Activist short seller Carson Block, the founder of Muddy Waters Research, is short Bank Of The Ozarks (OZRK).

The Little Rock, Arkansas bank’s share price fell about 9% to as low as $33.66 as Block spoke at the 21st annual Sohn Conference in New York.

Block's thesis centers around the size of the bank's unfunded loan commitments relative to its balance sheet size.

To the bulls, unfunded loan commitments look like a promising pipeline. However, the loan book is problematic, according to Block.

Block noted that the bank has highly concentrated real estate lending, with extreme lending in construction.

“Our thesis is that in the best case, Ozark re-rates because it can’t sustain this earnings growth and we think that it’s cracking right now. And, in the worst case when there are downturns in some of its real estate lending markets…their balance sheet really could come under severe pressure.”

He said the bank has an “a** backward business model,” using a picture of a curvaceous woman in a bikini on a slide to demonstrate his point.

Block explained that in order to commit to these loans, they have to have funding. They've continued to make loans. Meanwhile, they've acquired banks and sold off assets in order to have deposits to fund the loans, Block said.

"It puts them on this treadmill where they've made these commitments, so they have to go acquire stuff. So they have to remain a growth stock. In order to remain a growth stock, they have to make more committments. And the accounting gets kind of aggressive as well."

“At best, we think this re-rates because they can’t sustain the earnings growth and at worst they can have a funding and obligation mismatch.”

The Sohn Conference raises funds for pediatric cancer research.

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Julia La Roche is a finance reporter at Yahoo Finance.

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