BOK Financial (BOKF) Shares Fall 10.6% on Q3 Earnings Miss
BOK Financial Corporation’s BOKF shares have lost 10.6% following its third-quarter 2023 results announced on Oct 25. Earnings per share of $2.04 missed the Zacks Consensus Estimate of $2.12. The bottom line also decreased 12.1% from the prior-year quarter.
Results were adversely affected by a rise in expenses and a decline in net interest revenues. However, total fees and commissions witnessed a rise in the reported quarter. Also, loan and deposit balances improved sequentially.
Net income attributable to shareholders was $134.5 million, down 14.1% year over year.
Revenues Decline, Expenses Rise
Quarterly net revenues of $499 million (including net interest revenues and total other operating revenues) were down 1.4% year over year. Further, the top line missed the Zacks Consensus Estimate of $517.4 million.
Net interest revenues were $300.9 million, down 4.9% year over year. Net interest margin (NIM) shrunk 55 basis points (bps) year over year to 2.69%.
Total fees and commissions were $197.9 million, up 2.7% year over year. The rise was driven by an increase in almost all fee income components except for deposit service charges and fees.
Total other operating expenses were $324.3 million, up 10% year over year. The rise was due to an increase in almost all cost components, except for printing, postage and supplies expenditures, amortization of intangible assets and mortgage banking costs.
The efficiency ratio increased to 64.01% from the prior year’s 57.33%. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Sep 30, 2023, total loans were $23.72 billion, up 2.1% sequentially. As of the same date, total deposits amounted to $33.65 billion, up 1.1% from the prior quarter.
Credit Quality Improves
Non-performing assets were $123.3 million or 0.52% of outstanding loans and repossessed assets as of Sep 30, 2023, down from $336.5 million or 1.54% recorded in the year-ago period.
Allowance for loan losses was 1.15% of outstanding loans as of Sep 30, 2023, down 4 bps year over year. Moreover, it recorded provisions for credit losses of $7 million in the reported quarter compared to provisions of $15 million in the prior-year quarter.
However, the company recorded net charge-offs of $6.5 million compared to $0.5 million in the prior-year quarter.
Capital Ratios Improve & Profitability Ratios Decline
As of Sep 30, 2023, the common equity Tier 1 capital ratio was 12.06%, up from 11.80% as of Sep 30, 2022. Tier 1 and total capital ratios were 12.07% and 13.16%, up from 11.82% and 12.81%, respectively, as of Sep 30, 2022.
The leverage ratio was 9.52%, down from 9.76% as of Sep 30, 2022.
Return on average equity was 10.88% compared with the year-earlier quarter’s 13.01%. Return on average assets was 1.08%, down from 1.38% in the year-ago quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 700,500 shares at an average price of $84.17 per share.
Our View
BOK Financial is poised to benefit from higher loan balances and high interest rates. However, elevated expenses, as witnessed in the third quarter, may hurt the bottom line in the near term.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
UMB Financial’s UMBF third-quarter 2023 operating earnings per share of $2.02 surpassed the Zacks Consensus Estimate of $1.76. Also, the bottom line increased 11% from the prior-year quarter’s $2.83.
Results of UMBF were affected by a decline in revenues, a contraction of NIM and a rise in expenses. Nonetheless, increasing loan balances offered some support.
Regions Financial Corporation’s RF third-quarter 2023 adjusted earnings per share of 49 cents missed the Zacks Consensus Estimate of 59 cents. The bottom line improved from 43 cents in the prior-year quarter.
Results have been aided by a rise in NII and average loan balances. However, increasing expenses and provision for credit losses affected RF’s bottom line.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Regions Financial Corporation (RF) : Free Stock Analysis Report
BOK Financial Corporation (BOKF) : Free Stock Analysis Report
UMB Financial Corporation (UMBF) : Free Stock Analysis Report
