Author Topic: OZRK - Bank of the Ozarks  (Read 43424 times)

SlowAppreciation

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OZRK - Bank of the Ozarks
« on: February 07, 2017, 09:16:47 AM »
Anyone done any research on OZRK? Seems attractively priced, conservatively run, and long track record of making low-risk loans. There are some short theses floating around on concerns about their loans being more aggressive/reckless than they let on. But that doesn't seem to be the case historically so not sure why all of a sudden this would change.


thepupil

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Re: OZRK - Bank of the Ozarks
« Reply #1 on: February 07, 2017, 09:32:26 AM »
It trades for 3.2x last reported tangible and has gone from $2.7B of assets to $18.4B in 7 years.

What about that is "attractively priced" or "conservatively run"? Don't those say "aggressive roll-up at a premium"?

I have no opinion on the bank, but am just questioning your premise against what my 1 minutes of work on Bloomberg tells me.

ASTA

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Re: OZRK - Bank of the Ozarks
« Reply #2 on: February 07, 2017, 09:34:57 AM »
Giverny Capital Inc. check it out what they say about it

SlowAppreciation

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Re: OZRK - Bank of the Ozarks
« Reply #3 on: February 07, 2017, 09:54:13 AM »
It trades for 3.2x last reported tangible and has gone from $2.7B of assets to $18.4B in 7 years.

What about that is "attractively priced" or "conservatively run"? Don't those say "aggressive roll-up at a premium"?

I have no opinion on the bank, but am just questioning your premise against what my 1 minutes of work on Bloomberg tells me.

NIM, net charge-off, and LTC ratios are far superior to industry norms so that would imply conservatively run to me.

SlowAppreciation

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Re: OZRK - Bank of the Ozarks
« Reply #4 on: February 07, 2017, 09:56:00 AM »
Giverny Capital Inc. check it out what they say about it

I can only find that it's ~8% of their portfolio. Do you have a link to something a little meatier?

thepupil

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Re: OZRK - Bank of the Ozarks
« Reply #5 on: February 07, 2017, 10:21:51 AM »
http://www.givernycapital.com/assets/documents/102/Conferance_LA_2010.pdf?1284752119

This has some info.

Very interesting company. You have all the love from a few investors (have found positive writeups over the years) and have also heard short theses that say exact opposite of what data shows (they say very aggressive on loans). When there are such divergent views and an assymetric risk to the downside on valuation, I would have a very high bar in terms of buying.

For example here's a bunch of guys with no agenda opining they are aggressive.


http://www.wallstreetoasis.com/forums/bank-of-the-ozarks-real-estate-specialties-group

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If Ozarks doesn't do your construction deal you're in trouble.

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Have worked on a deal with them recently for spec office development...one of the only banks willing to lend with partial recourse on a project with minimal pre-leasing. All other banks required 50%+ preleasing, lower proceeds, crazy recourse provisions.

oddballstocks

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Re: OZRK - Bank of the Ozarks
« Reply #6 on: February 07, 2017, 10:38:54 AM »
What thepupil said plus look at their loan book.  I'm not sure how having 70% of your loans in construction loans is "conservative".

This bank essentially outran the crisis by rolling up other lenders faster than their own loans were going bad.

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oddballstocks

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Re: OZRK - Bank of the Ozarks
« Reply #7 on: February 07, 2017, 10:43:50 AM »
An above average NIM doesn't say conservative, it says they're stretching for yield.  You have to ask, if everyone is paying almost 0% on deposits how does a bank get an above average NIM?  It's by doing one of two things:

1) Going long yield - They'll get killed as rates rise
2) Higher yielding loans - Business loans, auto loans, construction loans, the type of things that go bad quickly.

The WallStreetOasis thread gives some insight into their lending.  As one person said if Ozarks won't fund your construction loan then no one will.  What's that say about the quality of their lending?
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SlowAppreciation

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Re: OZRK - Bank of the Ozarks
« Reply #8 on: February 07, 2017, 10:47:47 AM »
http://www.givernycapital.com/assets/documents/102/Conferance_LA_2010.pdf?1284752119

This has some info.

Very interesting company. You have all the love from a few investors (have found positive writeups over the years) and have also heard short theses that say exact opposite of what data shows (they say very aggressive on loans). When there are such divergent views and an assymetric risk to the downside on valuation, I would have a very high bar in terms of buying.

For example here's a bunch of guys with no agenda opining they are aggressive.

http://www.wallstreetoasis.com/forums/bank-of-the-ozarks-real-estate-specialties-group

Quote
If Ozarks doesn't do your construction deal you're in trouble.

Quote
Have worked on a deal with them recently for spec office development...one of the only banks willing to lend with partial recourse on a project with minimal pre-leasing. All other banks required 50%+ preleasing, lower proceeds, crazy recourse provisions.

Thanks for sharing.

Yeah that's what I find very interesting. If they were as aggressive as many claim, then you would think over a 30 year history that loan losses and defaults would be much higher. But instead, they're far below industry norms. Glassdoor reviews indicate it's not a "sales-pressure-y" culture either (though to be fair the reviews mostly come from tellers, while the bulk of their business is CSE lending). But would surprise me to see one side of the business being very aggressive and the other not so.

I see people saying "beware" which gives me pause, but see no smoke.

SlowAppreciation

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Re: OZRK - Bank of the Ozarks
« Reply #9 on: February 07, 2017, 10:50:29 AM »
What thepupil said plus look at their loan book.  I'm not sure how having 70% of your loans in construction loans is "conservative".

This bank essentially outran the crisis by rolling up other lenders faster than their own loans were going bad.

So where did those bad loans go? Guessing they just bought the good parts of those businesses?

(not arguing here at all.... just trying to understand the company more)