Trading Points: Bank OZK, Annaly and Rithm Capital

July 29, 2026 | This weekend we’ll update the WGA Bank Top 50 listing for our subscribers to the IRA Premium Service. Next weekend we'll be updating out listing of gold, silver and miner stocks in the WGA Precious Metals Top 25. Don't forget to watch “The Wrap with Chris Whalen” on The Julia LaRoche Show every Saturday on YouTube to catch our discussion of what’s hot and what’s not in Washington and on Wall Street.

Banks in the US tend to report earnings in the first couple of weeks after the quarter close, while nonbanks and mortgage issuers tend to release earnings later in the reporting period. As we noted previously, the bank group is performing well financially due to huge capital markets volumes and the larger stocks have managed to rise nearly 30% in the past 12 months despite the market muddle of rising interest rates and inflation.

One of the remarkable developments over the past week were reports that several large banks have decided to add to exposure to commercial real estate, this as default rates on CRE are bottoming and quality collateral is fast disappearing into private balance sheets.

“Big banks are on the hunt to grow their loan books and are turning back to an area they had shunned not that long ago,” notes Ben Gillman of the Wall Street Journal. The relatively low volumes in agency and government loans is forcing larger banks to add more CRE to their asset menu.

The chart below shows default rates for the $1.2 trillion in non-owner occupied commercial real estate held in bank portfolios. Part of the reason that default rates have been falling is the growing crowd of investors just waiting to acquire commercial properties. Notice in the second chart that loss given default (LGD) actually skewed negative in 2016-2017 when investor demand for CRE surged, but not during COVID.

Source: FDIC

Notice in the chart below that even as CRE loan delinquency rates have fallen, loss severities for defaulted commercial real estate loans owned by banks are still over 80% of the loan amount. Although loss given default or LGD on residential assets is still near zero due to elevated home prices, loss severity on CRE still suggests a fundamental problem with the sector. Likewise, LGD on bank-owned multifamily assets is closer to 100% of the loan amount.

Source: FDIC

Bank OZK

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