It has been about a month since the last earnings report for BOK Financial Corporation BOKF. Shares have lost about 6.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
BOK Financial Posts Q2 Earnings Beat
BOK Financial’s second-quarter 2017 earnings per share of $1.35 surpassed the Zacks Consensus Estimate of $1.31. Moreover, the bottom line jumped 35% from the prior-year quarter.
Results were primarily driven by higher net interest income. Higher loan balances were the key driver. Also, the absence of provisions acted as tailwind. However, an increase in non-performing assets and lower fees and commissions revenues perhaps was disappointing.
Net income attributable to common shareholders came in at $88.1 million, up 33.9% from $65.8 million in the year-ago quarter.
Revenues Rise, Costs Decline
Revenues came in at $387.5 million, up 5.2% year over year. Moreover, the figure surpassed the Zacks Consensus Estimate of $384.5 million.
Net interest revenue came in at $205.2 million, up 12.4% year over year. NIM also expanded 26 basis points year over year to 2.89%.
BOK Financial’s fees and commissions revenues amounted to $177.5 million, down 1.5% on a year-over-year basis. The quarter witnessed growth in several income categories, partially offset by lower mortgage banking, and brokerage and trading revenues.
Total other operating expenses were $250.9 million, down slightly year over year. The decline was attributed to a significant reduction in insurance costs.
Total loans as of Jun 30, 2017 were $17.0 billion, almost stable compared with the prior quarter. As of the same date, total deposits amounted to $22.3 billion, down nearly 1.2% from the prior quarter.
Credit Quality: A Mixed Bag
The company did not record any provisions during the quarter. Also, charge-offs were down 77.8% on a year-over-year basis to $1.6 million.
Further, the combined allowance for credit losses was 1.49% of outstanding loans as of Jun 30, 2017, down from 1.54% in the year-ago period.
However, non-performing assets totaled $365.5 million or 2.12% of outstanding loans and repossessed assets as of Jun 30, 2017, up from of $350 million or 2.13% in the prior-year period.
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 Jun 30, 2017, the common equity Tier 1 capital ratio was 11.76%.
Tier 1 and total capital ratios on Jun 30, 2017 were 11.76% and 13.37%, respectively, compared with 11.86% and 13.51% as of Jun 30, 2016. Leverage ratio was 9.26% compared with 9.06% as of Jun 30, 2016.
For full-year 2017, management expects mid single-digit loan growth reflected by growth in C&I personal loans and mortgage loans. Low-single digit revenue growth from fee-generating businesses is expected on a trailing 12-month basis.
Given the lack of deposit pricing pressure, management expects to keep securities portfolio at current levels for the balance of 2017.
Regarding net interest income (NII), low single digit growth is expected. NIM is expected to increase or remain stable.
Management expects expenses to be almost stable or slightly down year over year for 2017.
Loan loss provision for 2017 is expected in the range of $0–$10 million, given the relatively stable credit environment and the company’s current reserve levels.
The company anticipates continued capital deployment through acquisitions, organic growth, share buybacks and dividends.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There have been six moves up in the last two months.
BOK Financial Corporation Price and Consensus
BOK Financial Corporation Price and Consensus | BOK Financial Corporation Quote
At this time, BOK Financial's stock has a strong Growth Score of A, though it is lagging a bit on the momentum front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than value and momentum investors.
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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