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Balanced View on BOK Financial

Zacks Equity Research

On Apr 2, 2013, we reiterated our Neutral recommendation on BOK Financial Corp (BOKF) based on reduced net charge-offs and healthy capital ratios. However, reduced mortgage banking and net interest revenue as well as escalating operating expenses were the dampeners.

Why Neutral?

BOK Financial’s fourth-quarter earnings of $1.21 per share missed the Zacks Consensus Estimate as well as the prior-quarter earnings. Results were impacted by reduced net interest revenue and lower mortgage banking revenue, along with elevated operating expenses. However, reduced net charge-offs and strong capital ratios were the positives.

Over the last 60 days, the Zacks Consensus Estimate for 2013 and 2014 scaled up only by 1% and 2%, respectively. As a result, BOK Financial carries a Zack Rank #3 (Hold).

Moreover, diverse revenue stream and economically diverse footprint with a major chunk of revenues being generated outside its primary market in OK are long-term growth drivers. Further, healthy capital position and opportunistic acquisitions are positives for the stock. Extensive capital deployment activities also continue to reinforce investors’ confidence in the stock.

However, the low interest rate environment and changing regulatory landscape are expected to be headwinds in the near future. Further, we remain concerned about the bank’s significant amount of loans in areas that has experienced less economic growth. In addition, we remain wary of the mortgage-banking operations of the company, which may temper profitability in the near to mid-term.

Other Banks Worth Considering

Other banks that are performing better than BOK Financial include Meta Financial Group, Inc. (CASH), Flagstar Bancorp Inc. (FBC) and First Defiance Financial Corp. (FDEF). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on BOKF

Read the Full Research Report on FBC

Read the Full Research Report on CASH

Read the Full Research Report on FDEF

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