CFR Cullen Frost Bankers Inc

After a detailed analysis of the company fundamentals following first quarter 2011 earnings results and in light of the current economic environment, we reaffirm our Neutral recommendation on BOK Financial Corporation (BOKF).

BOK Financial’s first quarter 2011 earnings of 94 cents per share were slightly ahead of the Zacks Consensus Estimate of 91 cents. The results also compare favorably with the prior quarter’s earnings of 86 cents per share and prior-year quarter’s earnings of 88 cents per share.

Results primarily reflect a rise in interest revenue, lower expenses and an improvement in credit metrics. However, fees and commissions revenue remained stretched with a drop in mortgage banking income. BOK Financial also announced a dividend increase.

Strategic expansions and the local-leadership based business model of BOK Financial, which has peers such as Cullen/Frost Bankers Inc. (CFR) and First Financial Bankshares Inc. (FFIN), have aided its expansion into a leading financial service provider from a small bank in Oklahoma. Going forward, we believe that its diverse revenue stream and expense control initiatives would augment its earnings.

Capital ratios at BOK Financial are exhibiting an uptrend while asset quality trends are also improving. The company also continues to return wealth to its shareholders in the form of dividends and concurrent with the first quarter 2011 earnings results, it has also announced a sixth consecutive annual hike since it paid its first cash dividend in the second quarter of 2005. The increased dividend was paid last month. Such a shareholder friendly approach augurs well for the stock.

However, as economic and employment conditions are likely to remain weak, we expect revenue growth to be restricted. Additionally, we also expect both top and bottom lines to bear the brunt of regulatory issues. Therefore, the risk and reward profile of the company seems somewhat balanced for BOK Financial and we reiterate our Neutral recommendation.

BOK Financial shares are maintaining a Zacks #2 Rank, which translates into a short-term Buy recommendation.

 
BOK FINL CORP (BOKF): Free Stock Analysis Report
 
CULLEN FROST BK (CFR): Free Stock Analysis Report
 
FIRST FIN BK-TX (FFIN): Free Stock Analysis Report
 
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