OZK Bank reports a Q4 jump in net income


OZK CEO George Gleason (photo via OZK; iStock)

OZK CEO George Gleason (photo via OZK; iStock)

One of the most active providers of construction work in the country ended 2020 at a high level after an overall unfortunate year for the real estate industry.

Bank OZK reported net income of $ 120.5 million in the fourth quarter, up 19.5 percent from $ 100.8 million a year ago, the second highest quarterly profit in the company’s history. The Arkansas-based bank also announced another nearly a quarter no depreciation on their real estate loans.

As of December, it had deferred loans totaling $ 1.1 billion, but approximately $ 980 million of those deferrals had expired.

In Friday’s call for earnings, bank executives said they saw fewer opportunities in New York. The pandemic has led some residents to seek more space and less dense areas, including in the south.

“It’s hard to find things that make sense there.” [New York]”Said CEO George Gleason. Although Bank OZK was one of the largest providers of construction services in New York, Miami and Los Angeles after the second quarter, one CEO said the company was “rather on the cautious side denser urban environment.

However, the increase in net income in Q4 is second straight quarter The positive news after two quarters is huge losses. The bank stated that the losses in the first half were caused by a sudden and severe economic downturn caused by coronavirus and the introduction of the bank accounting method used to calculate OZK’s contribution to credit losses.

For the full year, OZK reported net income of $ 291.9 million, down 31.5 percent from $ 425.9 million reported in 2019, the company said.

In the last quarter, Bank OZK – which has assets worth USD 27 billion – increased its value creation of a real estate loan. The Real Estate Specialties Group provided $ 1.77 billion in loans in the fourth quarter, up 23 percent from $ 1.44 billion in 2019. In comments accompanying the bank’s release on Thursday, Gleason called fourth quarter “strong end of the challenging challenge” year. “

The bank said payments on its real estate loans remained high from October to December.

In Friday’s call, the company highlighted a New York project that she said was in trouble.

OZK Bank sold a $ 50 million loan that it provided Reading International in early 2017 for the 70,000-square-foot Union Square Theater expansion project in Manhattan. According to a recent filing with the Securities and Exchange Commission, the borrower has drawn down a loan of $ 40.8 million. OZK Bank extended the maturity of the loan and raised the interest rate to 17.5 percent.

“It was a transaction that simply did not please us with progress,” Gleason said during a conversation with analysts. He said the bank had not lost any money on the loan. “We didn’t leave a penny on the table.”

Brannon Hamblen, chief operating officer and head of its real estate lending department, said the bank had recently provided loans humanities projects and sees more opportunities in more families across the country; he also mentioned this strategy at the beginning of the year.

Hamblen said the multi-member family “probably has the highest number of developments and, moreover, the competition that is following them.” He added: to the right people. “

Bank OZK, formerly known as the Bank of the Ozarks, is known for underwriting large construction loans for housing projects. It has passed the scrutiny of retailers and some banking experts, who claim that it takes too much risk. OZK also divested its holding company, which allowed it to stop filing SEC quarterly and annual reports, and removed the Federal Reserve’s oversight.

The bank has long claimed that it works only with the best sponsors with low leverage points. He also says he is the only lender on his projects, which means that if something goes wrong, OZK Bank is the first to get paid.

Shares of OZK bank rose almost 5 percent to USD 35.96 on Friday at the closing bell.

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