Bank OZK Announces Third Quarter 2019 Earnings

LITTLE ROCK, Ark., Oct. 17, 2019 (GLOBE NEWSWIRE) — Bank OZK (the “Bank”) (Nasdaq: OZK) today announced that net income for the third quarter of 2019 was $103.9 million, a 40.1% increase from $74.2 million for the third quarter of 2018, but a 6.0% decrease from $110.5 million for the second quarter of 2019.  Diluted earnings per common share for the third quarter of 2019 were $0.81, a 39.7% increase from $0.58 for the third quarter of 2018, but a 5.8% decrease from $0.86 for the second quarter of 2019.

The Bank’s results for the third quarter of 2018 included (i) pretax expenses of $10.8 million as a result of its name change and strategic rebranding and (ii) net charge-offs of $45.5 million on two unrelated credits.

For the first nine months of 2019, net income totaled $325.1 million, a 7.6% increase from $302.1 million for the first nine months of 2018.  Diluted earnings per common share for the first nine months of 2019 were $2.52, a 7.2% increase from $2.35 for the first nine months of 2018.

The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the third quarter of 2019 were 1.81%, 10.22% and 12.33%, respectively, compared to 1.33%, 8.07% and 9.99%, respectively, for the third quarter of 2018.  The Bank’s annualized returns on average assets, average common stockholders’ equity and average tangible common stockholders’ equity for the first nine months of 2019 were 1.92%, 11.07%, and 13.44%, respectively, compared to 1.85%, 11.32%, and 14.11%, respectively, for the first nine months of 2018. The calculation of the Bank’s annualized return on average tangible common stockholders’ equity and the reconciliation to generally accepted accounting principles (“GAAP”) are included in the schedules accompanying this release.  

George Gleason, Chairman and Chief Executive Officer, stated, “We are very pleased to have once again delivered financial metrics among the best in the industry for the quarter just ended.  We continue to maintain our focus on our strong credit culture and consistent discipline, which are paramount in this interest rate and competitive environment.  Our excellent team of bankers have us well positioned for continued success as we remain focused on delivering long-term value for our shareholders.”

KEY BALANCE SHEET METRICS

Total loans were $17.73 billion at September 30, 2019, a 6.0% increase from $16.73 billion at September 30, 2018.  Non-purchased loans, which exclude loans acquired in previous acquisitions, were $16.31 billion at September 30, 2019, a 12.9% increase from $14.44 billion at September 30, 2018.  Purchased loans, which consist of loans acquired in previous acquisitions, were $1.43 billion at September 30, 2019, a 37.5% decrease from $2.29 billion at September 30, 2018.  The unfunded balance of closed loans was $11.43 billion at September 30, 2019, a 3.9% decrease from $11.89 billion at September 30, 2018, but a 2.4% increase from $11.17 billion at June 30, 2019.

Deposits were $18.44 billion at September 30, 2019, a 3.5% increase from $17.82 billion at September 30, 2018.  Total assets were $23.40 billion at September 30, 2019, a 6.0% increase from $22.09 billion at September 30, 2018.

Common stockholders’ equity was $4.08 billion at September 30, 2019, an 11.6% increase from $3.65 billion at September 30, 2018.  Tangible common stockholders’ equity was $3.39 billion at September 30, 2019, a 14.8% increase from $2.95 billion at September 30, 2018.  Book value per common share was $31.63 at September 30, 2019, an 11.3% increase from $28.41 at September 30, 2018.  Tangible book value per common share was $26.30 at September 30, 2019, a 14.5% increase from $22.97 at September 30, 2018.  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 increased to 17.43% at September 30, 2019 compared to 16.54% at September 30, 2018.  Its ratio of total tangible common stockholders’ equity to total tangible assets increased to 14.93% at September 30, 2019 compared to 13.81% at September 30, 2018.  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 the results for the quarter just ended, which are available at http://ir.ozk.com.  This release should be read in conjunction with management’s comments on the results for the third quarter of 2019. 

Management will conduct a conference call to take questions on these quarterly results and management’s comments at 10:00 a.m. CT (11:00 a.m. ET) on October 18, 2019.  Interested parties may listen to this call by dialing 1-844-818-5110 (U.S. and Canada) or 210-229-8841 (internationally) and asking for the Bank OZK conference call.  A recorded playback of the call will be available for one week following the call at 1-855-859-2056 (U.S. and Canada) or 404-537-3406 (internationally).  The passcode for this playback is 7188336.  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 and the ratio of total tangible common stockholders’ equity to total tangible assets, as important measures of the strength of its capital and its ability to generate earnings on its tangible capital invested by its shareholders. These measures typically adjust GAAP financial measures to exclude intangible assets.  Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks.  Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”

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 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 change in the method for determining 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; 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; adoption of new accounting standards, including the estimated effects from the adoption of the current expected credit loss (“CECL”) model on January 1, 2020, or changes in existing standards; and adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions or rulings as well as other factors identified in this press release or as detailed from time to time in the other public reports the Bank files with the FDIC, including those factors described in the disclosures under the headings “Forward-Looking Information” and “Item 1A. Risk Factors” in the Bank’s most recent Annual Report on Form 10-K for the year ended December 31, 2018 and its quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those projected in, or implied by, such forward-looking statements.  The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

GENERAL INFORMATION

Bank OZK (Nasdaq: OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence.  Bank OZK has been recognized as the top performing bank in the nation in its asset size 13 times in the past eight years. Headquartered in Little Rock, Arkansas, Bank OZK conducts operations through more than 250 offices in Arkansas, Georgia, Florida, North Carolina, Texas, Alabama, South Carolina, California, New York and Mississippi.  Bank OZK can be found at www.ozk.com and on Facebook, Twitter and LinkedIn or contacted at (501) 978-2265 or P. O. Box 8811, Little Rock, Arkansas 72231-8811. 

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

Bank OZK
Consolidated Balance Sheets
Unaudited
		September 30,				December 31,
		2019				2018
		(Dollars in thousands, except per share amounts)
ASSETS
Cash and cash equivalents		$	1,029,946			$	290,672
Investment securities – available for sale (“AFS”)			2,414,722				2,862,340
Federal Home Loan Bank of Dallas and other banker’s bank stocks			13,656				25,941
Non-purchased loans			16,307,621				15,073,791
Purchased loans			1,427,230				2,044,032
Allowance for loan losses			(109,001	)			(102,264	)
Net loans			17,625,850				17,015,559
Premises and equipment, net			687,511				567,189
Foreclosed assets			33,319				16,171
Accrued interest receivable			76,218				81,968
Bank owned life insurance (“BOLI”)			735,531				721,238
Goodwill and other intangible assets, net			687,397				696,461
Other, net			98,529				110,491
Total assets		$	23,402,679			$	22,388,030
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Demand non-interest bearing		$	2,793,369			$	2,748,273
Savings and interest bearing transaction			8,441,339				9,682,713
Time			7,205,370				5,507,429
Total deposits			18,440,078				17,938,415
Repurchase agreements with customers			12,156				20,564
Other borrowings			301,421				96,692
Subordinated notes			223,567				223,281
Subordinated debentures			119,775				119,358
Accrued interest payable and other liabilities			224,234				216,355
Total liabilities			19,321,231				18,614,665
Commitments and contingencies
Stockholders’ equity:
Preferred stock; $0.01 par value; 100,000,000 shares authorized; no shares   issued or outstanding at September 30, 2019 or December 31, 2018			—				—
Common stock; $0.01 par value; 300,000,000 shares authorized;   128,946,359 and 128,611,049 shares issued and outstanding at   September 30, 2019 and December 31, 2018, respectively			1,289				1,286
Additional paid-in capital			2,247,973				2,237,948
Retained earnings			1,801,414				1,565,201
Accumulated other comprehensive income (loss)			27,648				(34,105	)
Total stockholders’ equity before noncontrolling interest			4,078,324				3,770,330
Noncontrolling interest			3,124				3,035
Total stockholders’ equity			4,081,448				3,773,365
Total liabilities and stockholders’ equity		$	23,402,679			$	22,388,030

Bank OZK
Consolidated Statements of Income
Unaudited
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2019				2018				2019				2018
		(Dollars in thousands, except per share amounts)
Interest income:
Non-purchased loans		$	244,954			$	219,847			$	740,900			$	620,659
Purchased loans			26,042				40,173				84,756				138,012
Investment securities:
Taxable			12,511				12,472				40,992				35,380
Tax-exempt			3,363				3,991				10,930				12,252
Deposits with banks and federal funds sold			2,647				1,112				4,001				2,448
Total interest income			289,517				277,595				881,579				808,751
Interest expense:
Deposits			66,248				51,785				196,727				130,009
Repurchase agreements with customers			5				215				39				759
Other borrowings			90				144				1,497				824
Subordinated notes			3,216				3,216				9,542				9,542
Subordinated debentures			1,178				1,621				4,570				4,567
Total interest expense			70,737				56,981				212,375				145,701
Net interest income			218,780				220,614				669,204				663,050
Provision for loan losses			7,854				41,949				21,303				57,126
Net interest income after provision for loan losses			210,926				178,665				647,901				605,924
Non-interest income:
Service charges on deposit accounts			10,827				9,730				30,841				28,959
Trust income			1,975				1,730				5,544				5,114
BOLI income			5,414				5,321				15,753				18,160
Other income from purchased loans			674				1,418				2,925				5,413
Loan service, maintenance and other fees			4,197				4,724				13,636				15,108
Gains (losses) on sales of other assets			189				(518	)			875				1,753
Net gains on investment securities			—				—				713				17
Other			3,170				1,716				6,834				5,691
Total non-interest income			26,446				24,121				77,121				80,215
Non-interest expense:
Salaries and employee benefits			48,376				41,477				140,801				128,641
Net occupancy and equipment			14,825				14,358				44,163				42,335
Other operating expenses			37,713				47,107				111,760				114,883
Total non-interest expense			100,914				102,942				296,724				285,859
Income before taxes			136,458				99,844				428,298				400,280
Provision for income taxes			32,574				25,665				103,189				98,227
Net income			103,884				74,179				325,109				302,053
Earnings attributable to noncontrolling interest			7				1				(9	)			22
Net income available to common stockholders		$	103,891			$	74,180			$	325,100			$	302,075
Basic earnings per common share		$	0.81			$	0.58			$	2.52			$	2.35
Diluted earnings per common share		$	0.81			$	0.58			$	2.52			$	2.35

Bank OZK
Consolidated Statements of Stockholders’ Equity
Unaudited
		Common Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Non- Controlling Interest				Total
		(Dollars in thousands, except per share amounts)
Three months ended September 30, 2019:
Balances – June 30, 2019		$	1,289			$	2,243,779			$	1,728,486			$	19,693			$	3,131			$	3,996,378
Net income			—				—				103,884				—				—				103,884
Earnings attributable to noncontrolling interest			—				—				7				—				(7	)			—
Total other comprehensive income			—				—				—				7,955				—				7,955
Common stock dividends paid, $0.24 per   share			—				—				(30,963	)			—				—				(30,963	)
Issuance of 10,800 shares of common   stock for exercise of stock options			—				214				—				—				—				214
Stock-based compensation expense			—				3,980				—				—				—				3,980
Forfeitures of 11,157 shares of unvested   restricted common stock			—				—				—				—				—				—
Balances – September 30, 2019		$	1,289			$	2,247,973			$	1,801,414			$	27,648			$	3,124			$	4,081,448
Nine months ended September 30, 2019:
Balances – December 31, 2018		$	1,286			$	2,237,948			$	1,565,201			$	(34,105	)		$	3,035			$	3,773,365
Net income			—				—				325,109				—				—				325,109
Earnings attributable to noncontrolling   interest			—				—				(9	)			—				9				—
Total other comprehensive income			—				—				—				61,753				—				61,753
Common stock dividends paid, $0.69   per share			—				—				(88,887	)			—				—				(88,887	)
Noncontrolling interest cash contribution			—				—				—				—				80				80
Issuance of 67,350 shares of common   stock for exercise of stock options			1				1,090				—				—				—				1,091
Issuance of 406,074 shares of unvested   restricted common stock			4				(4	)			—				—				—				—
Repurchase and cancellation of 62,742   shares of common stock			(1	)			(1,646	)			—				—				—				(1,647	)
Stock-based compensation expense			—				10,584				—				—				—				10,584
Forfeiture of 75,372 shares of unvested   restricted common stock			(1	)			1				—				—				—				—
Balances – September 30, 2019		$	1,289			$	2,247,973			$	1,801,414			$	27,648			$	3,124			$	4,081,448

Bank OZK
Consolidated Statements of Stockholders’ Equity (continued)
Unaudited
		Common Stock				Additional Paid-In Capital				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Non- Controlling Interest				Total
		(Dollars in thousands, except per share amounts)
Three months ended September 30, 2018:
Balances – June 30, 2018		$	1,286			$	2,230,809			$	1,428,721			$	(46,913	)		$	3,039			$	3,616,942
Net income			—				—				74,179				—				—				74,179
Earnings attributable to noncontrolling interest			—				—				1				—				(1	)			—
Total other comprehensive loss			—				—				—				(12,338	)			—				(12,338	)
Common stock dividends paid, $0.20 per   share			—				—				(25,723	)			—				—				(25,723	)
Issuance of 6,100 shares of common   stock for exercise of stock options			—				92				—				—				—				92
Issuance of 5,511 shares of unvested   restricted common stock			—				—				—				—				—				—
Stock-based compensation expense			—				3,482				—				—				—				3,482
Forfeitures of 18,791 shares of unvested   restricted common stock			—				—				—				—				—				—
Balances – September 30, 2018		$	1,286			$	2,234,383			$	1,477,178			$	(59,251	)		$	3,038			$	3,656,634
Nine months ended September 30, 2018:
Balances – December 31, 2017		$	1,283			$	2,221,844			$	1,250,313			$	(12,712	)		$	3,060			$	3,463,788
Net income			—				—				302,053				—				—				302,053
Earnings attributable to noncontrolling interest			—				—				22				—				(22	)			—
Total other comprehensive loss			—				—				—				(46,539	)			—				(46,539	)
Common stock dividends paid, $0.585 per   share			—				—				(75,210	)			—				—				(75,210	)
Issuance of 216,990 shares of common   stock for exercise of stock options			2				5,677				—				—				—				5,679
Issuance of 220,102 shares of unvested   restricted common stock			2				(2	)			—				—				—				—
Repurchase and cancellation of 71,750 shares   of common stock			(1	)			(3,769	)			—				—				—				(3,770	)
Stock-based compensation expense			—				10,633				—				—				—				10,633
Forfeitures of 43,655 shares of unvested   restricted common stock			—				—				—				—				—				—
Balances – September 30, 2018		$	1,286			$	2,234,383			$	1,477,178			$	(59,251	)		$	3,038			$	3,656,634

Bank OZK
Summary of Non-Interest Expense
Unaudited
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2019				2018				2019				2018
		(Dollars in thousands)
Salaries and employee benefits		$	48,376			$	41,477			$	140,801			$	128,641
Net occupancy and equipment			14,825				14,358				44,163				42,335
Other operating expenses:
Professional and outside services			9,204				9,725				25,874				27,542
Software and data processing			5,095				3,336				14,561				9,786
Deposit insurance and assessments			2,505				3,948				9,645				11,068
Travel and meals			2,777				2,517				8,385				7,168
Telecommunication services			2,094				3,373				8,248				10,056
Postage and supplies			2,040				2,517				6,201				6,930
Advertising and public relations			2,067				6,977				5,421				10,084
ATM expense			1,277				1,202				3,363				3,683
Loan collection and repossession expense			317				932				2,218				2,225
Writedowns of foreclosed and other assets			354				544				1,509				1,156
Writedown of signage due to strategic rebranding			—				4,915				—				4,915
Amortization of intangibles			2,907				3,145				9,064				9,435
Other			7,076				3,976				17,271				10,835
Total non-interest expense		$	100,914			$	102,942			$	296,724			$	285,859

Bank OZK
Summary of Total Loans Outstanding
Unaudited
		September 30, 2019								December 31, 2018
		(Dollars in thousands)
Real estate:
Residential 1-4 family		$	1,016,834				5.7	%		$	1,049,460				6.1	%
Non-farm/non-residential			3,883,113				21.9				4,319,388				25.2
Construction/land development			6,682,143				37.7				6,562,185				38.4
Agricultural			207,801				1.2				165,088				1.0
Multifamily residential			1,358,127				7.6				1,116,026				6.5
Total real estate			13,148,018				74.1				13,212,147				77.2
Commercial and industrial			706,048				4.0				823,417				4.8
Consumer			2,921,307				16.5				2,345,863				13.7
Other			959,478				5.4				736,396				4.3
Total loans			17,734,851				100.0	%			17,117,823				100.0	%
Allowance for loan losses			(109,001	)							(102,264	)
Net loans		$	17,625,850							$	17,015,559

Summary of Deposits
Unaudited
		September 30, 2019								December 31, 2018
		(Dollars in thousands)
Non-interest bearing		$	2,793,369				15.1	%		$	2,748,273				15.3	%
Interest bearing:
Transaction (NOW)			2,730,018				14.8				2,359,299				13.2
Savings and money market			5,711,321				31.0				7,323,414				40.8
Time deposits less than $100			3,445,873				18.7				2,297,101				12.8
Time deposits of $100 or more			3,759,497				20.4				3,210,328				17.9
Total deposits		$	18,440,078				100.0	%		$	17,938,415				100.0	%

Bank OZK
Selected Consolidated Financial Data
Unaudited
		Three Months Ended September 30,												Nine Months Ended September 30,
		2019				2018				% Change				2019				2018				% Change
	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income		$	218,780			$	220,614				(0.8	)%		$	669,204			$	663,050				0.9	%
Provision for loan losses			7,854				41,949				(81.3	)			21,303				57,126				(62.7	)
Non-interest income			26,446				24,121				9.6				77,121				80,215				(3.9	)
Non-interest expense			100,914				102,942				(2.0	)			296,724				285,859				3.8
Net income available to common stockholders			103,891				74,180				40.1				325,100				302,075				7.6
Common stock data:
Net income per share – diluted		$	0.81			$	0.58				39.7	%		$	2.52			$	2.35				7.2	%
Net income per share – basic			0.81				0.58				39.7				2.52				2.35				7.2
Cash dividends per share			0.24				0.20				20.0				0.69				0.585				17.9
Book value per share			31.63				28.41				11.3				31.63				28.41				11.3
Tangible book value per share(1)			26.30				22.97				14.5				26.30				22.97				14.5
Diluted shares outstanding (thousands)			129,012				128,744								128,995				128,771
End of period shares outstanding (thousands)			128,946				128,609								128,946				128,609
Balance sheet data at period end:
Total assets		$	23,402,679			$	22,086,539				6.0	%		$	23,402,679			$	22,086,539				6.0	%
Total loans			17,734,851				16,725,791				6.0				17,734,851				16,725,791				6.0
Non-purchased loans			16,307,621				14,440,623				12.9				16,307,621				14,440,623				12.9
Purchased loans			1,427,230				2,285,168				(37.5	)			1,427,230				2,285,168				(37.5	)
Allowance for loan losses			109,001				98,200				11.0				109,001				98,200				11.0
Foreclosed assets			33,319				18,470				80.4				33,319				18,470				80.4
Investment securities – AFS			2,414,722				2,669,877				(9.6	)			2,414,722				2,669,877				(9.6	)
Goodwill and other intangible assets, net			687,397				699,606				(1.7	)			687,397				699,606				(1.7	)
Deposits			18,440,078				17,822,915				3.5				18,440,078				17,822,915				3.5
Repurchase agreements with customers			12,156				51,891				(76.6	)			12,156				51,891				(76.6	)
Other borrowings			301,421				1,729			NM					301,421				1,729			NM
Subordinated notes			223,567				223,185				0.2				223,567				223,185				0.2
Subordinated debentures			119,775				119,217				0.5				119,775				119,217				0.5
Unfunded balance of closed loans			11,429,918				11,891,247				(3.9	)			11,429,918				11,891,247				(3.9	)
Total common stockholders’ equity			4,078,324				3,653,596				11.6				4,078,324				3,653,596				11.6
Net unrealized gains (losses) on investment securities AFS   included in common stockholders’ equity			27,648				(59,251	)							27,648				(59,251	)
Loan (including purchased loans) to deposit ratio			96.18	%			93.84	%							96.18	%			93.84	%
Selected ratios:
Return on average assets(2)			1.81	%			1.33	%							1.92	%			1.85	%
Return on average common stockholders’ equity(2)			10.22				8.07								11.07				11.32
Return on average tangible common stockholders’ equity(1) (2)			12.33				9.99								13.44				14.11
Average common equity to total average assets			17.69				16.47								17.31				16.38
Net interest margin – FTE(2)			4.26				4.47								4.41				4.60
Efficiency ratio			40.98				41.87								39.58				38.28
Net charge-offs to average non-purchased loans(2) (3)			0.07				1.32								0.08				0.49
Net charge-offs to average total loans(2)			0.12				1.14								0.11				0.43
Nonperforming loans to total loans(4)			0.17				0.23								0.17				0.23
Nonperforming assets to total assets(4)			0.26				0.23								0.26				0.23
Allowance for loan losses to non-purchased loans(5)			0.66				0.67							0.66				0.67
Other information:
Non-accrual loans(4)		$	25,552			$	32,960							$	25,552			$	32,960
Accruing loans – 90 days past due(4)			—				—								—				—
Troubled and restructured non-purchased loans – accruing (4)			1,510				—								1,510				—
Impaired purchased loans			12,969				5,064								12,969				5,064

⁽¹⁾Calculations of 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 purchased loans and any allowance for such loans.
NM – Not meaningful

Bank OZK
Selected Consolidated Financial Data
Unaudited
		Three Months Ended
		September 30,				June 30,
		2019				2019				% Change
	(Dollars in thousands, except per share amounts)
Income statement data:
Net interest income		$	218,780			$	224,536				(2.6	)%
Provision for loan losses			7,854				6,769				16.0
Non-interest income			26,446				26,603				(0.6	)
Non-interest expense			100,914				99,131				1.8
Net income available to common stockholders			103,891				110,503				(6.0	)
Common stock data:
Net income per share – diluted		$	0.81			$	0.86				(5.8	)%
Net income per share – basic			0.81				0.86				(5.8	)
Cash dividends per share			0.24				0.23				4.3
Book value per share			31.63				30.97				2.1
Tangible book value per share (1)			26.30				25.61				2.7
Diluted shares outstanding (thousands)			129,012				129,079
End of period shares outstanding (thousands)			128,946				128,947
Balance sheet data at period end:
Total assets		$	23,402,679			$	22,960,731				1.9	%
Total loans			17,734,851				17,485,205				1.4
Non-purchased loans			16,307,621				15,786,809				3.3
Purchased loans			1,427,230				1,698,396				(16.0	)
Allowance for loan losses			109,001				106,642				2.2
Foreclosed assets			33,319				33,467				(0.4	)
Investment securities – AFS			2,414,722				2,548,489				(5.2	)
Goodwill and other intangible assets, net			687,397				690,304				(0.4	)
Deposits			18,440,078				18,186,215				1.4
Repurchase agreements with customers			12,156				10,909				11.4
Other borrowings			301,421				201,455				49.6
Subordinated notes			223,567				223,471				0.1
Subordinated debentures			119,775				119,635				0.1
Unfunded balance of closed loans			11,429,918				11,167,055				2.4
Total common stockholders’ equity			4,078,324				3,993,247				2.1
Net unrealized gains on investment securities AFS   included in common stockholders’ equity			27,648				19,693
Loan (including purchased loans) to deposit ratio			96.18	%			96.15	%
Selected ratios:
Return on average assets(2)			1.81	%			1.95	%
Return on average common stockholders’ equity(2)			10.22				11.29
Return on average tangible common stockholders’ equity(1) (2)			12.33				13.70
Average common equity to total average assets			17.69				17.31
Net interest margin – FTE(2)			4.26				4.45
Efficiency ratio			40.98				39.30
Net charge-offs to average non-purchased loans(2) (3)			0.07				0.12
Net charge-offs to average total loans(2)			0.12				0.14
Nonperforming loans to total loans(4)			0.17				0.15
Nonperforming assets to total assets(4)			0.26				0.25
Allowance for loan losses to non-purchased loans(5)			0.66			0.67
Other information:
Non-accrual loans(4)		$	25,552			$	22,860
Accruing loans – 90 days past due(4)			—				—
Troubled and restructured non-purchased loans – accruing(4)			1,510				1,399
Impaired purchased loans			12,969				15,440

⁽¹⁾Calculations of 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 purchased loans and any allowance for such loans

Bank OZK
Supplemental Quarterly Financial Data
Unaudited
		12/31/17				3/31/18				6/30/18				9/30/18				12/31/18				3/31/19				6/30/19				9/30/19
		(Dollars in thousands, except per share amounts)
Earnings Summary:
Net interest income		$	214,831			$	217,776			$	224,661			$	220,614			$	228,382			$	225,888			$	224,536			$	218,780
Federal tax (FTE) adjustment			2,450				1,166				1,151				1,132				1,219				1,207				1,136				1,038
Net interest income (FTE)			217,281				218,942				225,812				221,746				229,601				227,095				225,672				219,818
Provision for loan losses			(9,279	)			(5,567	)			(9,610	)			(41,949	)			(7,271	)			(6,681	)			(6,769	)			(7,854	)
Non-interest income			30,213				28,707				27,386				24,121				27,560				24,072				26,603				26,446
Non-interest expense			(86,177	)			(93,810	)			(89,107	)			(102,942	)			(94,893	)			(96,678	)			(99,131	)			(100,914	)
Pretax income (FTE)			152,038				148,272				154,481				100,976				154,997				147,808				146,375				137,496
FTE adjustment			(2,450	)			(1,166	)			(1,151	)			(1,132	)			(1,219	)			(1,207	)			(1,136	)			(1,038	)
Provision for income taxes			(3,434	)			(33,973	)			(38,589	)			(25,665	)			(38,750	)			(35,889	)			(34,726	)			(32,574	)
Noncontrolling interest			10				11				10				1				3				(6	)			(10	)			7
Net income available to   common stockholders		$	146,164			$	113,144			$	114,751			$	74,180			$	115,031			$	110,706			$	110,503			$	103,891
Earnings per common share – diluted		$	1.14			$	0.88			$	0.89			$	0.58			$	0.89			$	0.86			$	0.86			$	0.81
Non-interest Income:
Service charges on deposit accounts		$	10,058			$	9,525			$	9,704			$	9,730			$	10,585			$	9,722			$	10,291			$	10,827
Trust income			1,729				1,793				1,591				1,730				1,821				1,730				1,839				1,975
BOLI income			5,166				7,580				5,259				5,321				5,751				5,162				5,178				5,414
Other income from purchased loans			2,009				1,251				2,744				1,418				2,370				795				1,455				674
Loan service, maintenance and   other fees			4,289				4,743				5,641				4,724				5,245				4,874				4,565				4,197
Net gains on investment securities			1,201				17				—				—				—				—				713				—
Gains (losses) on sales of other assets			1,899				1,426				844				(518	)			465				284				402				189
Other			3,862				2,372				1,603				1,716				1,323				1,505				2,160				3,170
Total non-interest income		$	30,213			$	28,707			$	27,386			$	24,121			$	27,560			$	24,072			$	26,603			$	26,446
Non-interest Expense:
Salaries and employee benefits		$	38,417			$	45,499			$	41,665			$	41,477			$	41,837			$	44,868			$	47,558			$	48,376
Net occupancy expense			13,474				14,150				13,827				14,358				14,027				14,750				14,587				14,825
Other operating expenses			34,286				34,161				33,615				47,107				39,029				37,060				36,986				37,713
Total non-interest expense		$	86,177			$	93,810			$	89,107			$	102,942			$	94,893			$	96,678			$	99,131			$	100,914
Balance Sheet Data:
Total assets		$	21,275,647			$	22,039,439			$	22,220,380			$	22,086,539			$	22,388,030			$	23,005,652			$	22,960,731			$	23,402,679
Non-purchased loans			12,733,937				13,674,561				14,183,533				14,440,623				15,073,791				15,610,681				15,786,809				16,307,621
Purchased loans			3,309,092				2,934,535				2,580,341				2,285,168				2,044,032				1,864,715				1,698,396				1,427,230
Investment securities – AFS			2,593,873				2,603,600				2,608,439				2,669,877				2,862,340				2,769,602				2,548,489				2,414,722
Deposits			17,192,345				17,833,672				17,897,085				17,822,915				17,938,415				18,476,868				18,186,215				18,440,078
Unfunded balance of closed loans			13,192,439				12,551,032				11,999,661				11,891,247				11,364,975				11,544,218				11,167,055				11,429,918
Common stockholders’ equity			3,460,728				3,526,605				3,613,903				3,653,596				3,770,330				3,882,643				3,993,247				4,078,324
Allowance for Loan Losses:
Balance at beginning of period		$	86,784			$	94,120			$	98,097			$	104,638			$	98,200			$	102,264			$	105,954			$	106,642
Net charge-offs			(1,943	)			(1,590	)			(3,069	)			(48,387	)			(3,207	)			(2,991	)			(6,081	)			(5,495	)
Provision for loan losses			9,279				5,567				9,610				41,949				7,271				6,681				6,769				7,854
Balance at end of period		$	94,120			$	98,097			$	104,638			$	98,200			$	102,264			$	105,954			$	106,642			$	109,001
Selected Ratios:
Net interest margin – FTE(1)			4.72	%			4.69	%			4.66	%			4.47	%			4.55	%			4.53	%			4.45	%			4.26	%
Efficiency ratio			34.82				37.88				35.19				41.87				36.90				38.49				39.30				40.98
Net charge-offs to average   non-purchased loans(1) (2)			0.08				0.04				0.05				1.32				0.06				0.05				0.12				0.07
Net charge-offs to average   total loans(1)			0.05				0.04				0.07				1.14				0.07				0.07				0.14				0.12
Nonperforming loans   to total loans(3)			0.10				0.09				0.10				0.23				0.23				0.22				0.15				0.17
Nonperforming assets to total assets(3)			0.18				0.16				0.15				0.23				0.23				0.21				0.25				0.26
Allowance for loan losses to   total non-purchased loans(4)			0.73				0.71				0.73				0.67				0.67				0.67				0.67				0.66
Loans past due 30 days or   more, including past due non-   accrual loans, to total loans(3)			0.15				0.14				0.12				0.17				0.28				0.28				0.13				0.14

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

Bank OZK
Average Consolidated Balance Sheets and Net Interest Analysis – FTE
Unaudited
		Three Months Ended September 30,																					Nine Months Ended September 30,
		2019											2018										2019											2018
		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		$	486,174			$	2,647			2.16	%		$	240,665		$	1,112			1.83	%		$	242,476			$	4,001			2.21	%		$	179,429		$	2,448			1.82	%
Investment securities:
Taxable			2,027,267				12,511			2.45				2,117,498			12,472			2.34				2,169,218				40,992			2.53				2,078,710			35,380			2.28
Tax-exempt – FTE			462,927				4,256			3.65				532,503			5,051			3.76				495,694				13,835			3.73				544,728			15,509			3.81
Non-purchased loans – FTE			15,934,033				245,099			6.10				14,363,015			219,919			6.07				15,727,447				741,375			6.30				13,760,166			620,851			6.03
Purchased loans			1,553,398				26,042			6.65				2,436,888			40,173			6.54				1,760,740				84,756			6.44				2,789,226			138,012			6.62
Total earning assets – FTE			20,463,799				290,555			5.63				19,690,569			278,727			5.62				20,395,575				884,959			5.80				19,352,259			812,200			5.61
Non-interest earning assets			2,323,028											2,457,577										2,277,584											2,421,623
Total assets		$	22,786,827										$	22,148,146									$	22,673,159										$	21,773,882
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Savings and interest bearing transaction		$	8,792,998			$	30,108			1.36	%		$	10,231,569		$	33,753			1.31	%		$	9,318,915			$	103,721			1.49	%		$	10,113,882		$	85,571			1.13	%
Time deposits of $100 or more			3,564,862				19,803			2.20				3,306,014			13,288			1.59				3,292,375				52,056			2.11				3,175,855			33,096			1.39
Other time deposits			3,069,997				16,337			2.11				1,580,886			4,744			1.19				2,697,660				40,950			2.03				1,492,575			11,342			1.02
Total interest bearing deposits			15,427,857				66,248			1.70				15,118,469			51,785			1.36				15,308,950				196,727			1.72				14,782,312			130,009			1.18
Repurchase agreements with customers			9,037				5			0.24				97,249			215			0.88				14,062				39			0.37				123,587			759			0.82
Other borrowings (1)			29,422				90			1.21				63,909			144			0.90				122,254				1,497			1.64				88,101			824			1.25
Subordinated notes			223,516				3,216			5.71				223,135			3,216			5.72				223,419				9,542			5.71				223,042			9,542			5.72
Subordinated debentures (1)			119,700				1,178			3.90				119,145			1,621			5.40				119,558				4,570			5.11				119,006			4,567			5.13
Total interest bearing liabilities			15,809,532				70,737			1.78				15,621,907			56,981			1.45				15,788,243				212,375			1.80				15,336,048			145,701			1.27
Non-interest bearing liabilities:
Non-interest bearing deposits			2,728,596											2,685,802										2,736,350											2,689,818
Other non-interest bearing liabilities			213,505											189,003										220,126											177,824
Total liabilities			18,751,633											18,496,712										18,744,719											18,203,690
Common stockholders’ equity			4,032,066											3,648,398										3,925,321											3,567,148
Noncontrolling interest			3,128											3,036										3,119											3,044
Total liabilities and stockholders’ equity		$	22,786,827										$	22,148,146									$	22,673,159										$	21,773,882
Net interest income – FTE						$	219,818									$	221,746										$	672,584									$	666,499
Net interest margin – FTE										4.26	%									4.47	%										4.41	%									4.60	%

⁽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 $0.11 million for the third quarter and $0.86 million for the first nine months of 2019 and $0.20 million for the third quarter and $0.38 million for the first nine months of 2018.  In the absence of this interest capitalization, the rates on other borrowings would have been 2.69% for the third quarter and 2.57% for the first nine months of 2019 and 2.12% for the third quarter and 1.83% for the first nine months of 2018.  Capitalized interest included in subordinated debentures totaled $0.45 million for both the third quarter and the first nine months of 2019 and none in 2018.  In the absence of this interest capitalization, the rates on subordinated debentures would have been 5.39% for the third quarter and 5.61% for the first nine months of 2019

Bank OZK
Reconciliation of Non-GAAP Financial Measures
Calculation of Average Tangible Common
Stockholders’ Equity and the Annualized Return on
Average Tangible Common Stockholders’ Equity
Unaudited
		Three Months Ended												Nine Months Ended
		September 30,								June 30,				September 30,
		2019				2018				2019				2019				2018
		(Dollars in thousands)
Net income available to common stockholders		$	103,891			$	74,180			$	110,503			$	325,100			$	302,075
Average common stockholders’ equity before   noncontrolling interest		$	4,032,066			$	3,648,398			$	3,927,522			$	3,925,321			$	3,567,148
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			(28,275	)			(40,743	)			(31,225	)			(31,290	)			(43,886	)
Total average intangibles			(689,064	)			(701,532	)			(692,014	)			(692,079	)			(704,675	)
Average tangible common stockholders’ equity		$	3,343,002			$	2,946,866			$	3,235,508			$	3,233,242			$	2,862,473
Return on average common stockholders’ equity(1)			10.22	%			8.07	%			11.29	%			11.07	%			11.32	%
Return on average tangible common stockholders’ equity(1)			12.33	%			9.99	%			13.70	%			13.44	%			14.11	%

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

Calculation of Total Tangible Common
Stockholders’ Equity and Tangible
Book Value per Common Share
Unaudited
		September 30,								June 30,
		2019				2018				2019
		(In thousands, except per share amounts)
Total common stockholders’ equity before noncontrolling interest		$	4,078,324			$	3,653,596			$	3,993,247
Less intangible assets:
Goodwill			(660,789	)			(660,789	)			(660,789	)
Core deposit and other intangible assets, net of accumulated amortization			(26,608	)			(38,817	)			(29,515	)
Total intangibles			(687,397	)			(699,606	)			(690,304	)
Total tangible common stockholders’ equity		$	3,390,927			$	2,953,990			$	3,302,943
Shares of common stock outstanding			128,946				128,609				128,947
Book value per common share		$	31.63			$	28.41			$	30.97
Tangible book value per common share		$	26.30			$	22.97			$	25.61

Calculation of Total Tangible Common Stockholders’
Equity and the Ratio of Total Tangible Common
Stockholders’ Equity to Total Tangible Assets
Unaudited
		September 30,
		2019				2018
		(Dollars in thousands)
Total common stockholders’ equity before noncontrolling interest		$	4,078,324			$	3,653,596
Less intangible assets:
Goodwill			(660,789	)			(660,789	)
Core deposit and other intangible assets, net of accumulated amortization			(26,608	)			(38,817	)
Total intangibles			(687,397	)			(699,606	)
Total tangible common stockholders’ equity		$	3,390,927			$	2,953,990
Total assets		$	23,402,679			$	22,086,539
Less intangible assets:
Goodwill			(660,789	)			(660,789	)
Core deposit and other intangible assets, net of accumulated amortization			(26,608	)			(38,817	)
Total intangibles			(687,397	)			(699,606	)
Total tangible assets		$	22,715,282			$	21,386,933
Ratio of total common stockholders’ equity to total assets			17.43	%			16.54	%
Ratio of total tangible common stockholders’ equity to total   tangible assets			14.93	%			13.81	%