Bank OZK loans are expected to decline in the fourth quarter of 2026 as unusually large real estate loan repayments outweigh new lending, management said in its October 21 third-quarter earnings discussion. Chief Executive Officer George Gleason nevertheless forecast 10%–12% loan growth in 2027, compared with revised guidance of 3%–5% for full-year 2026.
Key Takeaways
- Management expects near-record or record RESG repayments to reduce fourth-quarter loan balances.
- Corporate and Institutional Banking could surpass RESG loan balances in 2027, Gleason said.
- Credit indicators improved in Q3, but foreclosed assets remained elevated at $420 million.
Table of Contents
- Bank OZK loans face a repayment-heavy fourth quarter
- Corporate lending changes the portfolio mix
- Credit improves, but property resolutions take time
- Deposit growth must translate into cheaper funding
- Conclusion
Bank OZK loans face a repayment-heavy fourth quarter
Gleason said several RESG repayments expected in the third quarter slipped into the fourth. Roughly $690 million had already been repaid in the first 19 days of October, setting up a quarter in which repayments could reach a record.
New Corporate and Institutional Banking lending, along with positive activity in indirect lending and Community Banking, is expected to offset part of that outflow. Even so, management anticipates a modest decline in total loan balances.
The revised 2026 growth range is about one percentage point below the original guidance, which Gleason attributed to repayments being pulled forward. The distinction matters: new lending can remain strong while outstanding balances decline if borrowers repay existing loans faster.
The 2027 forecast is management guidance, not a completed recovery. Gleason also expects growth to accelerate in 2028 as the RESG repayment wave subsides and that portfolio begins expanding again.
| Item | Details |
|---|---|
| Indirect lending share | Management put the business at 12%–13% of loans, with potential to move toward 15%. |
| Powersports lending | Launched October 1, 2026. |
| Staffing | Net headcount declined by 94 over the preceding two quarters despite additions in priority businesses. |
| Dividend record | Management cited 65 consecutive quarters of dividend increases. |
| Share repurchases | Almost $1 billion over five years, management said. |
Corporate lending changes the portfolio mix
RESG has fallen from a peak of 70% of total loans to below 50%, Gleason said. He expects Corporate and Institutional Banking, or CIB, to overtake RESG balances in 2027 and remain larger even when real estate lending resumes growth.
The bank’s Corporate and Institutional Banking services include asset-based lending, fund finance, syndicated transactions, interest-rate hedging, and treasury management. That breadth helps explain the strategy of building borrower relationships beyond a single real estate loan.
Management said the CIB portfolio spans 44 three-digit industry classification codes and had no past-due loans or net charge-offs. Those results describe that portfolio specifically, rather than the bank’s entire loan book.
Credit improves, but property resolutions take time
Special mention loans declined, and the quarterly net charge-off ratio was the lowest of 2026. Management nevertheless expects charge-offs to remain elevated during 2026 and 2027 before improving.
Foreclosed assets stood at $420 million across seven main properties. Gleason said buyers were working on all but one property, which the bank preferred to lease rather than sell.
There was no firm timetable for reducing those balances. Gleason said sales and leases can take several quarters and sometimes require a process to be repeated. The bank intends to resolve properties without accepting unnecessary losses, leaving the pace of disposals uncertain.
Deposit growth must translate into cheaper funding
CIB deposits increased more than 20% quarter over quarter, division President Jake Munn said. The bank is investing in treasury-management staff and technology to win more operating accounts and deepen relationships through additional services.
Gleason said improvement in the deposit mix remains a priority, with steady progress expected through 2027 and 2028. The benefits are therefore largely prospective rather than fully reflected in current funding costs.
Those investments also create expense pressure. Management expects to keep the efficiency ratio in the 30-something range while directing capital first toward organic growth and retaining flexibility for opportunistic share repurchases.
Conclusion
The next reporting period to watch is Q4 2026: loan balances will show how much of the repayment surge new lending offsets. The subsequent test is whether CIB expansion and better deposit funding support management’s projected return to double-digit loan growth in 2027.
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