OZKAP - Bank OZK: 7.3% Yielding Preferred Shares Are Interesting CRE Risks Overblown
2024-06-09 11:40:00 ET
Summary
- Bank OZK has a high exposure to commercial real estate but maintains a low average loan-to-value ratio.
- The bank's earnings profile is strong, with increasing interest income and controlled expenses.
- The preferred shares of Bank OZK offer a low payout ratio and a yield of approximately 7.30%, making them an attractive investment option.
Introduction
Bank OZK ( OZK ) has had a tough time lately as the market continues to focus on the negative impact of commercial real estate on the bank’s loan book with fellow author Mark Dockray explaining how Citigroup ( C ) torpedoed OZK . While Bank OZK definitely has an overweight position in CRE as a portion of its total loan book, the average LTV ratio in that segment remains low. In fact, despite expanding the loan book in the first quarter of the year, the total amount of loans past due actually decreased. Meanwhile, the bank is guiding for record earnings this year, and that’s why I’m having a closer look at the preferred shares while also considering the common equity for an investment....
Bank OZK: 7.3% Yielding Preferred Shares Are Interesting, CRE Risks Overblown