Bank of the Ozarks Announces Second Quarter 2018 Earnings

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

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

Bank of the Ozarks

Consolidated Statements of Income

Unaudited

Total non-interest income

Bank of the Ozarks

Consolidated Statements of Stockholders’ Equity

Unaudited

CommonStock

AdditionalPaid-InCapital

RetainedEarnings

AccumulatedOtherComprehensiveLoss

Non-ControllingInterest

Cumulative effect of change in accounting principals

Common stock dividends paid, $0.345 per share

Issuance of 81,350 shares of common stock for exercise of stock
options

Issuance of 238,794 shares of unvested restricted common stock

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

Common stock dividends paid, $0.385 per share

Issuance of 210,890 shares of common stock for exercise of stock
options

Issuance of 214,591 shares of unvested restricted common stock

Repurchase and cancellation of 71,750 shares of common stock

Forfeitures of 24,864 shares of unvested restricted common stock

Bank of the Ozarks

Summary of Non-Interest Expense

Unaudited

Bank of the Ozarks

Summary of Total Loans Outstanding

Unaudited

Bank of the Ozarks

Selected Consolidated Financial Data

(Dollars in thousands, except per share amounts)

Unaudited

Three Months EndedJune 30,

Six Months EndedJune 30,

Income statement data:

Common stock data:

Balance sheet data at period end:

Net unrealized losses on investment securities AFS included in
common stockholders’ equity

Selected ratios:

Allowance for loan losses to non-purchased loans (5)

Other information:

(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

Earnings Summary:

Net income available to common stockholders

Non-interest Income:

Loan service, maintenance and other fees

Non-interest Expense:

Balance Sheet Data:

Common stockholders’ equity

Allowance for Loan Losses:

Selected Ratios:

Net charge-offs to average non-purchased loans(1) (2)

Net charge-offs to average total loans(1)

Nonperforming loans to total loans(3)

Allowance for loan losses to total non-purchased loans(4)

Loans past due 30 days or more, including past due non-accrual
loans, to total loans(3)

(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

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

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

Average common stockholders’ equity before noncontrolling interest

Core deposit and other intangibles, net of accumulated amortization

(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

Core deposit and other intangibles, net of accumulated amortization

Calculation of Total Tangible Common Stockholders’

Equity and the Ratio of Total Tangible Common

Stockholders’ Equity to Total Tangible Assets

Unaudited

Core deposit and other intangibles, net of accumulated amortization

Core deposit and other intangibles, net of accumulated amortization

Ratio of total tangible common stockholders’ equity to total
tangible assets

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