OZK is an extremely well-run bank that is fundamentally misunderstood. The bank’s core business, its Real Estate Specialties Group (or RESG), specializes in underwriting development and construction loans – which are often seen as risky. However, OZK has historically earned above-market returns on assets and net interest margins, with low charge-offs. With almost $29 billion in loans and commitments, almost half of which is already at floor rates, conservative underwriting practices within RESG, and potentially $1.6 billion in “excess” equity, OZK should trade above its 9.7x NTM P/E and 0.8x forward P/B multiples. Should it decide to launch a buyback, OZK could improve 2020E EPS by as much as ~50% over consensus.