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BOK Financial (BOKF) Q3 Earnings Beat Estimates, Stock Up

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Zacks Equity Research
·5 min read
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BOK Financial BOKF reported an earnings surprise of 45% for third-quarter 2020. Earnings per share of $2.19 cents surpassed the Zacks Consensus Estimate of $1.51. Further, the bottom line compares favorably with the prior-year quarter’s $2.00.

Results reflect top-line growth, aided by an increase in fee income and no provisions. Further, growth in deposits strengthens the balance sheet. These driving factors boosted investors’ optimism, prompting a share-price appreciation of 2.13%, following the release. Yet, rising expenses, shrinking margins and rising non-performing assets remain woes.

Net income attributable to shareholders came in at $154 million compared with the $142.2 million recorded in the year-ago quarter.

Revenues Climb, Costs Flare Up, Loans Decrease

Revenues came in at $505.9 million, up 11.5% year over year. The revenue figure also handily outpaced the Zacks Consensus Estimate of $482.6 million.

Net interest revenues totaled $271.8 million, down 2.6% year over year. Furthermore, net interest margin (NIM) shrunk 20 basis points (bps) year over year to 2.81%.

BOK Financial’s fees and commissions revenues amounted to $222.9 million, up 19.7% on a year-over-year basis. Higher brokerage and trading revenues, transaction card revenues, along with elevated mortgage banking revenues, primarily led to this upswing. This was partly offset by lower deposit service charges and fees, fiduciary and asset management revenues, along with reduced other revenues.

Total other operating expenses were $301.3 million, up 7.9% year over year. This uptick mainly stemmed from higher personnel expenses, data-processing and communication expenses and mortgage banking costs.

Efficiency ratio increased to 60.41% from the prior years’ 59.31%. Generally, a higher ratio indicates decline in profitability.

Total loans as of Sep 30, 2020, were $23.8 billion, down 1.5% sequentially. As of the same date, total deposits amounted to $35 billion, up 3.2% sequentially.

Credit Quality: A Concern

No provisions for credit losses were reported in the third quarter. However, the combined allowance for credit losses was 1.76% of outstanding loans as of Sep 30, 2020, up from the year-ago period’s 0.92%.

Additionally, non-performing assets totaled $416.8 million or 1.75% of outstanding loans and repossessed assets as of Sep 30, 2020, up from the $286.2 million recorded in the prior-year period. Net charge-offs were $22.4 million, up significantly year over year.

Capital & Profitability Ratios

As of Sep 30, 2020, the common equity Tier 1 capital ratio was 12.07% as compared with 11.06% as of Sep 30, 2019.

Tier 1 and total capital ratios on Sep 30, 2020, were 12.07% and 14.05%, respectively, compared with 11.06% and 12.56% as of Sep 30, 2019. Leverage ratio was 8.39% compared with 8.41% as of Sep 30, 2019.

Return on average equity was 11.89% compared with the year-earlier quarter’s 11.83%. Return on average assets was 1.25% compared with the 1.29% witnessed in the year-ago period.

Our Take

BOK Financial’s continued fee income growth keeps us optimistic about the stock. Furthermore, growth in deposit balances highlights an efficient organic-growth strategy. The company’s diverse revenue mix and favorable geographic footprint are likely to keep supporting its performance in the upcoming quarters. Nevertheless, escalating expenses and shrinking margins are concerns.

BOK Financial Corporation Price, Consensus and EPS Surprise

BOK Financial Corporation Price, Consensus and EPS Surprise
BOK Financial Corporation Price, Consensus and EPS Surprise

BOK Financial Corporation price-consensus-eps-surprise-chart | BOK Financial Corporation Quote


BOK Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Performance of Other Banks

Washington Federal’s WAFD fourth-quarter fiscal 2020 (ended Sep 30) earnings came in at 45 cents per share, surpassing the Zacks Consensus Estimate of 42 cents. However, the figure reflected a year-over-year plunge of 31.8%.

BancorpSouth Bank BXS delivered a positive earnings surprise of 32.7% in third-quarter 2020 on higher interest income. Net operating earnings of 69 cents per share beat the Zacks Consensus Estimate of 52 cents. The bottom line, however, was flat year over year.

Zions Bancorporation’s ZION third-quarter 2020 net earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 86 cents. However, the bottom line compared unfavorably with the year-ago quarter’s $1.17.

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BOK Financial Corporation (BOKF) : Free Stock Analysis Report
 
Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report
 
Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
 
BancorpSouth Bank (BXS) : Free Stock Analysis Report
 
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