Highest level of OZK Bank loan origins since 2017



George Gleason (OZK Bank)

Bank OZK, one of New York and Miami’s busiest construction lenders, saw loan origination reach their highest levels in nearly four years.

Arkansas-based real estate specialty group Bank OZK closed $ 2.21 billion in new loans during the third quarter, marking the highest quarterly level of originations since the fourth quarter of 2017. The bank has also recorded almost zero depreciation on problematic loans.

The midsize bank, led by George Gleason, is being closely watched by the real estate industry as an indicator of appetite for construction loans. Bank OZK, formerly known as Bank of the Ozarks, has also been the target of short sellers who say the bank’s off-market lending and its hefty real estate portfolio could be problematic if the market slows down.

Bank OZK showed few signs of distress in the third quarter, according to an earnings call on Friday.

Creations in 2021 will likely surpass the all-time high of $ 5.67 billion in 2019, the bank said. Its RESG division closed 23 loans averaging $ 96 million in the third quarter.

“The market is quite active right now,” Brannon Hamblen, head of the bank’s RESG division, said on a conference call with analysts in the third quarter. “There are a lot of people trying to close a lot of deals after a quieter year in 2020.”

OZK Bank did not discuss its loans in New York – the bank’s largest market – during the call. In accompanying management comments, Bank OZK mentioned that the volume of lending in the city is likely to decline in the short term.

“The volume of new opportunities meeting our standards in the market (NYC) has not been as large in recent years,” the bank said.

OZK Bank’s RESG loan commitments in the NYC MSA fell to $ 3.87 billion in the third quarter, from $ 6.95 billion in the fourth quarter in 2018. The bank also closed its only depository branch in New York, but keeps its real local. mortgage bureau, according to management’s comments.

Hamblen, in general, said the bank has seen plenty of loan opportunities for multi-family projects, mixed-use projects and even office developments.

Bank OZK’s RESG division reported lower loan repayments compared to the previous two quarters. Repayments by borrowers fell to $ 1.34 billion from $ 1.68 billion in the second quarter. The company said some loan repayments that are expected to take place in the third quarter have been pushed back to the fourth quarter of 2021. Yet the bank still expects 2021 repayments to exceed 2019 levels, according to comments from its direction.

OZK Bank reported net profit of $ 130.3 million, an increase of 19.3% from the third quarter of 2020.

The company also implemented new initiatives in the third quarter, including the creation of an “Equipment Finance and Capital Solutions Group” to provide equipment finance and rental structures. In the second quarter, the bank launched an asset lending group.

Bank OZK stock was down 2% to $ 44.52 by noon on Friday.



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