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Raymond James: 11 Takeaways From Bank Ozk's Q1 Call

Jayson Derrick

Bank Ozk (NASDAQ: OZK) reported first-quarter results April 17 that show a "relatively solid start" to 2019, highlighted by better-than-expected loan growth and net interest income, according to Raymond James.

The Analyst

Michael Rose maintains a Market Perform rating on Bank Ozk. 

The Thesis

Bank Ozk held a conference call following its first-quarter report, and Rose shared 11 takeaways in a Friday note. (See the analyst's track record here.) 

  • A higher level of prepayments compared to last year is factored into management's low-to-mid-teen outlook for next year.
  • Noninterest income and expenses in the first quarter are at "fairly good" run rates for the full year 2019.
  • Around 98 percent of its floating rate loans have floors while 10 percent are at that floor.
  • The core spread may turn negative for several quarters.
  • CECL preparations are ongoing, and parallel modeling is likely to start in the third quarter.
  • The loan-deposit ratio is expected to fall in the 89-99-percent range.
  • Last year's $1-billion growth in the marine and RV segment will likely be sustained moving forward, with the second quarter acting as a "watermark" period.
  • The bank continues to view a stock buyback program as unlikely to occur. 
  • The increase in the cost of interest-bearing deposits might be lower than the 67-basis point increase seen last year.
  • The CRE and construction concentration ratios are expected to continue moving lower.
  • The disclosed watchlist credit at 102 percent LTV has around $50 million funded and should be fully repaid.

Price Action

Bank Ozk shares were trading up 1.06 percent at $31.37 at the time of publication Monday. 

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Public domain photo via Wikimedia. 

Latest Ratings for OZK

Date Firm Action From To
Jan 2019 Upgrades Underweight Equal-Weight
Dec 2018 Maintains Equal-Weight Equal-Weight
Dec 2018 Downgrades Overweight Neutral

View More Analyst Ratings for OZK
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