Bank of the Ozarks (OZRK) is an undervalued regional banking stock that is earning a significant 2% on assets and has shown 15% to 17% growth for many years, and the company is well-positioned to continue this rapid growth rate, says Francois Rochon, President and Portfolio Manager at Giverny Capital.
“Ozarks is very well-managed. They are very conservative in their loans so they have very low charge-off ratios. They are very low-cost, so their efficiency ratio is much lower than the average. So they can earn much higher return on assets than the average. They earn something like 2% on assets, which is tremendous,” Rochon said.
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OZRK has a solid CEO in George Gleason, and the company’s small size enables OZRK to continue to grow at a rapid rate in the future, Rochon says.
“Ozarks is not very well-known and not very well-followed, but it has been growing 15% to 17% a year for many, many years now,” Rochon said. “Bank of the Ozarks, [is] still growing pretty fast by making good acquisitions. But I would add that it is not really the banking industry as such that we like; it’s really that we think that we own the three best banks in the U.S., because to us, their CEOs are the best of the sector.”
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