Why Wall Street is still worried about regional banks
What triggered the stock drop of Bank OZK and Axos Financial?
The stock drop of Bank OZK and Axos Financial was triggered by concerns over their commercial real estate loan portfolios. In Bank OZK's case, a Citigroup analyst downgraded the stock to sell due to potential risks tied to large loans on projects in Atlanta and San Diego, as well as broader concerns about lending to the life sciences construction market2. Axos Financial was targeted by a short seller over its property loan portfolio.
Why did First Foundation's stock plummet recently?
First Foundation's stock plummeted due to a $228 million investor infusion, raising concerns about the bank's commercial real estate exposure and potential loan concentration in multifamily properties3. The investment was intended to help the bank reduce its concentration of multifamily apartment loans, which make up 52% of its portfolio.
What was the purpose of First Foundation's investor infusion?
First Foundation received a $228 million investor infusion to reduce its concentration of multifamily loans and provide time to sell certain loans. The investment came from Fortress Investment Group, Canyon Partners, Strategic Value Bank Partners, North Reef Capital, and other investors4. The bank's stock fell 24% following the announcement.