Monday, 26 July 2021 01:34 GMT

Bank OZK Announces Record Second Quarter 2021 Earnings


( MENAFN - GlobeNewsWire - Nasdaq LI)TTLE ROCK, Ark., July 22, 2021 (GLOBE NEWSWIRE) -- Bank OZK (the“Bank”) (Nasdaq: OZK) today announced that net income for the second quarter of 2021 was a record $150.5 million, a 199.5% increase from $50.3 million for the second quarter of 2020. Diluted earnings per common share for the second quarter of 2021 were a record $1.16, a 197.4% increase from $0.39 for the second quarter of 2020.

For the six months ended June 30, 2021, net income was $299.0 million, a 381.2% increase from $62.1 million for the first six months of 2020. Diluted earnings per common share for the first six months of 2021 were $2.30, a 379.2% increase from $0.48 for the first six months of 2020.

As a result of improving economic conditions and prospects for improvement in the U.S. economy, management recorded negative provision for credit losses of $30.9 million during the second quarter and $62.5 million during the first six months of 2021, reducing the Bank's total allowance for credit losses (“ACL”) from $377.3 million at December 31, 2020 to $307.6 million at June 30, 2021. The Bank's provision for credit losses was $72.0 million during the second quarter and $189.7 million during the first six months of 2020, reflecting significant economic uncertainty at that time.

The Bank's results for the first six months of 2021 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, both of which were recognized during the first quarter of 2021. The Bank had no gains from branch sales and had $0.6 million of tax-exempt BOLI death benefits during the first six months of 2020.

Pre-tax pre-provision net revenue (“PPNR”) was $164.8 million for the second quarter of 2021, a 20.1% increase from $137.2 million for the second quarter of 2020. For the six months ended June 30, 2021, PPNR was $325.5 million, a 20.0% increase from $271.3 million for the first six months 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 second quarter of 2021 were 2.24%, 13.65% and 16.10%, respectively, compared to 0.78%, 4.92% and 5.89%, respectively, for the second quarter of 2020. The Bank's annualized returns on average assets, average common stockholder's equity and average tangible common stockholders' equity for the first six months of 2021 were 2.23%, 13.81% and 16.33%, respectively, compared to 0.50%, 3.04%, and 3.64%, respectively, for the first six months 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 record results for the quarter just ended. Our strong capital and liquidity, our disciplined credit culture and our exceptional team have us well positioned for the future.”

KEY BALANCE SHEET METRICS

Total loans were $18.27 billion at June 30, 2021, a 5.4% decrease from $19.31 billion at June 30, 2020. Non-purchased loans were $17.61 billion at June 30, 2021, a 3.5% decrease from $18.25 billion at June 30, 2020. Purchased loans, which consist of loans acquired in previous acquisitions, were $0.66 billion at June 30, 2021, a 38.0% decrease from $1.06 billion at June 30, 2020.

Deposits were $20.71 billion at June 30, 2021, a 0.1% decrease from $20.72 billion at June 30, 2020. Total assets were $26.61 billion at June 30, 2021, a 0.9% increase from $26.38 billion at June 30, 2020, but a 2.5% decrease from $27.28 billion at March 31, 2021.

Common stockholders' equity was $4.50 billion at June 30, 2021, a 9.5% increase from $4.11 billion at June 30, 2020. Tangible common stockholders' equity was $3.83 billion at June 30, 2021, an 11.6% increase from $3.43 billion at June 30, 2020. Book value per common share was $34.70 at June 30, 2021, a 9.2% increase from $31.78 at June 30, 2020. Tangible book value per common share was $29.52 at June 30, 2021, an 11.3% increase from $26.53 at June 30, 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 16.92% at June 30, 2021 compared to 15.58% at June 30, 2020. Its ratio of total tangible common stockholders' equity to total tangible assets was 14.77% at June 30, 2021 compared to 13.35% at June 30, 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.

AUTHORIZATION OF STOCK REPURCHASE PROGRAM

In July 2021, the Bank's Board of Directors authorized a stock repurchase program pursuant to which the Bank may repurchase up to $300 million of its outstanding common stock. The Bank has received regulatory approval of the repurchase program, and the timing and amount of repurchases will be determined by management based on a variety of factors such as the Bank's capital position, liquidity, financial performance and alternative uses of capital, stock price, regulatory requirements and general market and economic conditions. The repurchase program will expire on July 1, 2022, unless extended or shortened by the Board of Directors, and may be suspended by the Bank at any time.

SUBORDINATED DEBT REDEMPTION

On July 1, 2021, the Bank redeemed all of its $225 million of fixed-to-floating rate subordinated notes at a redemption price equal to 100% of the principal amount of the subordinated notes plus accrued and unpaid interest. As of June 30, 2021, the Bank's subordinated debt had a carrying value of $224.2 million and remaining unamortized debt issuance cost of $0.8 million.

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 . 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 July 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 3462545. 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 and are also available on the Bank's Investor Relations website at . To receive automated email alerts for these materials, please visit 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 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 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 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 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
June 30, December 31,
2021 2020
(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents $ 1,424,249 $ 2,393,662
Investment securities ― available for sale ("AFS") 4,693,396 3,405,351
Federal Home Loan Bank of Dallas and other bankers' bank stocks 40,609 38,486
Non-purchased loans 17,611,848 18,401,495
Purchased loans 659,822 807,673
Allowance for loan losses (248,753 ) (295,824 )
Net loans 18,022,917 18,913,344
Premises and equipment, net 729,187 738,842
Foreclosed assets 7,542 11,085
Accrued interest receivable 93,693 88,077
Bank owned life insurance (“BOLI”) 766,362 758,071
Goodwill and other intangible assets, net 672,125 675,458
Other, net 155,858 140,220
Total assets $ 26,605,938 $ 27,162,596
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand non-interest bearing $ 4,510,678 $ 3,996,546
Savings and interest bearing transaction 8,835,674 8,160,982
Time 7,360,425 9,292,828
Total deposits 20,706,777 21,450,356
Repurchase agreements with customers 8,449 8,013
Other borrowings 750,228 750,928
Subordinated notes 224,236 224,047
Subordinated debentures 120,752 120,475
Reserve for losses on unfunded loan commitments 58,811 81,481
Accrued interest payable and other liabilities 231,892 251,940
Total liabilities 22,101,145 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 June 30, 2021 or December 31, 2020
Common stock; $0.01 par value; 300,000,000 shares authorized; 129,720,140 and 129,350,448 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively 1,297 1,294
Additional paid-in capital 2,277,138 2,265,850
Retained earnings 2,173,114 1,946,875
Accumulated other comprehensive income 50,127 58,252
Total stockholders' equity before noncontrolling interest 4,501,676 4,272,271
Noncontrolling interest 3,117 3,085
Total stockholders' equity 4,504,793 4,275,356
Total liabilities and stockholders' equity $ 26,605,938 $ 27,162,596


Bank OZK
Consolidated Statements of Income
Unaudited
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans $ 238,554 $ 232,816 $ 478,381 $ 464,669
Purchased loans 11,699 17,087 23,635 38,474
Investment securities:
Taxable 9,467 11,055 17,550 21,814
Tax-exempt 3,883 5,846 7,563 9,443
Deposits with banks and federal funds sold 496 330 1,033 4,706
Total interest income 264,099 267,134 528,162 539,106
Interest expense:
Deposits 18,231 45,251 42,582 102,933
Repurchase agreements with customers 6 6 10 13
Other borrowings 996 963 1,982 1,013
Subordinated notes 3,181 3,172 6,326 6,344
Subordinated debentures 939 1,149 1,881 2,436
Total interest expense 23,353 50,541 52,781 112,739
Net interest income 240,746 216,593 475,381 426,367
Provision for credit losses (30,932 ) 72,026 (62,491 ) 189,689
Net interest income after provision for credit losses 271,678 144,567 537,872 236,678
Non-interest income:
Service charges on deposit accounts 10,311 8,281 19,976 18,290
Trust income 1,911 1,759 4,118 3,698
BOLI income:
Increase in cash surrender value 4,919 5,057 9,799 10,124
Death benefits 1,409 608
Loan service, maintenance and other fees 3,953 3,394 7,504 7,110
Gains on sales of other assets 2,341 621 8,169 783
Net gains on investment securities 2,223
Other 4,307 2,479 8,884 6,435
Total non-interest income 27,742 21,591 59,859 49,271
Non-interest expense:
Salaries and employee benefits 52,119 48,410 105,764 99,883
Net occupancy and equipment 16,168 15,756 32,636 31,086
Other operating expenses 35,424 36,787 71,371 73,409
Total non-interest expense 103,711 100,953 209,771 204,378
Income before taxes 195,709 65,205 387,960 81,571
Provision for income taxes 45,161 14,948 88,978 19,456
Net income 150,548 50,257 298,982 62,115
Earnings attributable to noncontrolling interest (13 ) 9 (32 ) 17
Net income available to common stockholders $ 150,535 $ 50,266 $ 298,950 $ 62,132
Basic earnings per common share $ 1.16 $ 0.39 $ 2.31 $ 0.48
Diluted earnings per common share $ 1.16 $ 0.39 $ 2.30 $ 0.48


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 June 30, 2021:
Balances – March 31, 2021 $ 1,297 $ 2,272,046 $ 2,059,398 $ 50,464 $ 3,104 $ 4,386,309
Net income 150,548 150,548
Earnings attributable to noncontrolling interest (13 ) 13
Total other comprehensive loss (337 ) (337 )
Common stock dividends, $0.28 per share (36,819 ) (36,819 )
Issuance of 14,300 shares of common stock for exercise of stock options 515 515
Issuance of 20,328 shares of unvested restricted common stock
Repurchase and cancellation of 153 shares of common stock (6 ) (6 )
Stock-based compensation expense 4,583 4,583
Forfeitures of 33,241 shares of unvested restricted common stock
Balances – June 30, 2021 $ 1,297 $ 2,277,138 $ 2,173,114 $ 50,127 $ 3,117 $ 4,504,793
Six months ended June 30, 2021:
Balances – December 31, 2020 $ 1,294 $ 2,265,850 $ 1,946,875 $ 58,252 $ 3,085 $ 4,275,356
Net income 298,982 298,982
Earnings attributable to noncontrolling interest (32 ) 32
Total other comprehensive loss (8,125 ) (8,125 )
Common stock dividends, $0.5575 per share (72,711 ) (72,711 )
Issuance of 142,400 shares of common stock for exercise of stock options 1 5,007 5,008
Issuance of 332,831 shares of unvested restricted common stock 3 (3 )
Repurchase and cancellation of 55,893 shares of common stock (1 ) (1,976 ) (1,977 )
Stock-based compensation expense 8,260 8,260
Forfeitures of 49,646 shares of unvested restricted common stock
Balances – June 30, 2021 $ 1,297 $ 2,277,138 $ 2,173,114 $ 50,127 $ 3,117 $ 4,504,793


Bank OZK
Consolidated Statements of Stockholders' Equity
Unaudited
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Non-
Controlling
Interest
Total
(Dollars in thousands, except per share amounts)
Three months ended June 30, 2020:
Balances – March 31, 2020 $ 1,293 $ 2,253,991 $ 1,772,978 $ 54,888 $ 3,109 $ 4,086,259
Net income 50,257 50,257
Earnings attributable to noncontrolling interest 9 (9 )
Total other comprehensive income 8,289 8,289
Common stock dividends, $0.27 per share (34,915 ) (34,915 )
Issuance of 46,676 shares of unvested restricted common stock
Stock-based compensation expense 3,876 3,876
Forfeitures of 20,810 shares of unvested restricted common stock
Balances – June 30, 2020 $ 1,293 $ 2,257,867 $ 1,788,329 $ 63,177 $ 3,100 $ 4,113,766
Six months ended June 30, 2020:
Balances – December 31, 2019 $ 1,289 $ 2,251,824 $ 1,869,983 $ 27,255 $ 3,117 $ 4,153,468
Cumulative effect of change in accounting principle (75,344 ) (75,344 )
Balances – January 1, 2020 1,289 2,251,824 1,794,639 27,255 3,117 4,078,124
Net income 62,115 62,115
Earnings attributable to noncontrolling interest 17 (17 )
Total other comprehensive income 35,922 35,922
Common stock dividends, $0.53 per share (68,442 ) (68,442 )
Issuance of 4,300 shares of common stock for exercise of stock options 45 45
Issuance of 493,761 shares of unvested restricted common stock 5 (5 )
Repurchase and cancellation of 61,873 shares of common stock (1 ) (1,852 ) (1,853 )
Stock-based compensation expense 7,855 7,855
Forfeitures of 36,911 shares of unvested restricted common stock
Balances – June 30, 2020 $ 1,293 $ 2,257,867 $ 1,788,329 $ 63,177 $ 3,100 $ 4,113,766


Bank OZK
Summary of Non-Interest Expense
Unaudited
Three Months Ended
June 30,
Six Months Ended
June 30,
2021 2020 2021 2020
(Dollars in thousands)
Salaries and employee benefits $ 52,119 $ 48,410 $ 105,764 $ 99,883
Net occupancy and equipment 16,168 15,756 32,636 31,086
Other operating expenses:
Professional and outside services 7,724 7,629 14,050 14,393
Software and data processing 6,006 5,145 11,798 10,119
Deposit insurance and assessments 2,885 4,585 6,405 8,005
Telecommunication services 2,165 2,334 4,397 4,511
Postage and supplies 1,544 1,892 3,188 3,945
ATM expense 1,486 1,002 2,769 2,162
Travel and meals 1,419 710 2,194 2,812
Writedowns of foreclosed and other assets 123 720 1,486 1,599
Loan collection and repossession expense 540 857 1,050 1,551
Advertising and public relations 593 1,704 902 3,407
Amortization of intangibles 1,602 2,582 3,332 5,377
Amortization of CRA and tax credit investments 3,227 3,107 7,352 5,847
Other 6,110 4,520 12,448 9,681
Total non-interest expense $ 103,711 $ 100,953 $ 209,771 $ 204,378


Bank OZK
Summary of Total Loans Outstanding
Unaudited
June 30, 2021 December 31, 2020
(Dollars in thousands)
Real estate:
Residential 1-4 family $ 894,404 4.9 % $ 911,115 4.7 %
Non-farm/non-residential 4,415,246 24.2 4,213,636 21.9
Construction/land development 7,289,254 39.9 8,046,978 41.9
Agricultural 226,345 1.2 204,868 1.1
Multifamily residential 1,065,123 5.8 856,297 4.5
Total real estate 13,890,372 76.0 14,232,894 74.1
Commercial and industrial 651,019 3.6 842,206 4.4
Consumer 2,220,660 12.2 2,393,964 12.5
Other 1,509,619 8.2 1,740,104 9.0
Total loans 18,271,670 100.0 % 19,209,168 100.0 %
Allowance for loan losses (248,753 ) (295,824 )
Net loans $ 18,022,917 $ 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 June 30, 2021:
Balances – March 31, 2021 $ 268,077 $ 74,230 $ 342,307
Net charge-offs (3,811 ) (3,811 )
Provision for credit losses (15,513 ) (15,419 ) (30,932 )
Balances – June 30, 2021 $ 248,753 $ 58,811 $ 307,564
Six months ended June 30, 2021:
Balances – December 31, 2020 $ 295,824 $ 81,481 $ 377,305
Net charge-offs (7,250 ) (7,250 )
Provision for credit losses (39,821 ) (22,670 ) (62,491 )
Balances – June 30, 2021 $ 248,753 $ 58,811 $ 307,564
Three months ended June 30, 2020:
Balances – March 31, 2020 $ 238,737 $ 77,672 $ 316,409
Net charge-offs (13,941 ) (13,941 )
Provision for credit losses 81,400 (9,374 ) 72,026
Balances – June 30, 2020 $ 306,196 $ 68,298 $ 374,494
Six months ended June 30, 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 (18,232 ) (18,232 )
Provision for credit losses 176,315 13,374 189,689
Balances – June 30, 2020 $ 306,196 $ 68,298 $ 374,494


Bank OZK
Summary of Deposits – By Account Type
Unaudited
June 30, 2021 December 31, 2020
(Dollars in thousands)
Non-interest bearing $ 4,510,678 21.8 % $ 3,996,546 18.6 %
Interest bearing:
Transaction (NOW) 3,252,394 15.7 3,124,007 14.6
Savings and money market 5,583,280 27.0 5,036,975 23.5
Time deposits less than $100 2,173,883 10.5 3,075,845 14.3
Time deposits of $100 or more 5,186,542 25.0 6,216,983 29.0
Total deposits $ 20,706,777 100.0 % $ 21,450,356 100.0 %


Summary of Deposits – By Customer Type
Unaudited
June 30, 2021 December 31, 2020
(Dollars in thousands)
Consumer $ 10,679,525 51.6 % $ 11,165,603 52.1 %
Commercial 6,566,031 31.7 6,056,536 28.2
Public Funds 2,082,988 10.1 2,111,971 9.8
Brokered 914,907 4.4 1,600,116 7.5
Reciprocal 463,326 2.2 516,130 2.4
Total deposits $ 20,706,777 100.0 % $ 21,450,356 100.0 %


Bank OZK
Selected Consolidated Financial Data
Unaudited
Three Months Ended
June 30,
Six Months Ended
June 30,
2021 2020 % Change 2021 2020 % Change
(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income $ 240,746 $ 216,593 11.2 % $ 475,381 $ 426,367 11.5 %
Provision for credit losses (30,932 ) 72,026 (142.9 ) (62,491 ) 189,689 (132.9 )
Non-interest income 27,742 21,591 28.5 59,859 49,271 21.5
Non-interest expense 103,711 100,953 2.7 209,771 204,378 2.6
Net income available to common stockholders 150,535 50,266 199.5 298,950 62,132 381.2
Pre-tax pre-provision net revenue(1) 164,777 137,231 20.1 325,469 271,260 20.0
Common share and per common share data:
Net income per share − diluted $ 1.16 $ 0.39 197.4 % $ 2.30 $ 0.48 379.2 %
Net income per share − basic 1.16 0.39 197.4 2.31 0.48 381.3
Dividends per share 0.28 0.27 3.7 0.5575 0.53 5.2
Book value per share 34.70 31.78 9.2 34.70 31.78 9.2
Tangible book value per share(1) 29.52 26.53 11.3 29.52 26.53 11.3
Weighted-average diluted shares outstanding (thousands) 130,255 129,399 0.7 130,109 129,349 0.6
End of period shares outstanding (thousands) 129,720 129,350 0.3 129,720 129,350 0.3
Balance sheet data at period end:
Total assets $ 26,605,938 $ 26,380,409 0.9 % $ 26,605,938 $ 26,380,409 0.9 %
Total loans 18,271,670 19,311,078 (5.4 ) 18,271,670 19,311,078 (5.4 )
Non-purchased loans 17,611,848 18,247,431 (3.5 ) 17,611,848 18,247,431 (3.5 )
Purchased loans 659,822 1,063,647 (38.0 ) 659,822 1,063,647 (38.0 )
Allowance for loan losses 248,753 306,196 (18.8 ) 248,753 306,196 (18.8 )
Foreclosed assets 7,542 18,328 (58.8 ) 7,542 18,328 (58.8 )
Investment securities − AFS 4,693,396 3,299,944 42.2 4,693,396 3,299,944 42.2
Goodwill and other intangible assets, net 672,125 679,166 (1.0 ) 672,125 679,166 (1.0 )
Deposits 20,706,777 20,723,598 (0.1 ) 20,706,777 20,723,598 (0.1 )
Other borrowings 750,228 903,696 (17.0 ) 750,228 903,696 (17.0 )
Subordinated notes 224,236 223,854 0.2 224,236 223,854 0.2
Subordinated debentures 120,752 120,194 0.5 120,752 120,194 0.5
Unfunded balance of closed loans 11,709,818 11,411,441 2.6 11,709,818 11,411,441 2.6
Reserve for losses on unfunded loan commitments 58,811 68,298 (13.9 ) 58,811 68,298 (13.9 )
Total common stockholders' equity 4,501,676 4,110,666 9.5 4,501,676 4,110,666 9.5
Net unrealized gains on investment securities AFS included in common stockholders' equity 50,127 63,177 50,127 63,177
Loan (including purchased loans) to deposit ratio 88.24 % 93.18 % 88.24 % 93.18 %
Selected ratios:
Return on average assets(2) 2.24 % 0.78 % 2.23 % 0.50 %
Return on average common stockholders' equity(2) 13.65 4.92 13.81 3.04
Return on average tangible common stockholders' equity(1) (2) 16.10 5.89 16.33 3.64
Average common equity to total average assets 16.42 15.93 16.17 16.59
Net interest margin – FTE(2) 3.95 3.74 3.91 3.84
Efficiency ratio 38.43 42.07 39.00 42.71
Net charge-offs to average non-purchased loans(2) (3) 0.09 0.05 0.08 0.06
Net charge-offs to average total loans(2) 0.08 0.29 0.08 0.20
Nonperforming loans to total loans(4) 0.22 0.18 0.22 0.18
Nonperforming assets to total assets(4) 0.18 0.19 0.18 0.19
Allowance for loan losses to total loans(5) 1.36 1.59 1.36 1.59
Other information:
Non-accrual loans(4) $ 38,195 $ 31,083 $ 38,195 $ 31,083
Accruing loans − 90 days past due(4)
Troubled and restructured non-purchased loans − accruing(4) 1,365 934 1,365 934

(1) Calculations of pre-tax pre-provision net revenue, tangible book value per common share and return on average tangible common stockholders' equity and the reconciliations to GAAP are included in the schedules accompanying this release.
(2) Ratios for interim periods annualized based on actual days.
(3) Excludes purchased loans and net charge-offs related to such loans.
(4) Excludes purchased loans, except for their inclusion in total assets.
(5) Excludes reserve for losses on unfunded loan commitments.

Selected Consolidated Financial Data (continued)
Unaudited
Three Months Ended
June 30, March 31,
2021 2021 % Change
(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income $ 240,746 $ 234,636 2.6 %
Provision for credit losses (30,932 ) (31,559 ) (2.0 )
Non-interest income 27,742 32,117 (13.6 )
Non-interest expense 103,711 106,059 (2.2 )
Net income available to common stockholders 150,535 148,416 1.4
Pre-tax pre-provision net revenue(1) 164,777 160,694 2.5
Common share and per common share data:
Net income per share − diluted $ 1.16 $ 1.14 1.8 %
Net income per share − basic 1.16 1.15 0.9
Dividends per share 0.28 0.2775 0.9
Book value per share 34.70 33.79 2.7
Tangible book value per share(1) 29.52 28.60 3.2
Weighted-average diluted shares outstanding (thousands) 130,255 129,816 0.3
End of period shares outstanding (thousands) 129,720 129,719 0.1
Balance sheet data at period end:
Total assets $ 26,605,938 $ 27,276,892 (2.5 )%
Total loans 18,271,670 18,715,065 (2.4 )
Non-purchased loans 17,611,848 17,979,435 (2.0 )
Purchased loans 659,822 735,630 (10.3 )
Allowance for loan losses 248,753 268,077 (7.2 )
Foreclosed assets 7,542 8,436 (10.6 )
Investment securities − AFS 4,693,396 4,162,479 12.8
Goodwill and other intangible assets, net 672,125 673,728 (0.2 )
Deposits 20,706,777 21,296,442 (2.8 )
Other borrowings 750,228 750,361 (0.1 )
Subordinated notes 224,236 224,141 0.1
Subordinated debentures 120,752 120,613 0.1
Unfunded balance of closed loans 11,709,818 11,780,099 (0.6 )
Reserve for losses on unfunded loan commitments 58,811 74,230 (20.8 )
Total common stockholders' equity 4,501,676 4,383,205 2.7
Net unrealized gains on investment securities AFS included in common stockholders' equity 50,127 50,464
Loan (including purchased loans) to deposit ratio 88.24 % 87.88 %
Selected ratios:
Return on average assets(2) 2.24 % 2.23 %
Return on average common stockholders' equity(2) 13.65 13.97
Return on average tangible common stockholders' equity(1) (2) 16.10 16.57
Average common equity to total average assets 16.42 15.93
Net interest margin – FTE(2) 3.95 3.86
Efficiency ratio 38.43 39.57
Net charge-offs to average non-purchased loans(2) (3) 0.09 0.08
Net charge-offs to average total loans(2) 0.08 0.07
Nonperforming loans to total loans(4) 0.22 0.25
Nonperforming assets to total assets(4) 0.18 0.19
Allowance for loan losses to total loans(5) 1.36 1.43
Other information:
Non-accrual loans(4) $ 38,195 $ 43,059
Accruing loans − 90 days past due(4)
Troubled and restructured non-purchased loans − accruing(4) 1,365 1,380

(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
9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21
(Dollars in thousands, except per share amounts)
Earnings Summary:
Net interest income $ 218,780 $ 214,977 $ 209,775 $ 216,593 $ 224,657 $ 237,600 $ 234,636 $ 240,746
Federal tax (FTE) adjustment 1,038 1,028 1,133 1,753 1,605 1,533 1,275 1,355
Net interest income (FTE) 219,818 216,005 210,908 218,346 226,262 239,133 235,911 242,101
Provision for credit losses (7,854 ) (4,938 ) (117,663 ) (72,026 ) (7,200 ) (6,750 ) 31,559 30,932
Non-interest income 26,446 30,406 27,680 21,591 26,676 28,661 32,117 27,742
Non-interest expense (100,914 ) (104,406 ) (103,425 ) (100,953 ) (105,641 ) (103,394 ) (106,059 ) (103,711 )
Pretax income (FTE) 137,496 137,067 17,500 66,958 140,097 157,650 193,528 197,064
FTE adjustment (1,038 ) (1,028 ) (1,133 ) (1,753 ) (1,605 ) (1,533 ) (1,275 ) (1,355 )
Provision for income taxes (32,574 ) (35,240 ) (4,509 ) (14,948 ) (29,251 ) (35,607 ) (43,818 ) (45,161 )
Noncontrolling interest 7 7 8 9 12 3 (19 ) (13 )
Net income available to common stockholders $ 103,891 $ 100,806 $ 11,866 $ 50,266 $ 109,253 $ 120,513 $ 148,416 $ 150,535
Earnings per common share – diluted $ 0.81 $ 0.78 $ 0.09 $ 0.39 $ 0.84 $ 0.93 $ 1.14 $ 1.16
Non-interest Income:
Service charges on deposit accounts $ 10,827 $ 10,933 $ 10,009 $ 8,281 $ 9,427 $ 9,983 $ 9,665 $ 10,311
Trust income 1,975 2,010 1,939 1,759 1,936 1,909 2,206 1,911
BOLI income:
Increase in cash surrender value 5,208 5,167 5,067 5,057 5,081 5,034 4,881 4,919
Death benefits 206 2,989 608 1,409
Loan service, maintenance and other fees 4,197 4,282 3,716 3,394 3,351 3,797 3,551 3,953
Gains on sales of other assets 189 1,358 161 621 891 5,189 5,828 2,341
Net gains on investment securities 2,223 2,244
Other 3,844 3,667 3,957 2,479 3,746 2,749 4,577 4,307
Total non-interest income $ 26,446 $ 30,406 $ 27,680 $ 21,591 $ 26,676 $ 28,661 $ 32,117 $ 27,742
Non-interest Expense:
Salaries and employee benefits $ 48,376 $ 52,050 $ 51,473 $ 48,410 $ 53,119 $ 53,832 $ 53,645 $ 52,119
Net occupancy and equipment 14,825 14,855 15,330 15,756 16,676 15,617 16,468 16,168
Other operating expenses 37,713 37,501 36,622 36,787 35,846 33,945 35,946 35,424
Total non-interest expense $ 100,914 $ 104,406 $ 103,425 $ 100,953 $ 105,641 $ 103,394 $ 106,059 $ 103,711
Balance Sheet Data:
Total assets $ 23,402,679 $ 23,555,728 $ 24,565,810 $ 26,380,409 $ 26,888,308 $ 27,162,596 $ 27,276,892 $ 26,605,938
Non-purchased loans 16,307,621 16,224,539 17,030,378 18,247,431 18,419,958 18,401,495 17,979,435 17,611,848
Purchased loans 1,427,230 1,307,504 1,197,826 1,063,647 938,485 807,673 735,630 659,822
Investment securities – AFS 2,414,722 2,277,389 2,816,556 3,299,944 3,468,243 3,405,351 4,162,479 4,693,396
Deposits 18,440,078 18,474,259 18,809,190 20,723,598 21,287,405 21,450,356 21,296,442 20,706,777
Unfunded balance of closed loans 11,429,918 11,325,598 11,334,737 11,411,441 11,604,614 11,847,117 11,780,099 11,709,818
Common stockholders' equity 4,078,324 4,150,351 4,083,150 4,110,666 4,186,285 4,272,271 4,383,205 4,501,676


Bank OZK
Supplemental Quarterly Financial Data (Continued)
Unaudited
9/30/19 12/31/19 3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21
(Dollars in thousands, except per share amounts)
Allowance for Credit Losses:
Balance at beginning of period $ 106,642 $ 109,001 $ 108,525 $ 316,409 $ 374,494 $ 377,273 $ 377,305 $ 342,307
Adoption of CECL(1) methodology 94,512
Net charge-offs (5,495 ) (5,414 ) (4,291 ) (13,941 ) (4,421 ) (6,718 ) (3,439 ) (3,811 )
Provision for credit losses 7,854 4,938 117,663 72,026 7,200 6,750 (31,559 ) (30,932 )
Balance at end of period $ 109,001 $ 108,525 $ 316,409 $ 374,494 $ 377,273 $ 377,305 $ 342,307 $ 307,564
Allowance for loan losses $ 109,001 $ 108,525 $ 238,737 $ 306,196 $ 308,847 $ 295,824 $ 268,077 $ 248,753
Reserve for losses on unfunded loan commitments 77,672 68,298 68,426 81,481 74,230 58,811
Total allowance for credit losses $ 109,001 $ 108,525 $ 316,409 $ 374,494 $ 377,273 $ 377,305 $ 342,307 $ 307,564
Selected Ratios:
Net interest margin – FTE(2) 4.26 % 4.15 % 3.96 % 3.74 % 3.69 % 3.88 % 3.86 % 3.95 %
Efficiency ratio 40.98 42.37 43.35 42.07 41.77 38.61 39.57 38.43
Net charge-offs to average non-purchased loans(2) (3) 0.07 0.10 0.08 0.05 0.09 0.14 0.08 0.09
Net charge-offs to average total loans(2) 0.12 0.12 0.10 0.29 0.09 0.14 0.07 0.08
Nonperforming loans to total loans(4) 0.17 0.15 0.16 0.18 0.15 0.25 0.25 0.22
Nonperforming assets to total assets(4) 0.26 0.18 0.19 0.19 0.17 0.21 0.19 0.18
Allowance for loan losses to total loans (5) 0.61 0.62 1.31 1.59 1.60 1.54 1.43 1.36
Loans past due 30 days or more, including past due non-accrual loans, to total loans(4) 0.14 0.19 0.18 0.13 0.13 0.16 0.13 0.10

(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 June 30, Six Months Ended June 30,
2021 2020 2021 2020
Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
Average
Balance
Income/
Expense
Yield/
Rate
(Dollars in thousands)
ASSETS
Earning assets:
Interest earning deposits and federal funds sold $ 1,886,166 $ 496 0.11 % $ 1,303,791 $ 330 0.10 % $ 2,048,521 $ 1,033 0.10 % $ 1,335,544 $ 4,706 0.71 %
Investment securities:
Taxable 3,508,655 9,467 1.08 1,923,362 11,055 2.31 2,968,393 17,550 1.19 1,859,711 21,814 2.36
Tax-exempt – FTE 963,522 4,915 2.05 1,151,492 7,400 2.58 1,065,110 9,574 1.81 818,777 11,953 2.94
Non-purchased loans – FTE 17,544,405 238,877 5.46 17,963,230 233,015 5.22 17,864,558 479,001 5.41 17,244,750 465,046 5.42
Purchased loans 697,136 11,699 6.73 1,133,611 17,087 6.06 736,399 23,635 6.47 1,199,512 38,474 6.45
Total earning assets – FTE 24,599,884 265,454 4.33 23,475,486 268,887 4.61 24,682,981 530,793 4.34 22,458,294 541,993 4.85
Non-interest earning assets 2,345,169 2,318,334 2,312,504 2,335,832
Total assets $ 26,945,053 $ 25,793,820 $ 26,995,485 $ 24,794,126
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction $ 8,735,178 $ 3,338 0.15 % $ 7,517,260 $ 7,702 0.41 % $ 8,537,681 $ 6,954 0.16 % $ 7,824,330 $ 27,449 0.71 %
Time deposits of $100 or more 5,592,645 10,317 0.74 5,279,716 23,765 1.81 5,842,740 24,229 0.84 4,834,026 45,955 1.91
Other time deposits 2,407,569 4,576 0.76 3,752,793 13,784 1.48 2,652,713 11,399 0.87 3,543,161 29,529 1.68
Total interest bearing deposits 16,735,392 18,231 0.44 16,549,769 45,251 1.10 17,033,134 42,582 0.50 16,201,517 102,933 1.28
Repurchase agreements with customers 7,161 6 0.33 8,087 6 0.30 6,484 10 0.30 7,985 13 0.31
Other borrowings(1) 750,274 996 0.53 1,043,004 963 0.37 750,329 1,982 0.53 669,987 1,013 0.30
Subordinated notes 224,188 3,181 5.69 223,793 3,172 5.70 224,140 6,326 5.69 223,752 6,344 5.70
Subordinated debentures(1) 120,680 939 3.12 120,120 1,149 3.85 120,610 1,881 3.14 120,052 2,436 4.08
Total interest bearing liabilities 17,837,695 23,353 0.53 17,944,773 50,541 1.13 18,134,697 52,781 0.59 17,223,293 112,739 1.32
Non-interest bearing liabilities:
Non-interest bearing deposits 4,366,380 3,478,030 4,170,685 3,202,663
Other non-interest bearing liabilities 314,768 257,874 321,546 251,026
Total liabilities 22,518,843 21,680,677 22,626,928 20,676,982
Common stockholders' equity 4,423,093 4,110,038 4,365,454 4,114,035
Noncontrolling interest 3,117 3,105 3,103 3,109
Total liabilities and stockholders' equity $ 26,945,053 $ 25,793,820 $ 26,995,485 $ 24,794,126
Net interest income – FTE $ 242,101 $ 218,346 $ 478,012 $ 429,254
Net interest margin – FTE 3.95 % 3.74 % 3.91 % 3.84 %
Core spread(2) 5.02 % 4.12 % 4.91 % 4.14 %

(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 $0.02 million for the second quarter and $0.05 million for the first six months of 2021 compared to $0.27 million for the second quarter and $0.62 million for the first six months of 2020. In the absence of this interest capitalization, the rates on other borrowings would have been 0.54% for the second quarter and 0.55% for the first six months of 2021 compared to 0.47% for the second quarter and 0.49% for the first six months of 2020. Capitalized interest included in subordinated debentures totaled $0.03 million for the second quarter and $0.18 million for the first six months of 2020 (none in the second quarter or first six months of 2021). In the absence of this interest capitalization, the rates on subordinated debentures would have been 3.95% for the second quarter and 4.37% for the first six months of 2020.

(2) 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 Tangible Common Stockholders' Equity
and the Annualized Return on Average Tangible Common Stockholders' Equity
Unaudited
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 March 31, 2021 June 30, 2021 June 30, 2020
(Dollars in thousands)
Net income available to common stockholders $ 150,535 $ 50,266 $ 148,416 $ 298,950 $ 62,132
Average common stockholders' equity before noncontrolling interest $ 4,423,093 $ 4,110,038 $ 4,307,174 $ 4,365,454 $ 4,114,035
Less average intangible assets:
Goodwill (660,789 ) (660,789 ) (660,789 ) (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (12,175 ) (19,563 ) (13,828 ) (12,997 ) (20,987 )
Total average intangibles (672,964 ) (680,352 ) (674,617 ) (673,786 ) (681,776 )
Average tangible common stockholders' equity $ 3,750,129 $ 3,429,686 $ 3,632,557 $ 3,691,668 $ 3,432,259
Return on average common stockholders' equity(1) 13.65 % 4.92 % 13.97 % 13.81 % 3.04 %
Return on average tangible common stockholders' equity(1) 16.10 % 5.89 % 16.57 % 16.33 % 3.64 %

(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
June 30, March 31,
2021 2020 2021
(In thousands, except per share amounts)
Total common stockholders' equity before noncontrolling interest $ 4,501,676 $ 4,110,666 $ 4,383,205
Less intangible assets:
Goodwill (660,789 ) (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (11,336 ) (18,377 ) (12,939 )
Total intangibles (672,125 ) (679,166 ) (673,728 )
Total tangible common stockholders' equity $ 3,829,551 $ 3,431,500 $ 3,709,477
Shares of common stock outstanding 129,720 129,350 129,719
Book value per common share $ 34.70 $ 31.78 $ 33.79
Tangible book value per common share $ 29.52 $ 26.53 $ 28.60


Calculation of Total Tangible Common Stockholders' Equity
and the Ratio of Total Tangible Common Stockholders' Equity
to Total Tangible Assets
Unaudited
June 30,
2021 2020
(Dollars in thousands)
Total common stockholders' equity before noncontrolling interest $ 4,501,676 $ 4,110,666
Less intangible assets:
Goodwill (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (11,336 ) (18,377 )
Total intangibles (672,125 ) (679,166 )
Total tangible common stockholders' equity $ 3,829,551 $ 3,431,500
Total assets $ 26,605,938 $ 26,380,409
Less intangible assets:
Goodwill (660,789 ) (660,789 )
Core deposit and other intangible assets, net of accumulated amortization (11,336 ) (18,377 )
Total intangibles (672,125 ) (679,166 )
Total tangible assets $ 25,933,813 $ 25,701,243
Ratio of total common stockholders' equity to total assets 16.92 % 15.58 %
Ratio of total tangible common stockholders' equity to total tangible assets 14.77 % 13.35 %


Calculation of Pre-Tax Pre-Provision Net Revenue
Unaudited
Three Months Ended Six Months Ended
June 30, 2021 June 30, 2020 March 31, 2021 June 30, 2021 June 30, 2020
(Dollars in thousands)
Income before taxes $ 195,709 $ 65,205 $ 192,253 $ 387,960 $ 81,571
Provision for credit losses (30,932 ) 72,026 (31,559 ) (62,491 ) 189,689
Pre-tax pre-provision net revenue $ 164,777 $ 137,231 $ 160,694 $ 325,469 $ 271,260


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


MENAFN22072021004107003653ID1102494377


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