Although Undervalued, The Street Is Still Holding Its Breath On Bank OZK's Credit

“You don’t know until you know” may be honest advice where bank loan losses are concerned, but it’s not particularly helpful advice. And that’s the issue with Bank OZK (OZK) – is past loan loss experience for this construction and CRE lending specialist still relevant given the growth in the business over the past decade-plus and the particular challenges created by COVID-19? I don’t think actual losses will meaningfully strain the business, but it is still early in this recession and Bank OZK may yet see both worse losses and weaker demand as the process rolls on.

Bank OZK’s valuation is a mixed bag. There are a lot of cheaper-looking banks out there, and in some respects, I’m surprised there isn’t a bigger fear discount here. On the other hand, this still looks like a pretty good price for a bank with demonstrated ability to grow share in a specialized segment of the lending market.

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Although Undervalued, The Street Is Still Holding Its Breath On Bank OZK's Credit