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Bank OZK Announces First Quarter 2022 Earnings
ソース: Nasdaq GlobeNewswire / 21 4 2022 16:15:39 America/New_York
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
UnauditedMarch 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
UnauditedThree 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
UnauditedPreferred
StockCommon
StockAdditional
Paid-In
CapitalRetained
EarningsAccumulated
Other
Comprehensive
(Loss) IncomeNon-
Controlling
InterestTotal (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
UnauditedThree 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
UnauditedMarch 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
UnauditedAllowance for
Loan LossesReserve for
Losses on
Unfunded Loan CommitmentsTotal 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
UnauditedMarch 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
UnauditedMarch 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
UnauditedThree 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)
UnauditedThree 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
Unaudited6/30/20 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)
Unaudited6/30/20 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
UnauditedThree Months Ended March 31, 2022 2021 Average
BalanceIncome/
ExpenseYield/
RateAverage
BalanceIncome/
ExpenseYield/
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 MeasuresCalculation 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
UnauditedThree 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
UnauditedMarch 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
UnauditedMarch 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
UnauditedThree 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
