Bank Lending Stress as OZK Marks CRE Loan Losses

Bank lending faces stress as Bank OZK marks major loan losses. Key properties reflect commercial real estate risk in 2026 market conditions.

January 23, 2026

Jordan B.

Bank OZK reported its highest loan charge-off rate since 2010, fueled by losses on commercial real estate loans.
The bank flagged several high-profile office, mixed-use, and hotel properties as substandard, including assets in Boston, Chicago, Santa Monica, Baltimore, Seattle, and Milwaukee.
Bank OZK doubled its allowance for credit losses to $600M and began drawing reserves to cover problem loans, with management expecting further losses as market conditions remain challenging.
The bank is actively selling or moving to acquire underperforming assets, aiming to limit further losses and preserve capital strength.

Key Takeaways

Loan Losses Hit Bank Lending

Bank OZK, the largest US construction lender in 2023, ended the year with its steepest real estate loan losses since 2010, reports Bisnow. The Arkansas-based bank charged off $98.3M in Q4. Its annual charge-off rate hit 0.5%, the highest level in 15 years. The losses highlight growing pressure across the US bank lending sector tied to commercial real estate.

Spotlight Properties Signal Trouble

Several large properties now face scrutiny due to recent charge-offs and loan workouts. Bank OZK wrote off $72.4M on a vacant Cambridge, MA office redevelopment. It also marked down loans tied to nearly empty creative offices in Santa Monica and Chicago’s Lincoln Yards. In Baltimore, the bank plans to take title to part of the Peninsula mixed-use site. Developer turnover triggered the action, and sales efforts for the site are now underway.

Investor Response and Capital Moves

Despite loan losses, Bank OZK beat revenue expectations and posted higher annualized earnings per share. CRE loans now make up 54.4% of its portfolio, down from historic highs. Management expects to keep drawing on reserves to offset losses. The bank doubled its credit loss allowance to over $600M since 2022. Loans face stress across office, multifamily, hotel, and development sectors. OZK’s strategy hinges on selling assets or taking ownership to reduce ongoing risk. The bank also began tightening loan sizes in anticipation of more rate cuts and continued balance sheet pressure.

What’s Next for Bank Lending

CEO George Gleason indicated more losses are possible as market headwinds persist. Bank OZK is dual-tracking asset sales and title acquisitions depending on resolution paths for each property, aiming to stabilize its capital position. Across the industry, Bank OZK’s challenges are an indicator of wider risk in bank lending to commercial real estate amid ongoing occupancy and refinancing pressures in 2026.