BOK Financial (BOKF) Q3 Earnings Miss, Stock Slips 3.7% (Revised)
Zacks Investment Research | Oct 26, 2017 10:53PM ET
BOK Financial Corporation’s (NASDAQ: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
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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).
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