Bank OZK continued aggressive condo lending in Q1

Despite a nationwide market slowdown, the Arkansas bank ramped up lending, it said in earnings report
By Keith Larsen | April 18, 2019 01:33PM

Bank OZK’s George Gleason

Bank OZK is showing no signs of curbing its construction lending this year.

Little Rock-based Bank OZK, formerly known as Bank of the Ozarks, reported first quarter earnings that beat analysts’ estimates, as it real estate lending division originated more than $1.86 billion in new loans. That’s an increase of 86 percent compared to the first quarter of 2018.

With just over $23 billion in assets, Bank OZK is one of the largest and most aggressive condo construction lenders in Miami, Los Angeles and New York City, lending at a time when other banks are pulling back.

The bank reported first quarter net income of $110.7 million or 86 cents per share, down 2.2 percent from the same period of 2018. Bank OZK attributed the decline to a tax benefit it was able to incur in the first quarter of 2018, according to the company’s management comments. Earnings beat analysts expectations of 85 cents per share.

Total loans were $17.48 billion as of March 31, an increase of 5.2 percent from $16.61 billion from a year earlier. The bank reported no major write-offs on its real estate loans in its most recent quarter. In the third quarter of 2018, the regional bank had to write down two real estate loans it made about a decade ago which caused its stock to plummet by more than 24 percent.

Critics worry Bank OZK is being overly aggressive at a time when condo sales have slowed down in New York and Miami. Signaling this change in market conditions, the bank reported that it expects to see more repayments on its real estate loans due to “high levels of property sales, leasing and refinancing activity.”

In March, Bank OZK provided a $475 million construction loan for One Chicago Square, which is expected to be Chicago’s sixth tallest tower with 76 stories, totaling 1.5 million square feet. The bank also provided a $96 million loan to Anbau Enterprises for a two-building condominium project in New York City’s Flatiron District in April.

Bank OZK’s stock rose 3 percent to $31.28 on Thursday at 1:20 p.m.