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Bank OZK Announces Record First Quarter 2021 Earnings

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LITTLE ROCK, Ark., April 22, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the "Bank") (NASDAQ:OZK) today announced that net income for the first quarter of 2021 was a record $148.4 million compared to $11.9 million for the first quarter of 2020. Diluted earnings per common share for the first quarter of 2021 were $1.14 compared to $0.09 for the first quarter of 2020.

As a result of improving economic conditions, management recorded negative provision for credit losses of $31.6 million during the first quarter of 2021, reducing the Bank's total allowance for credit losses ("ACL") from $377.3 million at December 31, 2020 to $342.3 million at March 31, 2021. The Bank's provision for credit losses was $117.7 million during the first quarter of 2020, reflecting significant economic uncertainty at that time. The Bank's results for the first quarter of 2021 also included pretax gains of $4.4 million from the sale of its South Carolina branches and $1.4 million of tax-exempt bank-owned life insurance ("BOLI") death benefits. The Bank had no gains from branch sales and had $0.6 million of tax-exempt BOLI death benefits during the first quarter of 2020.

Pre-tax pre-provision net revenue ("PPNR") was $160.7 million for the first quarter of 2021, a 19.9% increase from $134.0 million for the first quarter of 2020, but a decrease of 1.3% from $162.9 million for the fourth quarter of 2020. 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 2021 were 2.23%, 13.97% and 16.57%, respectively, compared to 0.20%, 1.16% and 1.39%, respectively, for the first quarter of 2020. The calculation of the Bank's return on average tangible common stockholders' equity and the reconciliation to GAAP are included in the schedules accompanying this release.

George Gleason, Chairman and Chief Executive Officer stated, "We are pleased to report excellent results for the first quarter of 2021, including record quarterly net income, strong net interest income, continued improvement in our core spread, excellent asset quality and an efficiency ratio among the best in the industry. Our combination of strong earnings, robust capital and an exceptional team have us well positioned for the future."

KEY BALANCE SHEET METRICS

Total loans were $18.72 billion at March 31, 2021, a 2.7% increase from $18.23 billion at March 31, 2020, but a decrease of 2.6% from $19.21 billion at December 31, 2020. Non-purchased loans were $17.98 billion at March 31, 2021, a 5.6% increase from $17.03 billion at March 31, 2020, but a decrease of 2.3% from $18.40 billion at December 31, 2020. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.74 billion at March 31, 2021, a 38.6% decrease from $1.20 billion at March 31, 2020.

Deposits were $21.30 billion at March 31, 2021, a 13.2% increase from $18.81 billion at March 31, 2020, but a decrease of 0.7% from $21.45 billion at December 31, 2020. Total assets were $27.28 billion at March 31, 2021, an 11.0% increase from $24.57 billion at March 31, 2020.

Common stockholders' equity was $4.38 billion at March 31, 2021, a 7.5% increase from $4.08 billion at March 31, 2020. Tangible common stockholders' equity was $3.71 billion at March 31, 2021, a 9.1% increase from $3.40 billion at March 31, 2020. Book value per common share was $33.79 at March 31, 2021, a 7.0% increase from $31.57 at March 31, 2020. Tangible book value per common share was $28.60 at March 31, 2021, an 8.7% increase from $26.30 at March 31, 2020. 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 16.07% at March 31, 2021 compared to 16.62% at March 31, 2020. Its ratio of total tangible common stockholders' equity to total tangible assets was 13.94% at March 31, 2021 compared to 14.24% at March 31, 2020. 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 April 23, 2021. Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call. A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally). The conference ID for this playback is 4472527. The call will be available live or in a recorded version on the Bank's Investor Relations website at ir.ozk.com under "Company News/Webcasts." The Bank will also provide a transcript of the conference call on its Investor Relations website.

The Bank files annual, quarterly and current reports, proxy materials and other information required by the Securities Exchange Act of 1934 with the Federal Deposit Insurance Corporation ("FDIC"), copies of which are available electronically at the FDIC's website at https://efr.fdic.gov/fcxweb/efr/index.html and are also available on the Bank's Investor Relations website at http://ir.ozk.com. To receive automated email alerts for these materials, please visit http://ir.ozk.com/EmailNotification to sign up.

NON-GAAP FINANCIAL MEASURES

This release contains certain non-GAAP financial measures. The Bank uses these non-GAAP financial measures, specifically return on average tangible common stockholders' equity, tangible book value per common share, total tangible common stockholders' equity, the ratio of total tangible common stockholders' equity to total tangible assets and PPNR, to assess the strength of its capital, its ability to generate earnings on tangible capital invested by its shareholders and trends in its net revenue. These measures typically adjust GAAP financial measures to exclude intangible assets or provision for credit losses. Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP performance measures that may be presented by other banks. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption "Reconciliation of Non-GAAP Financial Measures."

FORWARD-LOOKING STATEMENTS

This release and other communications by the Bank include certain "forward-looking statements" regarding the Bank's plans, expectations, thoughts, beliefs, estimates, goals and outlook for the future that are intended to be covered by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's expectations as well as certain assumptions and estimates made by, and information available to, management at the time. Those statements are not guarantees of future results or performance and are subject to certain known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: potential delays or other problems implementing the Bank's growth, expansion and acquisition strategies, including delays in identifying satisfactory sites, hiring or retaining qualified personnel, obtaining regulatory or other approvals, obtaining permits and designing, constructing and opening new offices or relocating, selling or closing existing offices; the ability to enter into and/or close additional acquisitions; the availability of and access to capital; possible downgrades in the Bank's credit ratings or outlook which could increase the costs or availability of funding from capital markets; the ability to attract new or retain existing or acquired deposits or to retain or grow loans, including growth from unfunded closed loans; the ability to generate future revenue growth or to control future growth in non-interest expense; interest rate fluctuations, including changes in the yield curve between short-term and long-term interest rates or changes in the relative relationships of various interest rate indices; the potential impact of the proposed phase-out of the London Interbank Offered Rate ("LIBOR") or other changes involving LIBOR; competitive factors and pricing pressures, including their effect on the Bank's net interest margin or core spread; general economic, unemployment, credit market and real estate market conditions, and the effect of such conditions on the creditworthiness of borrowers, collateral values, the value of investment securities and asset recovery values; changes in legal, financial and/or regulatory requirements; recently enacted and potential legislation and regulatory actions and the costs and expenses to comply with new and/or existing legislation and regulatory actions, including those in response to the COVID-19 pandemic such as the Coronavirus Aid, Relief and Economic Security Act, the Consolidated Appropriations Act of 2021, 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, 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 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 financial markets; national, international or political instability; impairment of the Bank's 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 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, 2020 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements. The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

GENERAL INFORMATION

Bank OZK (NASDAQ:OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 branches, loan production offices and other offices in Arkansas, Georgia, Florida, North Carolina, Texas, California, New York and Mississippi. Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 

Investor Contact:   Tim Hicks (501) 978-2336
Media Contact:   Susan Blair (501) 978-2217

Bank OZK
Consolidated Balance Sheets
Unaudited

    March 31,     December 31,  
    2021     2020  
    (Dollars in thousands, except per share amounts)  
ASSETS                
Cash and cash equivalents   $ 2,216,336     $ 2,393,662  
Investment securities ― available for sale ("AFS")     4,162,479       3,405,351  
Federal Home Loan Bank of Dallas and other bankers' bank stocks     38,578       38,486  
Non-purchased loans     17,979,435       18,401,495  
Purchased loans     735,630       807,673  
Allowance for loan losses     (268,077 )     (295,824 )
Net loans     18,446,988       18,913,344  
Premises and equipment, net     729,433       738,842  
Foreclosed assets     8,436       11,085  
Accrued interest receivable     94,265       88,077  
Bank owned life insurance ("BOLI")     761,680       758,071  
Goodwill and other intangible assets, net     673,728       675,458  
Other, net     144,969       140,220  
Total assets   $ 27,276,892     $ 27,162,596  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Deposits:                
Demand non-interest bearing   $ 4,196,603     $ 3,996,546  
Savings and interest bearing transaction     8,529,229       8,160,982  
Time     8,570,610       9,292,828  
Total deposits     21,296,442       21,450,356  
Repurchase agreements with customers     5,936       8,013  
Other borrowings     750,361       750,928  
Subordinated notes     224,141       224,047  
Subordinated debentures     120,613       120,475  
Reserve for losses on unfunded loan commitments     74,230       81,481  
Accrued interest payable and other liabilities     418,860       251,940  
Total liabilities     22,890,583       22,887,240  
                 
Commitments and contingencies                
                 
Stockholders' equity:                
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares
issued or outstanding at March 31, 2021 or December 31, 2020
           
Common stock; $0.01 par value; 300,000,000 shares authorized;
129,718,906 and 129,350,448 shares issued and outstanding at
March 31, 2021 and December 31, 2020, respectively
    1,297       1,294  
Additional paid-in capital     2,272,046       2,265,850  
Retained earnings     2,059,398       1,946,875  
Accumulated other comprehensive income     50,464       58,252  
Total stockholders' equity before noncontrolling interest     4,383,205       4,272,271  
Noncontrolling interest     3,104       3,085  
Total stockholders' equity     4,386,309       4,275,356  
Total liabilities and stockholders' equity   $ 27,276,892     $ 27,162,596  


Bank OZK
Consolidated Statements of Income
Unaudited

  Three Months Ended March 31,  
  2021     2020  
  (Dollars in thousands, except per share amounts)  
Interest income:              
Non-purchased loans $ 239,827     $ 231,853  
Purchased loans   11,935       21,387  
Investment securities:              
Taxable   8,083       10,760  
Tax-exempt   3,681       3,597  
Deposits with banks and federal funds sold   538       4,376  
   Total interest income   264,064       271,973  
               
Interest expense:              
Deposits   24,350       57,682  
Repurchase agreements with customers   4       6  
Other borrowings   986       50  
Subordinated notes   3,146       3,172  
Subordinated debentures   942       1,288  
Total interest expense   29,428       62,198  
               
Net interest income   234,636       209,775  
Provision for credit losses   (31,559 )     117,663  
Net interest income after provision for credit losses   266,195       92,112  
               
Non-interest income:              
Service charges on deposit accounts   9,665       10,009  
Trust income   2,206       1,939  
BOLI income:              
Increase in cash surrender value   4,881       5,067  
Death benefits   1,409       608  
Loan service, maintenance and other fees   3,551       3,716  
Gains on sales of other assets   5,828       161  
Net gains on investment securities         2,223  
Other   4,577       3,957  
Total non-interest income   32,117       27,680  
               
Non-interest expense:              
Salaries and employee benefits   53,645       51,473  
Net occupancy and equipment   16,468       15,330  
Other operating expenses   35,946       36,622  
Total non-interest expense   106,059       103,425  
               
Income before taxes   192,253       16,367  
Provision for income taxes   43,818       4,509  
Net income   148,435       11,858  
Earnings attributable to noncontrolling interest   (19 )     8  
Net income available to common stockholders $ 148,416     $ 11,866  
               
Basic earnings per common share $ 1.15     $ 0.09  
               
Diluted earnings per common share $ 1.14     $ 0.09  


Bank OZK
Consolidated Statements of Stockholders' Equity
Unaudited

    Common
Stock
    Additional
Paid-In
Capital
    Retained
Earnings
    Accumulated
Other
Comprehensive
Income
    Non-
Controlling
Interest
    Total  
    (Dollars in thousands, except per share amounts)  
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
    (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  
                                                 
Three months ended March 31, 2020:                                                
Balances – December 31, 2019   $ 1,289     $ 2,251,824     $ 1,869,983     $ 27,255     $ 3,117     $ 4,153,468  
Cumulative effect of change
in accounting principle
                (75,344 )                 (75,344 )
Balances – January 1, 2020     1,289       2,251,824       1,794,639       27,255       3,117       4,078,124  
Net income                 11,858                   11,858  
Earnings attributable to noncontrolling interest                 8             (8 )      
Total other comprehensive income                       27,633             27,633  
Common stock dividends, $0.26 per
share
                (33,527 )                 (33,527 )
Issuance of 4,300 shares of common
stock for exercise of stock options
          45                         45  
Issuance of 447,085 shares of unvested
restricted common stock
    4       (4 )                        
Repurchase and cancellation of 61,873
shares of common stock
          (1,853 )                       (1,853 )
Stock-based compensation expense           3,979                         3,979  
Forfeitures of 16,101 shares of unvested
restricted common stock
                                   
Balances – March 31, 2020   $ 1,293     $ 2,253,991     $ 1,772,978     $ 54,888     $ 3,109     $ 4,086,259  


Bank OZK
Summary of Non-Interest Expense
Unaudited

    Three Months Ended
March 31,
 
    2021     2020  
    (Dollars in thousands)  
Salaries and employee benefits   $ 53,645     $ 51,473  
Net occupancy and equipment     16,468       15,330  
Other operating expenses:                
Professional and outside services     6,326       6,764  
Software and data processing     5,792       4,974  
Deposit insurance and assessments     3,520       3,420  
Telecommunication services     2,232       2,177  
Postage and supplies     1,645       2,053  
Writedowns of foreclosed and other assets     1,363       879  
ATM expense     1,283       1,160  
Travel and meals     774       2,102  
Loan collection and repossession expense     509       694  
Advertising and public relations     308       1,703  
Amortization of intangibles     1,730       2,795  
Amortization of CRA and tax credit investments     4,125       2,740  
Other     6,339       5,161  
Total non-interest expense   $ 106,059     $ 103,425  


Bank OZK
Summary of Total Loans Outstanding
Unaudited

    March 31, 2021     December 31, 2020  
    (Dollars in thousands)  
                                 
Real estate:                                
Residential 1-4 family   $ 869,585       4.6 %   $ 911,115       4.7 %
Non-farm/non-residential     4,406,692       23.5       4,213,636       21.9  
Construction/land development     7,733,670       41.3       8,046,978       41.9  
Agricultural     212,681       1.1       204,868       1.1  
Multifamily residential     797,847       4.3       856,297       4.5  
Total real estate     14,020,475       74.8       14,232,894       74.1  
Commercial and industrial     790,568       4.2       842,206       4.4  
Consumer     2,275,011       12.2       2,393,964       12.5  
Other     1,629,011       8.8       1,740,104       9.0  
Total loans     18,715,065       100.0 %     19,209,168       100.0 %
Allowance for loan losses     (268,077 )             (295,824 )        
Net loans   $ 18,446,988             $ 18,913,344          


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, 2021:                        
Balances – December 31, 2020   $ 295,824     $ 81,481     $ 377,305  
Net charge-offs     (3,439 )           (3,439 )
Provision     (24,308 )     (7,251 )     (31,559 )
Balances – March 31, 2021   $ 268,077     $ 74,230     $ 342,307  
                         
Three months ended March 31, 2020:                        
Balances – December 31, 2019   $ 108,525     $     $ 108,525  
Adoption of CECL methodology     39,588       54,924       94,512  
Balances – January 1, 2020     148,113       54,924       203,037  
Net charge-offs     (4,291 )           (4,291 )
Provision     94,915       22,748       117,663  
Balances – March 31, 2020   $ 238,737     $ 77,672     $ 316,409  


Bank OZK
Summary of Deposits – By Account Type
Unaudited

    March 31, 2021     December 31, 2020  
    (Dollars in thousands)  
Non-interest bearing   $ 4,196,603       19.7 %   $ 3,996,546       18.6 %
Interest bearing:                                
Transaction (NOW)     3,253,715       15.3       3,124,007       14.6  
Savings and money market     5,275,514       24.8       5,036,975       23.5  
Time deposits less than $100     2,657,568       12.5       3,075,845       14.3  
Time deposits of $100 or more     5,913,042       27.7       6,216,983       29.0  
Total deposits   $ 21,296,442       100.0 %   $ 21,450,356       100.0 %


Summary of Deposits – By Customer Type
Unaudited

    March 31, 2021     December 31, 2020  
    (Dollars in thousands)  
Consumer   $ 11,252,744       52.8 %   $ 11,165,603       52.1 %
Commercial     6,259,409       29.4       6,056,536       28.2  
Public Funds     2,048,909       9.6       2,111,971       9.8  
Brokered     1,210,155       5.7       1,600,116       7.5  
Reciprocal     525,225       2.5       516,130       2.4  
Total deposits   $ 21,296,442       100.0 %   $ 21,450,356       100.0 %


Bank OZK
Selected Consolidated Financial Data
Unaudited

    Three Months Ended
March 31,
 
    2021     2020     % Change  
    (Dollars in thousands, except per share amounts)  
Income statement data:                        
Net interest income   $ 234,636     $ 209,775       11.9 %
Provision for credit losses     (31,559 )     117,663       (126.8 )
Non-interest income     32,117       27,680       16.0  
Non-interest expense     106,059       103,425       2.5  
Net income available to common stockholders     148,416       11,866       1,150.8  
Pre-tax pre-provision net revenue(1)     160,694       134,030       19.9  
Common share and per common share data:                        
Net income per share − diluted   $ 1.14     $ 0.09       1,166.7 %
Net income per share − basic     1.15       0.09       1,177.8  
Dividends per share     0.2775       0.26       6.7  
Book value per share     33.79       31.57       7.0  
Tangible book value per share(1)     28.60       26.30       8.7  
Weighted-average diluted shares outstanding (thousands)     129,816       129,307       0.4  
End of period shares outstanding (thousands)     129,719       129,324       0.3  
Balance sheet data at period end:                        
Total assets   $ 27,276,892     $ 24,565,810       11.0 %
Total loans     18,715,065       18,228,204       2.7  
Non-purchased loans     17,979,435       17,030,378       5.6  
Purchased loans     735,630       1,197,826       (38.6 )
Allowance for loan losses     268,077       238,737       12.3  
Foreclosed assets     8,436       20,616       (59.1 )
Investment securities − AFS     4,162,479       2,816,556       47.8  
Goodwill and other intangible assets, net     673,728       681,747       (1.2 )
Deposits     21,296,442       18,809,190       13.2  
Other borrowings     750,361       1,051,353       (28.6 )
Subordinated notes     224,141       223,759       0.2  
Subordinated debentures     120,613       120,055       0.5  
Unfunded balance of closed loans     11,780,099       11,334,737       3.9  
Reserve for losses on unfunded loan commitments     74,230       77,672       (4.4 )
Total common stockholders' equity     4,383,205       4,083,150       7.3  
Net unrealized gains on investment securities AFS
included in common stockholders' equity
    50,464       54,888          
Loan (including purchased loans) to deposit ratio     87.88 %     96.91 %        
Selected ratios:                        
Return on average assets(2)     2.23 %     0.20 %        
Return on average common stockholders' equity(2)     13.97       1.16          
Return on average tangible common stockholders' equity(1) (2)     16.57       1.39          
Average common equity to total average assets     15.93       17.31          
Net interest margin – FTE(2)     3.86       3.96          
Efficiency ratio     39.57       43.35          
Net charge-offs to average non-purchased loans(2) (3)     0.08       0.08          
Net charge-offs to average total loans(2)     0.07       0.10          
Nonperforming loans to total loans(4)     0.25       0.16          
Nonperforming assets to total assets(4)     0.19       0.19          
Allowance for loan losses to total loans(5)     1.43       1.31          
Other information:                        
Non-accrual loans(4)   $ 43,059     $ 25,681          
Accruing loans − 90 days past due(4)                    
Troubled and restructured non-purchased loans − accruing(4)     1,380       757          


(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.


Selected Consolidated Financial Data (continued)
Unaudited

    Three Months Ended  
    March 31,     December 31,          
    2021     2020     % Change  
  (Dollars in thousands, except per share amounts)  
Income statement data:                        
Net interest income   $ 234,636     $ 237,600       (1.2 )%
Provision for credit losses     (31,559 )     6,750       (567.5 )
Non-interest income     32,117       28,661       12.1  
Non-interest expense     106,059       103,394       2.6  
Net income available to common stockholders     148,416       120,513       23.2  
Pre-tax pre-provision net revenue(1)     160,694       162,867       (1.3 )
Common share and per common share data:                        
Net income per share − diluted   $ 1.14     $ 0.93       22.6 %
Net income per share − basic     1.15       0.93       23.7  
Dividends per share     0.2775       0.275       0.9  
Book value per share     33.79       33.03       2.3  
Tangible book value per share(1)     28.60       27.81       2.8  
Weighted-average diluted shares outstanding (thousands)     129,816       129,523       0.2  
End of period shares outstanding (thousands)     129,719       129,350       0.3  
Balance sheet data at period end:                        
Total assets   $ 27,276,892     $ 27,162,596       0.4 %
Total loans     18,715,065       19,209,168       (2.6 )
Non-purchased loans     17,979,435       18,401,495       (2.3 )
Purchased loans     735,630       807,673       (8.9 )
Allowance for loan losses     268,077       295,824       (9.4 )
Foreclosed assets     8,436       11,085       (23.9 )
Investment securities − AFS     4,162,479       3,405,351       22.2  
Goodwill and other intangible assets, net     673,728       675,458       (0.3 )
Deposits     21,296,442       21,450,356       (0.7 )
Other borrowings     750,361       750,928       (0.1 )
Subordinated notes     224,141       224,047       0.1  
Subordinated debentures     120,613       120,475       0.1  
Unfunded balance of closed loans     11,780,099       11,847,117       (0.6 )
Reserve for losses on unfunded loan commitments     74,230       81,481       (8.9 )
Total common stockholders' equity     4,383,205       4,272,271       2.6  
Net unrealized gains on investment securities AFS
included in common stockholders' equity
    50,464       58,252          
Loan (including purchased loans) to deposit ratio     87.88 %     89.55 %        
Selected ratios:                        
Return on average assets(2)     2.23 %     1.79 %        
Return on average common stockholders' equity(2)     13.97       11.36          
Return on average tangible common stockholders' equity(1) (2)     16.57       13.53          
Average common equity to total average assets     15.93       15.74          
Net interest margin – FTE(2)     3.86       3.88          
Efficiency ratio     39.57       38.61          
Net charge-offs to average non-purchased loans(2) (3)     0.08       0.14          
Net charge-offs to average total loans(2)     0.07       0.14          
Nonperforming loans to total loans(4)     0.25       0.25          
Nonperforming assets to total assets(4)     0.19       0.21          
Allowance for loan losses to total loans(5)     1.43       1.54          
Other information:                        
Non-accrual loans(4)   $ 43,059     $ 44,402          
Accruing loans − 90 days past due(4)                    
Troubled and restructured non-purchased loans − accruing(4)     1,380       1,483          

(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

    6/30/19     9/30/19     12/31/19     3/31/20     6/30/20     9/30/20     12/31/20     3/31/21  
    (Dollars in thousands, except per share amounts)  
Earnings Summary:                                                                
Net interest income   $ 224,536     $ 218,780     $ 214,977     $ 209,775     $ 216,593     $ 224,657     $ 237,600     $ 234,636  
Federal tax (FTE) adjustment     1,136       1,038       1,028       1,133       1,753       1,605       1,533       1,275  
Net interest income (FTE)     225,672       219,818       216,005       210,908       218,346       226,262       239,133       235,911  
Provision for credit losses     (6,769 )     (7,854 )     (4,938 )     (117,663 )     (72,026 )     (7,200 )     (6,750 )     31,559  
Non-interest income     26,603       26,446       30,406       27,680       21,591       26,676       28,661       32,117  
Non-interest expense     (99,131 )     (100,914 )     (104,406 )     (103,425 )     (100,953 )     (105,641 )     (103,394 )     (106,059 )
Pretax income (FTE)     146,375       137,496       137,067       17,500       66,958       140,097       157,650       193,528  
FTE adjustment     (1,136 )     (1,038 )     (1,028 )     (1,133 )     (1,753 )     (1,605 )     (1,533 )     (1,275 )
Provision for income taxes     (34,726 )     (32,574 )     (35,240 )     (4,509 )     (14,948 )     (29,251 )     (35,607 )     (43,818 )
Noncontrolling interest     (10 )     7       7       8       9       12       3       (19 )
Net income available to common stockholders   $ 110,503     $ 103,891     $ 100,806     $ 11,866     $ 50,266     $ 109,253     $ 120,513     $ 148,416  
Earnings per common share – diluted   $ 0.86     $ 0.81     $ 0.78     $ 0.09     $ 0.39     $ 0.84     $ 0.93     $ 1.14  
Non-interest Income:                                                                
Service charges on deposit accounts   $ 10,291     $ 10,827     $ 10,933     $ 10,009     $ 8,281     $ 9,427     $ 9,983     $ 9,665  
Trust income     1,839       1,975       2,010       1,939       1,759       1,936       1,909       2,206  
BOLI income:                                                                
Increase in cash surrender value     5,178       5,208       5,167       5,067       5,057       5,081       5,034       4,881  
Death benefits           206       2,989       608                         1,409  
Loan service, maintenance and other fees     4,565       4,197       4,282       3,716       3,394       3,351       3,797       3,551  
Gains on sales of other assets     402       189       1,358       161       621       891       5,189       5,828  
Net gains on investment securities     713                   2,223             2,244              
Other     3,615       3,844       3,667       3,957       2,479       3,746       2,749       4,577  
Total non-interest income   $ 26,603     $ 26,446     $ 30,406     $ 27,680     $ 21,591     $ 26,676     $ 28,661     $ 32,117  
Non-interest Expense:                                                                
Salaries and employee benefits   $ 47,558     $ 48,376     $ 52,050     $ 51,473     $ 48,410     $ 53,119     $ 53,832     $ 53,645  
Net occupancy and equipment     14,587       14,825       14,855       15,330       15,756       16,676       15,617       16,468  
Other operating expenses     36,986       37,713       37,501       36,622       36,787       35,846       33,945       35,946  
Total non-interest expense   $ 99,131     $ 100,914     $ 104,406     $ 103,425     $ 100,953     $ 105,641     $ 103,394     $ 106,059  
Balance Sheet Data:                                                                
Total assets   $ 22,960,731     $ 23,402,679     $ 23,555,728     $ 24,565,810     $ 26,380,409     $ 26,888,308     $ 27,162,596     $ 27,276,892  
Non-purchased loans     15,786,809       16,307,621       16,224,539       17,030,378       18,247,431       18,419,958       18,401,495       17,979,435  
Purchased loans     1,698,396       1,427,230       1,307,504       1,197,826       1,063,647       938,485       807,673       735,630  
Investment securities – AFS     2,548,489       2,414,722       2,277,389       2,816,556       3,299,944       3,468,243       3,405,351       4,162,479  
Deposits     18,186,215       18,440,078       18,474,259       18,809,190       20,723,598       21,287,405       21,450,356       21,296,442  
Unfunded balance of closed loans     11,167,055       11,429,918       11,325,598       11,334,737       11,411,441       11,604,614       11,847,117       11,780,099  
Common stockholders' equity     3,993,247       4,078,324       4,150,351       4,083,150       4,110,666       4,186,285       4,272,271       4,383,205  


Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited

    6/30/19     9/30/19     12/31/19     3/31/20     6/30/20     9/30/20     12/31/20     3/31/21  
    (Dollars in thousands, except per share amounts)  
Allowance for Credit Losses:                                                                
Balance at beginning of period   $ 105,954     $ 106,642     $ 109,001     $ 108,525     $ 316,409     $ 374,494     $ 377,273     $ 377,305  
Adoption of CECL(1) methodology                       94,512                          
Net charge-offs     (6,081 )     (5,495 )     (5,414 )     (4,291 )     (13,941 )     (4,421 )     (6,718 )     (3,439 )
Provision for credit losses     6,769       7,854       4,938       117,663       72,026       7,200       6,750       (31,559 )
Balance at end of period   $ 106,642     $ 109,001     $ 108,525     $ 316,409     $ 374,494     $ 377,273     $ 377,305     $ 342,307  
Allowance for loan losses   $ 106,642     $ 109,001     $ 108,525     $ 238,737     $ 306,196     $ 308,847     $ 295,824     $ 268,077  
Reserve for losses on unfunded loan commitments                       77,672       68,298       68,426       81,481       74,230  
Total allowance for credit losses   $ 106,642     $ 109,001     $ 108,525     $ 316,409     $ 374,494     $ 377,273     $ 377,305     $ 342,307  
Selected Ratios:                                                                
Net interest margin – FTE(2)     4.45 %     4.26 %     4.15 %     3.96 %     3.74 %     3.69 %     3.88 %     3.86 %
Efficiency ratio     39.30       40.98       42.37       43.35       42.07       41.77       38.61       39.57  
Net charge-offs to average non-purchased loans(2) (3)     0.12       0.07       0.10       0.08       0.05       0.09       0.14       0.08  
Net charge-offs to average total loans(2)     0.14       0.12       0.12       0.10       0.29       0.09       0.14       0.07  
Nonperforming loans to total loans(4)     0.15       0.17       0.15       0.16       0.18       0.15       0.25       0.25  
Nonperforming assets to total assets(4)     0.25       0.26       0.18       0.19       0.19       0.17       0.21       0.19  
Allowance for loan losses to total loans (5)     0.61       0.61       0.62       1.31       1.59       1.60       1.54       1.43  
Loans past due 30 days or more, including
past due non-accrual loans, to total loans(4)
    0.13       0.14       0.19       0.18       0.13       0.13       0.16       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 March 31,  
    2021     2020  
    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   $ 2,212,680     $ 538       0.10 %   $ 1,367,297     $ 4,376       1.29 %
Investment securities:                                                
Taxable     2,422,127       8,083       1.35       1,796,061       10,760       2.41  
Tax-exempt – FTE     1,167,827       4,659       1.62       486,062       4,553       3.77  
Non-purchased loans – FTE     18,188,269       240,124       5.35       16,526,270       232,030       5.65  
Purchased loans     776,097       11,935       6.24       1,265,413       21,387       6.80  
Total earning assets – FTE     24,767,000       265,339       4.34       21,441,103       273,106       5.12  
Non-interest earning assets     2,279,477                       2,353,330                  
Total assets   $ 27,046,477                     $ 23,794,433                  
LIABILITIES AND STOCKHOLDERS' EQUITY                                                
Interest bearing liabilities:                                                
Deposits:                                                
Savings and interest bearing transaction   $ 8,337,990     $ 3,616       0.18 %   $ 8,131,400     $ 19,747       0.98 %
Time deposits of $100 or more     6,095,614       13,913       0.93       4,388,337       22,190       2.03  
Other time deposits     2,900,579       6,821       0.95       3,333,529       15,745       1.90  
Total interest bearing deposits     17,334,183       24,350       0.57       15,853,266       57,682       1.46  
Repurchase agreements with customers     5,800       4       0.26       7,883       6       0.32  
Other borrowings(1)     750,384       986       0.53       296,969       50       0.07  
Subordinated notes     224,092       3,146       5.69       223,711       3,172       5.70  
Subordinated debentures(1)     120,540       942       3.17       119,984       1,288       4.31  
Total interest bearing liabilities     18,434,999       29,428       0.65       16,501,813       62,198       1.52  
Non-interest bearing liabilities:                                                
Non-interest bearing deposits     3,972,815                       2,927,296                  
Other non-interest bearing liabilities     328,401                       243,598                  
Total liabilities     22,736,215                       19,672,707                  
Common stockholders' equity     4,307,174                       4,118,614                  
Noncontrolling interest     3,088                       3,112                  
Total liabilities and stockholders'
equity
  $ 27,046,477                     $ 23,794,433                  
Net interest income – FTE           $ 235,911                     $ 210,908          
Net interest margin – FTE                     3.86 %                     3.96 %
Core spread(2)                     4.78 %                     4.19 %

(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 first quarter of 2021 compared to $0.36 million for the first quarter of 2020. In the absence of this interest capitalization, the rates on other borrowings would have been 0.55% for the first quarter of 2021 and 0.55% for the first quarter of 2020. Capitalized interest included in subordinated debentures totaled $0.14 million for the first quarter of 2020 (none in the first quarter of 2021). In the absence of this interest capitalization, the rate on subordinated debentures would have been 4.80% for the first quarter of 2020.

(2) Core spread is the difference between the yield on the Bank's non-purchased loans-FTE and the cost of its interest bearing deposits.


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  
    March 31,     December 31,  
    2021     2020     2020  
    (Dollars in thousands)  
Net income available to common stockholders   $ 148,416     $ 11,866     $ 120,513  
Average common stockholders' equity before
noncontrolling interest
  $ 4,307,174     $ 4,118,614     $ 4,219,249  
Less average intangible assets:                        
Goodwill     (660,789 )     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of
accumulated amortization
    (13,828 )     (22,412 )     (15,578 )
Total average intangibles     (674,617 )     (683,201 )     (676,367 )
Average tangible common stockholders' equity   $ 3,632,557     $ 3,435,413     $ 3,542,882  
Return on average common stockholders' equity(1)     13.97 %     1.16 %     11.36 %
Return on average tangible common stockholders'
equity(1)
    16.57 %     1.39 %     13.53 %

(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

     March 31,     December 31,  
    2021     2020     2020  
    (In thousands, except per share amounts)  
Total common stockholders' equity before noncontrolling interest   $ 4,383,205     $ 4,083,150     $ 4,272,271  
Less intangible assets:                        
Goodwill     (660,789 )     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated
amortization
    (12,939 )     (20,958 )     (14,669 )
Total intangibles     (673,728 )     (681,747 )     (675,458 )
Total tangible common stockholders' equity   $ 3,709,477     $ 3,401,403     $ 3,596,813  
Shares of common stock outstanding     129,719       129,324       129,350  
Book value per common share   $ 33.79     $ 31.57     $ 33.03  
Tangible book value per common share   $ 28.60     $ 26.30     $ 27.81  


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

     March 31,  
    2021     2020  
    (Dollars in thousands)  
Total common stockholders' equity before noncontrolling interest   $ 4,383,205     $ 4,083,150  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (12,939 )     (20,958 )
Total intangibles     (673,728 )     (681,747 )
Total tangible common stockholders' equity   $ 3,709,477     $ 3,401,403  
Total assets   $ 27,276,892     $ 24,565,810  
Less intangible assets:                
Goodwill     (660,789 )     (660,789 )
Core deposit and other intangible assets, net of accumulated amortization     (12,939 )     (20,958 )
Total intangibles     (673,728 )     (681,747 )
Total tangible assets   $ 26,603,164     $ 23,884,063  
Ratio of total common stockholders' equity to total assets     16.07 %     16.62 %
Ratio of total tangible common stockholders' equity to total
tangible assets
    13.94 %     14.24 %


Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited

    Three Months Ended  
    March 31,     December 31,  
    2021     2020     2020  
    (Dollars in thousands)  
Income before taxes   $ 192,253     $ 16,367     $ 156,117  
Provision for credit losses     (31,559 )     117,663       6,750  
Pre-tax pre-provision net revenue   $ 160,694     $ 134,030     $ 162,867  

 


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