Shares of BOK Financial BOKF inched up nearly 1.56%, following the release of first-quarter 2018 results. The company recorded positive earnings surprise of 5.9%.
Earnings per share of $1.61 outpaced the Zacks Consensus Estimate of $1.52. Further, the bottom line compared favorably with $1.35 in the prior-year quarter.
Top-line strength was recorded aided by rising rates, higher loan balances and strong fee income. Moreover, improved credit trends and steady capital position were the positives. However, expenses escalated in the reported quarter.
Net income attributable to common shareholders came in at $105.6 million compared with $88.4 million reported in the year-ago quarter.
Revenues Increase and Costs Dip
Revenues came in at $378.7 million, up 6.3% year over year. However, the figure lagged the Zacks Consensus Estimate of $385.4 million.
Net interest revenues came in at $219.7 million, up 9.2% year over year. Net interest margin (NIM) also expanded 18 basis points year over year to 2.99%.
BOK Financial’s fees and commissions revenues amounted to $159 million, up 2.4% on a year-over-year basis. The quarter witnessed growth in several income categories, partially offset by lower deposit service charges, along with brokerage and trading revenues.
Total other operating expenses were $244.4 million, up 3.8% year over year. The upsurge mainly stemmed from higher personnel, and net occupancy and equipment costs, along with elevated net losses and operating expenses of repossessed assets. These were partially offset by lower mortgage banking costs and professional fees.
Total loans as of Mar 31, 2018 were $17.3 billion, up 1.8% from the prior-year quarter. As of the same date, total deposits amounted to $22.2 billion, down 1.8% from the year-earlier quarter.
Credit Quality Improves
The company recorded a benefit of $5 million during the first quarter compared with no provisions for credit losses witnessed in the prior-year quarter. Further, the combined allowance for credit losses was 1.32% of outstanding loans as of Mar 31, 2018, down from 1.52% in the year-ago period.
Additionally, non-performing assets totaled $278.1 million or 1.60% of outstanding loans and repossessed assets as of Mar 31, 2018, down from $333.9 million or 1.96% in the prior-year period.
However, charge-offs of $1.3 million were reported against net recoveries of $0.7 million in the year-ago quarter.
Capital Position
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 Mar 31, 2018, the common equity Tier 1 capital ratio was 12.06% as compared with 11.59% as of Mar 31, 2017.
Tier 1 and total capital ratios on Mar 31, 2018 were 12.06% and 13.49%, respectively, compared with 11.59% and 13.25% as of Mar 31, 2017. Leverage ratio was 9.40% compared with 8.89% as of Mar 31, 2017.
Share Repurchase Update
During the reported quarter, the company repurchased 82.6 million common shares at an average price of $91.83 per share.
Our Viewpoint
BOK Financial’s 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 keep supporting growth in the upcoming quarters. Also, benefit provision is a tailwind. Nevertheless, escalating expenses remains a concern.
BOK Financial Corporation Price, Consensus and EPS Surprise
BOK Financial Corporation Price, Consensus and EPS Surprise | BOK Financial Corporation Quote
BOK Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
People's United PBCT reported net earnings of 30 cents per share in the first quarter, in line with the Zacks Consensus Estimate. The reported figure improved 36.4% year over year. Rising rates and higher fee income supported results. Growth in loan and deposit balances highlighted organic growth. However, elevated expenses and provisions remained major drags.
Driven by top-line strength, Texas Capital Bancshares Inc. TCBI reported a positive earnings surprise of around 0.7% in first-quarter 2018. Earnings per share of $1.38 outpaced the Zacks Consensus Estimate by a penny. Additionally, results compared favorably with 80 cents recorded in the prior-year quarter. Results were driven by rise in revenues. Organic growth was reflected, with significant rise in loans and deposit balances. Yet, elevated expenses and provisions remained undermining factors.
Huntington Bancshares HBAN reported first-quarter 2018 earnings per share of 28 cents, in line with the Zacks Consensus Estimate. However, the figure came in higher than the prior-year quarter adjusted earnings of 21 cents. Results were driven by higher revenues and lower provisions. Continued growth in both loan and deposit balances was also recorded. Moreover, lower expenses were the primary tailwinds.
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