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BOK Financial (BOKF) Q3 Earnings Miss, Stock Slips 3.7% (Revised)

BOK Financial Corporation’s BOKF third-quarter 2017 earnings per share of $1.31 missed the Zacks Consensus Estimate of $1.36. However, the bottom line jumped 15.9% from the prior-year quarter.

Results were primarily affected by lower fees and commissions revenues which perhaps disappointed investors. As a result, the stock lost 3.7% after the announcement.

However, improved revenues and higher loan balances as well as absence of provisions and a decrease in nonperforming assets acted as tailwinds.

Net income attributable to common shareholders came in at $85.6 million, up 15.2% from $74.3 million in the year-ago quarter.

Revenues and Costs Rise

Revenues came in at $394.2 million, up 7.9% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate of $392.1 million.

Net interest revenues came in at $218.5 million, up 16.3% year over year. Net interest margin (NIM) also expanded 37 basis point year over year to 3.01%.

BOK Financial’s fees and commissions revenues amounted to $173.5 million, down 4.3% on a year-over-year basis. The quarter witnessed growth in several income categories, partially offset by lower mortgage banking, deposit service charges, and brokerage and trading revenues.

Total other operating expenses were $265.9 million, 3% higher year over year. The rise can be attributed to a significant increase in personnel expenses, and net losses and operating expenses of repossessed assets.

Total loans as of Sep 30, 2017 were $17.2 billion, marginally up compared with the prior quarter. As of the same date, total deposits amounted to $21.8 billion, down nearly 2.2% from the prior quarter.

Credit Quality Improves

The company did not record any provisions during the quarter. Also, charge-offs were down 44.1% on a year-over-year basis to $3.4 million.

Further, the combined allowance for credit losses was 1.47% of outstanding loans as of Sep 30, 2017, down from 1.56% in the year-ago period.

Moreover, non-performing assets totaled $327.6 million or 1.90% of outstanding loans and repossessed assets as of Sep 30, 2017, up from of $349.2 million or 2.12% in the prior-year period.

Capital Position

Armed with healthy capital ratios, BOK Financial and its subsidiary banks exceeded the regulatory well-capitalized level. The company was subject to new regulatory rules on Jan 1, 2015. As of Sep 30, 2017, the common equity Tier 1 capital ratio was 11.90%.

Tier 1 and total capital ratios on Sep 30, 2017 were 11.90% and 13.47%, respectively, compared with 11.99% and 13.65% as of Sep 30, 2016. Leverage ratio was 9.30% compared with 9.06% as of Sep 30, 2016.

Our Viewpoint

BOK Financial’s consistent revenue growth keeps us optimistic about the stock. Moreover, continued growth in loan balances indicates an efficient organic growth strategy. Its diverse revenue mix and favorable geographic footprint should keep supporting growth in the upcoming quarters. However, elevated expenses remain a near-term concern.

Currently, BOK Financial carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Performance of Other Banks

Regions Financial Corporation’s RF third-quarter 2017 earnings from continuing operations of 25 cents per share came in line with the Zacks Consensus Estimate. The figure came in 4.2% higher than the prior-year quarter tally.

First Horizon National Corporation FHN reported third-quarter 2017 adjusted earnings per share of 32 cents, surpassing the Zacks Consensus Estimate by 6.7%. Further, the figure reflects an increase of nearly 22% from the year-ago quarter.

Bank of the Ozarks’ OZRK third-quarter 2017 earnings of 75 cents per share surpassed the Zacks Consensus Estimate by a penny. Moreover, the bottom line jumped 13.6% on a year-over-year basis.

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(We are re-publishing this article to correct an error. The original version, published yesterday, Oct 26, 2017, should no longer be relied upon.)

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