equivalents

$

2,393,662

$

1,495,757

Investment securities ― available for sale ("AFS")

3,405,351

2,277,389

Federal Home Loan Bank of Dallas and other bankers' bank stocks

38,486

21,855

Non-purchased loans

18,401,495

16,224,539

Purchased loans

807,673

1,307,504

Allowance for loan losses

(295,824

)

(108,525

)

Net loans

18,913,344

17,423,518

Premises and equipment, net

738,842

711,541

Foreclosed assets

11,085

19,096

Accrued interest receivable

88,077

75,208

Bank owned life insurance (“BOLI”)

758,071

738,860

Goodwill and other intangible assets, net

675,458

684,542

Other, net

140,220

107,962

Total assets

$

27,162,596

$

23,555,728

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits:

Demand non-interest bearing

$

3,996,546

$

2,795,251

Savings and interest bearing transaction

8,160,982

8,307,607

Time

9,292,828

7,371,401

Total deposits

21,450,356

18,474,259

Repurchase agreements with customers

8,013

11,249

Other borrowings

750,928

351,387

Subordinated notes

224,047

223,663

Subordinated debentures

120,475

119,916

Reserve for losses on unfunded loan commitments

81,481

Accrued interest payable and other liabilities

251,940

221,786

Total liabilities

22,887,240

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 December 31, 2020 or 2019

Common stock; $0.01 par value; 300,000,000 shares authorized;
129,350,448 and 128,951,024 shares issued and outstanding at
December 31, 2020 and 2019, respectively

1,294

1,289

Additional paid-in capital

2,265,850

2,251,824

Retained earnings

1,946,875

1,869,983

Accumulated other comprehensive income

58,252

27,255

Total stockholders’ equity before noncontrolling interest

4,272,271

4,150,351

Noncontrolling interest

3,085

3,117

Total stockholders’ equity

4,275,356

4,153,468

Total liabilities and stockholders’ equity

$

27,162,596

$

23,555,728

Bank OZK
Consolidated Statements of Income
Unaudited

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

(Dollars in thousands, except per share amounts)

Interest income:

Non-purchased loans

$

243,064

$

240,912

$

944,354

$

981,811

Purchased loans

16,069

22,152

70,812

106,908

Investment securities:

Taxable

9,066

11,820

40,547

52,812

Tax-exempt

4,767

3,323

19,403

14,252

Deposits with banks and federal funds sold

428

2,756

5,665

6,758

Total interest income

273,394

280,963

1,080,781

1,162,541

Interest expense:

Deposits

30,607

61,631

171,813

258,358

Repurchase agreements with customers

6

11

23

50

Other borrowings

1,011

34

3,179

1,531

Subordinated notes

3,207

3,216

12,758

12,757

Subordinated debentures

963

1,094

4,384

5,664

Total interest expense

35,794

65,986

192,157

278,360

Net interest income

237,600

214,977

888,624

884,181

Provision for credit losses

6,750

4,938

203,639

26,241

Net interest income after provision for credit losses

230,850

210,039

684,985

857,940

Non-interest income:

Service charges on deposit accounts

9,983

10,933

37,699

41,774

Trust income

1,909

2,010

7,544

7,554

BOLI income:

Increase in cash surrender value

5,034

5,167

20,239

20,715

Death benefits

2,989

608

3,194

Loan service, maintenance and other fees

3,797

4,282

14,257

17,917

Other income from purchased loans

759

3,684

Gains on sales of other assets

5,189

1,358

6,863

2,233

Net gains on investment securities

4,467

713

Other

2,749

2,908

12,931

9,743

Total non-interest income

28,661

30,406

104,608

107,527

Non-interest expense:

Salaries and employee benefits

53,832

52,050

206,834

192,851

Net occupancy and equipment

15,617

14,855

63,379

59,018

Other operating expenses

33,945

37,501

143,200

149,261

Total non-interest expense

103,394

104,406

413,413

401,130

Income before taxes

156,117

136,039

376,180

564,337

Provision for income taxes

35,607

35,240

84,314

138,429

Net income

120,510

100,799

291,866

425,908

Earnings attributable to noncontrolling interest

3

7

32

(2

)

Net income available to common stockholders

$

120,513

$

100,806

$

291,898

$

425,906

Basic earnings per common share

$

0.93

$

0.78

$

2.26

$

3.30

Diluted earnings per common share

$

0.93

$

0.78

$

2.26

$

3.30

Bank OZK
Consolidated Statements of Stockholders’ Equity
Unaudited

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Non-
Controlling
Interest

Total

(Dollars in thousands, except per share amounts)

Three months ended December 31, 2020:

Balances – September 30, 2020

$

1,293

$

2,261,864

$

1,862,012

$

61,116

$

3,088

$

4,189,373

Net income

120,510

120,510

Earnings attributable to noncontrolling
interest

3

(3

)

Total other comprehensive loss

(2,864

)

(2,864

)

Common stock dividends,
$0.275 per share

(35,650

)

(35,650

)

Issuance of 39,900 shares of common
stock for exercise of stock options

991

991

Stock-based compensation expense

2,996

2,996

Forfeitures of 31,525 shares of unvested
restricted common stock

1

(1

)

Balances – December 31, 2020

$

1,294

$

2,265,850

$

1,946,875

$

58,252

$

3,085

$

4,275,356

Year ended December 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

291,866

291,866

Earnings attributable to noncontrolling
interest

32

(32

)

Total other comprehensive income

30,997

30,997

Common stock dividends,
$1.0775 per share

(139,662

)

(139,662

)

Issuance of 44,200 shares of common
stock for exercise of stock options

1,036

1,036

Issuance of 493,761 shares of unvested
restricted common stock

5

(5

)

Repurchase and cancellation of 61,873
shares of common stock

(1

)

(1,852

)

(1,853

)

Stock-based compensation expense

14,848

14,848

Forfeitures of 76,664 shares of unvested
restricted common stock

1

(1

)

Balances – December 31, 2020

$

1,294

$

2,265,850

$

1,946,875

$

58,252

$

3,085

$

4,275,356

Bank OZK
Consolidated Statements of Stockholders’ Equity (Continued)
Unaudited

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Non-
Controlling
Interest

Total

(Dollars in thousands, except per share amounts)

Three months ended December 31, 2019:

Balances – September 30, 2019

$

1,289

$

2,247,973

$

1,801,414

$

27,648

$

3,124

$

4,081,448

Net income

100,799

100,799

Earnings attributable to noncontrolling interest

7

(7

)

Total other comprehensive loss

(393

)

(393

)

Common stock dividends, $0.25 per
share

(32,237

)

(32,237

)

Issuance of 16,150 shares of common
stock for exercise of stock options

266

266

Stock-based compensation expense

3,585

3,585

Forfeitures of 11,485 shares of unvested
restricted common stock

Balances – December 31, 2019

$

1,289

$

2,251,824

$

1,869,983

$

27,255

$

3,117

$

4,153,468

Year ended December 31, 2019:

Balances – December 31, 2018

$

1,286

$

2,237,948

$

1,565,201

$

(34,105

)

$

3,035

$

3,773,365

Net income

425,908

425,908

Earnings attributable to noncontrolling
interest

(2

)

2

Total other comprehensive income

61,360

61,360

Common stock dividends, $0.94
per share

(121,124

)

(121,124

)

Noncontrolling interest cash contribution

80

80

Issuance of 83,500 shares of common
stock for exercise of stock options

1

1,384

1,385

Issuance of 406,074 shares of unvested
restricted common stock

4

(4

)

Repurchase and cancellation of 63,716
shares of common stock

(1

)

(1,674

)

(1,675

)

Stock-based compensation expense

14,169

14,169

Forfeiture of 85,883 shares of unvested
restricted common stock

(1

)

1

Balances – December 31, 2019

$

1,289

$

2,251,824

$

1,869,983

$

27,255

$

3,117

$

4,153,468

Bank OZK
Summary of Non-Interest Expense
Unaudited

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

2020

2019

(Dollars in thousands)

Salaries and employee benefits

$

53,832

$

52,050

$

206,834

$

192,851

Net occupancy and equipment

15,617

14,855

63,379

59,018

Other operating expenses:

Professional and outside services

7,345

7,156

30,974

33,030

Software and data processing

5,729

4,974

21,279

19,535

Deposit insurance and assessments

3,647

3,780

15,247

13,425

Telecommunication services

2,296

2,335

9,159

10,583

Postage and supplies

1,709

2,483

7,462

8,684

Advertising and public relations

1,086

1,822

6,050

7,242

ATM expense

1,490

1,263

5,256

4,626

Travel and meals

835

2,845

4,336

11,230

Loan collection and repossession expense

481

600

3,062

2,818

Writedowns of foreclosed and other assets

1,582

910

3,669

2,419

Amortization of intangibles

1,794

2,854

9,085

11,918

Other

5,951

6,479

27,621

23,751

Total non-interest expense

$

103,394

$

104,406

$

413,413

$

401,130

Bank OZK
Summary of Total Loans Outstanding
Unaudited

December 31,

2020

2019

(Dollars in thousands)

Real estate:

Residential 1-4 family

$

911,115

4.7

%

$

998,632

5.7

%

Non-farm/non-residential

4,213,636

21.9

3,956,579

22.6

Construction/land development

8,046,978

41.9

6,391,429

36.4

Agricultural

204,868

1.1

230,076

1.3

Multifamily residential

856,297

4.5

1,194,192

6.8

Total real estate

14,232,894

74.1

12,770,908

72.8

Commercial and industrial

842,206

4.4

661,952

3.8

Consumer

2,393,964

12.5

2,934,534

16.8

Other

1,740,104

9.0

1,164,649

6.6

Total loans

19,209,168

100.0

%

17,532,043

100.0

%

Allowance for loan losses

(295,824

)

(108,525

)

Net loans

$

18,913,344

$

17,423,518

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 December 31, 2020:

Balances – September 30, 2020

$

308,847

$

68,426

$

377,273

Net charge-offs

(6,718

)

(6,718

)

Provision for credit losses

(6,305

)

13,055

6,750

Balances – December 31, 2020

$

295,824

$

81,481

$

377,305

Year ended December 31, 2020:

Balances – December 31, 2019

$

108,525

$

$

108,525

Adoption of Current Expected Credit Loss (CECL) methodology

39,588

54,924

94,512

Balances – January 1, 2020

148,113

54,924

203,037

Net charge-offs

(29,371

)

(29,371

)

Provision for credit losses

177,082

26,557

203,639

Balances – December 31, 2020

$

295,824

$

81,481

$

377,305

Three months ended December 31, 2019:

Balances – September 30, 2019

$

109,001

$

$

109,001

Net charge-offs

(5,414

)

(5,414

)

Provision for credit losses

4,938

4,938

Balances – December 31, 2019

$

108,525

$

$

108,525

Year ended December 31, 2019:

Balances – December 31, 2018

$

102,264

$

$

102,264

Net charge-offs

(19,980

)

(19,980

)

Provision for credit losses

26,241

26,241

Balances – December 31, 2019

$

108,525

$

$

108,525

Bank OZK
Summary of Deposits – By Account Type
Unaudited

December 31,

2020

2019

(Dollars in thousands)

Non-interest bearing

$

3,996,546

18.6

%

$

2,795,251

15.1

%

Interest bearing:

Transaction (NOW)

3,124,007

14.6

2,706,426

14.7

Savings and money market

5,036,975

23.5

5,601,181

30.3

Time deposits less than $100

3,075,845

14.3

3,321,446

18.0

Time deposits of $100 or more

6,216,983

29.0

4,049,955

21.9

Total deposits

$

21,450,356

100.0

%

$

18,474,259

100.0

%

Summary of Deposits – By Customer Type
Unaudited

December 31,

2020

2019

(Dollars in thousands)

Consumer

$

11,165,603

52.1

%

$

7,526,014

40.7

%

Commercial

6,056,536

28.2

4,334,366

23.5

Public Funds

2,111,971

9.8

3,782,415

20.5

Brokered

1,600,116

7.5

2,115,193

11.4

Reciprocal

516,130

2.4

716,271

3.9

Total deposits

$

21,450,356

100.0

%

$

18,474,259

100.0

%

Bank OZK
Selected Consolidated Financial Data
Unaudited

Three Months Ended

Year Ended

December 31,

December 31,

2020

2019

% Change

2020

2019

% Change

(Dollars in thousands, except per share amounts)

Income statement data:

Net interest income

$

237,600

$

214,977

10.5

%

$

888,624

$

884,181

0.5

%

Provision for credit losses

6,750

4,938

36.7

203,639

26,241

676.0

Non-interest income

28,661

30,406

(5.7

)

104,608

107,527

(2.7

)

Non-interest expense

103,394

104,406

(1.0

)

413,413

401,130

3.1

Net income available to common stockholders

120,513

100,806

19.5

291,898

425,906

(31.5

)

Pre-tax pre-provision net revenue(1)

162,867

140,977

15.5

579,819

590,578

(1.8

)

Common share and per common share data:

Net income per share − diluted

$

0.93

$

0.78

19.2

%

$

2.26

$

3.30

(31.5

)%

Net income per share − basic

0.93

0.78

19.2

2.26

3.30

(31.5

)

Dividends per share

0.275

0.25

10.0

1.0775

0.94

14.6

Book value per share

33.03

32.19

2.6

33.03

32.19

2.6

Tangible book value per share(1)

27.81

26.88

3.5

27.81

26.88

3.5

Weighted-average diluted shares outstanding (thousands)

129,523

129,036

129,435

129,006

End of period shares outstanding (thousands)

129,350

128,951

129,350

128,951

Balance sheet data at period end:

Total assets

$

27,162,596

$

23,555,728

15.3

%

$

27,162,596

$

23,555,728

15.3

%

Total loans

19,209,168

17,532,043

9.6

19,209,168

17,532,043

9.6

Non-purchased loans

18,401,495

16,224,539

13.4

18,401,495

16,224,539

13.4

Purchased loans

807,673

1,307,504

(38.2

)

807,673

1,307,504

(38.2

)

Allowance for loan losses

295,824

108,525

172.6

295,824

108,525

172.6

Foreclosed assets

11,085

19,096

(42.0

)

11,085

19,096

(42.0

)

Investment securities − AFS

3,405,351

2,277,389

49.5

3,405,351

2,277,389

49.5

Goodwill and other intangible assets, net

675,458

684,542

(1.3

)

675,458

684,542

(1.3

)

Deposits

21,450,356

18,474,259

16.1

21,450,356

18,474,259

16.1

Other borrowings

750,928

351,387

113.7

750,928

351,387

113.7

Subordinated notes

224,047

223,663

0.2

224,047

223,663

0.2

Subordinated debentures

120,475

119,916

0.5

120,475

119,916

0.5

Unfunded balance of closed loans

11,847,117

11,325,598

4.6

11,847,117

11,325,598

4.6

Reserve for losses on unfunded loan commitments

81,481

NM

81,481

NM

Total common stockholders’ equity

4,272,271

4,150,351

2.9

4,272,271

4,150,351

2.9

Net unrealized gains on investment securities AFS
included in common stockholders' equity

58,252

27,255

58,252

27,255

Loan (including purchased loans) to deposit ratio

89.55

%

94.90

%

89.55

%

94.90

%

Selected ratios:

Return on average assets(2)

1.79

%

1.74

%

1.13

%

1.87

%

Return on average common stockholders’ equity(2)

11.36

9.73

7.04

10.72

Return on average tangible common stockholders’ equity(1) (2)

13.53

11.68

8.41

12.98

Average common equity to total average assets

15.74

17.86

16.10

17.45

Net interest margin – FTE(2)

3.88

4.15

3.81

4.34

Efficiency ratio

38.61

42.37

41.37

40.27

Net charge-offs to average non-purchased loans(2) (3)

0.14

0.10

0.09

0.09

Net charge-offs to average total loans(2)

0.14

0.12

0.16

0.11

Nonperforming loans to total loans(4)

0.25

0.15

0.25

0.15

Nonperforming assets to total assets(4)

0.21

0.18

0.21

0.18

Allowance for loan losses to total loans(5)

1.54

0.62

1.54

0.62

Other information:

Non-accrual loans(4)

$

45,162

$

23,221

$

45,162

$

23,221

Accruing loans − 90 days past due(4)

Troubled and restructured non-purchased loans − accruing(4)

1,483

656

1,483

656


(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.

NM – Not meaningful

Selected Consolidated Financial Data (continued)
Unaudited

Three Months Ended

December 31,

September 30,

2020

2020

% Change

(Dollars in thousands, except per share amounts)

Income statement data:

Net interest income

$

237,600

$

224,657

5.8

%

Provision for credit losses

6,750

7,200

(6.3

)

Non-interest income

28,661

26,676

7.4

Non-interest expense

103,394

105,641

(2.1

)

Net income available to common stockholders

120,513

109,253

10.3

Pre-tax pre-provision net revenue(1)

162,867

145,692

11.8

Common share and per common share data:

Net income per share − diluted

$

0.93

$

0.84

10.7

%

Net income per share − basic

0.93

0.84

10.7

Dividends per share

0.275

0.2725

0.9

Book value per share

33.03

32.37

2.0

Tangible book value per share(1)

27.81

27.13

2.5

Weighted-average diluted shares outstanding (thousands)

129,523

129,470

End of period shares outstanding (thousands)

129,350

129,342

Balance sheet data at period end:

Total assets

$

27,162,596

$

26,888,308

1.0

%

Total loans

19,209,168

19,358,443

(0.8

)

Non-purchased loans

18,401,495

18,419,958

(0.1

)

Purchased loans

807,673

938,485

(13.9

)

Allowance for loan losses

295,824

308,847

(4.2

)

Foreclosed assets

11,085

16,543

(33.0

)

Investment securities − AFS

3,405,351

3,468,243

(1.8

)

Goodwill and other intangible assets, net

675,458

677,251

(0.3

)

Deposits

21,450,356

21,287,405

0.8

Other borrowings

750,928

750,949

0.1

Subordinated notes

224,047

223,950

0.1

Subordinated debentures

120,475

120,335

0.1

Unfunded balance of closed loans

11,847,117

11,604,614

2.1

Reserve for losses on unfunded loan commitments

81,481

68,426

19.1

Total common stockholders’ equity

4,272,271

4,186,285

2.1

Net unrealized gains on investment securities AFS
included in common stockholders' equity

58,252

61,116

Loan (including purchased loans) to deposit ratio

89.55

%

90.94

%

Selected ratios:

Return on average assets(2)

1.79

%

1.63

%

Return on average common stockholders’ equity(2)

11.36

10.48

Return on average tangible common stockholders’ equity(1) (2)

13.53

12.52

Average common equity to total average assets

15.74

15.56

Net interest margin – FTE(2)

3.88

3.69

Efficiency ratio

38.61

41.77

Net charge-offs to average non-purchased loans(2) (3)

0.14

0.09

Net charge-offs to average total loans(2)

0.14

0.09

Nonperforming loans to total loans(4)

0.25

0.15

Nonperforming assets to total assets(4)

0.21

0.17

Allowance for loan losses to total loans(5)

1.54

1.60

Other information:

Non-accrual loans(4)

$

45,162

$

27,181

Accruing loans − 90 days past due(4)

Troubled and restructured non-purchased loans − accruing(4)

1,483

1,251


(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

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

9/30/20

12/31/20

(Dollars in thousands, except per share amounts)

Earnings Summary:

Net interest income

$

225,888

$

224,536

$

218,780

$

214,977

$

209,775

$

216,593

$

224,657

$

237,600

Federal tax (FTE) adjustment

1,207

1,136

1,038

1,028

1,133

1,753

1,605

1,533

Net interest income (FTE)

227,095

225,672

219,818

216,005

210,908

218,346

226,262

239,133

Provision for credit losses

(6,681

)

(6,769

)

(7,854

)

(4,938

)

(117,663

)

(72,026

)

(7,200

)

(6,750

)

Non-interest income

24,072

26,603

26,446

30,406

27,680

21,591

26,676

28,661

Non-interest expense

(96,678

)

(99,131

)

(100,914

)

(104,406

)

(103,425

)

(100,953

)

(105,641

)

(103,394

)

Pretax income (FTE)

147,808

146,375

137,496

137,067

17,500

66,958

140,097

157,650

FTE adjustment

(1,207

)

(1,136

)

(1,038

)

(1,028

)

(1,133

)

(1,753

)

(1,605

)

(1,533

)

Provision for income taxes

(35,889

)

(34,726

)

(32,574

)

(35,240

)

(4,509

)

(14,948

)

(29,251

)

(35,607

)

Noncontrolling interest

(6

)

(10

)

7

7

8

9

12

3

Net income available to common stockholders

$

110,706

$

110,503

$

103,891

$

100,806

$

11,866

$

50,266

$

109,253

$

120,513

Earnings per common share – diluted

$

0.86

$

0.86

$

0.81

$

0.78

$

0.09

$

0.39

$

0.84

$

0.93

Non-interest Income:

Service charges on deposit accounts

$

9,722

$

10,291

$

10,827

$

10,933

$

10,009

$

8,281

$

9,427

$

9,983

Trust income

1,730

1,839

1,975

2,010

1,939

1,759

1,936

1,909

BOLI income:

Increase in cash surrender value

5,162

5,178

5,208

5,167

5,067

5,057

5,081

5,034

Death benefits

206

2,989

608

Loan service, maintenance and other fees

4,874

4,565

4,197

4,282

3,716

3,394

3,351

3,797

Other income from purchased loans

795

1,455

674

759

Gains on sales of other assets

284

402

189

1,358

161

621

891

5,189

Net gains on investment securities

713

2,223

2,244

Other

1,505

2,160

3,170

2,908

3,957

2,479

3,746

2,749

Total non-interest income

$

24,072

$

26,603

$

26,446

$

30,406

$

27,680

$

21,591

$

26,676

$

28,661

Non-interest Expense:

Salaries and employee benefits

$

44,868

$

47,558

$

48,376

$

52,050

$

51,473

$

48,410

$

53,119

$

53,832

Net occupancy and equipment

14,750

14,587

14,825

14,855

15,330

15,756

16,676

15,617

Other operating expenses

37,060

36,986

37,713

37,501

36,622

36,787

35,846

33,945

Total non-interest expense

$

96,678

$

99,131

$

100,914

$

104,406

$

103,425

$

100,953

$

105,641

$

103,394

Balance Sheet Data:

Total assets

$

23,005,652

$

22,960,731

$

23,402,679

$

23,555,728

$

24,565,810

$

26,380,409

$

26,888,308

$

27,162,596

Non-purchased loans

15,610,681

15,786,809

16,307,621

16,224,539

17,030,378

18,247,431

18,419,958

18,401,495

Purchased loans

1,864,715

1,698,396

1,427,230

1,307,504

1,197,826

1,063,647

938,485

807,673

Investment securities – AFS

2,769,602

2,548,489

2,414,722

2,277,389

2,816,556

3,299,944

3,468,243

3,405,351

Deposits

18,476,868

18,186,215

18,440,078

18,474,259

18,809,190

20,723,598

21,287,405

21,450,356

Unfunded balance of closed loans

11,544,218

11,167,055

11,429,918

11,325,598

11,334,737

11,411,441

11,604,614

11,847,117

Common stockholders' equity

3,882,643

3,993,247

4,078,324

4,150,351

4,083,150

4,110,666

4,186,285

4,272,271

Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

3/31/19

6/30/19

9/30/19

12/31/19

3/31/20

6/30/20

9/30/20

12/31/20

(Dollars in thousands, except per share amounts)

Allowance for Credit Losses:

Balance at beginning of period

$

102,264

$

105,954

$

106,642

$

109,001

$

108,525

$

316,409

$

374,494

$

377,273

Adoption of CECL(1) methodology

94,512

Net charge-offs

(2,991

)

(6,081

)

(5,495

)

(5,414

)

(4,291

)

(13,941

)

(4,421

)

(6,718

)

Provision for credit losses

6,681

6,769

7,854

4,938

117,663

72,026

7,200

6,750

Balance at end of period

$

105,954

$

106,642

$

109,001

$

108,525

$

316,409

$

374,494

$

377,273

$

377,305

Allowance for loan losses

$

105,954

$

106,642

$

109,001

$

108,525

$

238,737

$

306,196

$

308,847

$

295,824

Reserve for losses on unfunded loan commitments

77,672

68,298

68,426

81,481

Total allowance for credit losses

$

105,954

$

106,642

$

109,001

$

108,525

$

316,409

$

374,494

$

377,273

$

377,305

Selected Ratios:

Net interest margin – FTE(2)

4.53

%

4.45

%

4.26

%

4.15

%

3.96

%

3.74

%

3.69

%

3.88

%

Efficiency ratio

38.49

39.30

40.98

42.37

43.35

42.07

41.77

38.61

Net charge-offs to average non-purchased loans(2) (3)

0.05

0.12

0.07

0.10

0.08

0.05

0.09

0.14

Net charge-offs to average total loans(2)

0.07

0.14

0.12

0.12

0.10

0.29

0.09

0.14

Nonperforming loans to total loans(4)

0.22

0.15

0.17

0.15

0.16

0.18

0.15

0.25

Nonperforming assets to total assets(4)

0.21

0.25

0.26

0.18

0.19

0.19

0.17

0.21

Allowance for loan losses to total loans (5)

0.61

0.61

0.61

0.62

1.31

1.59

1.60

1.54

Loans past due 30 days or more, including
past due non-accrual loans, to total loans(4)

0.28

0.13

0.14

0.19

0.18

0.13

0.13

0.16


(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 December 31,

Year Ended December 31,

2020

2019

2020

2019

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

$

1,762,810

$

428

0.10

%

$

668,403

$

2,756

1.64

%

$

1,535,977

$

5,665

0.37

%

$

353,528

$

6,758

1.91

%

Investment securities:

Taxable

2,036,253

9,066

1.77

1,892,693

11,820

2.48

1,993,667

40,547

2.03

2,099,522

52,812

2.52

Tax-exempt – FTE

1,485,224

6,034

1.62

457,026

4,207

3.65

1,080,459

24,561

2.27

485,946

18,041

3.71

Non-purchased loans – FTE

18,378,050

243,330

5.27

16,260,467

241,056

5.88

17,797,684

945,222

5.31

15,861,797

982,430

6.19

Purchased loans

881,372

16,069

7.25

1,365,846

22,152

6.43

1,069,250

70,812

6.62

1,661,205

106,908

6.44

Total earning assets – FTE

24,543,709

274,927

4.46

20,644,435

281,991

5.42

23,477,037

1,086,807

4.63

20,461,998

1,166,949

5.70

Non-interest earning assets

2,258,105

2,370,753

2,291,135

2,297,372

Total assets

$

26,801,814

$

23,015,188

$

25,768,172

$

22,759,370

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest bearing liabilities: