Bank of the Ozarks (the “Bank”) (Nasdaq: OZRK) today announced
that net income for the second quarter of 2018 was $114.8 million,
a 26.8% increase from the second quarter of 2017. Diluted earnings
per common share for the second quarter of 2018 were $0.89, a 21.9%
increase from the second quarter of 2017.
For the six months ended June 30, 2018, net income totaled
$227.9 million, a 26.8% increase from the first six months of 2017.
Diluted earnings per common share for the first six months of 2018
were $1.77, a 21.2% increase from the first six months of 2017.
The Bank’s annualized returns on average assets, average common
stockholders’ equity and average tangible common stockholders’
equity for the second quarter of 2018 were 2.10%, 12.90% and
16.08%, respectively, compared to 1.90%, 12.05% and 15.81%,
respectively, for the second quarter of 2017. The Bank’s annualized
returns on average assets, average common stockholders’ equity and
average tangible common stockholders’ equity for the first six
months of 2018 were 2.13%, 13.03%, and 16.30%, respectively,
compared to 1.92%, 12.41%, and 16.45%, respectively, for the first
six months of 2017. The calculation of the Bank’s 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 report another excellent quarter,
continuing our long tradition of achieving industry-leading results
quarter after quarter. Our 2.10% annualized return on average
assets, 4.66% net interest margin, 35.2% efficiency ratio, and
0.07% annualized net charge-off ratio for total loans are just a
few among many highlights in the quarter. In addition, our
non-purchased loans have grown $3.2 billion, or 28.6%, over the
last four quarters. Our outstanding team continues to work hard
delivering great results for both our shareholders and
customers.”
KEY BALANCE SHEET
METRICS
Total loans, including purchased loans, were $16.8 billion at
June 30, 2018, a 10.4% increase from $15.2 billion at June 30,
2017. Non-purchased loans, which exclude loans acquired in previous
acquisitions, were $14.2 billion at June 30, 2018, a 28.6% increase
from $11.0 billion at June 30, 2017. Purchased loans, which consist
of loans acquired in previous acquisitions, were $2.6 billion at
June 30, 2018, a 38.0% decrease from $4.2 billion at June 30, 2017.
The unfunded balance of closed loans totaled $12.0 billion at June
30, 2018, a 1.0% increase from $11.9 billion at June 30, 2017, but
a 4.4% decrease from $12.6 billion at March 31, 2018.
Deposits were $17.9 billion at June 30, 2018, a 10.2% increase
from $16.2 billion at June 30, 2017. Total assets were $22.2
billion at June 30, 2018, a 10.7% increase from $20.1 billion at
June 30, 2017.
Common stockholders’ equity was $3.61 billion at June 30, 2018,
a 10.9% increase from $3.26 billion at June 30, 2017. Tangible
common stockholders’ equity was $2.91 billion at June 30, 2018, a
14.4% increase from $2.54 billion at June 30, 2017. Book value per
common share was $28.10 at June 30, 2018, a 10.5% increase from
$25.43 at June 30, 2017. Tangible book value per common share was
$22.63 at June 30, 2018, a 14.0% increase from $19.85 at June 30,
2017. 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 16.26% at June 30, 2018 compared to 16.25% at June 30,
2017. Its ratio of total tangible common stockholders’ equity to
total tangible assets was 13.53% at June 30, 2018 compared to
13.15% at June 30, 2017. 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.
NET INTEREST INCOME
Net interest income for the second quarter of 2018 was a record
$224.7 million, an 11.2% increase from $202.1 million for the
second quarter of 2017. Net interest margin, on a fully taxable
equivalent (“FTE”) basis, was 4.66% for the second quarter of 2018,
a decrease of 33 basis points from 4.99% for the second quarter of
2017. Average earning assets were $19.4 billion for the second
quarter of 2018, a 17.7% increase from $16.5 billion for the second
quarter of 2017.
Net interest income for the first six months of 2018 was $442.4
million, a 12.6% increase from $392.9 million for the first six
months of 2017. Net interest margin, on a FTE basis, was 4.68% for
the first six months of 2018, a decrease of 25 basis points from
4.93% for the first six months of 2017. Average earning assets were
$19.2 billion for the first six months of 2018, a 17.3% increase
from $16.3 billion for the first six months of 2017.
NON-INTEREST INCOME
Non-interest income for the second quarter of 2018 decreased
14.0% to $27.4 million compared to $31.8 million for the second
quarter of 2017. Non-interest income for the first six months of
2018 decreased 7.9% to $56.1 million compared to $60.9 million for
the first six months of 2017. The Bank’s service charges on deposit
accounts declined from $11.76 million for the second quarter of
2017 to $9.70 million for the second quarter of 2018 primarily due
to the Durbin Amendment’s impact on the Bank’s interchange revenue
effective as of July 1, 2017. The Bank’s mortgage lending income
declined from $1.91 million in the second quarter of 2017 to
effectively none in the second quarter of 2018. This was a result
of the Bank’s decision in December 2017 to exit the secondary
market mortgage lending business and the substantial wind down of
that business in the first quarter of 2018.
NON-INTEREST EXPENSE
Non-interest expense for the second quarter of 2018 increased
6.3% to $89.1 million compared to $83.8 million for the second
quarter of 2017. Non-interest expense for the first six months of
2018 increased 12.8% to $182.9 million compared to $162.1 million
for the first six months of 2017. Non-interest expense for both the
second quarter and the first six months of 2018 included
approximately $0.6 million related to the pending name change that
will be effective on July 16, 2018 and the related strategic
rebranding initiatives.
The Bank’s efficiency ratio (non-interest expense divided by the
sum of net interest income FTE and non-interest income) for the
second quarter of 2018 was 35.2% compared to 35.3% for the second
quarter of 2017. The Bank’s efficiency ratio for the first six
months of 2018 was 36.5% compared to 35.2% for the first six months
of 2017.
ASSET QUALITY, CHARGE-OFFS AND
ALLOWANCE
Excluding purchased loans, the Bank’s ratio of nonperforming
loans as a percent of total loans was 0.10% at June 30, 2018
compared to 0.11% at June 30, 2017, and its ratio of nonperforming
assets as a percent of total assets was 0.15% at June 30, 2018
compared to 0.23% at June 30, 2017.
Excluding purchased loans, the Bank’s ratio of loans past due 30
days or more, including past due non-accrual loans, to total loans
was 0.12% at June 30, 2018 compared to 0.15% at June 30, 2017.
The Bank’s annualized net charge-off ratio for non-purchased
loans was 0.05% for the second quarter of 2018 compared to 0.03%
for the second quarter of 2017 and 0.04% for both the first six
months of 2018 and the first six months of 2017. The Bank’s
annualized net charge-off ratio for all loans was 0.07% for the
second quarter of 2018 compared to 0.05% for the second quarter of
2017 and 0.06% for the first six months of 2018 compared to 0.07%
for the first six months of 2017.
The Bank’s allowance for loan losses for its non-purchased loans
was $103.0 million, or 0.73% of total non-purchased loans, at June
30, 2018 compared to $80.7 million, or 0.73% of total non-purchased
loans, at June 30, 2017. The Bank had $1.6 million of allowance for
loan losses for its purchased loans at both June 30, 2018 and
2017.
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. 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 Thursday, July 12, 2018. 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 of the Ozarks 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
5268256. The call will be available live or in a recorded version
on the Bank’s Investor Relations website at ir.bankozarks.com under
“Company News.” 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 and
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.bankozarks.com.
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 sites, hiring or retaining qualified personnel,
obtaining regulatory or other approvals, obtaining permits and
designing, constructing and opening new offices; the ability to
enter into and/or close additional acquisitions; problems with, or
additional expenses relating to, integrating acquisitions; the
inability to realize expected cost savings and/or synergies from
acquisitions; problems with managing acquisitions; the effect of
the announcements of any future acquisition on customer
relationships and operating results; the availability 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;
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; failure to receive approval of the Bank’s pending
applications for change in accounting methods with the Internal
Revenue Service; changes in legal, financial and/or regulatory
requirements; recently enacted and potential legislation and
regulatory actions, including changes expected to result from the
Tax Cuts and Jobs Act and the Economic Growth, Regulatory Relief
and Consumer Protection Act 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,
our operational or security systems or infrastructure, or those of
third parties with whom we do business, including as a result of
cyber-attacks or an increase in the incidence or severity of fraud,
illegal payments, security breaches or other illegal acts impacting
the Bank or its customers; 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 Bank’s public filings, including those factors included 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, 2017 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 of the Ozarks (Nasdaq: OZRK) is a regional bank providing
innovative financial solutions delivered by expert bankers with a
relentless pursuit of excellence. Bank of the Ozarks has been
recognized as the #1 bank in the nation in its asset size for eight
consecutive years.
Headquartered in Little Rock, Arkansas, Bank of the Ozarks
conducts operations through 253 offices in Arkansas, Georgia,
Florida, North Carolina, Texas, Alabama, South Carolina,
California, New York, and Mississippi. Bank of the Ozarks can be
found at www.bankozarks.com and on Facebook, Twitter and LinkedIn
or contacted at (501) 978-2265 or P.O. Box 8811, Little Rock,
Arkansas 72231-8811.
Bank of the Ozarks
Consolidated Balance Sheets
Unaudited
June 30, December
31, 2018 2017 (Dollars in thousands, except per
share amounts)
ASSETS Cash and cash equivalents $ 585,352 $
440,388 Investment securities - available for sale 2,617,859
2,622,796 Non-purchased loans 14,183,533 12,733,937 Purchased loans
2,580,341 3,309,092 Allowance for loan losses (104,638 )
(94,120 ) Net loans 16,659,236 15,948,909 Premises and
equipment, net 540,998 519,811 Foreclosed assets 20,662 25,357
Accrued interest receivable 71,828 64,608 Bank owned life insurance
(“BOLI”) 711,327 658,147 Intangible assets, net 702,751 709,040
Other, net 310,367 286,591 Total assets
$ 22,220,380 $ 21,275,647
LIABILITIES AND
STOCKHOLDERS’ EQUITY Deposits: Demand non-interest bearing $
2,785,861 $ 2,726,623 Savings and interest bearing transaction
10,267,464 10,051,122 Time 4,843,760 4,414,600
Total deposits 17,897,085 17,192,345 Repurchase agreements
with customers 179,851 69,331 Other borrowings 1,766 22,320
Subordinated notes 223,088 222,899 Subordinated debentures 119,077
118,800 Accrued interest payable and other liabilities
182,571 186,164 Total liabilities
18,603,438 17,811,859 Commitments and
contingencies Stockholders’ equity:
Preferred stock; $0.01 par value;
100,000,000 shares authorized; no shares issued or outstanding at
June 30, 2018 or December 31, 2017
— —
Common stock; $0.01 par value; 300,000,000
shares authorized; 128,616,417 and 128,287,550 shares issued and
outstanding at June 30, 2018 and December 31, 2017,
respectively
1,286 1,283 Additional paid-in capital 2,230,809 2,221,844 Retained
earnings 1,428,721 1,250,313 Accumulated other comprehensive loss
(46,913 ) (12,712 ) Total stockholders’ equity before
noncontrolling interest 3,613,903 3,460,728 Noncontrolling interest
3,039 3,060 Total stockholders’ equity
3,616,942 3,463,788 Total liabilities
and stockholders’ equity $ 22,220,380 $ 21,275,647
Bank of the Ozarks
Consolidated Statements of
Income
Unaudited
Three Months Ended Six
Months Ended June 30, June 30, 2018
2017 2018 2017 (Dollars
in thousands, except per share amounts) Interest income:
Non-purchased loans $ 210,385 $ 141,985 $ 400,812 $ 269,413
Purchased loans 46,862 75,729 97,839 151,723 Investment securities:
Taxable 11,476 4,181 22,907 7,997 Tax-exempt 4,102 6,148 8,262
12,660 Deposits with banks and federal funds sold 839
115 1,336 134 Total interest income
273,664 228,158 531,156 441,927
Interest expense: Deposits 43,832 21,479 78,224 39,856 Repurchase
agreements with customers 385 30 544 60 Other borrowings 46 255 679
477 Subordinated notes 3,180 3,052 6,326 6,240 Subordinated
debentures 1,560 1,237 2,946 2,418
Total interest expense 49,003 26,053
88,719 49,051 Net interest income 224,661
202,105 442,437 392,876 Provision for loan losses 9,610
6,103 15,177 11,036 Net interest income
after provision for loan losses 215,051 196,002
427,260 381,840 Non-interest income:
Service charges on deposit accounts 9,704 11,764 19,229 23,065
Mortgage lending income 1 1,910 493 3,484 Trust income 1,591 1,577
3,384 3,208 BOLI income 5,259 4,594 12,839 9,058 Other income from
purchased loans, net 2,744 4,777 3,995 8,515 Loan service,
maintenance and other fees 5,641 3,427 10,384 6,133 Net gains on
investment securities — 404 17 404 Gains on sales of other assets
844 672 2,270 2,292 Other 1,602 2,715 3,483
4,739
Total non-interest income
27,386 31,840 56,094 60,898
Non-interest expense: Salaries and employee benefits 41,665
39,892 87,164 78,446 Net occupancy and equipment 13,827 12,937
27,977 26,129 Other operating expenses 33,615 30,999
67,776 57,520 Total non-interest expense
89,107 83,828 182,917 162,095
Income before taxes 153,330 144,014 300,437 280,643
Provision for income taxes 38,589 53,488
72,563 100,907 Net income 114,741 90,526 227,874
179,736 Earnings attributable to noncontrolling interest 10
6 21 (16 ) Net income available to common
stockholders $ 114,751 $ 90,532 $ 227,895 $ 179,720
Basic earnings per common share $ 0.89 $ 0.73 $ 1.77 $ 1.47
Diluted earnings per common share $ 0.89 $ 0.73 $ 1.77 $
1.46 Dividends declared per common share $ 0.195 $
0.175 $ 0.385 $ 0.345
Bank of the Ozarks
Consolidated Statements of
Stockholders’ Equity
Unaudited
CommonStock
AdditionalPaid-InCapital
RetainedEarnings
AccumulatedOtherComprehensiveLoss
Non-ControllingInterest
Total (Dollars in thousands, except per share
amounts) Balances – December 31, 2016 $ 1,213 $ 1,901,880 $
914,434 $ (25,920 ) $ 3,264 $ 2,794,871
Cumulative effect of change in accounting
principals
— 1,133 2,720
(3,408 ) — 445 Balances – January 1,
2017, as adjusted 1,213 1,903,013 917,154 (29,328 ) 3,264 2,795,316
Net income — — 179,736 — — 179,736 Earnings attributable to
noncontrolling interest — — (16 ) — 16 — Total other comprehensive
income — — — 20,928 — 20,928
Common stock dividends paid, $0.345 per
share
— — (41,935 ) — — (41,935 ) Dividend paid to non-controlling
interest — — — — (250 ) (250 )
Issuance of 81,350 shares of common stock
for exercise of stock options
1 1,365 — — — 1,366
Issuance of 238,794 shares of unvested
restricted common stock
2 (2 ) — — — — Stock-based compensation expense — 8,269 — — — 8,269
Forfeiture of 12,231 shares of unvested
restricted common stock
— — — — — —
Issuance of 14,476 shares of common stock
to non-employee directors
— — — — — —
Issuance of 6,600,000 shares of common
stock, net of stock issue costs
66 299,657 — —
— 299,723 Balances – June 30,
2017 $ 1,282 $ 2,212,302 $ 1,054,939 $ (8,400
) $ 3,030 $ 3,263,153 Balances – December 31,
2017 $ 1,283 $ 2,221,844 $ 1,250,313 $ (12,712 ) $ 3,060 $
3,463,788 Net income — — 227,874 — — 227,874 Earnings attributable
to noncontrolling interest — — 21 — (21 ) — Total other
comprehensive loss — — — (34,201 ) — (34,201 )
Common stock dividends paid, $0.385 per
share
— — (49,487 ) — — (49,487 )
Issuance of 210,890 shares of common stock
for exercise of stock options
2 5,585 — — — 5,587
Issuance of 214,591 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 —
7,151 — — — 7,151
Forfeitures of 24,864 shares of unvested
restricted common stock
— — — —
— — Balances – June 30, 2018 $ 1,286
$ 2,230,809 $ 1,428,721 $ (46,913 ) $ 3,039
$ 3,616,942
Bank of the Ozarks
Summary of Non-Interest Expense
Unaudited
Three Months Ended Six
Months Ended June 30, June 30, 2018
2017 2018 2017 (Dollars
in thousands) Salaries and employee benefits $ 41,665 $ 39,892 $
87,164 $ 78,446 Net occupancy and equipment 13,827 12,937 27,977
26,129 Other operating expenses: Professional and outside services
9,112 6,816 17,817 12,154 Postage and supplies 2,218 1,934 4,412
3,853 Advertising and public relations 1,777 1,258 3,107 2,448
Telecommunication services 3,487 3,107 6,683 7,077 Software and
data processing 3,110 2,289 6,450 4,762 ATM expense 1,118 1,513
2,481 2,651 Travel and meals 2,498 2,061 4,651 3,916 FDIC insurance
2,700 2,500 5,400 3,500 FDIC and state assessments 858 908 1,720
1,650 Loan collection and repossession expense 503 1,803 1,293
3,105 Writedowns of foreclosed and other assets 460 870 611 1,466
Amortization of intangibles 3,145 3,145 6,290 6,290 Other
2,629 2,795 6,861 4,648 Total non-interest
expense $ 89,107 $ 83,828 $ 182,917 $ 162,095
Bank of the Ozarks
Summary of Total Loans
Outstanding
Unaudited
June 30, 2018 December
31, 2017 (Dollars in thousands) Real estate:
Residential 1-4 family $ 1,073,455 6.4 % $ 1,174,427
7.3 % Non-farm/non-residential 4,329,453 25.8 4,478,876 27.9
Construction/land development 7,344,070 43.8 6,648,061 41.5
Agricultural 160,805 1.0 150,003 0.9 Multifamily residential
400,867 2.4 508,514 3.2 Total real estate
13,308,650 79.4 12,959,881 80.8 Commercial and industrial 780,193
4.6 738,225 4.6 Consumer 1,977,483 11.8 1,472,593 9.2 Other
697,548 4.2 872,330 5.4 Total loans $
16,763,874 100.0 % $ 16,043,029 100.0 %
Bank of the Ozarks
Selected Consolidated Financial
Data
(Dollars in thousands, except per share
amounts)
Unaudited
Three Months EndedJune
30,
Six Months EndedJune 30,
2018 2017 % Change
2018 2017 % Change
Income statement
data:
Net interest income $ 224,661 $ 202,105 11.2 % $ 442,437 $ 392,876
12.6 % Provision for loan losses 9,610 6,103 57.5 15,177 11,036
37.5 Non-interest income 27,386 31,840 (14.0 ) 56,094 60,898 (7.9 )
Non-interest expense 89,107 83,828 6.3 182,917 162,095 12.8 Net
income available to common stockholders 114,751 90,532 26.8 227,895
179,720 26.8
Common stock
data:
Net income per share - diluted $ 0.89 $ 0.73 21.9 % $ 1.77 $ 1.46
21.2 % Net income per share - basic 0.89 0.73 21.9 1.77 1.47 20.4
Cash dividends per share 0.195 0.175 11.4 0.385 0.345 11.6 Book
value per share 28.10 25.43 10.5 28.10 25.43 10.5 Tangible book
value per share(1) 22.63 19.85 14.0 22.63 19.85 14.0 Diluted shares
outstanding (thousands) 128,804 124,198 128,783 123,084 End of
period shares outstanding (thousands) 128,616 128,190 128,616
128,190
Balance sheet
data at period end:
Assets $ 22,220,380 $ 20,064,589 10.7 % $ 22,220,380 $ 20,064,589
10.7 % Total loans 16,763,874 15,184,342 10.4 16,763,874 15,184,342
10.4 Non-purchased loans 14,183,533 11,025,203 28.6 14,183,533
11,025,203 28.6 Purchased loans 2,580,341 4,159,139 (38.0 )
2,580,341 4,159,139 (38.0 ) Allowance for loan losses 104,638
82,320 27.1 104,638 82,320 27.1 Foreclosed assets 20,662 34,000
(39.2 ) 20,662 34,000 (39.2 ) Investment securities 2,617,859
2,101,751 24.6 2,617,859 2,101,751 24.6 Goodwill and other
intangible assets 702,751 715,330 (1.8 ) 702,751 715,330 (1.8 )
Deposits 17,897,085 16,241,440 10.2 17,897,085 16,241,440 10.2
Repurchase agreements with customers 179,851 68,502 162.5 179,851
68,502 162.5 Other borrowings 1,766 42,486 (95.8 ) 1,766 42,486
(95.8 ) Subordinated notes 223,088 222,706 0.2 223,088 222,706 0.2
Subordinated debentures 119,077 118,519 0.5 119,007 118,519 0.5
Unfunded balance of closed loans 11,999,661 11,883,679 1.0
11,999,661 11,883,679 1.0 Common stockholders’ equity 3,613,903
3,260,123 10.9 3,613,903 3,260,123 10.9
Net unrealized losses on investment
securities AFS included in common stockholders’ equity
(46,913 ) (8,400 ) (46,913 ) (8,400 ) Loan (including purchased
loans) to deposit ratio 93.67 % 93.49 % 93.67 % 93.49 %
Selected
ratios:
Return on average assets (2) 2.10 % 1.90 % 2.13 % 1.92 % Return on
average common stockholders’ equity (2) 12.90 12.05 13.03 12.41
Return on average tangible common stockholders’ equity (1) (2)
16.08 15.81 16.30 16.45 Average common equity to total average
assets 16.30 15.81 16.34 15.45 Net interest margin – FTE (2) 4.66
4.99 4.68 4.93 Efficiency ratio 35.19 35.32 36.52 35.18 Net
charge-offs to average non-purchased loans (2) (3) 0.05 0.03 0.04
0.04 Net charge-offs to average total loans(2) 0.07 0.05 0.06 0.07
Nonperforming loans to total loans (4) 0.10 0.11 0.10 0.11
Nonperforming assets to total assets(4) 0.15 0.23 0.15 0.23
Allowance for loan losses to non-purchased
loans (5)
0.73 0.73 0.73 0.73
Other
information:
Non-accrual loans(4) $ 13,543 $ 11,628 $ 13,543 $ 11,628 Accruing
loans - 90 days past due(4) — — — — Troubled and restructured
loans(4) — — — — Impaired purchased loans 6,577 11,679 6,577 11,679
(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 of the Ozarks
Supplemental Quarterly Financial
Data
(Dollars in thousands, except per share
amounts)
Unaudited
9/30/16 12/31/16
3/31/17 6/30/17
9/30/17 12/31/17
3/31/18 6/30/18
Earnings
Summary:
Net interest income $ 175,150 $ 194,800 $ 190,771 $ 202,105 $
209,722 $ 214,831 $ 217,776 $ 224,661 Federal tax (FTE) adjustment
2,533 3,254 3,594
3,396 3,014 2,450 1,166
1,151 Net interest income (FTE) 177,683
198,054 194,365 205,501 212,736 217,281 218,942 225,812 Provision
for loan losses (7,086 ) (9,855 ) (4,933 ) (6,103 ) (7,777 ) (9,279
) (5,567 ) (9,610 ) Non-interest income 29,231 30,571 29,058 31,840
32,747 30,213 28,707 27,386 Non-interest expense (78,781 )
(78,358 ) (78,268 ) (83,828 ) (84,399 )
(86,177 ) (93,810 ) (89,107 ) Pretax income
(FTE) 121,047 140,412 140,222 147,410 153,307 152,038 148,272
154,481 FTE adjustment (2,533 ) (3,254 ) (3,594 ) (3,396 ) (3,014 )
(2,450 ) (1,166 ) (1,151 ) Provision for income taxes (42,470 )
(49,312 ) (47,417 ) (53,488 ) (54,246 ) (3,434 ) (33,973 ) (38,589
) Noncontrolling interest (14 ) (59 ) (23 )
6 (40 ) 10 11
10
Net income available to common
stockholders
$ 76,030 $ 87,787 $ 89,188 $ 90,532 $
96,007 $ 146,164 $ 113,144 $ 114,751
Earnings per common share – diluted $ 0.66 $ 0.72 $ 0.73 $ 0.73 $
0.75 $ 1.14 $ 0.88 $ 0.89
Non-interest
Income:
Service charges on deposit accounts $ 10,926 $ 11,759 $ 11,301 $
11,764 $ 9,729 $ 10,058 $ 9,525 $ 9,704 Mortgage lending income
2,616 2,097 1,574 1,910 1,620 1,294 492 1 Trust income 1,564 1,623
1,631 1,577 1,755 1,729 1,793 1,591 BOLI income 4,638 4,564 4,464
4,594 4,453 5,166 7,580 5,259 Other income from purchased loans
4,635 4,993 3,737 4,777 2,933 2,009 1,251 2,744
Loan service, maintenance and other
fees
1,687 2,962 2,706 3,427 5,274 4,289 4,743 5,641 Net gains on
investment securities — 4 — 404 2,429 1,201 17 — Gains on sales of
other assets 594 1,537 1,619 672 1,363 1,899 1,426 844 Other
2,571 1,032 2,026 2,715
3,191 2,568 1,880
1,602 Total non-interest income $ 29,231 $
30,571 $ 29,058 $ 31,840 $ 32,747 $
30,213 $ 28,707 $ 27,386
Non-interest
Expense:
Salaries and employee benefits $ 38,069 $ 36,481 $ 38,554 $ 39,892
$ 35,331 $ 38,417 $ 45,499 $ 41,665 Net occupancy expense 11,669
13,936 13,192 12,937 13,595 13,474 14,150 13,827 Other operating
expenses 29,043 27,941 26,522
30,999 35,473 34,286
34,161 33,615 Total non-interest
expense $ 78,781 $ 78,358 $ 78,268 $ 83,828
$ 84,399 $ 86,177 $ 93,810 $ 89,107
Balance Sheet
Data:
Total assets $ 18,451,783 $ 18,890,142 $ 19,152,212 $ 20,064,589 $
20,768,493 $ 21,275,647 $ 22,039,439 $ 22,220,380 Non-purchased
loans 8,759,766 9,605,093 10,216,875 11,025,203 12,047,094
12,733,937 13,674,561 14,183,533 Purchased loans 5,399,831
4,958,022 4,580,047 4,159,139 3,731,536 3,309,092 2,934,535
2,580,341 Investment securities 1,341,894 1,471,612 1,470,568
2,101,751 1,975,102 2,622,796 2,612,961 2,617,859 Deposits
15,123,804 15,574,878 15,713,427 16,241,440 16,823,359 17,192,345
17,833,672 17,897,085 Unfunded balance of closed loans 8,660,804
10,070,043 11,258,762 11,883,679 12,519,839 13,192,439 12,551,032
11,999,661
Common stockholders’ equity
2,756,346 2,791,607 2,873,317 3,260,123 3,334,740 3,460,728
3,526,605 3,613,903
Allowance for
Loan Losses:
Balance at beginning of period $ 65,133 $ 69,760 $ 76,541 $ 78,224
$ 82,320 $ 86,784 $ 94,120 $ 98,097 Net charge-offs (2,459 ) (3,074
) (3,250 ) (2,007 ) (3,313 ) (1,943 ) (1,590 ) (3,069 ) Provision
for loan losses 7,086 9,855
4,933 6,103 7,777 9,279
5,567 9,610 Balance at end of
period $ 69,760 $ 76,541 $ 78,224 $ 82,320
$ 86,784 $ 94,120 $ 98,097 $ 104,638
Selected
Ratios:
Net interest margin – FTE(1) 4.90 % 5.02 % 4.88 % 4.99 % 4.84 %
4.72 % 4.69 % 4.66 % Efficiency ratio 38.07 34.27 35.03 35.32 34.38
34.82 37.88 35.19
Net charge-offs to average non-purchased
loans(1) (2)
0.06 0.08 0.05 0.03 0.08 0.08 0.04 0.05
Net charge-offs to average total
loans(1)
0.07 0.09 0.09 0.05 0.09 0.05 0.04 0.07
Nonperforming loans to total loans(3)
0.08 0.15 0.11 0.11 0.11 0.10 0.09 0.10 Nonperforming assets to
total assets(3) 0.28 0.31 0.25 0.23 0.20 0.18 0.16 0.15
Allowance for loan losses to total
non-purchased loans(4)
0.78 0.78 0.75 0.73 0.71 0.73 0.71 0.73
Loans past due 30 days or more, including
past due non-accrual loans, to total loans(3)
0.17 0.16 0.16 0.15 0.12 0.15 0.14 0.12
(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 of the Ozarks
Average Consolidated Balance Sheets and
Net Interest Analysis – FTE
Unaudited
Three Months Ended June 30,
Six Months Ended June 30, 2018
2017 2018 2017 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 $ 186,103 $ 839 1.81 % $
87,025 $ 115 0.53 % $ 148,304 $ 1,336 1.82 % $ 83,302 $ 135 0.33 %
Investment securities: Taxable 2,055,737 11,476 2.24 739,184 4,181
2.27 2,058,995 22,907 2.24 701,378 7,997 2.30 Tax-exempt – FTE
545,173 5,192 3.82 774,837 9,458 4.90 550,942 10,458 3.83 789,134
19,477 4.98 Non-purchased loans – FTE 13,892,522 210,446 6.08
10,517,666 142,071 5.42 13,453,745 400,933 6.01 10,174,598 269,586
5.34 Purchased loans 2,757,235 46,862 6.82
4,391,894 75,729 6.92 2,968,315 97,839 6.65
4,598,340 151,723 6.65 Total earning assets – FTE
19,436,770 274,815 5.67 16,510,606 231,554 5.63 19,180,301 533,473
5.61 16,346,752 448,918 5.54 Non-interest earning assets
2,446,188 2,558,960 2,403,283 2,562,131 Total
assets $ 21,882,958 $ 19,069,566 $ 21,583,584 $ 18,908,883
LIABILITIES AND STOCKHOLDERS’ EQUITY Interest bearing
liabilities: Deposits: Savings and interest bearing transaction $
10,248,619 $ 29,249 1.14 % $ 8,084,021 $ 10,912 0.54 % $ 10,054,064
$ 51,818 1.04 % $ 7,973,949 $ 19,370 0.49 % Time deposits of $100
or more 3,182,463 11,027 1.39 3,211,778 7,737 0.97 3,109,697 19,808
1.28 3,226,600 14,869 0.93 Other time deposits 1,449,406
3,556 0.98 1,572,703 2,830 0.72
1,447,687 6,598 0.92 1,635,929 5,617 0.69
Total interest bearing deposits 14,880,488 43,832 1.18 12,868,502
21,479 0.67 14,611,448 78,224 1.08 12,836,478 39,856 0.63
Repurchase agreements with customers 161,246 385 0.96 76,610 30
0.16 136,975 544 0.80 78,238 60 0.16 Other borrowings 35,573 46
0.52 42,365 255 2.41 100,398 679 1.36 42,251 477 2.27 Subordinated
notes 223,041 3,180 5.72 222,660 3,052 5.50 222,994 6,326 5.72
222,611 6,240 5.65 Subordinated debentures 119,006
1,560 5.26 118,449 1,237 4.19 118,935
2,946 5.00 118,375 2,418 4.12 Total interest bearing
liabilities 15,419,354 49,003 1.27 13,328,586 26,053 0.78
15,190,750 88,719 1.18 13,297,953 49,051 0.74 Non-interest bearing
liabilities: Non-interest bearing deposits 2,717,316 2,643,836
2,691,855 2,609,420 Other non-interest bearing liabilities
176,302 79,331 172,081 77,195 Total
liabilities 18,312,972 16,051,753 18,054,686 15,984,568 Common
stockholders’ equity 3,566,944 3,014,462 3,525,849 2,921,165
Noncontrolling interest 3,042 3,351 3,049
3,150 Total liabilities and stockholders’ equity $
21,882,958 $ 19,069,566 $ 21,583,584 $
18,908,883 Net interest income – FTE $ 225,812 $ 205,501 $
444,754 $ 399,867 Net interest margin – FTE 4.66 % 4.99 % 4.68 %
4.93 %
Bank of the Ozarks
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, June 30, 2018
2017 2018 2017 (Dollars
in thousands) Net income available to common stockholders $ 114,751
$ 90,532 $ 227,895 $ 179,720
Average common stockholders’ equity before
noncontrolling interest
$ 3,566,944 $ 3,014,462 $ 3,525,849 $ 2,921,165 Less average
intangible assets: Goodwill (660,789 ) (660,789 ) (660,789 )
(660,472 )
Core deposit and other intangibles, net of
accumulated amortization
(43,862 ) (56,281 ) (45,483 ) (57,929 )
Total average intangibles (704,651 ) (717,070 )
(706,272 ) (718,401 ) Average tangible common
stockholders’ equity $ 2,862,293 $ 2,297,392 $
2,819,577 $ 2,202,764 Return on average common
stockholders’ equity(1) 12.90 % 12.05 % 13.03
% 12.41 % Return on average tangible common stockholders’
equity(1) 16.08 % 15.81 % 16.30 % 16.45
%
(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, 2018
2017 (In thousands, except per share amounts) Total common
stockholders’ equity before noncontrolling interest $ 3,613,903 $
3,260,123 Less intangible assets: Goodwill (660,789 ) (660,789 )
Core deposit and other intangibles, net of
accumulated amortization
(41,962 ) (54,541 ) Total intangibles (702,751
) (715,330 ) Total tangible common stockholders’ equity $
2,911,152 $ 2,544,793 Shares of common stock
outstanding 128,616 128,190 Book value
per common share $ 28.10 $ 25.43 Tangible book value
per common share $ 22.63 $ 19.85
Calculation of Total Tangible Common
Stockholders’
Equity and the Ratio of Total Tangible
Common
Stockholders’ Equity to Total Tangible
Assets
Unaudited
June 30, 2018
2017 (Dollars in thousands) Total common stockholders’
equity before noncontrolling interest $ 3,613,903 $ 3,260,123 Less
intangible assets: Goodwill (660,789 ) (660,789 )
Core deposit and other intangibles, net of
accumulated amortization
(41,962 ) (54,541 ) Total intangibles (702,751
) (715,330 ) Total tangible common stockholders’ equity $
2,911,152 $ 2,544,793 Total assets $ 22,220,380 $
20,064,589 Less intangible assets: Goodwill (660,789 ) (660,789 )
Core deposit and other intangibles, net of
accumulated amortization
(41,962 ) (54,541 ) Total intangibles (702,751
) (715,330 ) Total tangible assets $ 21,517,629 $
19,349,259 Ratio of total common stockholders’ equity to
total assets 16.26 % 16.25 %
Ratio of total tangible common
stockholders’ equity to total tangible assets
13.53 % 13.15 %
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Bank of the OzarksMedia Contact:Susan Blair,
501-978-2217orInvestor Contact:Tim Hicks, 501-978-2336
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