On Mar 30, 2015, we issued an updated research report on BOK Financial Corporation BOKF. The company’s growth prospects look promising based on its organic growth. However, the rising expense base remains a concern.
Period end loans grew at a Compound Annual Growth Rate (CAGR) of 7.5% in the last five years (2010-2014). Further, management expects doubledigit loan growth for 2015. Apart from rising loan balances, BOK Financial is strengthening its balance sheet with improving credit quality. Nonperforming assets and allowance for credit losses have been declining consistently over the past few years.
The company currently remains focused on its two major strategic objectives: balance sheet repositioning for a probable rising rate environment in 2015 and building operational infrastructure to boost risk management, compliance and information technology.
The year 2014 supported BOK Financial’s strategy to grow through inorganic routes. In Feb 2014, the company completed the acquisition of Kansas-based GTRUST Financial Corp., while in Apr 2014 the company acquired Houston-based MBM Advisors, an independent full service retirement and pension plan investment company.
However, the company faces operational risk from escalating costs. Operating expenses increased at a CAGR of 3% over the last five years (2010-2014). Also, we remain concerned owing to a persistent low interest rate environment and the prevailing stringent regulatory landscape.
Over the past 30 days, the Zacks Consensus Estimate remained stable at $4.37 per share and $4.77 per share for 2015 and 2016, respectively.
BOK Financial currently carries a Zacks Rank #3 (Hold)
Some-better ranked stocks in the finance sector include Cowen Group, Inc. COWN, Pinnacle Financial Partners Inc. PNFP and FCB Financial Holdings, Inc. FCB. All three stocks sport a Zacks Rank #1 (Strong Buy).
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