Bank OZK of Little Rock has agreed to pay $45 million to settle a class-action lawsuit alleging that it misled investors about the health of two commercial real estate loans.
The bank in April reached an agreement in principal with the lead plaintiff in the case, Strathclyde Pension Fund of Glasgow, Scotland. U.S. District Judge D.P. Marshall Jr. in June granted a preliminary motion to approve the settlement and a set a hearing for Sept. 19 in Little Rock.
A spokesperson for the bank declined to comment Tuesday, citing company policy on pending litigation.
The suit came after Bank OZK in October 2018 disclosed a $45 million write-off on two bad loans, one for a shopping mall in South Carolina and the other for a single-family residential development in North Carolina. The news sunk shares of the company (Nasdaq: OZK) by nearly 24% in one day.
More: Read the stipulation of settlement.
Strathclyde alleged that Bank OZK made false and misleading statements about its asset and credit quality and concealed the two non-performing loans.
Bank OZK denied those claims and maintained that its conduct was proper and in compliance with federal securities law.
Under the proposed settlement, the $26.5 billion-asset bank will pay an estimated average of $0.41 per allegedly damaged share and be released from liability. Payments would be available to those who purchased or otherwise acquired the bank's common stock between Feb. 19, 2016 and Oct. 18, 2018.
Carney Bates & Pulliam PLLC of Little Rock teamed up with Robbins Geller Rudman & Dowd LLP of San Diego to represent Strathclyde in the lawsuit.
The original plaintiff in the suit was Bank OZK shareholder Jordan Colbert. He was represented by Little Rock’s Owings Law Firm and Glancy Prongay & Murray LLP of Los Angeles.
