Bank OZK Should Reverse Some Recent Underperformance As Loan Growth Accelerates

Apr. 06, 2022 11:31 AM ETBank OZK (OZK)OZKAP7 Comments
Stephen Simpson profile picture
Stephen Simpson


  • The banking sector saw further loan growth in Q1'22, with a pick up in CRE lending, and Bank OZK entered the year with good momentum in its core RESG operations.
  • I expect above-average loan growth from Bank OZK over the next two years, though paydowns could still weigh on 1H'22 growth.
  • Management has improved its deposit base, but deposit beta is still likely to be high and OZK isn't particularly asset-sensitive as rate floors will mitigate leverage to initial rate hikes.
  • Bank OZK should be able to grow core earnings at a high single-digit rate (normalized) and looks undervalued today.
Bank OZK branch bank

Lawrence Glass/iStock Editorial via Getty Images

Given the prospect for numerous rate hikes over the next two years, not to mention improving loan growth, the over growth prospects for banks are looking better than they have in some time. Keys for this next part of the cycle will be

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Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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