BOK Financial (BOKF) Q2 Earnings Beat Estimates, Revenues Up

Shares of BOK Financial BOKF gained 8.2% post delivering a second-quarter 2019 positive earnings surprise of 7.2%. Earnings per share of $1.93 outpaced the Zacks Consensus Estimate of $1.80. Also, the bottom line compares favorably with the prior-year quarter’s reported earnings of $1.75.

Top-line strength, aided by rising net interest and fee income, was recorded. Further, loans balance improved. However, rise in expenses and provisions were headwinds.

Net income attributable to shareholders came in at $137.6 million compared with $114.4 million a year ago.

Revenues & Costs Rise, Loans Improve

Revenues in the second quarter were $457.5 million, up 15.8% year over year. Further, the figure surpassed the Zacks Consensus Estimate of $449.6 million. 

Net interest revenues totaled $285.4 million, up 19.6% year over year. Net interest margin expanded 13 basis points to 3.30%.

BOK Financial’s fees and commissions revenues amounted to $176.1 million, up 12% on a year-over-year basis. Higher brokerage and trading revenues, fiduciary and asset management revenues, along with deposit service charges and fees, primarily led to the rise.

Total other operating expenses were $277.1 million, up 12.4% year over year. The upswing mainly resulted from rise in almost all components of expenses.

Efficiency ratio improved to 59.51% from 61.77% a year ago. Generally, a lower ratio indicates improved profitability.

Net loans as of Jun 30, 2019, were $22.1 billion, up 2.3% sequentially. As of the same date, total deposits amounted to $25.3 billion, marginally down.

Credit Quality: A Mixed Bag

During the June-ended quarter, provisions for credit losses were $5 million against nil provision in the prior-year quarter. Additionally, non-performing assets totaled $297 million or 1.33% of outstanding loans and repossessed assets compared with $268.9 million or 1.49% at the end of the prior-year quarter.

However, combined allowance for credit losses was 0.92% of outstanding loans as of Jun 30, 2019, down from 1.21% a year ago. Net charge offs were $7.7 million, down 26.6% from $10.5 million.

Capital Position

Armed with healthy capital ratios, BOK Financial and its subsidiary banks exceeded the regulatory well-capitalized level. As of Jun 30, 2019, the common equity Tier 1 capital ratio was 10.84% compared with 11.92% on Jun 30, 2018.

Tier 1 and total capital ratios on Jun 30, 2019, were 10.84% and 12.34%, respectively, compared with 11.92% and 13.26% as of Jun 30, 2018. Leverage ratio was 8.75% compared with 9.57% a year ago.

Share Repurchase Update

During the second quarter, the company repurchased 250,000 million common shares at average price of $80.50 per share.

Our Viewpoint

BOK Financial’s second-quarter results reflect a decent performance. Consistent revenue growth keeps us optimistic about the stock. Furthermore, continued growth in loan balances indicates an efficient organic growth strategy. The company’s diverse revenue mix and favorable geographic footprint are likely to boost growth in the upcoming quarters. Nevertheless, escalating expenses and provisions are concerns.

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

Northern Trust Corporation NTRS reported second-quarter 2019 earnings per share of $1.75, which outpaced the Zacks Consensus Estimate of $1.68. Also, the bottom line improved 4.2% from the year-ago quarter.

Bank of Hawaii Corporation BOH pulled off a positive earnings surprise of 2.2% in second-quarter 2019, leading to an appreciation of 2.18% in shares, following the release. Earnings per share of $1.40 surpassed the Zacks Consensus Estimate of $1.37. Further, the reported figure compares favorably with $1.30 earned in the prior-year quarter.

Fifth Third Bancorp FITB delivered a positive earnings surprise of 7.6% in second-quarter 2019. Adjusted earnings per share of 71 cents surpassed the Zacks Consensus Estimate of 66 cents. However, excluding certain one-time items, the bottom line came in at 57 cents, down 30.5% year over year.

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