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Bank OZK reports uptick in construction lending in Q3

Bank OZK CEO George Gleason (Credit: Bank OZK, iStock)

Bank OZK CEO George Gleason (Credit: Bank OZK, iStock)

Bank OZK reported an uptick in real estate construction lending in the third quarter amid cooling markets in New York City and Miami.

The bank reported on Friday that its total construction loan portfolio grew to $6.68 billion at the end of the quarter, up from $6.49 billion a year earlier. Overall, the company’s real estate lending arm RESG originated $2 billion of loans in the third quarter, marking the largest volume of quarterly originations since 2017.

In a conference call with analysts, Bank OZK’s CEO George Gleason said part of RESG’s growth was due to the group’s origination of its largest construction loan to date. He did not give specifics on the loan amount, but the Tampa Bay Business Journal reported that Bank OZK provided a $664 million loan to a mixed-use project in Tampa earlier this month.

“It’s a very conservative, high-quality project with great sponsorship,” Gleason told analysts.

In the second quarter, the Little Rock, Arkansas-based regional bank had said the growth of its loan portfolio is expected to slow down due to an increased amount of repayments on existing real estate loans.

With $23 billion in assets, Bank OZK is one of the most active construction lenders in New York, Chicago, Los Angeles and Miami. The bank is lending at a time when many other regional banks are backing away from ground-up construction lending. Last year, the bank provided the largest condo construction loan in Miami-Dade County history, a $558 million loan to the Trump Group for its Estates at Acqualina condo project in Sunny Isles Beach.

The bank reported no major write-offs on its real estate loans in its most recent quarter.

A year ago, Bank OZK had to write down two real estate loans it made about a decade ago which caused its stock to plummet that day by more than 24 percent.
In the third quarter, the company’s net income jumped 40 percent to $103.9 million, but the increase was largely due to the two write-downs and a rebranding expense the company made in the third quarter of 2018.

Bank OZK’s stock traded at $28.73 as of 1 p.m., up 1.3 percent.

The post Bank OZK reports uptick in construction lending in Q3 appeared first on The Real Deal Chicago.

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