Bank OZK OZK

The business

Bank OZK is a $41.7B-asset regional lender out of Little Rock, Arkansas, with 267 offices across nine states, that funds itself with retail and commercial deposits and lends the money out mostly against real estate. The franchise engine is the Real Estate Specialties Group (RESG), a national ground-up construction and land-development lender that writes large senior loans on multifamily, office, life-sciences, condo and mixed-use projects in major metros. Real estate is 47% of the loan book as of Q2 2026, down from 52% a quarter earlier, and the bank's commercial-real-estate exposure runs at 358% of total risk-based capital with construction and land development at 197%, per KBRA, against interagency supervisory guidance of 300% and 100%. That concentration is why OZK out-earns almost every peer and why it trades at a discount to all of them.

The thing the income statement does not show is how RESG is structured, and that structure is the entire bull case. These are low-loan-to-cost, first-lien senior construction loans with deep sponsor equity sitting beneath the bank, single-credit caps, and a loss record that stayed near zero through the 2016-2019 short-seller siege and the 2020 shock. What changed in the last two quarters is that the record is being tested for the first time: nonperforming assets doubled year-over-year, four real estate credits (office and life-sciences the pressure points) drove 77 of 92 basis points of past-due-plus-nonperforming loans, and management is deliberately running RESG down, with $2.9B of paydowns against $1B of originations in the quarter and a stated goal of growing its commercial and institutional bank (CIB) to parity with RESG by 2027.