Bank OZK (OZK.O): 2Q26 Review - Softer PPNR Outlook, Special Mention Loans Nearly Doubled

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Bank OZK (OZK.O): 2Q26 Review - Softer PPNR Outlook, Special Mention Loans Nearly Doubled

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23 Jul 2026 05:00:00 ET │ 13 pages

Bank OZK (OZK.O)

2Q26 Review - Softer PPNR Outlook, Special Mention Loans Nearly

Doubled

CITI'S TAKE Sell

Short-Term View: Downside, expires 31-JUL-26

In terms of earnings power, core results were softer than expected and the

Price (22 Jul 26 16:00) US$50.97 guide for continued NIM compression weighs on PPNR trends. We

Target price US$40.00 continue to see very minimal loan growth in 2026 (modeling +2% this

year, 7.7% in 2027), the biggest delta in our PPNR vs cons. Special mention Expected share price return -21.5%

loans continue to build, nearly doubling from 1Q26, even as two past 1Q26 Expected dividend yield 3.0%

SM loans moved to REO in the quarter. The Office and LifeSci maturity Expected total return -18.5%

wall over the next 12 months drives a substantial portion of our elevated Market Cap US$5,574M

LLP expense. Fundamentally, we have difficulty seeing OZK maintaining

its 29 year streak of NCO ratio below the industry – 2Q26 saw the lowest

Additional Reserve Deposits (in 4+ years) coupled with a substantial

maturity wall in 2H26/2027, this trend piques our cautious stance and Benjamin GerlingerAC

supports our outlook for additional foreclosures. Maintaining our Sell +1-212-816-3538

rating and TP of $40. benjamin.gerlinger@citi.com

Kaili Wang, CFA

Estimate Changes — We refresh our model for the quarter’s results and updated +1-716-730-7408

guidance. We tweak both our 2026 EPS (from $5.82 to $5.41) and 2027 EPS (from kaili.wang@citi.com

$5.64 to $5.53). We adjust our loan growth modestly lower and trim our NIM Mikhail Mrotchek

outlook. While these changes are modest, the net impact weighs on PPNR.

+1-212-816-2345