Bank OZK Announces First Quarter 2022 Earnings

LITTLE ROCK, Ark., April 21, 2022 (GLOBE NEWSWIRE) — Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income available to common shareholders for the first quarter of 2022 was $128.0 million, a 13.7% decrease from $148.4 million for the first quarter of 2021. Diluted earnings per common share for the first quarter of 2022 were $1.02, a 10.5% decrease from $1.14 for the first quarter of 2021.

The Bank’s provision for credit losses was $4.2 million for the first quarter of 2022 compared to negative provision for credit losses of $31.6 million for the first quarter of 2021. Its total allowance for credit losses (“ACL”) was $293.5 million at March 31, 2022. The calculations of the Bank’s provision expense for the first quarter of 2022 and its total ACL at March 31, 2022 were based on a number of key estimates, assumptions and economic forecasts. The Bank’s provision for the first quarter of 2022 and its ACL at March 31, 2022 included certain qualitative adjustments to capture risks that management thought were not fully reflected in its modeled results.

During the fourth quarter of 2021, the Bank completed its public offering of 4.625% Series A Non-Cumulative Perpetual Preferred Stock (“Series A Preferred Stock”) and, during the first quarter of 2022, the Bank paid a Series A Preferred Stock dividend of $4.5 million.

Non-interest income for the first quarter of 2022 included gains on sales of other assets of $7.0 million, of which $1.8 million was a gain from the sale of the Bank’s Magnolia, Arkansas branch. The Bank had $0.3 million of Bank Owned Life Insurance (“BOLI”) death benefits in the first quarter of 2022. Non-interest income for the first quarter of 2021 included gains on sales of other assets of $5.8 million, of which $4.4 million was from the sale of the Bank’s South Carolina branches. The Bank had $1.4 million in BOLI death benefits in the first quarter of 2021.

Pre-tax pre-provision net revenue (“PPNR”) was $173.1 million for the first quarter of 2022, a 7.7% increase from $160.7 million for the first quarter of 2021. The calculation of PPNR and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first quarter of 2022 were 1.97%, 11.67% and 13.73%, respectively, compared to 2.23%, 13.97% and 16.57%, respectively, for the first quarter of 2021. The calculation of the Bank’s returns on average common stockholders’ equity and average tangible common stockholders’ equity and the reconciliations to GAAP are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer stated, “We are pleased to report our excellent results for the first quarter of 2022. Our results were highlighted by our second consecutive quarter of record RESG loan originations, reflecting the importance of organic growth in our long-term strategy. Our strong capital and liquidity, disciplined credit culture and outstanding team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $18.93 billion at March 31, 2022, a 1.2% increase from $18.72 billion at March 31, 2021. Non-purchased loans were $18.45 billion at March 31, 2022, a 2.6% increase from $17.98 billion at March 31, 2021. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.48 billion at March 31, 2022, a 34.6% decrease from $0.74 billion at March 31, 2021.

Deposits were $20.33 billion at March 31, 2022, a 4.5% decrease from $21.30 billion at March 31, 2021. Total assets were $26.56 billion at March 31, 2022, a 2.6% decrease from $27.28 billion at March 31, 2021.

Common stockholders’ equity was $4.35 billion at March 31, 2022, a 0.7% decrease from $4.38 billion at March 31, 2021. Tangible common stockholders’ equity was $3.68 billion at March 31, 2022, a 0.7% decrease from $3.71 billion at March 31, 2021. Book value per common share was $35.47 at March 31, 2022, a 5.0% increase from $33.79 at March 31, 2021. Tangible book value per common share was $30.03 at March 31, 2022, a 5.0% increase from $28.60 at March 31, 2021. The calculations of the Bank’s common stockholders’ equity, tangible common stockholders’ equity and tangible book value per common share and the reconciliations to GAAP are included in the schedules accompanying this release.

The Bank’s ratio of total common stockholders’ equity to total assets was 16.38% at March 31, 2022, compared to 16.07% at March 31, 2021. Its ratio of total tangible common stockholders’ equity to total tangible assets was 14.22% at March 31, 2022, compared to 13.94% at March 31, 2021. 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.

STOCK REPURCHASES

During the quarter just ended, the Bank repurchased approximately 2.9 million of its common shares at a weighted average repurchase price of $45.61, for a total of $131.6 million. In evaluating its plans for future stock repurchases, the Bank considers a variety of factors including its capital position, alternative uses of capital, liquidity, financial performance, stock price, regulatory requirements and other factors. The Bank may suspend its stock repurchase program at any time.

MANAGEMENT’S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS

In connection with this release, the Bank released management’s comments on its quarterly results, which are available at http://ir.ozk.com. This release should be read in conjunction with management’s comments on the quarterly results.

Management will conduct a conference call to take questions on these quarterly results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on April 22, 2022. Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call. A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally). The conference ID for this playback is 8028109. 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 with the Federal Deposit Insurance Corporation (“FDIC”) annual, quarterly and current reports, proxy materials and other information required by the Securities Exchange Act of 1934, 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 common stockholders’ equity, total tangible common stockholders’ equity, the ratio of total tangible common stockholders’ equity to total tangible assets, and PPNR, to assess the strength of its capital, its ability to generate earnings on tangible capital invested by its shareholders and trends in its net revenue. These measures typically adjust GAAP financial measures to exclude intangible assets or provision for credit losses. Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP performance measures that may be presented by other banks. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

FORWARD-LOOKING STATEMENTS

This presentation 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 in 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 of or decrease the 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 transition from the London Interbank Offered Rate (“LIBOR”) as a reference rate; 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 actions in response to the coronavirus (“COVID-19”) pandemic such as the Coronavirus Aid, Relief and Economic Security Act, the Consolidated Appropriations Act of 2021, the American Rescue Plan Act of 2021, and any similar or related laws, rules and regulations; changes in U.S. government monetary and fiscal policy; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding maintaining cybersecurity; the impact of failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do 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 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 the financial markets; potential impact of supply chain disruptions or inflation; national, international or political instability or military conflict, including the ongoing war in Ukraine; the competition and costs of recruiting and retaining human talent; impairment of our goodwill or other intangible assets; adoption of new accounting standards, or changes in existing standards; and adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions or rulings as well as other factors identified in this communication or as detailed from time to time in our public filings, including those factors described in the disclosures under the headings “Forward-Looking Information” and “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 and our 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 described 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 with over 240 offices in eight states including Arkansas, Georgia, Florida, North Carolina, Texas, California, New York and Mississippi. Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 


Bank OZK
Consolidated Balance Sheets
Unaudited

    March 31,     December 31,  
    2022     2021  
    (Dollars in thousands, except per share amounts)  
ASSETS                
Cash and cash equivalents   $ 1,605,812     $ 2,053,829  
Investment securities ― available for sale (“AFS”)     3,728,284       3,916,733  
Investment securities ― trading           14,957  
Federal Home Loan Bank of Dallas and other bankers’ bank stocks     40,876       40,788  
Non-purchased loans     18,449,723       17,791,610  
Purchased loans     481,299       516,215  
Allowance for loan losses     (204,213 )     (217,380 )
Net loans     18,726,809       18,090,445  
Premises and equipment, net     693,748       695,857  
Foreclosed assets     3,417       5,744  
Accrued interest receivable     83,114       83,025  
Bank owned life insurance (“BOLI”)     779,271       774,822  
Goodwill and other intangible assets, net     667,546       669,063  
Other, net     233,476       185,167  
Total assets   $ 26,562,353     $ 26,530,430  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Deposits:                
Demand non-interest bearing   $ 5,008,742     $ 4,983,788  
Savings and interest bearing transaction     9,753,148       9,245,727  
Time     5,567,772       5,979,619  
Total deposits     20,329,662       20,209,134  
Other borrowings     756,347       756,321  
Subordinated notes     346,333       346,133  
Subordinated debentures     121,171       121,033  
Reserve for losses on unfunded loan commitments     89,327       71,609  
Accrued interest payable and other liabilities     226,344       186,840  
Total liabilities     21,869,184       21,691,070  
                 
Commitments and contingencies                
                 
Stockholders’ equity:                
Preferred stock; $0.01 par value; 100,000,000 shares authorized; 14,000,000 issued and outstanding at March 31, 2022 and December 31, 2021     338,980       338,980  
Common stock; $0.01 par value; 300,000,000 shares authorized; 122,677,195 and 125,443,748 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively     1,227       1,254  
Additional paid-in capital     1,962,126       2,093,702  
Retained earnings     2,468,652       2,378,466  
Accumulated other comprehensive (loss) income     (80,928 )     23,841  
Total stockholders’ equity before noncontrolling interest     4,690,057       4,836,243  
Noncontrolling interest     3,112       3,117  
Total stockholders’ equity     4,693,169       4,839,360  
Total liabilities and stockholders’ equity   $ 26,562,353     $ 26,530,430  


Bank OZK
Consolidated Statements of Income
Unaudited

  Three Months Ended
March 31,
 
  2022     2021  
  (Dollars in thousands, except per share amounts)  
Interest income:              
Non-purchased loans $ 239,995     $ 239,827  
Purchased loans   8,170       11,935  
Investment securities:              
Taxable   10,611       8,083  
Tax-exempt   2,986       3,681  
Deposits with banks and federal funds sold   609       538  
Total interest income   262,371       264,064  
               
Interest expense:              
Deposits   8,492       24,350  
Other borrowings   998       990  
Subordinated notes   2,574       3,146  
Subordinated debentures   964       942  
Total interest expense   13,028       29,428  
               
Net interest income   249,343       234,636  
Provision for credit losses   4,190       (31,559 )
Net interest income after provision for credit losses   245,153       266,195  
               
Non-interest income:              
Service charges on deposit accounts:              
NSF/Overdraft fees   4,201       3,323  
All other service charges   6,690       6,342  
Trust income   2,094       2,206  
BOLI income:              
Increase in cash surrender value   4,793       4,881  
Death benefits   297       1,409  
Loan service, maintenance and other fees   3,018       3,551  
Gains on sales of other assets   6,992       5,828  
Net (losses) gains on investment securities   (90 )      
Other   3,480       4,577  
Total non-interest income   31,475       32,117  
               
Non-interest expense:              
Salaries and employee benefits   54,648       53,645  
Net occupancy and equipment   17,215       16,468  
Other operating expenses   35,852       35,946  
Total non-interest expense   107,715       106,059  
               
Income before taxes   168,913       192,253  
Provision for income taxes   36,410       43,818  
Net income   132,503       148,435  
Earnings attributable to noncontrolling interest   5       (19 )
Preferred stock dividends   4,480        
Net income available to common stockholders $ 128,028     $ 148,416  
               
Basic earnings per common share $ 1.03     $ 1.15  
               
Diluted earnings per common share $ 1.02     $ 1.14  


Bank OZK
Consolidated Statements of Stockholders’ Equity
Unaudited

  Preferred
Stock
    Common
Stock
    Additional
Paid-In
Capital
    Retained
Earnings
    Accumulated
Other
Comprehensive
(Loss) Income
    Non-
Controlling
Interest
    Total  
  (Dollars in thousands, except per share amounts)  
Three months ended March 31, 2022:                                          
Balances – December 31, 2021 $ 338,980     $ 1,254     $ 2,093,702     $ 2,378,466     $ 23,841     $ 3,117     $ 4,839,360  
Net income                     132,503                   132,503  
Earnings attributable to noncontrolling interest                     5             (5 )      
Total other comprehensive loss                           (104,769 )           (104,769 )
Preferred stock dividends, $0.32 per share                     (4,480 )                 (4,480 )
Common stock dividends, $0.30 per share                     (37,842 )                 (37,842 )
Issuance of 49,020 shares of common stock for exercise of stock options         1       1,486                         1,487  
Issuance of 199,406 shares of unvested restricted common stock         2       (2 )                        
Repurchase and cancellation of 2,883,013 shares of common stock under share repurchase program         (29 )     (131,536 )                       (131,565 )
Repurchase and cancellation of 112,974 shares of common stock withheld for taxes pursuant to restricted stock vesting         (1 )     (5,398 )                       (5,399 )
Stock-based compensation expense               3,874                         3,874  
Forfeitures of 18,992 shares of unvested restricted common stock                                        
Balances – March 31, 2022 $ 338,980     $ 1,227     $ 1,962,126     $ 2,468,652     $ (80,928 )   $ 3,112     $ 4,693,169  
                                                       
Three months ended March 31, 2021:                                                      
Balances – December 31, 2020 $     $ 1,294     $ 2,265,850     $ 1,946,875     $ 58,252     $ 3,085     $ 4,275,356  
Net income                     148,435                   148,435  
Earnings attributable to noncontrolling interest                     (19 )           19        
Total other comprehensive loss                           (7,788 )           (7,788 )
Common stock dividends, $0.2775 per share                     (35,893 )                 (35,893 )
Issuance of 128,100 shares of common stock for exercise of stock options         1       4,492                         4,493  
Issuance of 312,503 shares of unvested restricted common stock         3       (3 )                        
Repurchase and cancellation of 55,740 shares of common stock withheld for taxes pursuant to restricted stock vesting         (1 )     (1,970 )                       (1,971 )
Stock-based compensation expense               3,677                         3,677  
Forfeitures of 16,405 shares of unvested restricted common stock                                        
Balances – March 31, 2021 $     $ 1,297     $ 2,272,046     $ 2,059,398     $ 50,464     $ 3,104     $ 4,386,309  


Bank OZK
Summary of Non-Interest Expense
Unaudited

    Three Months Ended
March 31,
 
    2022     2021  
    (Dollars in thousands)  
Salaries and employee benefits   $ 54,648     $ 53,645  
Net occupancy and equipment     17,215       16,468  
Other operating expenses:                
Professional and outside services     7,082       6,326  
Software and data processing     5,921       5,792  
Deposit insurance and assessments     2,150       3,520  
Telecommunication services     2,010       2,232  
Travel and meals     1,758       774  
Postage and supplies     1,698       1,645  
ATM expense     1,509       1,283  
Advertising and public relations     1,259       308  
Loan collection and repossession expense     325       509  
Writedowns of foreclosed and other assets     258       1,363  
Amortization of intangibles     1,517       1,730  
Amortization of CRA and tax credit investments     5,102       4,125  
Other     5,263       6,339  
Total non-interest expense   $ 107,715     $ 106,059  


Bank OZK
Summary of Total Loans Outstanding
Unaudited

                                 
    March 31, 2022     December 31, 2021  
    (Dollars in thousands)  
                                 
Real estate:                                
Residential 1-4 family   $ 921,310       4.9 %   $ 887,024       4.8 %
Non-farm/non-residential     3,942,133       20.8       3,782,892       20.7  
Construction/land development     8,752,873       46.2       8,246,674       45.0  
Agricultural     256,462       1.4       247,727       1.4  
Multifamily residential     761,634       4.0       934,845       5.1  
Total real estate     14,634,412       77.3       14,099,162       77.0  
Commercial and industrial     440,203       2.3       510,784       2.8  
Consumer     2,257,909       11.9       2,185,429       11.9  
Other     1,598,498       8.5       1,512,450       8.3  
Total loans     18,931,022       100.0 %     18,307,825       100.0 %
Allowance for loan losses     (204,213 )             (217,380 )        
Net loans   $ 18,726,809             $ 18,090,445          


Bank OZK
Allowance for Credit Losses
Unaudited

                         
    Allowance for
Loan Losses
    Reserve for
Losses on
Unfunded Loan Commitments
    Total Allowance
for Credit Losses
 
    (Dollars in thousands)  
Three months ended March 31, 2022:                        
Balances – December 31, 2021   $ 217,380     $ 71,609     $ 288,989  
Net charge-offs     361             361  
Provision for credit losses     (13,528 )     17,718       4,190  
Balances – March 31, 2022   $ 204,213     $ 89,327     $ 293,540  
                         
Three months ended March 31, 2021:                        
Balances – December 31, 2020   $ 295,824     $ 81,481     $ 377,305  
Net charge-offs     (3,439 )           (3,439 )
Provision for credit losses     (24,308 )     (7,251 )     (31,559 )
Balances – March 31, 2021   $ 268,077     $ 74,230     $ 342,307  


Bank OZK
Summary of Deposits – By Account Type
Unaudited

                                 
    March 31, 2022     December 31, 2021  
    (Dollars in thousands)  
Non-interest bearing   $ 5,008,742       24.6 %   $ 4,983,788       24.7 %
Interest bearing:                                
Transaction (NOW)     3,434,321       16.9       3,412,369       16.9  
Savings and money market     6,318,827       31.1       5,833,358       28.9  
Time deposits     5,567,772       27.4       5,979,619       29.5  
Total deposits   $ 20,329,662       100.0 %   $ 20,209,134       100.0 %


Summary of Deposits – By Customer Type
Unaudited

       
    March 31, 2022     December 31, 2021  
    (Dollars in thousands)  
Non-Interest Bearing   $ 5,008,742       24.6 %   $ 4,983,788       24.7 %
Interest Bearing:                                
Consumer and Commercial:                                
Consumer – Non-Time     4,491,178       22.1       4,334,378       21.4  
Consumer – Time     4,089,074       20.1       4,318,742       21.4  
Commercial – Non-Time     2,645,789       13.0       2,634,817       13.0  
Commercial – Time     792,562       3.9       905,347       4.5  
Public Funds     2,043,667       10.1       2,094,800       10.4  
Brokered     754,979       3.7       452,137       2.2  
Reciprocal     503,671       2.5       485,125       2.4  
Total deposits   $ 20,329,662       100.0 %   $ 20,209,134       100.0 %



Bank OZK
Selected Consolidated Financial Data
Unaudited

    Three Months Ended
March 31,
 
    2022     2021     % Change  
    (Dollars in thousands, except per share amounts)  
Income statement data:                        
Net interest income   $ 249,343     $ 234,636       6.3 %
Provision for credit losses     4,190       (31,559 )   NM  
Non-interest income     31,475       32,117       (2.0 )
Non-interest expense     107,715       106,059       1.6  
Net income     132,503       148,435       (10.7 )
Preferred stock dividends     4,480           NM  
Net income available to common stockholders     128,028       148,416       (13.7 )
Pre-tax pre-provision net revenue (1)     173,103       160,694       7.7  
Common share and per common share data:                        
Diluted earnings per common share   $ 1.02     $ 1.14       (10.5 )%
Basic earnings per common share     1.03       1.15       (10.4 )
Common stock dividends per share     0.30       0.2775       8.1  
Book value per share     35.47       33.79       5.0  
Tangible book value per share (1)     30.03       28.60       5.0  
Weighted-average diluted shares outstanding (thousands)     125,004       129,816       (3.7 )
End of period shares outstanding (thousands)     122,677       129,719       (5.4 )
Balance sheet data at period end:                        
Total assets   $ 26,562,353     $ 27,276,892       (2.6 )%
Total loans     18,931,022       18,715,065       1.2  
Non-purchased loans     18,449,723       17,979,435       2.6  
Purchased loans     481,299       735,630       (34.6 )
Allowance for loan losses     204,213       268,077       (23.8 )
Foreclosed assets     3,417       8,436       (59.5 )
Investment securities − AFS     3,728,284       4,162,479       (10.4 )
Goodwill and other intangible assets, net     667,546       673,728       (0.9 )
Deposits     20,329,662       21,296,442       (4.5 )
Other borrowings     756,347       756,297       0.0  
Subordinated notes     346,333       224,141       54.5  
Subordinated debentures     121,171       120,613       0.5  
Unfunded balance of closed loans     14,954,367       11,780,099       26.9  
Reserve for losses on unfunded loan commitments     89,327       74,230       20.3  
Preferred stock     338,980           NM  
Total common stockholders’ equity (1)     4,351,077       4,383,205       (0.7 )
Net unrealized (losses) gains on investment securities AFS included in stockholders’ equity     (80,928 )     50,464          
Loan (including purchased loans) to deposit ratio     93.12 %     87.88 %        
Selected ratios:                        
Return on average assets (2)     1.97 %     2.23 %        
Return on average common stockholders’ equity (1) (2)     11.67       13.97          
Return on average tangible common stockholders’ equity (1) (2)     13.73       16.57          
Average common equity to total average assets     16.86       15.93          
Net interest margin – FTE (2)     4.24       3.86          
Efficiency ratio     38.22       39.57          
Net charge-offs to average non-purchased loans (2) (3)     0.08       0.08          
Net charge-offs to average total loans (2)     (0.01 )     0.07          
Nonperforming loans to total loans (4)     0.21       0.25          
Nonperforming assets to total assets (4)     0.16       0.19          
Allowance for loan losses to total loans (5)     1.08       1.43          
Other information:                        
Non-accrual loans (4)   $ 37,363     $ 43,059          
Accruing loans − 90 days past due (4)                    
Troubled and restructured non-purchased loans − accruing (4)     1,263       1,380          

(1) Calculations of pre-tax pre-provision net revenue, total common stockholders’ equity, tangible book value per common share and returns on average common stockholders’ equity and 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  
    March 31,     December 31,          
    2022     2021     % Change  
  (Dollars in thousands, except per share amounts)  
Income statement data:                        
Net interest income   $ 249,343     $ 266,381       (6.4 )%
Provision for credit losses     4,190       (7,992 )   NM  
Non-interest income     31,475       29,695       6.0  
Non-interest expense     107,715       110,106       (2.2 )
Net income     132,503       149,765       (11.5 )
Preferred stock dividends     4,480           NM  
Net income available to common stockholders     128,028       149,760       (14.5 )
Pre-tax pre-provision net revenue (1)     173,103       185,970       (6.9 )
Common share and per common share data:                        
Diluted earnings per common share   $ 1.02     $ 1.17       (12.8 )%
Basic earnings per common share     1.03       1.17       (12.0 )
Dividends per share     0.30       0.290       3.4  
Book value per share     35.47       35.85       (1.1 )
Tangible book value per share (1)     30.03       30.52       (1.6 )
Weighted-average diluted shares outstanding (thousands)     125,004       128,246       (2.5 )
End of period shares outstanding (thousands)     122,677       125,444       (2.2 )
Balance sheet data at period end:                        
Total assets   $ 26,562,353     $ 26,530,430       0.1 %
Total loans     18,931,022       18,307,825       3.4  
Non-purchased loans     18,449,723       17,791,610       3.7  
Purchased loans     481,299       516,215       (6.8 )
Allowance for loan losses     204,213       217,380       (6.1 )
Foreclosed assets     3,417       5,744       (40.5 )
Investment securities − AFS     3,728,284       3,916,733       (4.8 )
Goodwill and other intangible assets, net     667,546       669,063       (0.2 )
Deposits     20,329,662       20,209,134       0.6  
Other borrowings     756,347       756,321       0.0  
Subordinated notes     346,333       346,133       0.1  
Subordinated debentures     121,171       121,033       0.1  
Unfunded balance of closed loans     14,954,367       13,619,578       9.8  
Reserve for losses on unfunded loan commitments     89,327       71,609       24.7  
Preferred stock     338,980       338,980        
Total common stockholders’ equity (1)     4,351,077       4,497,263       (3.3 )
Net unrealized gains on investment securities AFS included in stockholders’ equity     (80,928 )     23,841          
Loan (including purchased loans) to deposit ratio     93.12 %     90.59 %        
Selected ratios:                        
Return on average assets (2)     1.97 %     2.25 %        
Return on average common stockholders’ equity (1) (2)     11.67       13.08          
Return on average tangible common stockholders’ equity (1) (2)     13.73       15.34          
Net interest margin – FTE (2)     4.24       4.41          
Efficiency ratio     38.22       37.06          
Net charge-offs to average non-purchased loans (2) (3)     0.08       0.05          
Net charge-offs to average total loans (2)     (0.01 )     0.04          
Nonperforming loans to total loans (4)     0.21       0.19          
Nonperforming assets to total assets (4)     0.16       0.15          
Allowance for loan losses to total loans (5)     1.08       1.19          
Other information:                        
Non-accrual loans (4)   $ 37,363     $ 33,274          
Accruing loans − 90 days past due (4)                    
Troubled and restructured non-purchased loans − accruing (4)     1,263       1,285          

(1) Calculations of pre-tax pre-provision net revenue, total common stockholders’ equity, tangible book value per common share and returns on average common stockholders’ equity and 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


Bank OZK
Supplemental Quarterly Financial Data
Unaudited

    6/30/20     9/30/20     12/31/20     3/31/21     6/30/21     9/30/21     12/31/21     03/31/22  
    (Dollars in thousands, except per share amounts)  
Earnings Summary:                                                                
Net interest income   $ 216,593     $ 224,657     $ 237,600     $ 234,636     $ 240,746     $ 247,957     $ 266,381     $ 249,343  
Federal tax (FTE) adjustment     1,753       1,605       1,533       1,275       1,355       1,106       1,009       1,017  
Net interest income (FTE)     218,346       226,262       239,133       235,911       242,101       249,063       267,390       250,360  
Provision for credit losses     (72,026 )     (7,200 )     (6,750 )     31,559       30,932       7,454       7,992       (4,190 )
Non-interest income     21,591       26,676       28,661       32,117       27,742       25,984       29,695       31,475  
Non-interest expense     (100,953 )     (105,641 )     (103,394 )     (106,059 )     (103,711 )     (110,397 )     (110,106 )     (107,715 )
Pretax income (FTE)     66,958       140,097       157,650       193,528       197,064       172,104       194,971       169,930  
FTE adjustment     (1,753 )     (1,605 )     (1,533 )     (1,275 )     (1,355 )     (1,106 )     (1,009 )     (1,017 )
Provision for income taxes     (14,948 )     (29,251 )     (35,607 )     (43,818 )     (45,161 )     (40,713 )     (44,197 )     (36,410 )
Noncontrolling interest     9       12       3       (19 )     (13 )     5       (5 )     5  
Preferred stock dividend                                               (4,480 )
Net income available to common stockholders   $ 50,266     $ 109,253     $ 120,513     $ 148,416     $ 150,535     $ 130,290     $ 149,760     $ 128,028  
Earnings per common share – diluted   $ 0.39     $ 0.84     $ 0.93     $ 1.14     $ 1.16     $ 1.00     $ 1.17     $ 1.02  
PPNR   $ 137,231     $ 145,692     $ 162,867     $ 160,694     $ 164,777     $ 163,544     $ 185,970     $ 173,103  
Non-interest Income:                                                                
Service charges on deposit accounts:                                                                
NSF/Overdraft fees   $ 2,702     $ 3,494     $ 4,024     $ 3,323     $ 3,244     $ 4,080     $ 4,315     $ 4,201  
All other service charges     5,579       5,933       5,959       6,342       7,067       7,097       7,149       6,690  
Trust income     1,759       1,936       1,909       2,206       1,911       2,247       2,141       2,094  
BOLI income:                                                                
Increase in cash surrender value     5,057       5,081       5,034       4,881       4,919       4,940       4,901       4,793  
Death benefits                       1,409                   618       297  
Loan service, maintenance and other fees     3,394       3,351       3,797       3,551       3,953       3,307       3,148       3,018  
Gains on sales of other assets     621       891       5,189       5,828       2,341       463       1,330       6,992  
Net gains (losses) on investment securities           2,244                               504       (90 )
Other     2,479       3,746       2,749       4,577       4,307       3,850       5,589       3,480  
Total non-interest income   $ 21,591     $ 26,676     $ 28,661     $ 32,117     $ 27,742     $ 25,984     $ 29,695     $ 31,475  
Non-interest Expense:                                                                
Salaries and employee benefits   $ 48,410     $ 53,119     $ 53,832     $ 53,645     $ 52,119     $ 53,769     $ 55,034     $ 54,648  
Net occupancy and equipment     15,756       16,676       15,617       16,468       16,168       17,161       17,004       17,215  
Other operating expenses     36,787       35,846       33,945       35,946       35,424       39,467       38,068       35,852  
Total non-interest expense   $ 100,953     $ 105,641     $ 103,394     $ 106,059     $ 103,711     $ 110,397     $ 110,106     $ 107,715  
Balance Sheet Data:                                                                
Total assets   $ 26,380,409     $ 26,888,308     $ 27,162,596     $ 27,276,892     $ 26,605,938     $ 26,143,367     $ 26,530,430     $ 26,562,353  
Non-purchased loans     18,247,431       18,419,958       18,401,495       17,979,435       17,611,848       17,707,452       17,791,610       18,449,723  
Purchased loans     1,063,647       938,485       807,673       735,630       659,822       597,851       516,215       481,299  
Investment securities – AFS     3,299,944       3,468,243       3,405,351       4,162,479       4,693,396       3,846,496       3,916,733       3,728,284  
Deposits     20,723,598       21,287,405       21,450,356       21,296,442       20,706,777       20,102,440       20,209,134       20,329,662  
Unfunded balance of closed loans     11,411,441       11,604,614       11,847,117       11,780,099       11,709,818       12,385,369       13,619,578       14,954,367  
Preferred stock                                         338,980       338,980  
Total stockholders’ equity before noncontrolling interest     4,110,666       4,186,285       4,272,271       4,383,205       4,501,676       4,553,240       4,836,243       4,690,057  



Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

    6/30/20     9/30/20     12/31/20     3/31/21     6/30/21     9/30/21     12/31/21     03/31/22  
    (Dollars in thousands, except per share amounts)  
Allowance for Credit Losses:                                                                
Balance at beginning of period   $ 316,409     $ 374,494     $ 377,273     $ 377,305     $ 342,307     $ 307,564     $ 298,798     $ 288,989  
Net charge-offs     (13,941 )     (4,421 )     (6,718 )     (3,439 )     (3,811 )     (1,312 )     (1,817 )     361  
Provision for credit losses     72,026       7,200       6,750       (31,559 )     (30,932 )     (7,454 )     (7,992 )     4,190  
Balance at end of period   $ 374,494     $ 377,273     $ 377,305     $ 342,307     $ 307,564     $ 298,798     $ 288,989     $ 293,540  
Allowance for loan losses   $ 306,196     $ 308,847     $ 295,824     $ 268,077     $ 248,753     $ 237,722     $ 217,380     $ 204,213  
Reserve for losses on unfunded loan commitments     68,298       68,426       81,481       74,230       58,811       61,076       71,609       89,327  
Total allowance for credit losses   $ 374,494     $ 377,273     $ 377,305     $ 342,307     $ 307,564     $ 298,798     $ 288,989     $ 293,540  
Selected Ratios:                                                                
Net interest margin – FTE (1)     3.74 %     3.69 %     3.88 %     3.86 %     3.95 %     4.16 %     4.41 %     4.24 %
Efficiency ratio     42.07       41.77       38.61       39.57       38.43       40.14       37.06       38.22  
Net charge-offs to average non-purchased loans (1) (2)     0.05       0.09       0.14       0.08       0.09       0.04       0.05       0.08  
Net charge-offs to average total loans (1)     0.29       0.09       0.14       0.07       0.08       0.03       0.04       (0.01 )
Nonperforming loans to total loans (3)     0.18       0.15       0.25       0.25       0.22       0.20       0.19       0.21  
Nonperforming assets to total assets (3)     0.19       0.17       0.21       0.19       0.18       0.17       0.15       0.16  
Allowance for loan losses to total loans (4)     1.59       1.60       1.54       1.43       1.36       1.30       1.19       1.08  
Loans past due 30 days or more, including past due non-accrual loans, to total loans (3)     0.13       0.13       0.16       0.13       0.10       0.13       0.15       0.14  

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


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

    Three Months Ended March 31,  
    2022     2021  
    Average
Balance
    Income/
Expense
    Yield/
Rate
    Average
Balance
    Income/
Expense
    Yield/
Rate
 
    (Dollars in thousands)  
ASSETS                                                
Interest earning assets:                                                
Interest earning deposits and federal funds sold   $ 1,359,510     $ 609       0.18 %   $ 2,212,680     $ 538       0.10 %
Investment securities:                                                
Taxable     3,378,613       10,611       1.27       2,422,127       8,083       1.35  
Tax-exempt – FTE     570,987       3,779       2.68       1,167,827       4,659       1.62  
Non-purchased loans – FTE     18,154,626       240,219       5.37       18,188,269       240,124       5.35  
Purchased loans     499,418       8,170       6.63       776,097       11,935       6.24  
Total earning assets – FTE     23,963,154       263,388       4.46       24,767,000       265,339       4.34  
Non-interest earning assets     2,421,122                       2,279,477                  
Total assets   $ 26,384,276                     $ 27,046,477                  
LIABILITIES AND STOCKHOLDERS’ EQUITY                                                
Interest bearing liabilities:                                                
Deposits:                                                
Savings and interest bearing transaction   $ 9,522,195     $ 2,783       0.12 %   $ 8,337,990     $ 3,616       0.18 %
Time deposits     5,760,998       5,709       0.40       8,996,193       20,734       0.93  
Total interest bearing deposits     15,283,193       8,492       0.23       17,334,183       24,350       0.57  
Other borrowings     756,115       998       0.54       756,184       990       0.53  
Subordinated notes     346,227       2,574       3.02       224,092       3,146       5.69  
Subordinated debentures     121,097       964       3.23       120,540       942       3.17  
Total interest bearing liabilities     16,506,632       13,028       0.32       18,434,999       29,428       0.65  
Non-interest bearing liabilities:                                                
Non-interest bearing deposits     4,773,827                       3,972,815                  
Other non-interest bearing liabilities     312,408                       328,401                  
Total liabilities     21,592,867                       22,736,215                  
Total stockholders’ equity before noncontrolling interest     4,788,294                       4,307,174                  
Noncontrolling interest     3,114                       3,088                  
Total liabilities and stockholders’ equity   $ 26,384,275                     $ 27,046,477                  
Net interest income – FTE           $ 250,360                     $ 235,911          
Net interest margin – FTE                     4.24 %                     3.86 %
Core spread (1)                     5.14 %                     4.78 %

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


Bank OZK
Reconciliation of Non-GAAP Financial Measures

Calculation of Average Common Stockholders’ Equity,
Average Tangible Common Stockholders’ Equity
and the Annualized Returns on Average Common Stockholders’ Equity and
Average Tangible Common Stockholders’ Equity
Unaudited

  Three Months Ended  
  March 31,     December 31,  
  2022     2021     2021  
  (Dollars in thousands)  
Net income available to common stockholders $ 128,028     $ 148,416     $ 149,760  
Average stockholders’ equity before noncontrolling interest $ 4,788,294     $ 4,307,174     $ 4,755,706  
Less average preferred stock   (338,980 )           (213,693 )
Total average common stockholders’ equity   4,449,314       4,307,174       4,542,013  
Less average intangible assets:                      
Goodwill   (660,789 )     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization   (7,572 )     (13,828 )     (9,032 )
Total average intangibles   (668,361 )     (674,617 )     (669,821 )
Average tangible common stockholders’ equity $ 3,780,953     $ 3,632,557     $ 3,872,192  
Return on average common stockholders’ equity (1)   11.67 %     13.97 %     13.08 %
Return on average tangible common stockholders’ equity (1)   13.73 %     16.57 %     15.34 %

(1) Ratios for interim periods annualized based on actual days.



Calculation of Total Common Stockholders’ Equity,
Total Tangible Common Stockholders’ Equity
and Tangible Book Value per Common Share
Unaudited

    March 31,     December 31,  
    2022     2021     2021  
    (In thousands, except per share amounts)  
Total stockholders’ equity before noncontrolling interest   $ 4,690,057     $ 4,383,205     $ 4,836,243  
Less preferred stock     (338,980 )           (338,980 )
Total common stockholders’ equity     4,351,077       4,383,205       4,497,263  
Less intangible assets:                        
Goodwill     (660,789 )     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (6,757 )     (12,939 )     (8,274 )
Total intangibles     (667,546 )     (673,728 )     (669,063 )
Total tangible common stockholders’ equity   $ 3,683,531     $ 3,709,477     $ 3,828,200  
Shares of common stock outstanding     122,677       129,719       125,444  
Book value per common share   $ 35.47     $ 33.79     $ 35.85  
Tangible book value per common share   $ 30.03     $ 28.60     $ 30.52  



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

    March 31,  
    2022     2021  
    (Dollars in thousands)  
Total stockholders’ equity before noncontrolling interest   $ 4,690,057     $ 4,383,205  
Less preferred stock     (338,980 )      
Total common stockholders’ equity     4,351,077       4,383,205  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (6,757 )     (12,939 )
Total intangibles     (667,546 )     (673,728 )
Total tangible common stockholders’ equity   $ 3,683,531     $ 3,709,477  
Total assets   $ 26,562,353     $ 27,276,892  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (6,757 )     (12,939 )
Total intangibles     (667,546 )     (673,728 )
Total tangible assets   $ 25,894,807     $ 26,603,164  
Ratio of total common stockholders’ equity to total assets     16.38 %     16.07 %
Ratio of total tangible common stockholders’ equity to total tangible assets     14.22 %     13.94 %


Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited

    Three Months Ended  
    March 31,     December 31,  
    2022     2021     2021  
    (Dollars in thousands)  
Income before taxes   $ 168,913     $ 192,253     $ 193,962  
Provision for credit losses     4,190       (31,559 )     (7,992 )
Pre-tax pre-provision net revenue   $ 173,103     $ 160,694     $ 185,970  

Investor Contact: Tim Hicks (501) 978-2336
Media Contact: Candace Graham (501) 320-4165

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