2Q26 EPS Beat: Further Credit Migration to Weigh on Shares

Research evidence excerpt

2Q26 EPS Beat: Further Credit Migration to Weigh on Shares

$49.3M on four

previously classified or criticized RESG office or life science loans. While management's Price Performance - 1 Year

commentary on potential resolutions for the six most disruptive RESG credits was USD

constructive, we believe the risk of further OREO migration will keep investors cautious 56

and could pressure shares lower at tomorrow's open. The potentially encouraging trends 54

continue to be the churn in these resolutions remains fairly consistent and OZK was 52

able to upgrade its largest substandard non-accrual on a new equity infusion. Ultimately, 50

with the shares trading at only 1.08x TBVPS and OZK delivering $260M+ in PPNR in 48

the qtr, we think this remains a story with less downside risk fundamentally than there 44

is speculatively. 42

• Capital Remains a Bright Spot with Ongoing Buybacks - OZK repurchased 0.33M Jul-25 Sep-25 Nov-25 Jan-26 Mar-26 May-26 Jul-26

shares in 2Q26 at ~$47.43 - slightly below current TBV of $48.41 (~98.0%), accretive Source: Bloomberg

to both EPS and TBV. In June, the Board authorized a new stock repurchase program

for up to $200M which expires July 1, 2027. Coupled with the bank's 64 consecutive

quarters of dividend increases, this should provide some comfort to longer-term, value-

oriented investors.

• 2026 Guidance Reiterated - OZK offered updated 2026/2027 guidance alongside their

earnings release. On the loan front, mgmt. continues to guide to mid-single digit growth

in 2026. For 2027, loans are still expected to grow 10-11%. RESG loan repayments

are expected to remain elevated throughout 2026 and 2027. NII is expected to increase

only modestly in 2H26, with the NIM forecast to be below the 4.20% from 1Q26. Fee