LITTLE ROCK, Ark., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the third quarter of 2020 was $109.3 million, a 5.2% increase from $103.9 million for the third quarter of 2019. Diluted earnings per common share for the third quarter of 2020 were $0.84, a 3.7% increase from $0.81 for the third quarter of 2019.
For the nine months ended September 30, 2020, net income was $171.4 million, a 47.3% decrease from $325.1 million for the first nine months of 2019. Diluted earnings per common share for the first nine months of 2020 were $1.32, a 47.6% decrease from $2.52 for the first nine months of 2019.
Pre-tax pre-provision net revenue (“PPNR”) was $145.7 million for the third quarter of 2020, a 1.0% increase from $144.3 million for the third quarter of 2019. PPNR was $417.0 million for the first nine months of 2020, a 7.3% decrease from $449.6 million for the first nine months 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 the first nine months of 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 provision for credit losses of $7.2 million in the third quarter and $196.9 million in the first nine months of 2020, resulting in a total ACL of $377.3 million at September 30, 2020.
The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the third quarter of 2020 were 1.63%, 10.48% and 12.52%, respectively, compared to 1.81%, 10.22% and 12.33%, respectively, for the third quarter of 2019. The Bank’s annualized returns on average assets, average common stockholder’s equity and average tangible common stockholders’ equity for the first nine months of 2020 were 0.90%, 5.55% and 6.65%, respectively, compared to 1.92%, 11.07%, and 13.44%, respectively, for the first nine months 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, “Our strong credit culture and consistent discipline are important ingredients in our long-term success, and we believe they have positioned us well for the current economic environment and beyond. This is clearly evident in our excellent asset quality and earnings for the quarter just ended.”
KEY BALANCE SHEET METRICS
Total loans were $19.36 billion at September 30, 2020, a 9.2% increase from $17.73 billion at September 30, 2019. Non-purchased loans, which exclude loans acquired in previous acquisitions, were $18.42 billion at September 30, 2020, a 13.0% increase from $16.31 billion at September 30, 2019. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.94 billion at September 30, 2020, a 34.2% decrease from $1.43 billion at September 30, 2019.
Deposits were $21.29 billion at September 30, 2020, a 15.4% increase from $18.44 billion at September 30, 2019. Total assets were $26.89 billion at September 30, 2020, a 14.9% increase from $23.40 billion at September 30, 2019.
Common stockholders’ equity was $4.19 billion at September 30, 2020, a 2.6% increase from $4.08 billion at September 30, 2019. Tangible common stockholders’ equity was $3.51 billion at September 30, 2020, a 3.5% increase from $3.39 billion at September 30, 2019. Book value per common share was $32.37 at September 30, 2020, a 2.3% increase from $31.63 at September 30, 2019. Tangible book value per common share was $27.13 at September 30, 2020, a 3.2% increase from $26.30 at September 30, 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 15.57% at September 30, 2020 compared to 17.43% at September 30, 2019. Its ratio of total tangible common stockholders’ equity to total tangible assets was 13.39% at September 30, 2020 compared to 14.93% at September 30, 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 October 23, 2020. Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call. A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally). The passcode for this playback is 4644917. 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 and 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, 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.”
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 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 allowance for credit losses 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 fluid and evolving nature of the pandemic.
If the health, logistical or economic effects of the 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 actual 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 news 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 coronavirus (COVID-19) pandemic; changes in U.S. Government monetary and fiscal policy, including any changes that result from the upcoming elections in November; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, the Bank’s operational or security systems or infrastructure, or those of third parties with whom it does business, including as a result of cyber-attacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank or its customers; natural disasters or acts of war or terrorism; the adverse effects of the ongoing global COVID-19 pandemic, including the magnitude and duration of the pandemic and actions taken to contain or treat COVID-19, on the Bank, the Bank’s customers, the global economy and financial markets; international or political instability; impairment of 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. Bank OZK was named Best Bank in the South for 2019-2020 by Money, the personal finance news and advice brand. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi. Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811.
| Investor Contact: | Tim Hicks (501) 978-2336 | ||
| Media Contact: | Susan Blair (501) 978-2217 | ||
Bank OZK
Consolidated Balance Sheets
Unaudited
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| (Dollars in thousands, except per share amounts) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 1,934,095 | $ | 1,495,757 | ||||
| Investment securities ― available for sale ("AFS") | 3,468,243 | 2,277,389 | ||||||
| Federal Home Loan Bank of Dallas and other bankers' bank stocks | 38,388 | 21,855 | ||||||
| Non-purchased loans | 18,419,958 | 16,224,539 | ||||||
| Purchased loans | 938,485 | 1,307,504 | ||||||
| Allowance for loan losses | (308,847 | ) | (108,525 | ) | ||||
| Net loans | 19,049,596 | 17,423,518 | ||||||
| Premises and equipment, net | 739,066 | 711,541 | ||||||
| Foreclosed assets | 16,543 | 19,096 | ||||||
| Accrued interest receivable | 85,858 | 75,208 | ||||||
| Bank owned life insurance (“BOLI”) | 753,038 | 738,860 | ||||||
| Goodwill and other intangible assets, net | 677,251 | 684,542 | ||||||
| Other, net | 126,230 | 107,962 | ||||||
| Total assets | $ | 26,888,308 | $ | 23,555,728 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Deposits: | ||||||||
| Demand non-interest bearing | $ | 3,908,207 | $ | 2,795,251 | ||||
| Savings and interest bearing transaction | 7,585,032 | 8,307,607 | ||||||
| Time | 9,794,166 | 7,371,401 | ||||||
| Total deposits | 21,287,405 | 18,474,259 | ||||||
| Repurchase agreements with customers | 4,994 | 11,249 | ||||||
| Other borrowings | 750,949 | 351,387 | ||||||
| Subordinated notes | 223,950 | 223,663 | ||||||
| Subordinated debentures | 120,335 | 119,916 | ||||||
| Reserve for losses on unfunded loan commitments | 68,426 | — | ||||||
| Accrued interest payable and other liabilities | 242,876 | 221,786 | ||||||
| Total liabilities | 22,698,935 | 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 September 30, 2020 or December 31, 2019 | — | — | ||||||
| Common stock; $0.01 par value; 300,000,000 shares authorized; 129,342,073 and 128,951,024 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 1,293 | 1,289 | ||||||
| Additional paid-in capital | 2,261,864 | 2,251,824 | ||||||
| Retained earnings | 1,862,012 | 1,869,983 | ||||||
| Accumulated other comprehensive income | 61,116 | 27,255 | ||||||
| Total stockholders’ equity before noncontrolling interest | 4,186,285 | 4,150,351 | ||||||
| Noncontrolling interest | 3,088 | 3,117 | ||||||
| Total stockholders’ equity | 4,189,373 | 4,153,468 | ||||||
| Total liabilities and stockholders’ equity | $ | 26,888,308 | $ | 23,555,728 | ||||
Bank OZK
Consolidated Statements of Income
Unaudited
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||
| Interest income: | |||||||||||||||
| Non-purchased loans | $ | 236,621 | $ | 244,954 | $ | 701,290 | $ | 740,900 | |||||||
| Purchased loans | 16,269 | 26,042 | 54,743 | 84,756 | |||||||||||
| Investment securities: | |||||||||||||||
| Taxable | 9,666 | 12,511 | 31,480 | 40,992 | |||||||||||
| Tax-exempt | 5,193 | 3,363 | 14,636 | 10,930 | |||||||||||
| Deposits with banks and federal funds sold | 532 | 2,647 | 5,237 | 4,001 | |||||||||||
| Total interest income | 268,281 | 289,517 | 807,386 | 881,579 | |||||||||||
| Interest expense: | |||||||||||||||
| Deposits | 38,273 | 66,248 | 141,206 | 196,727 | |||||||||||
| Repurchase agreements with customers | 4 | 5 | 17 | 39 | |||||||||||
| Other borrowings | 1,156 | 90 | 2,168 | 1,497 | |||||||||||
| Subordinated notes | 3,207 | 3,216 | 9,551 | 9,542 | |||||||||||
| Subordinated debentures | 984 | 1,178 | 3,420 | 4,570 | |||||||||||
| Total interest expense | 43,624 | 70,737 | 156,362 | 212,375 | |||||||||||
| Net interest income | 224,657 | 218,780 | 651,024 | 669,204 | |||||||||||
| Provision for credit losses | 7,200 | 7,854 | 196,889 | 21,303 | |||||||||||
| Net interest income after provision for credit losses | 217,457 | 210,926 | 454,135 | 647,901 | |||||||||||
| Non-interest income: | |||||||||||||||
| Service charges on deposit accounts | 9,427 | 10,827 | 27,717 | 30,841 | |||||||||||
| Trust income | 1,936 | 1,975 | 5,635 | 5,544 | |||||||||||
| BOLI income: | |||||||||||||||
| Increase in cash surrender value | 5,081 | 5,208 | 15,205 | 15,547 | |||||||||||
| Death benefits | — | 206 | 608 | 206 | |||||||||||
| Loan service, maintenance and other fees | 3,351 | 4,197 | 10,461 | 13,636 | |||||||||||
| Other income from purchased loans | — | 674 | — | 2,925 | |||||||||||
| Gains on sales of other assets | 891 | 189 | 1,674 | 875 | |||||||||||
| Net gains on investment securities | 2,244 | — | 4,467 | 713 | |||||||||||
| Other | 3,746 | 3,170 | 10,180 | 6,834 | |||||||||||
| Total non-interest income | 26,676 | 26,446 | 75,947 | 77,121 | |||||||||||
| Non-interest expense: | |||||||||||||||
| Salaries and employee benefits | 53,119 | 48,376 | 153,003 | 140,801 | |||||||||||
| Net occupancy and equipment | 16,676 | 14,825 | 47,761 | 44,163 | |||||||||||
| Other operating expenses | 35,846 | 37,713 | 109,255 | 111,760 | |||||||||||
| Total non-interest expense | 105,641 | 100,914 | 310,019 | 296,724 | |||||||||||
| Income before taxes | 138,492 | 136,458 | 220,063 | 428,298 | |||||||||||
| Provision for income taxes | 29,251 | 32,574 | 48,707 | 103,189 | |||||||||||
| Net income | 109,241 | 103,884 | 171,356 | 325,109 | |||||||||||
| Earnings attributable to noncontrolling interest | 12 | 7 | 29 | (9 | ) | ||||||||||
| Net income available to common stockholders | $ | 109,253 | $ | 103,891 | $ | 171,385 | $ | 325,100 | |||||||
| Basic earnings per common share | $ | 0.84 | $ | 0.81 | $ | 1.33 | $ | 2.52 | |||||||
| Diluted earnings per common share | $ | 0.84 | $ | 0.81 | $ | 1.32 | $ | 2.52 | |||||||
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 September 30, 2020: | ||||||||||||||||||||||||
| Balances – June 30, 2020 | $ | 1,293 | $ | 2,257,867 | $ | 1,788,329 | $ | 63,177 | $ | 3,100 | $ | 4,113,766 | ||||||||||||
| Net income | — | — | 109,241 | — | — | 109,241 | ||||||||||||||||||
| Earnings attributable to noncontrolling interest | — | — | 12 | — | (12 | ) | — | |||||||||||||||||
| Total other comprehensive loss | — | — | — | (2,061 | ) | — | (2,061 | ) | ||||||||||||||||
| Common stock dividends, $0.2725 per share | — | — | (35,570 | ) | — | — | (35,570 | ) | ||||||||||||||||
| Stock-based compensation expense | — | 3,997 | — | — | — | 3,997 | ||||||||||||||||||
| Forfeitures of 8,228 shares of unvested restricted common stock | — | — | — | — | — | — | ||||||||||||||||||
| Balances – September 30, 2020 | $ | 1,293 | $ | 2,261,864 | $ | 1,862,012 | $ | 61,116 | $ | 3,088 | $ | 4,189,373 | ||||||||||||
| Nine months ended September 30, 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 | — | — | 171,356 | — | — | 171,356 | ||||||||||||||||||
| Earnings attributable to noncontrolling interest | — | — | 29 | — | (29 | ) | — | |||||||||||||||||
| Total other comprehensive income | — | — | — | 33,861 | — | 33,861 | ||||||||||||||||||
| Common stock dividends, $0.8025 per share | — | — | (104,012 | ) | — | — | (104,012 | ) | ||||||||||||||||
| Issuance of 4,300 shares of common stock for exercise of stock options | — | 45 | — | — | — | 45 | ||||||||||||||||||
| 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 | — | 11,852 | — | — | — | 11,852 | ||||||||||||||||||
| Forfeitures of 45,139 shares of unvested restricted common stock | — | — | — | — | — | — | ||||||||||||||||||
| Balances – September 30, 2020 | $ | 1,293 | $ | 2,261,864 | $ | 1,862,012 | $ | 61,116 | $ | 3,088 | $ | 4,189,373 | ||||||||||||
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 September 30, 2019: | ||||||||||||||||||||||||
| Balances – June 30, 2019 | $ | 1,289 | $ | 2,243,779 | $ | 1,728,486 | $ | 19,693 | $ | 3,131 | $ | 3,996,378 | ||||||||||||
| Net income | — | — | 103,884 | — | — | 103,884 | ||||||||||||||||||
| Earnings attributable to noncontrolling interest | — | — | 7 | — | (7 | ) | — | |||||||||||||||||
| Total other comprehensive income | — | — | — | 7,955 | — | 7,955 | ||||||||||||||||||
| Common stock dividends, $0.24 per share | — | — | (30,963 | ) | — | — | (30,963 | ) | ||||||||||||||||
| Issuance of 10,800 shares of common stock for exercise of stock options | — | 242 | — | — | — | 242 | ||||||||||||||||||
| Repurchase and cancellation of 974 shares of common stock | — | (28 | ) | — | — | — | (28 | ) | ||||||||||||||||
| Stock-based compensation expense | — | 3,980 | — | — | — | 3,980 | ||||||||||||||||||
| Forfeitures of 10,183 shares of unvested restricted common stock | — | — | — | — | — | — | ||||||||||||||||||
| Balances – September 30, 2019 | $ | 1,289 | $ | 2,247,973 | $ | 1,801,414 | $ | 27,648 | $ | 3,124 | $ | 4,081,448 | ||||||||||||
| Nine months ended September 30, 2019: | ||||||||||||||||||||||||
| Balances – December 31, 2018 | $ | 1,286 | $ | 2,237,948 | $ | 1,565,201 | $ | (34,105 | ) | $ | 3,035 | $ | 3,773,365 | |||||||||||
| Net income | — | — | 325,109 | — | — | 325,109 | ||||||||||||||||||
| Earnings attributable to noncontrolling interest | — | — | (9 | ) | — | 9 | — | |||||||||||||||||
| Total other comprehensive income | — | — | — | 61,753 | — | 61,753 | ||||||||||||||||||
| Common stock dividends, $0.69 per share | — | — | (88,887 | ) | — | — | (88,887 | ) | ||||||||||||||||
| Noncontrolling interest cash contribution | — | — | — | — | 80 | 80 | ||||||||||||||||||
| Issuance of 67,350 shares of common stock for exercise of stock options | 1 | 1,118 | — | — | — | 1,119 | ||||||||||||||||||
| 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 | — | 10,584 | — | — | — | 10,584 | ||||||||||||||||||
| Forfeiture of 74,398 shares of unvested restricted common stock | (1 | ) | 1 | — | — | — | — | |||||||||||||||||
| Balances – September 30, 2019 | $ | 1,289 | $ | 2,247,973 | $ | 1,801,414 | $ | 27,648 | $ | 3,124 | $ | 4,081,448 | ||||||||||||
Bank OZK
Summary of Non-Interest Expense
Unaudited
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Salaries and employee benefits | $ | 53,119 | $ | 48,376 | $ | 153,003 | $ | 140,801 | ||||||||
| Net occupancy and equipment | 16,676 | 14,825 | 47,761 | 44,163 | ||||||||||||
| Other operating expenses: | ||||||||||||||||
| Professional and outside services | 8,647 | 9,204 | 23,629 | 25,874 | ||||||||||||
| Software and data processing | 5,431 | 5,095 | 15,550 | 14,561 | ||||||||||||
| Deposit insurance and assessments | 3,595 | 2,505 | 11,600 | 9,645 | ||||||||||||
| Telecommunication services | 2,352 | 2,094 | 6,863 | 8,248 | ||||||||||||
| Postage and supplies | 1,808 | 2,040 | 5,753 | 6,201 | ||||||||||||
| Advertising and public relations | 1,557 | 2,067 | 4,964 | 5,421 | ||||||||||||
| ATM expense | 1,604 | 1,277 | 3,766 | 3,363 | ||||||||||||
| Travel and meals | 689 | 2,777 | 3,501 | 8,385 | ||||||||||||
| Loan collection and repossession expense | 1,030 | 317 | 2,581 | 2,218 | ||||||||||||
| Writedowns of foreclosed and other assets | 488 | 354 | 2,087 | 1,509 | ||||||||||||
| Amortization of intangibles | 1,914 | 2,907 | 7,291 | 9,064 | ||||||||||||
| Other | 6,731 | 7,076 | 21,670 | 17,271 | ||||||||||||
| Total non-interest expense | $ | 105,641 | $ | 100,914 | $ | 310,019 | $ | 296,724 | ||||||||
Bank OZK
Summary of Total Loans Outstanding
Unaudited
| September 30, 2020 | December 31, 2019 | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Real estate: | ||||||||||||||||
| Residential 1-4 family | $ | 966,462 | 5.0 | % | $ | 998,632 | 5.7 | % | ||||||||
| Non-farm/non-residential | 4,415,477 | 22.8 | 3,956,579 | 22.6 | ||||||||||||
| Construction/land development | 7,406,447 | 38.2 | 6,391,429 | 36.4 | ||||||||||||
| Agricultural | 227,143 | 1.2 | 230,076 | 1.3 | ||||||||||||
| Multifamily residential | 1,346,385 | 7.0 | 1,194,192 | 6.8 | ||||||||||||
| Total real estate | 14,361,914 | 74.2 | 12,770,908 | 72.8 | ||||||||||||
| Commercial and industrial | 944,490 | 4.9 | 661,952 | 3.8 | ||||||||||||
| Consumer | 2,581,035 | 13.3 | 2,934,534 | 16.8 | ||||||||||||
| Other | 1,471,004 | 7.6 | 1,164,649 | 6.6 | ||||||||||||
| Total loans | 19,358,443 | 100.0 | % | 17,532,043 | 100.0 | % | ||||||||||
| Allowance for loan losses | (308,847 | ) | (108,525 | ) | ||||||||||||
| Net loans | $ | 19,049,596 | $ | 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 September 30, 2020: | ||||||||||||
| Balances – June 30, 2020 | $ | 306,196 | $ | 68,298 | $ | 374,494 | ||||||
| Net charge-offs | (4,421 | ) | — | (4,421 | ) | |||||||
| Provision for credit losses | 7,072 | 128 | 7,200 | |||||||||
| Balances – September 30, 2020 | $ | 308,847 | $ | 68,426 | $ | 377,273 | ||||||
| Nine months ended September 30, 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 | (22,653 | ) | — | (22,653 | ) | |||||||
| Provision for credit losses | 183,387 | 13,502 | 196,889 | |||||||||
| Balances – September 30, 2020 | $ | 308,847 | $ | 68,426 | $ | 377,273 | ||||||
| Three months ended September 30, 2019: | ||||||||||||
| Balances – June 30, 2019 | $ | 106,642 | $ | — | $ | 106,642 | ||||||
| Net charge-offs | (5,495 | ) | — | (5,495 | ) | |||||||
| Provision for credit losses | 7,854 | — | 7,854 | |||||||||
| Balances – September 30, 2019 | $ | 109,001 | $ | — | $ | 109,001 | ||||||
| Nine months ended September 30, 2019: | ||||||||||||
| Balances – December 31, 2018 | $ | 102,264 | $ | — | $ | 102,264 | ||||||
| Net charge-offs | (14,566 | ) | — | (14,566 | ) | |||||||
| Provision for credit losses | 21,303 | — | 21,303 | |||||||||
| Balances – September 30, 2019 | $ | 109,001 | $ | — | $ | 109,001 | ||||||
Bank OZK
Summary of Deposits – By Account Type
Unaudited
| September 30, 2020 | December 31, 2019 | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Non-interest bearing | $ | 3,908,207 | 18.4 | % | $ | 2,795,251 | 15.1 | % | ||||||||
| Interest bearing: | ||||||||||||||||
| Transaction (NOW) | 2,973,192 | 14.0 | 2,706,426 | 14.7 | ||||||||||||
| Savings and money market | 4,611,840 | 21.7 | 5,601,181 | 30.3 | ||||||||||||
| Time deposits less than $100 | 3,483,557 | 16.4 | 3,321,446 | 18.0 | ||||||||||||
| Time deposits of $100 or more | 6,310,609 | 29.5 | 4,049,955 | 21.9 | ||||||||||||
| Total deposits | $ | 21,287,405 | 100.0 | % | $ | 18,474,259 | 100.0 | % | ||||||||
Summary of Deposits – By Customer Type
Unaudited
| September 30, 2020 | December 31, 2019 | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Consumer | $ | 10,909,452 | 51.2 | % | $ | 7,526,014 | 40.7 | % | ||||||||
| Commercial | 5,963,072 | 28.0 | 4,334,366 | 23.5 | ||||||||||||
| Public Funds | 2,330,726 | 10.9 | 3,782,415 | 20.5 | ||||||||||||
| Brokered | 1,580,165 | 7.4 | 2,115,193 | 11.4 | ||||||||||||
| Reciprocal | 503,990 | 2.5 | 716,271 | 3.9 | ||||||||||||
| Total deposits | $ | 21,287,405 | 100.0 | % | $ | 18,474,259 | 100.0 | % | ||||||||
Bank OZK
Selected Consolidated Financial Data
Unaudited
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||
| Income statement data: | ||||||||||||||||||||||||
| Net interest income | $ | 224,657 | $ | 218,780 | 2.7 | % | $ | 651,024 | $ | 669,204 | (2.7 | )% | ||||||||||||
| Provision for credit losses | 7,200 | 7,854 | (8.3 | ) | 196,889 | 21,303 | 824.2 | |||||||||||||||||
| Non-interest income | 26,676 | 26,446 | 0.9 | 75,947 | 77,121 | (1.5 | ) | |||||||||||||||||
| Non-interest expense | 105,641 | 100,914 | 4.7 | 310,019 | 296,724 | 4.5 | ||||||||||||||||||
| Net income available to common stockholders | 109,253 | 103,891 | 5.2 | 171,385 | 325,100 | (47.3 | ) | |||||||||||||||||
| Pre-tax pre-provision net revenue (1) | 145,692 | 144,312 | 1.0 | 416,952 | 449,601 | (7.3 | ) | |||||||||||||||||
| Common share and per common share data: | ||||||||||||||||||||||||
| Net income per share − diluted | $ | 0.84 | $ | 0.81 | 3.7 | % | $ | 1.32 | $ | 2.52 | (47.6 | )% | ||||||||||||
| Net income per share − basic | 0.84 | 0.81 | 3.7 | 1.33 | 2.52 | (47.2 | ) | |||||||||||||||||
| Dividends per share | 0.2725 | 0.24 | 13.5 | 0.8025 | 0.69 | 16.3 | ||||||||||||||||||
| Book value per share | 32.37 | 31.63 | 2.3 | 32.37 | 31.63 | 2.3 | ||||||||||||||||||
| Tangible book value per share(1) | 27.13 | 26.30 | 3.2 | 27.13 | 26.30 | 3.2 | ||||||||||||||||||
| Weighted-average diluted shares outstanding (thousands) | 129,470 | 129,012 | 129,398 | 128,995 | ||||||||||||||||||||
| End of period shares outstanding (thousands) | 129,342 | 128,946 | 129,342 | 128,946 | ||||||||||||||||||||
| Balance sheet data at period end: | ||||||||||||||||||||||||
| Total assets | $ | 26,888,308 | $ | 23,402,679 | 14.9 | % | $ | 26,888,308 | $ | 23,402,679 | 14.9 | % | ||||||||||||
| Total loans | 19,358,443 | 17,734,851 | 9.2 | 19,358,443 | 17,734,851 | 9.2 | ||||||||||||||||||
| Non-purchased loans | 18,419,958 | 16,307,621 | 13.0 | 18,419,958 | 16,307,621 | 13.0 | ||||||||||||||||||
| Purchased loans | 938,485 | 1,427,230 | (34.2 | ) | 938,485 | 1,427,230 | (34.2 | ) | ||||||||||||||||
| Allowance for loan losses | 308,847 | 109,001 | 183.3 | 308,847 | 109,001 | 183.3 | ||||||||||||||||||
| Foreclosed assets | 16,543 | 33,319 | (50.3 | ) | 16,543 | 33,319 | (50.3 | ) | ||||||||||||||||
| Investment securities − AFS | 3,468,243 | 2,414,722 | 43.6 | 3,468,243 | 2,414,722 | 43.6 | ||||||||||||||||||
| Goodwill and other intangible assets, net | 677,251 | 687,397 | (1.5 | ) | 677,251 | 687,397 | (1.5 | ) | ||||||||||||||||
| Deposits | 21,287,405 | 18,440,078 | 15.4 | 21,287,405 | 18,440,078 | 15.4 | ||||||||||||||||||
| Other borrowings | 750,949 | 301,421 | 149.1 | 750,949 | 301,421 | 149.1 | ||||||||||||||||||
| Subordinated notes | 223,950 | 223,567 | 0.2 | 223,950 | 223,567 | 0.2 | ||||||||||||||||||
| Subordinated debentures | 120,335 | 119,775 | 0.5 | 120,335 | 119,775 | 0.5 | ||||||||||||||||||
| Unfunded balance of closed loans | 11,604,614 | 11,429,918 | 1.5 | 11,604,614 | 11,429,918 | 1.5 | ||||||||||||||||||
| Reserve for losses on unfunded loan commitments | 68,426 | — | NM | 68,426 | — | NM | ||||||||||||||||||
| Total common stockholders’ equity | 4,186,285 | 4,078,324 | 2.6 | 4,186,285 | 4,078,324 | 2.6 | ||||||||||||||||||
| Net unrealized gains on investment securities AFS included in common stockholders' equity | 61,116 | 27,648 | 61,116 | 27,648 | ||||||||||||||||||||
| Loan (including purchased loans) to deposit ratio | 90.94 | % | 96.18 | % | 90.94 | % | 96.18 | % | ||||||||||||||||
| Selected ratios: | ||||||||||||||||||||||||
| Return on average assets(2) | 1.63 | % | 1.81 | % | 0.90 | % | 1.92 | % | ||||||||||||||||
| Return on average common stockholders’ equity(2) | 10.48 | 10.22 | 5.55 | 11.07 | ||||||||||||||||||||
| Return on average tangible common stockholders’ equity(1) (2) | 12.52 | 12.33 | 6.65 | 13.44 | ||||||||||||||||||||
| Average common equity to total average assets | 15.56 | 17.69 | 16.23 | 17.31 | ||||||||||||||||||||
| Net interest margin – FTE(2) | 3.69 | 4.26 | 3.79 | 4.41 | ||||||||||||||||||||
| Efficiency ratio | 41.77 | 40.98 | 42.38 | 39.58 | ||||||||||||||||||||
| Net charge-offs to average non-purchased loans(2) (3) | 0.09 | 0.07 | 0.07 | 0.08 | ||||||||||||||||||||
| Net charge-offs to average total loans(2) | 0.09 | 0.12 | 0.16 | 0.11 | ||||||||||||||||||||
| Nonperforming loans to total loans(4) | 0.15 | 0.17 | 0.15 | 0.17 | ||||||||||||||||||||
| Nonperforming assets to total assets(4) | 0.17 | 0.26 | 0.17 | 0.26 | ||||||||||||||||||||
| Allowance for loan losses to total loans (5) | 1.60 | 0.61 | 1.60 | 0.61 | ||||||||||||||||||||
| Other information: | ||||||||||||||||||||||||
| Non-accrual loans(4) | $ | 27,181 | $ | 25,552 | $ | 27,181 | $ | 25,552 | ||||||||||||||||
| Accruing loans − 90 days past due(4) | — | — | — | — | ||||||||||||||||||||
| Troubled and restructured non-purchased loans − accruing(4) | 1,251 | 1,510 | 1,251 | 1,510 | ||||||||||||||||||||
| (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 | ||||||||||||
| September 30, | June 30, | |||||||||||
| 2020 | 2020 | % Change | ||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||
| Income statement data: | ||||||||||||
| Net interest income | $ | 224,657 | $ | 216,593 | 3.7 | % | ||||||
| Provision for credit losses | 7,200 | 72,026 | (90.0 | ) | ||||||||
| Non-interest income | 26,676 | 21,591 | 23.6 | |||||||||
| Non-interest expense | 105,641 | 100,953 | 4.6 | |||||||||
| Net income available to common stockholders | 109,253 | 50,266 | 117.3 | |||||||||
| Pre-tax pre-provision net revenue(1) | 145,692 | 137,231 | 6.2 | |||||||||
| Common share and per common share data: | ||||||||||||
| Net income per share − diluted | $ | 0.84 | $ | 0.39 | 115.4 | % | ||||||
| Net income per share − basic | 0.84 | 0.39 | 115.4 | |||||||||
| Dividends per share | 0.2725 | 0.27 | 0.9 | |||||||||
| Book value per share | 32.37 | 31.78 | 1.9 | |||||||||
| Tangible book value per share (1) | 27.13 | 26.53 | 2.3 | |||||||||
| Weighted-average diluted shares outstanding (thousands) | 129,470 | 129,399 | ||||||||||
| End of period shares outstanding (thousands) | 129,342 | 129,350 | ||||||||||
| Balance sheet data at period end: | ||||||||||||
| Total assets | $ | 26,888,308 | $ | 26,380,409 | 1.9 | % | ||||||
| Total loans | 19,358,443 | 19,311,078 | 0.2 | |||||||||
| Non-purchased loans | 18,419,958 | 18,247,431 | 0.9 | |||||||||
| Purchased loans | 938,485 | 1,063,647 | (11.8 | ) | ||||||||
| Allowance for loan losses | 308,847 | 306,196 | 0.9 | |||||||||
| Foreclosed assets | 16,543 | 18,328 | (9.7 | ) | ||||||||
| Investment securities − AFS | 3,468,243 | 3,299,944 | 5.1 | |||||||||
| Goodwill and other intangible assets, net | 677,251 | 679,166 | (0.3 | ) | ||||||||
| Deposits | 21,287,405 | 20,723,598 | 2.7 | |||||||||
| Other borrowings | 750,949 | 903,696 | (16.9 | ) | ||||||||
| Subordinated notes | 223,950 | 223,854 | 0.1 | |||||||||
| Subordinated debentures | 120,335 | 120,194 | 0.1 | |||||||||
| Unfunded balance of closed loans | 11,604,614 | 11,411,441 | 1.7 | |||||||||
| Reserve for losses on unfunded loan commitments | 68,426 | 68,298 | 0.2 | |||||||||
| Total common stockholders’ equity | 4,186,285 | 4,110,666 | 1.8 | |||||||||
| Net unrealized gains on investment securities AFS included in common stockholders' equity | 61,116 | 63,177 | ||||||||||
| Loan (including purchased loans) to deposit ratio | 90.94 | % | 93.18 | % | ||||||||
| Selected ratios: | ||||||||||||
| Return on average assets(2) | 1.63 | % | 0.78 | % | ||||||||
| Return on average common stockholders’ equity(2) | 10.48 | 4.92 | ||||||||||
| Return on average tangible common stockholders’ equity(1) (2) | 12.52 | 5.89 | ||||||||||
| Average common equity to total average assets | 15.56 | 15.93 | ||||||||||
| Net interest margin – FTE(2) | 3.69 | 3.74 | ||||||||||
| Efficiency ratio | 41.77 | 42.07 | ||||||||||
| Net charge-offs to average non-purchased loans(2) (3) | 0.09 | 0.05 | ||||||||||
| Net charge-offs to average total loans(2) | 0.09 | 0.29 | ||||||||||
| Nonperforming loans to total loans(4) | 0.15 | 0.18 | ||||||||||
| Nonperforming assets to total assets(4) | 0.17 | 0.19 | ||||||||||
| Allowance for loan losses to total loans (5) | 1.60 | 1.59 | ||||||||||
| Other information: | ||||||||||||
| Non-accrual loans(4) | $ | 27,181 | $ | 31,083 | ||||||||
| Accruing loans − 90 days past due(4) | — | — | ||||||||||
| Troubled and restructured non-purchased loans − accruing(4) | 1,251 | 934 | ||||||||||
(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
| 12/31/18 | 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | 3/31/20 | 6/30/20 | 9/30/20 | |||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| Earnings Summary: | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 228,382 | $ | 225,888 | $ | 224,536 | $ | 218,780 | $ | 214,977 | $ | 209,775 | $ | 216,593 | $ | 224,657 | ||||||||||||||||
| Federal tax (FTE) adjustment | 1,219 | 1,207 | 1,136 | 1,038 | 1,028 | 1,133 | 1,753 | 1,605 | ||||||||||||||||||||||||
| Net interest income (FTE) | 229,601 | 227,095 | 225,672 | 219,818 | 216,005 | 210,908 | 218,346 | 226,262 | ||||||||||||||||||||||||
| Provision for credit losses | (7,271 | ) | (6,681 | ) | (6,769 | ) | (7,854 | ) | (4,938 | ) | (117,663 | ) | (72,026 | ) | (7,200 | ) | ||||||||||||||||
| Non-interest income | 27,560 | 24,072 | 26,603 | 26,446 | 30,406 | 27,680 | 21,591 | 26,676 | ||||||||||||||||||||||||
| Non-interest expense | (94,893 | ) | (96,678 | ) | (99,131 | ) | (100,914 | ) | (104,406 | ) | (103,425 | ) | (100,953 | ) | (105,641 | ) | ||||||||||||||||
| Pretax income (FTE) | 154,997 | 147,808 | 146,375 | 137,496 | 137,067 | 17,500 | 66,958 | 140,097 | ||||||||||||||||||||||||
| FTE adjustment | (1,219 | ) | (1,207 | ) | (1,136 | ) | (1,038 | ) | (1,028 | ) | (1,133 | ) | (1,753 | ) | (1,605 | ) | ||||||||||||||||
| Provision for income taxes | (38,750 | ) | (35,889 | ) | (34,726 | ) | (32,574 | ) | (35,240 | ) | (4,509 | ) | (14,948 | ) | (29,251 | ) | ||||||||||||||||
| Noncontrolling interest | 3 | (6 | ) | (10 | ) | 7 | 7 | 8 | 9 | 12 | ||||||||||||||||||||||
| Net income available to common stockholders | $ | 115,031 | $ | 110,706 | $ | 110,503 | $ | 103,891 | $ | 100,806 | $ | 11,866 | $ | 50,266 | $ | 109,253 | ||||||||||||||||
| Earnings per common share – diluted | $ | 0.89 | $ | 0.86 | $ | 0.86 | $ | 0.81 | $ | 0.78 | $ | 0.09 | $ | 0.39 | $ | 0.84 | ||||||||||||||||
| Non-interest Income: | ||||||||||||||||||||||||||||||||
| Service charges on deposit accounts | $ | 10,585 | $ | 9,722 | $ | 10,291 | $ | 10,827 | $ | 10,933 | $ | 10,009 | $ | 8,281 | $ | 9,427 | ||||||||||||||||
| Trust income | 1,821 | 1,730 | 1,839 | 1,975 | 2,010 | 1,939 | 1,759 | 1,936 | ||||||||||||||||||||||||
| BOLI income: | ||||||||||||||||||||||||||||||||
| Increase in cash surrender value | 5,269 | 5,162 | 5,178 | 5,208 | 5,167 | 5,067 | 5,057 | 5,081 | ||||||||||||||||||||||||
| Death benefits | 482 | — | — | 206 | 2,989 | 608 | — | — | ||||||||||||||||||||||||
| Loan service, maintenance and other fees | 5,245 | 4,874 | 4,565 | 4,197 | 4,282 | 3,716 | 3,394 | 3,351 | ||||||||||||||||||||||||
| Other income from purchased loans | 2,370 | 795 | 1,455 | 674 | 759 | — | — | — | ||||||||||||||||||||||||
| Gains on sales of other assets | 465 | 284 | 402 | 189 | 1,358 | 161 | 621 | 891 | ||||||||||||||||||||||||
| Net gains on investment securities | — | — | 713 | — | — | 2,223 | — | 2,244 | ||||||||||||||||||||||||
| Other | 1,323 | 1,505 | 2,160 | 3,170 | 2,908 | 3,957 | 2,479 | 3,746 | ||||||||||||||||||||||||
| Total non-interest income | $ | 27,560 | $ | 24,072 | $ | 26,603 | $ | 26,446 | $ | 30,406 | $ | 27,680 | $ | 21,591 | $ | 26,676 | ||||||||||||||||
| Non-interest Expense: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | $ | 41,837 | $ | 44,868 | $ | 47,558 | $ | 48,376 | $ | 52,050 | $ | 51,473 | $ | 48,410 | $ | 53,119 | ||||||||||||||||
| Net occupancy and equipment | 14,027 | 14,750 | 14,587 | 14,825 | 14,855 | 15,330 | 15,756 | 16,676 | ||||||||||||||||||||||||
| Other operating expenses | 39,029 | 37,060 | 36,986 | 37,713 | 37,501 | 36,622 | 36,787 | 35,846 | ||||||||||||||||||||||||
| Total non-interest expense | $ | 94,893 | $ | 96,678 | $ | 99,131 | $ | 100,914 | $ | 104,406 | $ | 103,425 | $ | 100,953 | $ | 105,641 | ||||||||||||||||
| Balance Sheet Data: | ||||||||||||||||||||||||||||||||
| Total assets | $ | 22,388,030 | $ | 23,005,652 | $ | 22,960,731 | $ | 23,402,679 | $ | 23,555,728 | $ | 24,565,810 | $ | 26,380,409 | $ | 26,888,308 | ||||||||||||||||
| Non-purchased loans | 15,073,791 | 15,610,681 | 15,786,809 | 16,307,621 | 16,224,539 | 17,030,378 | 18,247,431 | 18,419,958 | ||||||||||||||||||||||||
| Purchased loans | 2,044,032 | 1,864,715 | 1,698,396 | 1,427,230 | 1,307,504 | 1,197,826 | 1,063,647 | 938,485 | ||||||||||||||||||||||||
| Investment securities – AFS | 2,862,340 | 2,769,602 | 2,548,489 | 2,414,722 | 2,277,389 | 2,816,556 | 3,299,944 | 3,468,243 | ||||||||||||||||||||||||
| Deposits | 17,938,415 | 18,476,868 | 18,186,215 | 18,440,078 | 18,474,259 | 18,809,190 | 20,723,598 | 21,287,405 | ||||||||||||||||||||||||
| Unfunded balance of closed loans | 11,364,975 | 11,544,218 | 11,167,055 | 11,429,918 | 11,325,598 | 11,334,737 | 11,411,441 | 11,604,614 | ||||||||||||||||||||||||
| Common stockholders' equity | 3,770,330 | 3,882,643 | 3,993,247 | 4,078,324 | 4,150,351 | 4,083,150 | 4,110,666 | 4,186,285 | ||||||||||||||||||||||||
Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited
| 12/31/18 | 3/31/19 | 6/30/19 | 9/30/19 | 12/31/19 | 3/31/20 | 6/30/20 | 9/30/20 | |||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
| Allowance for Credit Losses: | ||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 98,200 | $ | 102,264 | $ | 105,954 | $ | 106,642 | $ | 109,001 | $ | 108,525 | $ | 316,409 | $ | 374,494 | ||||||||||||||||
| Adoption of CECL(1) methodology | — | — | — | — | — | 94,512 | — | — | ||||||||||||||||||||||||
| Net charge-offs | (3,207 | ) | (2,991 | ) | (6,081 | ) | (5,495 | ) | (5,414 | ) | (4,291 | ) | (13,941 | ) | (4,421 | ) | ||||||||||||||||
| Provision for credit losses | 7,271 | 6,681 | 6,769 | 7,854 | 4,938 | 117,663 | 72,026 | 7,200 | ||||||||||||||||||||||||
| Balance at end of period | $ | 102,264 | $ | 105,954 | $ | 106,642 | $ | 109,001 | $ | 108,525 | $ | 316,409 | $ | 374,494 | $ | 377,273 | ||||||||||||||||
| Allowance for loan losses | $ | 102,264 | $ | 105,954 | $ | 106,642 | $ | 109,001 | $ | 108,525 | $ | 238,737 | $ | 306,196 | $ | 308,847 | ||||||||||||||||
| Reserve for losses on unfunded loan commitments | — | — | — | — | — | 77,672 | 68,298 | 68,426 | ||||||||||||||||||||||||
| Total allowance for credit losses | $ | 102,264 | $ | 105,954 | $ | 106,642 | $ | 109,001 | $ | 108,525 | $ | 316,409 | $ | 374,494 | $ | 377,273 | ||||||||||||||||
| Selected Ratios: | ||||||||||||||||||||||||||||||||
| Net interest margin – FTE(2) | 4.55 | % | 4.53 | % | 4.45 | % | 4.26 | % | 4.15 | % | 3.96 | % | 3.74 | % | 3.69 | % | ||||||||||||||||
| Efficiency ratio | 36.90 | 38.49 | 39.30 | 40.98 | 42.37 | 43.35 | 42.07 | 41.77 | ||||||||||||||||||||||||
| Net charge-offs to average non-purchased loans(2) (3) | 0.06 | 0.05 | 0.12 | 0.07 | 0.10 | 0.08 | 0.05 | 0.09 | ||||||||||||||||||||||||
| Net charge-offs to average total loans(2) | 0.07 | 0.07 | 0.14 | 0.12 | 0.12 | 0.10 | 0.29 | 0.09 | ||||||||||||||||||||||||
| Nonperforming loans to total loans(4) | 0.23 | 0.22 | 0.15 | 0.17 | 0.15 | 0.16 | 0.18 | 0.15 | ||||||||||||||||||||||||
| Nonperforming assets to total assets(4) | 0.23 | 0.21 | 0.25 | 0.26 | 0.18 | 0.19 | 0.19 | 0.17 | ||||||||||||||||||||||||
| Allowance for loan losses to total loans (5) | 0.60 | 0.61 | 0.61 | 0.61 | 0.62 | 1.31 | 1.59 | 1.60 | ||||||||||||||||||||||||
| Loans past due 30 days or more, including past due non-accrual loans, to total loans(4) | 0.28 | 0.28 | 0.13 | 0.14 | 0.19 | 0.18 | 0.13 | 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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 1,705,652 | $ | 532 | 0.12 | % | $ | 486,174 | $ | 2,647 | 2.16 | % | $ | 1,459,814 | $ | 5,237 | 0.48 | % | $ | 242,476 | $ | 4,001 | 2.21 | % | ||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 2,216,041 | 9,666 | 1.74 | 2,027,267 | 12,511 | 2.45 | 1,979,368 | 31,480 | 2.12 | 2,169,218 | 40,992 | 2.53 | ||||||||||||||||||||||||||||||||||||
| Tax-exempt – FTE | 1,193,407 | 6,573 | 2.19 | 462,927 | 4,256 | 3.65 | 944,552 | 18,527 | 2.62 | 495,694 | 13,835 | 3.73 | ||||||||||||||||||||||||||||||||||||
| Non-purchased loans – FTE | 18,311,166 | 236,846 | 5.15 | 15,934,033 | 245,099 | 6.10 | 17,602,817 | 701,892 | 5.33 | 15,727,447 | 741,375 | 6.30 | ||||||||||||||||||||||||||||||||||||
| Purchased loans | 999,438 | 16,269 | 6.48 | 1,553,398 | 26,042 | 6.65 | 1,132,334 | 54,743 | 6.46 | 1,760,740 | 84,756 | 6.44 | ||||||||||||||||||||||||||||||||||||
| Total earning assets – FTE | 24,425,704 | 269,886 | 4.40 | 20,463,799 | 290,555 | 5.63 | 23,118,885 | 811,879 | 4.69 | 20,395,575 | 884,959 | 5.80 | ||||||||||||||||||||||||||||||||||||
| Non-interest earning assets | 2,235,853 | 2,323,028 | 2,302,225 | 2,277,584 | ||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 26,661,557 | $ | 22,786,827 | $ | 25,421,110 | $ | 22,673,159 | ||||||||||||||||||||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Savings and interest bearing transaction | $ | 7,581,707 | $ | 5,496 | 0.29 | % | $ | 8,792,998 | $ | 30,108 | 1.36 | % | $ | 7,742,865 | $ | 32,945 | 0.57 | % | $ | 9,318,915 | $ | 103,721 | 1.49 | % | ||||||||||||||||||||||||
| Time deposits of $100 or more | 6,101,542 | 20,858 | 1.36 | 3,564,862 | 19,803 | 2.20 | 5,259,616 | 66,813 | 1.70 | 3,292,375 | 52,056 | 2.11 | ||||||||||||||||||||||||||||||||||||
| Other time deposits | 3,664,931 | 11,919 | 1.29 | 3,069,997 | 16,337 | 2.11 | 3,584,047 | 41,448 | 1.54 | 2,697,660 | 40,950 | 2.03 | ||||||||||||||||||||||||||||||||||||
| Total interest bearing deposits | 17,348,180 | 38,273 | 0.88 | 15,427,857 | 66,248 | 1.70 | 16,586,528 | 141,206 | 1.14 | 15,308,950 | 196,727 | 1.72 | ||||||||||||||||||||||||||||||||||||
| Repurchase agreements with customers | 7,093 | 4 | 0.24 | 9,037 | 5 | 0.24 | 7,686 | 17 | 0.29 | 14,062 | 39 | 0.37 | ||||||||||||||||||||||||||||||||||||
| Other borrowings (1) | 793,350 | 1,156 | 0.58 | 29,422 | 90 | 1.21 | 711,408 | 2,168 | 0.41 | 122,254 | 1,497 | 1.64 | ||||||||||||||||||||||||||||||||||||
| Subordinated notes | 223,899 | 3,207 | 5.70 | 223,516 | 3,216 | 5.71 | 223,801 | 9,551 | 5.70 | 223,419 | 9,542 | 5.71 | ||||||||||||||||||||||||||||||||||||
| Subordinated debentures (1) | 120,253 | 984 | 3.26 | 119,700 | 1,178 | 3.90 | 120,119 | 3,420 | 3.80 | 119,558 | 4,570 | 5.11 | ||||||||||||||||||||||||||||||||||||
| Total interest bearing liabilities | 18,492,775 | 43,624 | 0.94 | 15,809,532 | 70,737 | 1.78 | 17,649,542 | 156,362 | 1.18 | 15,788,243 | 212,375 | 1.80 | ||||||||||||||||||||||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-interest bearing deposits | 3,764,063 | 2,728,596 | 3,391,162 | 2,736,350 | ||||||||||||||||||||||||||||||||||||||||||||
| Other non-interest bearing liabilities | 253,211 | 213,505 | 251,723 | 220,126 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 22,510,049 | 18,751,633 | 21,292,427 | 18,744,719 | ||||||||||||||||||||||||||||||||||||||||||||
| Common stockholders’ equity | 4,148,409 | 4,032,066 | 4,125,578 | 3,925,321 | ||||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling interest | 3,099 | 3,128 | 3,105 | 3,119 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 26,661,557 | $ | 22,786,827 | $ | 25,421,110 | $ | 22,673,159 | ||||||||||||||||||||||||||||||||||||||||
| Net interest income – FTE | $ | 226,262 | $ | 219,818 | $ | 655,517 | $ | 672,584 | ||||||||||||||||||||||||||||||||||||||||
| Net interest margin – FTE | 3.69 | % | 4.26 | % | 3.79 | % | 4.41 | % | ||||||||||||||||||||||||||||||||||||||||
(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 third quarter and $0.65 million for the first nine months of 2020 compared to $0.11 million for the third quarter and $0.86 million for the first nine months of 2019. In the absence of this interest capitalization, the rates on other borrowings would have been 0.59% for the third quarter and 0.53% for the first nine months of 2020 and 2.69% for the third quarter and 2.57% for the first nine months of 2019. Capitalized interest included in subordinated debentures totaled $0.01 million for the third quarter and $0.18 million for the first nine months of 2020, compared to $0.45 million for both the third quarter and first nine months of 2019. In the absence of this interest capitalization, the rates on subordinated debentures would have been 3.27% for the third quarter and 4.00% for the first nine months of 2020 and 5.39% for the third quarter and 5.61% for the first nine months of 2019.
Bank OZK
Reconciliation of Non-GAAP Financial Measures
Calculation of Average Tangible Common Stockholders’ Equity
and the Annualized Return on Average Tangible Common Stockholders’ Equity
Unaudited
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Net income available to common stockholders | $ | 109,253 | $ | 103,891 | $ | 50,266 | $ | 171,385 | $ | 325,100 | ||||||||||
| Average common stockholders’ equity before noncontrolling interest | $ | 4,148,409 | $ | 4,032,066 | $ | 4,110,038 | $ | 4,125,578 | $ | 3,925,321 | ||||||||||
| Less average intangible assets: | ||||||||||||||||||||
| Goodwill | (660,789 | ) | (660,789 | ) | (660,789 | ) | (660,789 | ) | (660,789 | ) | ||||||||||
| Core deposit and other intangible assets, net of accumulated amortization | (17,461 | ) | (28,275 | ) | (19,563 | ) | (19,803 | ) | (31,290 | ) | ||||||||||
| Total average intangibles | (678,250 | ) | (689,064 | ) | (680,352 | ) | (680,592 | ) | (692,079 | ) | ||||||||||
| Average tangible common stockholders’ equity | $ | 3,470,159 | $ | 3,343,002 | $ | 3,429,686 | $ | 3,444,986 | $ | 3,233,242 | ||||||||||
| Return on average common stockholders’ equity(1) | 10.48 | % | 10.22 | % | 4.92 | % | 5.55 | % | 11.07 | % | ||||||||||
| Return on average tangible common stockholders’ equity(1) | 12.52 | % | 12.33 | % | 5.89 | % | 6.65 | % | 13.44 | % | ||||||||||
(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
| September 30, | June 30, | |||||||||||
| 2020 | 2019 | 2020 | ||||||||||
| (In thousands, except per share amounts) | ||||||||||||
| Total common stockholders’ equity before noncontrolling interest | $ | 4,186,285 | $ | 4,078,324 | $ | 4,110,666 | ||||||
| Less intangible assets: | ||||||||||||
| Goodwill | (660,789 | ) | (660,789 | ) | (660,789 | ) | ||||||
| Core deposit and other intangible assets, net of accumulated amortization | (16,462 | ) | (26,608 | ) | (18,377 | ) | ||||||
| Total intangibles | (677,251 | ) | (687,397 | ) | (679,166 | ) | ||||||
| Total tangible common stockholders' equity | $ | 3,509,034 | $ | 3,390,927 | $ | 3,431,500 | ||||||
| Shares of common stock outstanding | 129,342 | 128,946 | 129,350 | |||||||||
| Book value per common share | $ | 32.37 | $ | 31.63 | $ | 31.78 | ||||||
| Tangible book value per common share | $ | 27.13 | $ | 26.30 | $ | 26.53 | ||||||
Calculation of Total Tangible Common Stockholders’ Equity
and the Ratio of Total Tangible Common Stockholders’ Equity
to Total Tangible Assets
Unaudited
| September 30, | ||||||||
| 2020 | 2019 | |||||||
| (Dollars in thousands) | ||||||||
| Total common stockholders’ equity before noncontrolling interest | $ | 4,186,285 | $ | 4,078,324 | ||||
| Less intangible assets: | ||||||||
| Goodwill | (660,789 | ) | (660,789 | ) | ||||
| Core deposit and other intangible assets, net of accumulated amortization | (16,462 | ) | (26,608 | ) | ||||
| Total intangibles | (677,251 | ) | (687,397 | ) | ||||
| Total tangible common stockholders' equity | $ | 3,509,034 | $ | 3,390,927 | ||||
| Total assets | $ | 26,888,308 | $ | 23,402,679 | ||||
| Less intangible assets: | ||||||||
| Goodwill | (660,789 | ) | (660,789 | ) | ||||
| Core deposit and other intangible assets, net of accumulated amortization | (16,462 | ) | (26,608 | ) | ||||
| Total intangibles | (677,251 | ) | (687,397 | ) | ||||
| Total tangible assets | $ | 26,211,057 | $ | 22,715,282 | ||||
| Ratio of total common stockholders’ equity to total assets | 15.57 | % | 17.43 | % | ||||
| Ratio of total tangible common stockholders’ equity to total tangible assets | 13.39 | % | 14.93 | % | ||||
Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | June 30, | September 30, | ||||||||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Income before taxes | $ | 138,492 | $ | 136,458 | $ | 65,205 | $ | 220,063 | $ | 428,298 | ||||||||||
| Provision for credit losses | 7,200 | 7,854 | 72,026 | 196,889 | 21,303 | |||||||||||||||
| Pre-tax pre-provision net revenue | $ | 145,692 | $ | 144,312 | $ | 137,231 | $ | 416,952 | $ | 449,601 | ||||||||||