Bank OZK Announces Record Third Quarter 2024 Earnings
LITTLE ROCK, Ark., Oct. 17, 2024 (GLOBE NEWSWIRE) -- Bank OZK (the "Bank") (NASDAQ:OZK) today announced that net income available to common stockholders for the third quarter of 2024 was $177.1 million, its eighth consecutive quarterly record and a 4.4% increase from $169.7 million for the third quarter of 2023. For the first nine months of 2024, net income available to common stockholders was $522.1 million, a 3.7% increase from $503.5 million for the first nine months of 2023.
Diluted earnings per common share for the third quarter of 2024 were $1.55, its eighth consecutive quarterly record and a 4.0% increase from $1.49 for the third quarter of 2023. For the first nine months of 2024, diluted earnings per common share were $4.58, a 4.8% increase from $4.37 for the first nine months of 2023.
Pre-tax pre-provision net revenue ("PPNR") was a record $282.6 million for the third quarter of 2024, a 7.0% increase from $264.0 million for the third quarter of 2023. For the first nine months of 2024, PPNR was $834.6 million, an 8.4% increase from $769.9 million for the first nine months of 2023. The calculation of PPNR and the reconciliation to generally accepted accounting principles ("GAAP") are included in the schedules accompanying this release.
Provision for credit losses was $46.4 million for the third quarter of 2024 compared to $44.0 million for the third quarter of 2023, while our net charge-offs were only $26.0 million and $9.4 million, respectively, for those quarters. For the first nine months of 2024, provision for credit losses was $138.4 million compared to $121.6 million for the first nine months of 2023, while our net charge-offs were only $45.1 million and $25.4 million, respectively, for those nine month periods. The Bank's total allowance for credit losses ("ACL") was $594.5 million at September 30, 2024, an increase of $133.1 million or 28.8% compared to $461.5 million at September 30, 2023.
The Bank's annualized returns on average assets, average common stockholders' equity and average tangible common stockholders' equity for the third quarter of 2024 were 1.90%, 13.65% and 15.65%, respectively, compared to 2.13%, 14.81% and 17.33%, respectively, for the third quarter of 2023. For the first nine months of 2024, the Bank's annualized returns on average assets, average common stockholders' equity and average tangible common stockholders' equity were 1.93%, 13.92%, and 16.04%, respectively, compared to 2.26%, 15.06%, and 17.68%, respectively, for the first nine months of 2023. The calculation of the Bank's returns on average common stockholders' equity and average tangible common stockholders' equity and the reconciliations to GAAP are included in the schedules accompanying this release.
George Gleason, Chairman and Chief Executive Officer, stated, "We are very pleased with our results for the quarter just ended giving us our eighth consecutive quarter of record net income and earnings per share and ninth consecutive quarter of record net interest income. This consistent achievement of record results has allowed us to consistently increase dividends, significantly grow capital and opportunistically repurchase shares, all while significantly increasing our allowance for credit losses."
KEY BALANCE SHEET METRICS
Loans were $29.22 billion at September 30, 2024, a 15.3% increase from $25.33 billion at September 30, 2023. Deposits were $30.57 billion at September 30, 2024, a 19.6% increase from $25.55 billion at September 30, 2023. Total assets were $37.44 billion at September 30, 2024, a 14.3% increase from $32.77 billion at September 30, 2023.
Common stockholders' equity was $5.25 billion at September 30, 2024, a 15.1% increase from $4.56 billion at September 30, 2023. Tangible common stockholders' equity was $4.59 billion at September 30, 2024, a 17.7% increase from $3.90 billion at September 30, 2023.
Book value per common share was $46.31 at September 30, 2024, a $5.96 increase from $40.35 at September 30, 2023. Tangible book value per common share was $40.49 at September 30, 2024, a $5.99 increase from $34.50 at September 30, 2023.
The Bank's strong earnings and earning retention rate, among other factors, have contributed to our robust capital ratios. The Bank's ratio of total common stockholders' equity to total assets was 14.03% at September 30, 2024, compared to 13.93% at September 30, 2023. The Bank's ratio of total tangible common stockholders' equity to total tangible assets was 12.49% at September 30, 2024, compared to 12.16% at September 30, 2023. The calculations of the Bank's total common stockholders' equity, tangible common stockholders' equity, ratio of total tangible common stockholders' equity to total tangible assets and tangible book value per common share, and the reconciliations to GAAP, are included in the schedules accompanying this release.
ASSET QUALITY
The Bank's ratio of nonperforming loans to total loans was 0.60% at September 30, 2024, compared to 0.30% at June 30, 2024 and 0.27% as of September 30, 2023. The Bank's ratio of nonperforming assets to total assets was 0.68% at September 30, 2024, compared to 0.42% at June 30, 2024 and September 30, 2023. The Bank's annualized ratio of net charge-offs to average total loans was 0.36% for the quarter and 0.21% for the first nine months of 2024, compared to 0.15% for both the third quarter and first nine months of 2023.
MANAGEMENT'S COMMENTS, CONFERENCE CALL, TRANSCRIPT AND FILINGS
In connection with this release, the Bank released management's comments on its quarterly results, which are available at http://ir.ozk.com. This release should be read in conjunction with management's comments on the quarterly results.
Management will conduct a conference call to take questions at 10:00 a.m. CT (11:00 a.m. ET) on Friday, October 18, 2024. Interested parties may access the conference call live via webcast on the Bank's investor relations website at https://ir.ozk.com/news/event-calendar, or may participate via telephone by registering using this online form. Upon registration, all telephone participants will receive the dial-in number along with a unique PIN number that can be used to access the call. A replay of the conference call webcast will be archived on the Bank's website for at least 30 days.
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 ir.ozk.com. To receive automated email alerts for these materials please visit https://ir.ozk.com/other/email-alerts 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 common stockholders' equity, return on average tangible common stockholders' equity, tangible book value per common share, total common stockholders' equity, total tangible common stockholders' equity, the ratio of total tangible common stockholders' equity to total tangible assets, and PPNR, to assess the strength of its capital, its ability to generate earnings on tangible capital invested by its shareholders and trends in its net revenue. These measures typically adjust GAAP financial measures to exclude intangible assets or provision for credit losses. Management believes presentation of these non-GAAP financial measures provides useful supplemental information which contributes to a proper understanding of the financial results and capital levels of the Bank. These non-GAAP disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP performance measures that may be presented by other banks. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables at the end of this release under the caption "Reconciliation of Non-GAAP Financial Measures."
FORWARD-LOOKING STATEMENTS
This press 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 in implementing the Bank's growth, expansion and acquisition strategies, including obtaining regulatory or other approvals, delays in acquiring satisfactory sites, obtaining permits and designing, constructing and opening new offices, relocating, selling or closing existing offices, or integrating any 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 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; conditions within the banking industry; recently enacted and potential new laws and regulatory requirements or changes to existing laws and regulatory requirements, including changes affecting oversight of the financial services industry, changes intended to manage or mitigate climate and related environmental risks or changes in the interpretation and enforcement of such laws and requirements, changes as a result of the U.S. presidential and congressional elections, and the costs and expenses to comply with new and/or existing legislation and regulatory requirements; uncertainty regarding changes in U.S. government monetary and fiscal policy; the impact of any U.S. federal government shutdown or budgetary crisis; FDIC special assessments or changes to regular assessments; the ability to keep pace with technological changes, including changes regarding artificial intelligence and maintaining cybersecurity; the impact of any failure in, or breach of, our operational or security systems or infrastructure, or those of third parties with whom we do business or others, including as a result of cyberattacks or an increase in the incidence or severity of fraud, illegal payments, security breaches or other illegal acts impacting the Bank, its customers or others; natural disasters; acts of war or terrorism; the potential impact of continuing inflationary pressures; the potential impact of supply chain disruptions; national or international political instability or military conflict, including the conflict in the Middle East and the ongoing war in Ukraine; competition for and costs of recruiting and retaining qualified personnel; impairment of our goodwill; adoption of new accounting standards, or changes in existing standards; and adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions or rulings as well as other factors identified in this communication or as detailed from time to time in our public filings, including those factors described in the disclosures under the headings "Forward-Looking Information" and "Item 1A. Risk Factors" in our most recent Annual Report on Form 10-K for the year ended December 31, 2023 and our quarterly reports on Form 10-Q. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described in, or implied by, such forward-looking statements. The Bank disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.
GENERAL INFORMATION
Bank OZK (NASDAQ:OZK) is a regional bank providing innovative financial solutions delivered by expert bankers with a relentless pursuit of excellence. Established in 1903, Bank OZK conducts banking operations in approximately 240 offices in nine states including Arkansas, Georgia, Florida, North Carolina, Tennessee, Texas, New York, California and Mississippi and had $37.44 billion in total assets as of September 30, 2024. For more information, visit www.ozk.com.
Bank OZKConsolidated Balance SheetsUnaudited
September 30, 2024
December 31, 2023
(Dollars in thousands)
ASSETS
Cash and cash equivalents
$
2,678,726
$
2,149,529
Investment securities, available for sale ("AFS")
2,952,022
3,244,371
Federal Home Loan Bank of Dallas ("FHLB") and other bankers' bank stocks
13,808
50,400
Loans
29,218,144
26,459,075
Allowance for loan losses
(420,058
)
(339,394
)
Net Loans
28,798,086
26,119,681
Premises and equipment, net
712,787
676,821
Foreclosed assets
77,949
61,720
Accrued interest receivable
173,246
170,110
Bank owned life insurance ("BOLI")
823,598
808,490
Goodwill
660,789
660,789
Other, net
550,793
295,546
Total assets
$
37,441,804
$
34,237,457
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand non-interest bearing
$
3,855,214
$
4,095,874
Savings and interest bearing transaction
9,303,466
9,074,296
Time
17,412,933
14,234,973
Total deposits
30,571,613
27,405,143
Other borrowings
151,035
805,318
Subordinated notes
348,370
347,761
Subordinated debentures
121,652
121,652
Reserve for losses on unfunded credit commitments
174,479
161,834
Accrued interest payable and other liabilities
481,100
255,773
Total liabilities
31,848,249
29,097,481
Commitments and contingencies
Stockholders' equity:
Preferred stock: $0.01 par value; 100,000,000 shares authorized; 14,000,000 issued and outstanding at September 30, 2024 and December 31, 2023
338,980
338,980
Common stock: $0.01 par value; 300,000,000 shares authorized; 113,449,886 and 113,148,672 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
1,135
1,131
Additional paid-in capital
1,619,832
1,612,446
Retained earnings
3,684,869
3,283,818
Accumulated other comprehensive loss
(51,957
)
(97,374
)
Total stockholders' equity before noncontrolling interest
5,592,859
5,139,001
Noncontrolling interest
696
975
Total stockholders' equity
5,593,555
5,139,976
Total liabilities and stockholders' equity
$
37,441,804
$
34,237,457
Bank OZKConsolidated Statements of IncomeUnaudited
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
(Dollars in thousands, except per share amounts)
Interest income:
Loans
$
629,934
$
529,031
$
1,843,167
$
1,428,291
Investment securities:
Taxable
7,874
9,887
26,000
29,761
Tax-exempt
11,555
9,534
33,876
28,288
Deposits with banks
32,689
17,061
83,899
36,338
Total interest income
682,052
565,513
1,986,942
1,522,678
Interest expense:
Deposits
286,608
178,823
811,735
408,577
Other borrowings
953
14,326
5,668
30,339
Subordinated notes
2,631
2,631
7,808
7,808
Subordinated debentures
2,462
2,472
7,405
7,017
Total interest expense
292,654
198,252
832,616
453,741
Net interest income
389,398
367,261
1,154,326
1,068,937
Provision for credit losses
46,443
44,036
138,378
121,638
Net interest income after provision for credit losses
342,955
323,225
1,015,948
947,299
Non-interest income:
Service charges on deposit accounts:
NSF fees
—
1,102
—
3,097
Overdraft fees
3,563
3,606
10,354
10,262
All other service charges
7,561
6,973
21,958
20,662
Trust income
2,529
2,213
6,935
6,358
BOLI income:
Increase in cash surrender value
5,758
5,252
16,870
15,295
Death benefits
1,344
—
1,344
—
Loan service, maintenance and other fees
6,534
3,995
19,358
12,165
Gains on sales of other assets
1,303
364
2,835
5,740
Net gains (losses) on investment securities
25
(270
)
560
2,066
Other
4,988
2,492
11,257
9,877
Total non-interest income
33,605
25,727
91,471
85,522
Non-interest expense:
Salaries and employee benefits
75,324
64,107
218,297
192,576
Net occupancy and equipment
17,380
17,797
53,775
55,357
Other operating expenses
47,697
47,074
139,092
136,616
Total non-interest expense
140,401
128,978
411,164
384,549
Income before taxes
236,159
219,974
696,255
648,272
Provision for income taxes
54,953
46,144
161,958
132,564
Net income
181,206
173,830
534,297
515,708
Earnings attributable to noncontrolling interest
(12
)
(37
)
(22
)
(50
)
Preferred stock dividends
4,047
4,047
12,141
12,141
Net income available to common stockholders
$
177,147
$
169,746
$
522,134
$
503,517
Basic earnings per common share
$
1.56
$
1.50
$
4.60
$
4.39
Diluted earnings per common share
$
1.55
$
1.49
$
4.58
$
4.37
Bank OZKConsolidated Statements of Stockholders' EquityUnaudited
Preferred Stock
Common Stock
AdditionalPaid-inCapital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income
Non-Controlling Interest
Total
(Dollars in thousands, except per share amounts)
Three months ended September 30, 2024:
Balances, June 30, 2024
$
338,980
$
1,135
$
1,615,101
$
3,553,523
$
(100,939
)
$
985
$
5,408,785
Net income
—
—
—
181,206
—
—
181,206
Earnings attributable to noncontrolling interest
—
—
—
(12
)
—
12
—
Total other comprehensive income
—
—
—
—
48,982
—
48,982
Preferred stock dividends, $0.28906 per share
—
—
—
(4,047
)
—
—
(4,047
)
Common stock dividends, $0.40 per share
—
—
—
(45,801
)
—
—
(45,801
)
Return of capital paid to noncontrolling interest
—
—
—
—
—
(301
)
(301
)
Issuance of 3,197 shares of common stock pursuant to stock-based compensation plans
—
—
28
—
—
—
28
Repurchase and cancellation of 11,903 shares of common stock under share repurchase program
—
—
(462
)
—
—
—
(462
)
Stock-based compensation expense
—
—
5,165
—
—
—
5,165
Forfeitures of 6,646 shares of unvested restricted common stock
—
—
—
—
—
—
—
Balances, September 30, 2024
$
338,980
$
1,135
$
1,619,832
$
3,684,869
$
(51,957
)
$
696
$
5,593,555
Nine months ended September 30, 2024:
Balances, December 31, 2023
$
338,980
$
1,131
$
1,612,446
$
3,283,818
$
(97,374
)
$
975
$
5,139,976
Cumulative effect of change in accounting principle
—
—
—
12,690
—
—
12,690
Balances, January 1, 2024
338,980
1,131
1,612,446
3,296,508
(97,374
)
975
5,152,666
Net income
—
—
—
534,297
—
—
534,297
Earnings attributable to noncontrolling interest
—
—
—
(22
)
—
22
—
Total other comprehensive income
—
—
—
—
45,417
—
45,417
Preferred stock dividends, $0.86718 per share
—
—
—
(12,141
)
—
—
(12,141
)
Common stock dividends, $1.17 per share
—
—
—
(133,773
)
—
—
(133,773
)
Return of capital paid to noncontrolling interest
—
—
—
—
—
(301
)
(301
)
Issuance of 521,651 shares of common stock pursuant to stock-based compensation plans
—
6
439
—
—
—
445
Repurchase and cancellation of 11,903 shares of common stock under share repurchase program
—
—
(462
)
—
—
—
(462
)
Repurchase and cancellation of 184,415 shares of common stock withheld for tax pursuant to stock-based compensation plans
—
(2
)
(8,008
)
—
—
—
(8,010
)
Stock-based compensation expense
—
—
15,417
—
—
—
15,417
Forfeitures of 24,119 shares of unvested restricted common stock
—
—
—
—
—
—
—
Balances, September 30, 2024
$
338,980
$
1,135
$
1,619,832
$
3,684,869
$
(51,957
)
$
696
$
5,593,555
Bank OZKConsolidated Statements of Stockholders' EquityUnaudited
Preferred Stock
Common Stock
AdditionalPaid-inCapital
Retained Earnings
Accumulated Other Comprehensive (Loss) Income
Non-Controlling Interest
Total
(Dollars in thousands, except per share amounts)
Three months ended September 30, 2023:
Balances, June 30, 2023
$
338,980
$
1,131
$
1,602,964
$
3,026,247
$
(159,431
)
$
1,372
$
