Analysts critical of Bank OZK’s losses

A 23 percent decline in earnings reported Oct. 18 by Bank OZK, attributed to combined charge-offs of $45.5 million in the third quarter, is drawing criticism from analysts.

Unrelated loans, about 10 years old, one in South Carolina and one in North Carolina, defaulted in the third quarter.

American Banker pointed out several comments from analysts who cover Little Rock-based Bank OZK.

“With defenses penetrated, no matter how small the breach, confidence in the OZK mystique has evaporated,” wrote Michael Rose of Raymond James & Associates.

“It is very easy to make the case that these are oneoffs … and the rest of the portfolio looks nothing like this,” Catherine Mealor, an analyst at Keefe, Bruyette & Woods, wrote to her clients. “That said, at this point in the cycle, we don’t believe it matters. The market is going to shoot first and ask questions later, in our view.”

Matt Olney, a banking analyst in Little Rock with Stephens Inc., labeled his research brief “When the levee breaks.”

“OZK’s [third quarter] results were disappointing due to elevated credit concerns, slowing loan growth and [net interest margin] compression,” said Olney, who noted the losses were the largest for the bank in the past 14 years.

Bank OZK shares closed at $25.40 on Friday, down 27 percent since Oct. 18.