OZK - Bank OZK Should Reverse Some Recent Underperformance As Loan Growth Accelerates

• The banking sector saw further loan growth in Q1'22, with a pick up in CRE lending, and Bank OZK entered the year with good momentum in its core RESG operations.
• I expect above-average loan growth from Bank OZK over the next two years, though paydowns could still weigh on 1H'22 growth.
• Management has improved its deposit base, but deposit beta is still likely to be high and OZK isn't particularly asset-sensitive as rate floors will mitigate leverage to initial rate hikes.
• Bank OZK should be able to grow core earnings at a high single-digit rate (normalized) and looks undervalued today.

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