Bank Ozk · NASDAQ:OZK
Bank Ozk — Bank of the Ozarks — IPO Roadshow (June 2016)
44 slides from Bank Ozk's IPO roadshow presentation, Jun 13, 2016
Slide 1: Subordinated Debt Offering Presentation
Issuer Free Writing Prospectus Dated June 13, 2016 Filed pursuant to Rule 433 Registration Statement No. 333-203388 Subordinated Debt Offering Presentation June 2016
Slide 2: Forward-Looking Information
Forward-Looking Information This slide presentation and certain of our other filings with the Securities and Exchange Commission (“SEC”) contain statements that constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933
Slide 3: Registration Statement; Use of Non-GAAP Financial Measures
Registration Statement The Company has filed a registration statement (File No. 333-203388) (including a base prospectus) and related preliminary prospectus supplement dated June 13, 2016 with the SEC for the offering to which this communication relates. Before you invest, you should read the prospe
Slide 4: Proposed Offering
Proposed Offering • Issuer: Bank of the Ozarks, Inc. (“OZRK”) • Security: Fixed-to-Floating Subordinated Notes due 2026 • Credit Rating: Kroll Bond Rating: BBB / Egan-Jones Rating (1): A- • Term: 10 years • Optional Redemption: Optionalredemption 5 years after issuance date • Covenants: Consistent w
Slide 5: History
History 1903 1937 1979 1983 1994 1995 1997 Newton County Bank of Ozark Gleason Gleason Launches de Relocates Bank of the Bank chartered chartered in purchases purchases novo branching headquarters to Ozarks, Inc. holds in Jasper, AR Ozark, AR Bank of Ozark Newton County plan; changes Little Rock, AR
Slide 6: A Tradition of High Performance
Community Banker of the Year Top Performing Bank Top Performing Bank Top Performing Regional Bank American Banker, ABA Banking Journal, ABA Banking Journal, SNL Financial, December 2010 April 2011 April 2012 April 2012 A Tradition of High Performance Top Performing Bank Top Performing Bank Top Perfo
Slide 7: Key Operating Metrics
Key Operating Metrics Capital Adequacy ($ thousands) 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 3/31/16 Tier 1 Capital $375,597 $466,017 $548,054 $676,574 $851,681 $1,417,940 $1,448,298 Tier 1 Leverage Ratio 11.88% 12.06% 14.40% 14.19% 12.92% 14.96% 14.05% Common equity Tier 1 13.43% 15.2
Slide 8: A Track Record of Solid Earnings Growth
A Track Record of Solid Earnings Growth 53.7% Increase $200.0 182.3b Net Income ($ in Millions) • Record net income in 16 of 19 years $150.0 as a public company. a 118.6 • 37 years under current leadership. 101.3 91.2 29.6% $100.0 Red bars denote record annual results. 77.0 Increase 64.0 d 51.7 c 39
Slide 9: The Rewards of Discipline, Hard Work
The Rewards of: Discipline An Ability to Capitalize on Opportunities Hard Work ROAA (%) ROAE & ROATE (%) 27.79 2.70 27.04 2.13 2.14 2.11 21.6222.12 2.04 2.01 1.98 17.25 16.16 16.61 16.80 16.2816.73 16.64 17.02 15.08 15.59 14.97 13.7514.05 14.00 1.23 1.14 1.07 1.00 1.01 1.04 0.97 8.90 9.54 9.01 9.30
Slide 10: Our Business Strategy
Our Business Strategy The Company seeks to maximize long-term stakeholder value through year-to-year growth in earning assets (loans, leases, and investments), deposits, net income and earnings per share in a manner consistent with safe, sound and prudent banking practices. Organic Growth Engines: •
Slide 11: Our Business Strategy continued
Our Business Strategy continued - The geographic and product diversity of and within these different growth engines are significant factors to achieving our excellent asset quality and planned growth in earning assets (loans, leases, and investments) apart from acquisitions. Furthermore, we have des
Slide 12: History of Net Charge-Offs Well Below Industry Average
History of Net Charge-Offs Well Below Industry Average 3.00% From 2000 through 2015, our net charge-off 2.55 2.52 ratio was 38% of industry average. 2.50% Since going public in 1997, our annual net 2.00% charge-off ratio has been below the industry 1.75 average every year. 1.55 Q1 2016 Net Charge-Of
Slide 13: Recent History of Credit Quality
Recent History of Credit Quality Quarter Year Ended December 31, Ended 2011 2012 2013 2014 2015 3/31/2016 Asset quality ratios: Netcharge-offs toaverageloansandleases(1) 0.69% 0.30% 0.14% 0.12% 0.18% 0.06% Nonperforming loans and leases to total loans and leases (2) 0.70% 0.43% 0.33% 0.53% 0.20% 0.1
Slide 14: Strong Credit Culture and Underwriting Fundamentals
Strong Credit Culture and Underwriting Fundamentals • Bank of the Ozarks has a well-defined credit culture that requires consistently applied underwriting fundamentals. • Underwriting is thorough and independent and is based upon cash flow (ability to repay) and collateral (ability to exit). • Manag
Slide 15: Texas Ratio
Texas Ratio 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2009 2010 2011 2012 2013 2014 2015 2016Q1 Texas Ratio 27.96% 24.75% 26.11% 14.21% 8.97% 6.88% 2.63% 2.37% 15
Slide 16: Superb Net Interest Margin
Superb Net Interest Margin Favorable 1.82% Variance vs Industry at 3.10%* 5.84 5.91 6.0% 5.63 5.52 5.42 5.37 5.18 5.19 5.07 4.98 4.80 4.92 5.0% 3.96 4.0% 3.0% 2.0% 1.0% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2015Q2 2015 Q3 2015Q4 2015Q1 2016 * Data for all FDIC insured institutions for the
Slide 17: Key Drivers of Net Interest Margin
Key Drivers of Net Interest Margin • Profitable Deposit Mix (68.11% non-CD, 31.89% CD)* Favorable Variance vs • Favorable Loan Yields on Legacy Portfolio Industry FinancialInstitutions 2012 2013 2014 2015 1Q 2016 Nationwide*** 0.67% Loan Yield-Legacy 5.87% 5.48% 5.10% 5.00% 5.00% 4.33% COIBD 0.38% 0
Slide 18: RESG Business Model Reduces Credit Risk
RESG Business Model Reduces Credit Risk • Focus on strong sponsors, as evidenced by • Strong liquidity • Strong capital • Significant expertise and experience • Focus on marquee projects • Focus on low leverage with substantial equity • Focus on defensive loan structures providing substantial protec
Slide 19: Real Estate Specialties Group (RESG)
Real Estate Specialties Group (RESG) Our Primary Engine for Loan Growth Dan Thomas, Vice Chairman, Chief Lending Officer, RESG President • Dan Thomas, CPA, JD, LLM (Taxation) • RESG established in 2003 by Dan Thomas Team Members: 86 as of 4/26/2016 13 Year History of Annual Losses Ending Net charge-
Slide 20: RESG Portfolio Details
RESG Portfolio Details An Emphasis on Diversification and Low Leverage Total Commitment • No property type accounts (Funded and Percentage of Loan to Loan to for more than 18.8% of Property Type Unfunded) RESG Portfolio Cost (LTC) Value(LTV) RESG’s portfolio Condos $ 2,066,293,795 18.8% 44.0% 39.5%
Slide 21: Total Real Estate Portfolio Diversification Reduces Credit Risk
Total Real Estate Portfolio Diversification Reduces Credit Risk Significant Diversification by both Geography and Product Type Outstanding Balances by State of Collateral Outstanding Balances by Product Type Total Location Total ($ in thousands) Non-Farm/Non-Residential Loans ($ in thousands) % New
Slide 22: We Have Aggressively Lowered Loan Leverage in Recent Years
We Have Aggressively Lowered Loan Leverage in Recent Years to Reduce Credit Risk Construction Loans with Interest Reserves Loan to Cost* 70.00% 66%66%65%65%65%63%62%63%62% 61%59% 59%60%59% 60.00% 55%53%56% 55%54%56%53%54%54% 52%54%51%50%50% 50.00% 40.00% 30.00% 20.00% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 23: We are Well Positioned for Volatility in Interest Rates
We are Well Positioned for Volatility in Interest Rates Rising Interest Rates will Benefit our Net Interest Income % Increase in Projected Shift in Interest Rates (in bps) Baseline Net Interest Income* We have taken actions to protect our loan and investment +100 2.8% securities portfolios from a +2
Slide 24: Organic Loan and Lease Growth is Always Growth Priority #1
Organic Loan and Lease Growth is Always Growth Priority #1 Non-Purchased Loans & Leases 7.59B Financial data ($ in billions) 1.06B 6.53B 16% 2.55B Growth in Q1 2016 64% (not annualized) 3.98B Growth in 2015 1.35B 2.63B 51% 1.85B 1.88B 2.12B Growth in 2014 12/31/2010 12/31/2011 12/31/2012 12/31/2013
Slide 25: Total Loan & Lease Portfolio Details
Total Loan & Lease Portfolio Details (Dollars in thousands) December 31, March 31, 2011 2012 2013 2014 2015 2016 Real estate: Residential 1-4 family $ 463,093 $ 443,622 $ 491,694 $ 638,958 $ 737,206 $ 735,165 Non-farm/non-residential 1,078,522 1,100,852 1,420,769 2,008,430 3,146,413 3,554,987 Constr
Slide 26: Purchased Loan Portfolio
Purchased Loan Portfolio December 31, March 31, 2013 2014 2015 2016 (Dollars in thousands) Real estate: Residential 1-4 family $ 242,138 $ 355,705 $ 386,952 $ 354,834 Non-farm/non-residential 316,655 504,889 1,135,547 1,079,777 Construction/land development 73,376 99,776 47,823 42,557 Agricultural 2
Slide 27: Investment Portfolio
Investment Portfolio Fair Value of Investment Securities By Year December 31, March 31, 2009 2010 2011 2012 2013 2014 2015 2016 Fair Value (Dollars in thousands) Obligations of states and political subdivisions $ 393,887 $ 378,547 $ 373,047 $ 361,517 $ 435,989 $ 573,209 $ 427,278 $ 432,642 U.S. Gove
Slide 28: A Proven Track Record of Growth
A Proven Track Record of Growth Organic growth is always growth priority #1, but our acquisitions have contributed to our growth, particularly, in the development of our deposit franchise. Organic Growth through De Novo Branching $28 Million $2.8 Billion Organic Growth In In continues to 1979 2009 b
Slide 29: Our Pending Acquisitions will Enhance Our Strong Platform for Further Growth
Our Pending Acquisitions will Enhance Our Strong Platform for Further Growth Through a Combination of Organic Growth and Acquisitions, We NowHave 177 Offices in Nine States Potential office count: 177 + 47 + 33 + 1 = 258 2 2 25 47 Georgia and Florida offices expected to be 83 2 added through pending
Slide 30: Deposit Growth
Deposit Growth We have successfully grown our deposits while beating peer metrics. $9,627 Total Deposits ($ millions) $7,971 $5,496 $3,717 $2,944 $3,101 $2,541 2010 2011 2012 2013 2014 2015 2016Q1 1.26% Cost of Interest-Bearing Deposits vs. Peers* 1.01% 0.95% 0.71% 0.70% 0.53% 0.46% 0.45% 0.44% 0.46
Slide 31: Untapped Deposit Growth Potential in Existing Markets
Untapped Deposit Growth Potential in Existing Markets 7 States*, 93 Cities # Offices % of Offices**Deposit Balance% of Deposits** All FDIC Financial Institutions 3,979 $ 759.5B* asof June 30, 2015 4.05 0.88 Bank of the Ozarks 161 $ 6.7B* as of June 30, 2015 Our 13 acquisitions closed since 2010 have
Slide 32: Excellent Efficiency Ratio
Excellent Efficiency Ratio 70.0% 61.4 61.6 61.9 59.5 60.5 59.9 59.9 59.158.5 58.0 57.2 59.0 60.0% 57.7 56.8 57.2 56.0 56.6 55.5 52.5 50.0% 47.9 47.5 47.1 46.6 46.2 46.3 45.3 45.3 43.4 42.3 42.9 41.6 40.0% 37.8 38.4 35.5 30.0% 20.0% 10.0% 0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20
Slide 33: Consistently Strong Capital Levels
Consistently Strong Capital Levels Leverage Ratio (%) Tier 1 Ratio (%) 14.96% 14.40% 14.19% 14.05% 17.67% 18.11% 12.92% 16.13% 16.15% 11.88% 12.06% 11.74% 11.62% 10.89% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Q1 2010
Slide 34: Experienced Management Team
Experienced Management Team George Gleason Chairman & CEO Tyler Vance Dan Thomas Greg McKinney Darrel Russell Vice Chairman, Chief Chief Financial Officer Chief Operating Officer Chief Credit Officer Lending Officer & & Chief Accounting & Chief Banking Officer President of RESG Officer Scott Hasting
Slide 35: Select Management Profiles
Select Management Profiles Name Title Detail George Gleason Chairman and Chief George Gleason has led the Company and its predecessors for 37 years. Mr. Gleason Executive Officer purchasedBank of Ozark, which then had approximately $28 million in total assets, in 1979. Since then, the company has gr
Slide 36: Recent Development: 2015 M&A Highlights
Recent Development: 2015 M&A Highlights • Closed Intervest National Bank acquisition in February 2015. Our largest acquisition as of this date with offices in New York (1) and Florida (6). Systems conversion completed in June 2015. • Closed Bank of the Carolinas acquisition in August 2015 with 8 Nor
Slide 37: Key Actions in Q4 2015 to Prepare for 2016
Key Actions in Q4 2015 to Prepare for 2016 • Continued to intensify our longstanding emphasis on credit quality and conservative underwriting standards, including our focus on transactions involving great projects, strong and capable sponsors, low leverage and defensive loan structures. • Managed ou
Slide 38: Q1 2016 Financial Highlights
Q1 2016 Financial Highlights: • Record net income of $51.7 million, a 29.6% increase from $39.9 million for 2015Q1 • Diluted earnings per common share of $0.57, a 21.3% increase from 2015Q1 • Non-purchased loans and leases were $7.59 billion, a 76.1% increase from March 31, 2015 • Unfunded balances
Slide 39: Interest Coverage
Interest Coverage $ in thousands Assumptions % of Subordinated Debt Downstreamed to Bank 100% Subordinated Debt Issuance Net Proceeds Amount $123,750 Interest Rate 5.00% For the Twelve Months Ended: December 31, March 31, 2013 2014 2015 2016 Bank-Level Equity $673,657 $946,188 $1,558,811 $1,604,095
Slide 40: Appendix
Appendix 40 <> BANK of the OZARKS; INC.
Slide 41: Historical Income Statement
Historical Income Statement (Dollar Values in Thousands) For the Year Ended December 31, Quarter Ended, 2011 2012 2013 2014 2015 2016Q1 Interest income Non-purchased loans and leases $ 112,551 $ 115,108 $ 129,419 $ 162,567 $ 244,638 $ 87,010 Purchased loans 66,867 62,074 59,930 98,212 134,745 29,023
Slide 42: Historical Balance Sheet
Historical Balance Sheet (Dollar Values in Thousands) For the Year Ended December 31, Quarter Ended, 2011 2012 2013 2014 2015 2016Q1 ASSETS Cash and due from banks $ 58,247 $ 206,500 $ 195,094 $ 147,751 $ 89,122 $ 616,508 Interest earning deposits 680 1,467 881 2,452 1,866 6,253 Cash and cash equiva
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation Bank of the Ozarks, Inc. Return on Average Tangible Common Stockholders' Equity Years Ended Quarter Ended 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 3/31/2016 Net Income Available To Common Stockholders $ 34,474 $ 36,826 $ 64,001 $
Slide 44: Inc.
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