OZRK - Bank of the Ozarks

[atbed]

 

One can read these headline articles about while prices came down 4%, or I read one the other day that said sales of condos in this part of New York were taking 103 days on the market versus 89 days a year ago. And that’s true, but that hardly is prices. Yes, if you are selling, you’d rather have your money 2 weeks earlier than not, but a 2-week extension and time on the market. And it’s – these are relatively modest issues that seem to get a disproportionate amount of attention. So, one has to really look at the data and the analytics and make smart decisions based on that and not get carried away by headline that says all of the properties are down 4% from where they are a year ago and they are all in the market 14 days longer than they were a year ago and the sponsor is making an 18% return instead of a 22% return on its money. So keep it in perspective."

 

https://seekingalpha.com/article/4061815-bank-ozarks-ozrk-ceo-george-gleason-q1-2017-results-earnings-call-transcript?part=single

 

This is wrong and almost seems misleading considering he has run the bank for 30 years or something. In general, construction loans have relatively fixed costs and variable revenue. Lets assume it is 90 cents of costs for every $1 of revenue, which gives 10 cents of profit or 10% margin. If prices decline 4%, then 96 cents of revenue produces 6 cents of profit, or a 40% decline in profits. If 10% margin equated to a 22% return then a 6% margin equates to a 13.2% return. That's a decline 8.8% and not 4%. We also know there has to be leverage on these projects or OZRK wouldn't be loaning money. Construction/Development projects probably (hopefully) have 1x-3x leverage (25% to 50% equity).

 

A 4% decline in prices can substantially effect investment returns on RE development projects. Good underwriting would assume some variability in projected prices. Construction loans generally have the issue that decisions are primarily made for financial reasons, as opposed to mortgages where the buyer genuinely wants to live in the dwelling. There is nothing wrong with with positive spin but Gleason's comment is plain untrue.

 

I don't think his comments are patently false. For what it is worth, I believe the 4% drop he quoted is a fall in the developer's IRR from 22% to 18%. The profit margin for condo developments in Manhattan is much much higher than 10%.

 

please source on margin and article. TIA

 

This doesn't confirm with any of the numbers. No position long popcorn.

http://www.cnbc.com/2017/02/17/toll-brothers-big-sale-is-a-warning-manhattan-condo-market-is-cracking.html

 

The RE market and banking industry have been very tasty popcorn. Have had countless debates regarding it over the years.

 

Generally, I think margins are around 25-30% in NYC. Like other luxury products, margins generally expand as you go upmarket. I got my information from talking to some people in the RE development field.

 

This 1Q17 Douglas Elliman report is a better reflection of the overall market:

https://www.elliman.com/pdf/1a67b1d92427c5c724bbabbcf2a385795100843c

Overall:

Average price per square foot is up 3.8% YoY

The number of closings are about flat YoY

New Development:

Average price per square foot is up 12.1%

Number of closings are down 25%

[Green King]

schwab711 comment brings important insight.  It is not the effect of one standard deviation move that is important here but the compounding effects of multiple standard deviations move on a leveraged deal. Based on your report the numbers mentioned on the earnings call seems to check out.  It is hard to believe that a market veteran like him can't physically feel the pain from the beginning of these compounding effects.

 

They change in list price.

Condos

Days on market 110 q1 2016 to 133 q1 2017 Lagging indicators

Listing discount from the last price q1 2016 2.2% q1 2017 3.7%

 

I am very interested in this situation since it seems to be very hard to tell the difference from a skilled player and a lucky fool based on the numbers.

 

lending to condo developers is not a low-risk proposition no matter how good the underwriting and deep the collateral buffer.Since these things do not produce cash flow making them highly dependent on market liquidity they are extremely vulnerable to squeezes when the liquidity drys up. Requiring lenders to diversify above normal limits, build above average capital buffers to have an allowance for errors which is justified by charging a higher yield.

 

 

 

[atbed]

"these compounding effects."

 

 

We've been dancing around this issue and it is extremely important. It goes hand in hand, with the debate - are they superior loan-pickers or lucky fools? The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I used to be in the bear camp. I looked at condos from the point of view of an investor and not a consumer, and that is where I made a mistake. When I worked in Manhattan, I chose to save money by lengthening my commute. But I know plenty of people willing to pay up for luxury. You spend a large % of your paycheck on an expensive rental in the big city for the experience. Developers are betting that there are similar consumers in Miamia, Nashville, Seattle, etc...

 

NYC condos are at the center of the debate, because I believe they appear the most over-priced. Who is willing to pay $2,000 + per square foot for these condos? There is quite a mismatch between the people buying those condos and the people looking at OZRK stock. For what it is worth, my sample could be wrong. But I don't think these buyers are levering up to the hilt to make a gamble. I believe the majority of buyers are paying cash. Generally, they consider real estate a long-term investment. The statistics that I can find seem to corroborate this fact. The all cash % is high. It's gotten higher in the last 12 months. And it increases as you go upmarket. I think these buyers have holding power and generally won't be panic sellers.

 

The situation on the ground just does not seem as dire as people think and I don't think it will get as bad as people say. If I see things change, hopefully I'll sell in time.

 

If you guys get a chance, google "property collectors". I've met a number of them, and boy is it hard to change their mind. They don't care about cap rates. To them a NYC property is a trophy. The property is tangible. They can use it, even if they are only here a few months a year. They want to enjoy that view of the city. They like the fact that New Yorkers are friendly to foreigners. Did you know you could eat at a new restaurant every meal for 10 years without eating somewhere twice? Irrelevant, I guess. But these buyers care.

 

Should condos trade at the current valuation? Probably not. But there seems to be plenty of buyers even if it feels like buying a condo now is like buying KO around 2000.

 

You don't have to be long this thing, but I don't think it is worth it to be short since net income could be considerably higher 2-3 years out. $50B...

 

[Guest Schwab711]

"these compounding effects."

 

 

The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I don't think prices will collapse either, but that's not the bear thesis. I think that's what Green King and myself are trying to point out. When you lend to highly-levered, speculative developments that are collateralized by overvalued assets, prices don't need to fall by much to end up with a bad ending ('compounding effects'). It probably looks like I'm always bearish on this site but after 8 years of record-low interest rates at every point on the yield curve, it shouldn't be surprising that I think there are a lot of companies swimming naked. If a 10% decline occurs, OZRK is going to have a rough time. Mostly due to the knock-on effects like reduced demand, lower liquidity/prices when you go to sell the loans, cap rate expansion (which destroys collateral value at the exact moment it's handed over to you), and so on. Construction loans generally have terrible recovery rates in any downturn. LTV metrics always look great right up until you actually need that collateral.

 

To be fair, I have never liked OZRK and I have been wrong about them for years.

[Green King]

I have had great fun with this thread. Hopefully you did too. what is knowable for one might not be knowable for another. Being right or wrong is BS by street rules. It is more imporant how much you make when you are right and how much you make when you are wrong. 

 

Cheers

[rawraw]

"these compounding effects."

 

 

The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I don't think prices will collapse either, but that's not the bear thesis. I think that's what Green King and myself are trying to point out. When you lend to highly-levered, speculative developments that are collateralized by overvalued assets, prices don't need to fall by much to end up with a bad ending ('compounding effects').

This is why you'd want to look at loan to cost, unless you think the raw materials are overvalued?  Edit: But now that I think about it, I always did think the difference between LTC and LTV was too small.  I bet their LTC includes the purchase price of the prior property that gets modified.  Interesting point and something I hadn't considered

[Lowlight]

"these compounding effects."

 

 

The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I don't think prices will collapse either, but that's not the bear thesis. I think that's what Green King and myself are trying to point out. When you lend to highly-levered, speculative developments that are collateralized by overvalued assets, prices don't need to fall by much to end up with a bad ending ('compounding effects').

This is why you'd want to look at loan to cost, unless you think the raw materials are overvalued?  Edit: But now that I think about it, I always did think the difference between LTC and LTV was too small.  I bet their LTC includes the purchase price of the prior property that gets modified.  Interesting point and something I hadn't considered

 

Loan to cost would include all hard and soft costs in the deal including the land/prior building cost, the cost to develop the site, all hard construction costs, development fees, marketing costs, interest, loan fees, and a big contingency.  One bank's loan to cost is different than another's.  I wouldn't put much faith in an LTV or an LTC.  Just like you can't blindly accept the reported leverage of one company to another.  The adjustments made to EBITDA are very different across companies in the same industry.  For any bank that has doubled or tripled in size since the downturn, my first question would be whether their track record mattered.  If they were booking loans of $250 million pre-crisis to establish that record, it would definitely matter.  If they were booking $25 million loans, it would require a little more work.

 

[HJ]

"these compounding effects."

 

 

The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I don't think prices will collapse either, but that's not the bear thesis. I think that's what Green King and myself are trying to point out. When you lend to highly-levered, speculative developments that are collateralized by overvalued assets, prices don't need to fall by much to end up with a bad ending ('compounding effects').

This is why you'd want to look at loan to cost, unless you think the raw materials are overvalued?  Edit: But now that I think about it, I always did think the difference between LTC and LTV was too small.  I bet their LTC includes the purchase price of the prior property that gets modified.  Interesting point and something I hadn't considered

 

Condo development in Manhattan is a slightly different game than probably anywhere else.  The cost involves buying out the existing tenant / coops, tearing down the building if necessary, and then go up.  The initial buy out, as well as the process of moving out /buying out potential tenants benefitting from rental control laws can be quite expensive.  It can be somewhat of a blind bet for a while.  Some of the failures during the crisis were quite prominent.  Google up what happened to Stuyvesant Town for example, a project initial bought for $5-6 billion before any work was done to it, on the assumption that units can be converted and sold over time, at some point was supposedly worth less than $2 billion.  Smaller, but similar situation can and does happen.  There's been quite a few cases where upon completion, the real estate market was soft, and the developer (lender?) turned a fully developed condo into a rental.  Did the senior lenders take a haircut?  I don't know.  It's probably the same everywhere, but especially in NY, the speed with which a project can be done from permitting, tenant removal to selling out the apartments very much determines the profitability of that project.

 

That said, there does seem to be somewhat of a re-urbanization going on across a lot of major US cities.  I'm not certain if that is demographic / aging driven, which would argue for a much more sustainable NY housing market. 

 

 

 

 

[atbed]

"these compounding effects."

 

 

The bear thesis is contingent on a violent collapse in demand for high-priced condos and luxury rentals. I don't think that happens.

 

I don't think prices will collapse either, but that's not the bear thesis. I think that's what Green King and myself are trying to point out. When you lend to highly-levered, speculative developments that are collateralized by overvalued assets, prices don't need to fall by much to end up with a bad ending ('compounding effects').

This is why you'd want to look at loan to cost, unless you think the raw materials are overvalued?  Edit: But now that I think about it, I always did think the difference between LTC and LTV was too small.  I bet their LTC includes the purchase price of the prior property that gets modified.  Interesting point and something I hadn't considered

 

Condo development in Manhattan is a slightly different game than probably anywhere else. 

 

There is very little vacant land in the NYC and what's available is either expensive or covered in hair. The latter group includes development sites protected by a landmark designation and ones that require environmental remediation. These projects are trickier from a legal standpoint. As HJ pointed out, Manhattan projects tend to require the removal of tenants. This is extremely difficult and can be tremendously costly. I believe Gleason, Thomas, and the team have an advantage lending to these projects. Both Gleason and Thomas are lawyers.

 

HJ also brings up another interesting point - the alternative uses for a project. In NYC, turning luxury condos into rentals or even student housing is a viable risk management tool. I believe the demand for luxury condos sales is stronger than most think, but I could be wrong. However, there is strong demand for condos at the $3-3.5K a month price point, which happens to be ~30% below the expected rent for many 1 bedroom luxury condos.

 

A 10% fall in pre-sale construction prices would be a bad omen. After all, list prices should be going up as construction progresses. but I don't believe senior lenders with low LTC will lose money. I don't think Gleason is swimming naked

[atbed]

https://www.realpage.com/mpf-research/the-nations-top-10-apartment-markets-for-inventory-growth-construction-pipelines/

 

OZRK by % of total construction and land development loans: Dallas 4.9%, Houston 4.9%, Denver/Boulder 2.8%, Austin 2.2%, Charlotte 1.9%, and Nashville 1.9%.

 

"Nationally, urban living is enjoying a renaissance fueled by the

two largest generations, both of which are demonstrating a

preference for living, working and playing in urban environments.

Millennials, not yet tied to familial priorities and Baby Boomers

looking to downsize are fostering increased multifamily

development throughout the country."

- CBRE

[zhengmit]

Anybody still following the story and why the big 11% drop happening now.

 

To me, this is a difficult stock

1. Searching UCC or ACRIS would verify that they are sole senior lender with LTC around 50%.  But just as people commented on the wallstreetoasis who had done deals with them, their underwriting is aggressive with less requirement for pre-leasing and recourse.

2. Their inherent risk is big as CRE % of SEs is 450-500% level, way higher than 300% requirement.  This is not a hard regulation, but running against regulator's wishes has its own risk.

3. Construction loan RWA requirement will jump 50% if sponsor equity is below 20%.  Even if Ozarks makes money eventually on the project, the capital required jumps significantly during the process, which could force company raising capital even if they are right.

 

With all these, what kind of valuation will you buy regardless of these concerns?  If you have to put 10% of your lifetime net worth into stocks you buy, would Ozark be one of them? At what price?

[atbed]

It was never a 10-20% of your net worth type of stock for me. More of a: I don't think they get in trouble and they can deliver 20%+ growth plus multiple expansion type deal. It interested me enough to dig deeper into the banking sector for the first real time in my life, so most of my gain will be acquired industry knowledge.

 

At this point, there seems to be lower risk bank plays. Still respect Gleason and think he will do well. But have learned much from the experts who traffic more in this space. Banks are a hard space for me personally. OZRK is interesting but is a clear outlier to what typically works well in this space. Many believe there are better (lower risk) consolidation plays. OZRK doesn't have a low-cost deposit base. Instead, they are very focused on generating high returns. I think you have to give them credit for good execution over a long period of time. They have low efficiency, which is great, but much of that is due to strong ROA.

 

Despite my view on their CRE lending, it is hard to envision experts thinking this is low risk set up. Disappointing to see it fall back toward my purchase price. Definitely not happy about Thomas leaving.

 

[oddballstocks]

The first cracks have appeared.  Immediate resignation by CLO..what does it mean? 

 

I'm reading between the lines and see two things:

1) The CLO sees the house of cards falling and is getting out

2) A regulator forced this, said lending wasn't safe and for him to resign

3) Some sort of fraud or other activity

 

The guy generated a lot of growth, to jump ship suddenly is bad.

 

Anyone look at the Glassdoor reviews?  A few things stood out.  People kept saying "unorganized" and "lack of training".  I believe they cowboyed their way to 20% annual growth.  But that growth has come at a price.

 

This is something that happens cyclically in banking.  There is always a bank that wants to grow like a weed.  They take crazy risks and for years it works fine, then suddenly it doesn't.

 

One employee said "Mgmt's focus on acquisition spree of other banks pumping stock price and some day that will end with unsolved legacy issues coming to light!"  That's exactly the issue we've been pointing out on this thread, that's the concern.

[atbed]

The first cracks have appeared.  Immediate resignation by CLO..what does it mean? 

 

I'm reading between the lines and see two things:

1) The CLO sees the house of cards falling and is getting out

2) A regulator forced this, said lending wasn't safe and for him to resign

3) Some sort of fraud or other activity

 

The guy generated a lot of growth, to jump ship suddenly is bad.

 

Anyone look at the Glassdoor reviews?  A few things stood out.  People kept saying "unorganized" and "lack of training".  I believe they cowboyed their way to 20% annual growth.  But that growth has come at a price.

 

This is something that happens cyclically in banking.  There is always a bank that wants to grow like a weed.  They take crazy risks and for years it works fine, then suddenly it doesn't.

 

One employee said "Mgmt's focus on acquisition spree of other banks pumping stock price and some day that will end with unsolved legacy issues coming to light!"  That's exactly the issue we've been pointing out on this thread, that's the concern.

 

Gleason is definitely a cowboy:

http://virtualglobetrotting.com/map/george-gleasons-house/view/google/

 

 

[NBL0303]

I'm not sure if anyone else is interested in this bank, but I find it to be one of the more interesting current financial industry stories. The recent profile below is a pretty good overview of why the bank is so interesting. Over the last five years, the Bank of the Ozarks (which is about to change their name to Bank OZK) has become the singular largest luxury development lender in Miami, despite previously have no involvement in the area. According to the article, the bank has lent to projects in the Miami area, that no local lenders would lend to. For those that have followed Bank of the Ozarks, this tracks with their approach in New York City. It seems clear to me, that they have simply developed a far superior development lending mousetrap, that allows them to safely make loans that essentially no other lender would make, or the bank will blow up one day. I'm not weighing in on which of these two possibilities I find to be more likely, but I do believe that the reality of the situation is one or the other.  If they have discovered a manner of real estate development lending that is superior to every other real estate development lender, then good for them - seriously it is quite a business accomplishment. If, however, they have taken on inordinate risks, as others have suggested they have, then this will get very scary.

 

https://therealdeal.com/miami/2018/05/18/a-little-arkansas-bank-is-funding-much-of-south-floridas-condo-boom-what-could-go-wrong/

[bizaro86]

I'm not weighing in on which of these two possibilities I find to be more likely, but I do believe that the reality of the situation is one or the other.  If they have discovered a manner of real estate development lending that is superior to every other real estate development lender, then good for them - seriously it is quite a business accomplishment. If, however, they have taken on inordinate risks, as others have suggested they have, then this will get very scary.

 

https://therealdeal.com/miami/2018/05/18/a-little-arkansas-bank-is-funding-much-of-south-floridas-condo-boom-what-could-go-wrong/

 

Ecclesiastes 1:9

    What has been will be again,

    what has been done will be done again;

    there is nothing new under the sun.

 

I think this quote applies to banking...

[oddballstocks]

I'm not sure if anyone else is interested in this bank, but I find it to be one of the more interesting current financial industry stories. The recent profile below is a pretty good overview of why the bank is so interesting. Over the last five years, the Bank of the Ozarks (which is about to change their name to Bank OZK) has become the singular largest luxury development lender in Miami, despite previously have no involvement in the area. According to the article, the bank has lent to projects in the Miami area, that no local lenders would lend to. For those that have followed Bank of the Ozarks, this tracks with their approach in New York City. It seems clear to me, that they have simply developed a far superior development lending mousetrap, that allows them to safely make loans that essentially no other lender would make, or the bank will blow up one day. I'm not weighing in on which of these two possibilities I find to be more likely, but I do believe that the reality of the situation is one or the other.  If they have discovered a manner of real estate development lending that is superior to every other real estate development lender, then good for them - seriously it is quite a business accomplishment. If, however, they have taken on inordinate risks, as others have suggested they have, then this will get very scary.

 

https://therealdeal.com/miami/2018/05/18/a-little-arkansas-bank-is-funding-much-of-south-floridas-condo-boom-what-could-go-wrong/

 

I've been short them a while, and will continue to be so until they blow up.

 

Check out Penn Square Bank, similarities are scary.  There is nothing new in lending, and if you look on RE boards investors are shocked at the terms OZRK will take, they are the suckers at the table.

 

I'm short via options, I continue to roll them forward.  The carry cost is a few grand a year for about $100k of exposure.

 

[NBL0303]

 

I've been short them a while, and will continue to be so until they blow up.

 

Check out Penn Square Bank, similarities are scary.  There is nothing new in lending, and if you look on RE boards investors are shocked at the terms OZRK will take, they are the suckers at the table.

 

I'm short via options, I continue to roll them forward.  The carry cost is a few grand a year for about $100k of exposure.

 

Thank you for your thoughts, I'm going this route as well.  How far out are your puts generally? And how far out-of-the-money?

[oddballstocks]

 

I've been short them a while, and will continue to be so until they blow up.

 

Check out Penn Square Bank, similarities are scary.  There is nothing new in lending, and if you look on RE boards investors are shocked at the terms OZRK will take, they are the suckers at the table.

 

I'm short via options, I continue to roll them forward.  The carry cost is a few grand a year for about $100k of exposure.

 

Thank you for your thoughts, I'm going this route as well.  How far out are your puts generally? And how far out-of-the-money?

 

The longest dated they have are six months, so I buy those and every 3-6 months I re-up.

 

I'm buying the puts with a strike of $30.  This is binary to me.  A majority of their loans are construction loans and they have a TON of outstanding commitments for more construction lending.

 

It doesn't take a genius to see what happens here.  $9b in construction loans, and $9b in commitments for construction lending, with $3b in equity capital.  With a 20% default rate on construction loans they're sunk.  The thing is for a bank their size you don't even need that.  At a 10% default rate they're in receivership territory because the FDIC doesn't let banks get to $0.  And if you look at construction lending default rates during the crisis 10% isn't outlandish, it's fairly normal and in some places on the low side.

 

This presumes they have zero problems in any other area of their portfolio.  Which based on what I've seen I don't think will be the case.

 

 

They're on the record as saying they don't care about regulators and they just want loan volume.  This is dry tinder piled on dry tinder, all we need is a spark.

 

[NBL0303]

 

It doesn't take a genius to see what happens here.  $9b in construction loans, and $9b in commitments for construction lending, with $3b in equity capital.  With a 20% default rate on construction loans they're sunk.  The thing is for a bank their size you don't even need that.  At a 10% default rate they're in receivership territory because the FDIC doesn't let banks get to $0.  And if you look at construction lending default rates during the crisis 10% isn't outlandish, it's fairly normal and in some places on the low side.

 

 

Indeed. This is particularly true since they are making ground-up loans that, in some cases, no other lenders are unwilling to make. So it may not even take an industry-wide problem to hit them, it is possible that even moderate distress would have an outsized impact on their construction book due to the nature of their book.

 

Also, the quote below from the recent profile of the bank is interesting, this article is quoting the bank's former Chief Lending Officer who resigned last summer:

 

“You are there for over 14 years, it was a great run. I moved to a different company and they’ve moved on to new management,” Thomas, who is now president of Dallas-based LandPlan Development Corp., said in an interview with TRD. He noted that he no longer owns any of Ozarks’ stock.

 

The part that I find interesting is that he pointed out that he no longer owns shares. It is easy to read way too much into comments like these, there could be a wide variety of personal matters (personal conflict with Gleason, etc.) that led to the his decision to part from the company and/or sell shares, so this one quote is of limited value. But it is a least a little bit interesting that he specifically noted that he no longer owns shares.

 

[Spekulatius]

I think most exacutives sell their shares once they leave the company. One reason might be conflict of interest disclosures, if they work in the same field or for a pot. competitor. Those typically kick in once you own more than one percent, but they probably play it safe and sell everything.

[Guest Schwab711]

 

I've been short them a while, and will continue to be so until they blow up.

 

Check out Penn Square Bank, similarities are scary.  There is nothing new in lending, and if you look on RE boards investors are shocked at the terms OZRK will take, they are the suckers at the table.

 

I'm short via options, I continue to roll them forward.  The carry cost is a few grand a year for about $100k of exposure.

 

Thank you for your thoughts, I'm going this route as well.  How far out are your puts generally? And how far out-of-the-money?

 

The longest dated they have are six months, so I buy those and every 3-6 months I re-up.

 

I'm buying the puts with a strike of $30.  This is binary to me.  A majority of their loans are construction loans and they have a TON of outstanding commitments for more construction lending.

 

It doesn't take a genius to see what happens here.  $9b in construction loans, and $9b in commitments for construction lending, with $3b in equity capital.  With a 20% default rate on construction loans they're sunk.  The thing is for a bank their size you don't even need that.  At a 10% default rate they're in receivership territory because the FDIC doesn't let banks get to $0.  And if you look at construction lending default rates during the crisis 10% isn't outlandish, it's fairly normal and in some places on the low side.

 

This presumes they have zero problems in any other area of their portfolio.  Which based on what I've seen I don't think will be the case.

 

 

They're on the record as saying they don't care about regulators and they just want loan volume.  This is dry tinder piled on dry tinder, all we need is a spark.

 

+1

 

30% of total non-debt funding is time deposits and 25% of total is short-term. It looks like they'll be reliant on brokered deposits for at least the next couple of years. Not a great combo.

[NBL0303]

I think most exacutives sell their shares once they leave the company. One reason might be conflict of interest disclosures, if they work in the same field or for a pot. competitor. Those typically kick in once you own more than one percent, but they probably play it safe and sell everything.

 

Agreed. The part of it that I thought was interesting is that it seems he went out of his way to volunteer that to the author.  Again, that is a very minimal point.

[Spekulatius]

I do think that OZRK is extremely vulnerable both from the asset , as well as from the liability side. These guys are either extremely smart or extremely stupid. My bet is the latter.

[Gregmal]

I do think that OZRK is extremely vulnerable both from the asset , as well as from the liability side. These guys are either extremely smart or extremely stupid. My bet is the latter.

 

Or simply well incentivized.

 

With many companies, especially in the financial sector, and few good years of gunslinging and the embracing of risky behavior can make traders, managers, and executives millionaires many times over. You only have to make your fortune once, and when it all blows up, shareholders eat it. The folks whom caused the blow up usually walk away in good shape.