Bank OZK (OZK)

Regional banking company Bank OZK (NASDAQ:OZK) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 16.4% year on year to $428 million. Its GAAP profit of $1.58 per share was 1.8% above analysts’ consensus estimates.

Company Overview

Founded in 1903 and rebranded from Bank of the Ozarks in 2018, Bank OZK (NASDAQ:OZK) is a commercial bank that specializes in real estate lending while offering a full range of banking services to individuals and businesses.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Bank OZK competes with regional banks like Regions Financial (NYSE:RF), Truist Financial (NYSE:TFC), and Synovus Financial (NYSE:SNV), as well as larger national institutions such as JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) in its operating markets.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.

Thankfully, Bank OZK’s 22.9% annualized revenue growth over the last five years was incredible. Its growth beat the average bank company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Bank OZK’s annualized revenue growth of 10.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Bank OZK reported year-on-year revenue growth of 16.4%, and its $428 million of revenue exceeded Wall Street’s estimates by 1.1%.

Net interest income made up 97.6% of the company’s total revenue during the last five years, meaning Bank OZK lives and dies by its lending activities because non-interest income barely moves the needle.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last four years, Bank OZK’s efficiency ratio has decreased by 5.3 percentage points, clocking in at 34.7% for the past 12 months. Said differently, the company’s expenses have grown at a slower rate than revenue, which is always a positive sign.

Bank OZK’s efficiency ratio came in at 35.5% this quarter, close to analysts’ expectations. This print was 2.7 percentage points worse than the same quarter last year.

For the next 12 months, Wall Street expects Bank OZK to become less profitable as it anticipates an efficiency ratio of 36.4%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Bank OZK’s astounding 24.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.

In Q2, Bank OZK reported EPS at $1.58, up from $1.52 in the same quarter last year. This print beat analysts’ estimates by 1.8%. Over the next 12 months, Wall Street expects Bank OZK’s full-year EPS of $6.16 to grow 3%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

Bank OZK’s TBVPS grew at an incredible 10.5% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 13.9% annually over the last two years from $33.67 to $43.72 per share.

Over the next 12 months, Consensus estimates call for Bank OZK’s TBVPS to grow by 11% to $48.54, solid growth rate.

Leverage is core to the bank’s business model (loans funded by deposits) and to ensure their stability, regulators require certain levels of capital and liquidity, focusing on a bank’s Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a bank holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all banks must maintain a Tier 1 capital ratio greater than 4.5% On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, banks generally must maintain a 7-10% ratio at minimum.

Over the last two years, Bank OZK has averaged a Tier 1 capital ratio of 11.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity — a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Bank OZK has averaged an ROE of 12.8%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Bank OZK has a strong competitive moat.

It was encouraging to see Bank OZK beat analysts’ net interest income, revenue, and EPS expectations this quarter. Zooming out, we think this was a solid quarter. The stock traded up 1.7% to $52.95 immediately after reporting.

Updated: December 4, 2025 at 11:30 PM EST

Before investing in or passing on Bank OZK, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

There are some bright spots in Bank OZK’s fundamentals, but its business quality ultimately falls short. First off, its revenue growth was impressive over the last five years, and analysts believe it can continue growing at these levels. And while Bank OZK’s declining net interest margin shows its loan book is becoming less profitable, its admirable net interest margin a wonderful starting point for the overall profitability of the business.

Bank OZK’s P/B ratio based on the next 12 months is 0.9x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $54.78 on the company (compared to the current share price of $46.86).