Bank Of The Ozarks Squeezed By Growing Commercial Real Estate Concerns

I've been concerned about the heavy weighting of some banks toward commercial real estate and construction lending given where we are in the CRE cycle. Apparently, I'm not the only one, as more than a few banks with high ratios of commercial real estate loans to capital have underperformed their regional banking peers so far this year.

This brings me to Bank of the Ozarks (OZRK-OLD) (soon to be "Bank OZK" (NASDAQ:OZK)); this isn't the first time I've been concerned about the combination of OZRK's aggressive construction/CRE lending growth, its aggressive expansion into new markets, and its funding situation, not to mention its valuation, but it does seem like the market is now paying closer attention. The shares do now look undervalued if double-digit long-term growth remains a reasonable expectation, but investors should note the elevated risks that accompany that undervaluation.

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Bank Of The Ozarks Squeezed By Growing Commercial Real Estate Concerns