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BOK Financial (BOKF) Q4 Earnings Beat on Revenue Strength

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BOK Financial BOKF reported an earnings surprise of 11.1% for fourth-quarter 2020. Earnings per share of $2.21 handily surpassed the Zacks Consensus Estimate of $1.99. Further, the bottom line compares favorably with the prior-year quarter’s $1.56.

Top-line strength on fee income and net interest income growth, along with rise in deposits, were driving factors. Moreover, benefit provision was a tailwind. However, elevated expenses and pressure on margin were major drags, disappointing investors, causing shares to depreciate 1.02%, following the release. In addition, soft loan growth was visible.

Net income attributable to shareholders came in at $154.2 million compared with the $110.4 million recorded in the year-ago quarter.

For 2020, net income was $435 million or $6.19 per share compared with the $500.8 million or $7.03 reported in 2019. The results also surpassed the Zacks Consensus Estimate of $6.00.

Revenues Climb, Costs Up, Loans Decrease

For 2020, net revenues came in at $1.95 billion, up 7.7% year over year. The revenue figure is in line with the Zacks Consensus Estimate.

Net revenues in the fourth quarter came in at $494 million, up 10.1% year on year. The reported figure also handily outpaced the Zacks Consensus Estimate of $487.2 million.   

Net interest revenues totaled $297.2 million, up 10% year over year. Yet, net interest margin (NIM) shrunk 16 basis points year on year to 2.72%.

BOK Financial’s fees and commissions revenues amounted to $181.1 million, up around 1% on a year-over-year basis. Higher mortgage banking revenues primarily led to this upswing. This was partly offset by lower brokerage and trading revenues, transaction card revenues, deposit service charges and fees, fiduciary and asset management revenues, along with reduced other revenues.

Total other operating expenses were $300.7 million, flaring up 4.1% year on year. This uptick mainly stemmed from rise in almost all components of expenses, including a 4.6% jump in personnel expenses.

Efficiency ratio improved to 62.36% from the prior years’ 63.65%. Generally, a lower ratio indicates rise in profitability.

Total loans as of Dec 31, 2020, were $23 billion, down 3.4% sequentially. As of the same date, total deposits amounted to $36.1 billion, up 3.1% sequentially.

Credit Quality: A Mixed Bag

During the December-end quarter, credit metrics was a mixed bag. Provisions for credit losses were a benefit of $6.5 million compared with the provision of $19 million witnessed in the prior-year quarter. However, the combined allowance for credit losses was 1.69% of outstanding loans as of Dec 31, 2020, up from the year-ago period’s 0.97%.

Additionally, non-performing assets totaled $477 million or 2.07% of outstanding loans and repossessed assets as of Dec 31, 2020, up from the $293.8 million or 1.35% recorded in the prior-year period. Net charge-offs were $16.7 million, up 33.6% year over year.

Capital Position

Armed with healthy capital ratios, BOK Financial and its subsidiary banks exceeded the regulatory well-capitalized level. As of Dec 31, 2020, the common equity Tier 1 capital ratio was 11.94% as compared with 11.39% as of Dec 31, 2019.

Tier 1 and total capital ratios on Dec 31, 2020, were 11.94% and 13.81%, respectively, compared with 11.39% and 12.94% as of Dec 31, 2019. Leverage ratio was 8.28% compared with 8.40% as of Dec 31, 2019.

Return on average equity was 11.75% compared with the year-earlier quarter’s 9.05%. Return on average assets was 1.22% compared with the 0.99% witnessed in the year-ago quarter.

Capital Deployment Update

During the fourth quarter, the company repurchased 665,100 shares of common stock at an average price of $63.82 per share.

Our Viewpoint

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 margin pressure 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

Aided by higher revenues, Citizens Financial Group CFG pulled off fourth-quarter earnings surprise of 39.4%. Adjusted earnings per share of $1.04 surpassed the Zacks Consensus Estimate of 91 cents. Also, the bottom line compares favorably with 99 cents in the year-ago quarter.

Increase in fee income, on the back of a solid rise in mortgage banking and capital market fees, supported revenue growth. Also, the capital position remained strong. However, rise in provisions and elevated expenses hurt the company’s results. Lower loans and contraction of margin were other headwinds.

First Republic Bank FRC delivered an earnings surprise of 5.3% in the October-December period on solid top-line strength. Earnings per share of $1.60 surpassed the Zacks Consensus Estimate of $1.52. Additionally, the bottom line climbed 15.1% from the year-ago quarter. Results were supported by an increase in net interest income and fee income. Moreover, the company’s balance-sheet position was strong during the quarter. Nonetheless, higher expenses and elevated provisions were offsetting factors.

State Street’s STT fourth-quarter adjusted earnings of $1.69 per share outpaced the Zacks Consensus Estimate of $1.57. However, the figure came in 14.6% lower than the prior-year level. Results for the reported quarter reflected new investment servicing wins of $205 billion, improvement in fee income and lower expenses. However, a decline in net interest income mainly due to lower rates was a major headwind.

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