BOK Financial Tops Estimates - Analyst Blog
July 28 2011 - 2:42PM
Zacks
BOK Financial
Corporation’s
(BOKF)
second quarter 2011 earnings came in at $69.0 million or $1.00 per
share, which were above the Zacks Consensus Estimate of 98 cents.
The results also compare favorably with the prior-quarter earnings
of $64.8 million or 94 cents per share and prior-year earnings of
$63.5 million or 93 cents per share.
Results primarily reflect a
decrease in loan loss provisions and improved credit quality.
Increase in fees and commissions revenue also supported top-line
growth.
BOK Financial’s net
interest revenue totaled $174.0 million in the reported quarter, up
2% sequentially. While net interest margin decreased 7 basis points
(bps) from the prior quarter to 3.40%, average earning assets grew
$354 million.
Outstanding loan balances
at BOK Financial were $10.7 billion as of June 30, 2011, up from
$10.6 billion as of March 31, 2011. Growth in commercial loan and
residential mortgage loan balances was partially offset by lower
commercial real estate loans and consumer loans. However,
period-end deposits totaled $17.6 billion as of June 30, 2011, down
from $17.9 billion as of March 31, 2011.
Fees and commissions
revenue totaled $127.8 million, up 4% sequentially. The growth was
fueled by higher transaction card revenue, mortgage banking revenue
and deposit service charges, partially offset by lower brokerage
and trading revenue.
BOK Financial’s total
operating expenses were $203.2 million, up 14% sequentially.
Excluding changes in the fair value of mortgage servicing rights,
operating expenses totaled $189.7 million, up $8.1 million from the
prior quarter. The company experienced an increase in both
personnel expenses and non-personnel expenses.
The increase in personnel
expenses was primarily due to increased incentive compensation
expense while the advancement in non-personnel expenses was largely
brought about by increased mortgage banking expenses.
The credit quality of BOK
Financial’s loan portfolio continued to improve.
Nonperforming assets
totaled $351 million or 3.23% of outstanding loans and repossessed
assets as of March 31, 2011 compared with $379 million or 3.54%,
respectively, as of the same date.
Net loans charged off
dropped 17% to $8.5 million from $10.3 million in the prior
quarter. Provision for credit losses decreased 57% to $2.7 million
from $6.3 million in the prior quarter.
BOK Financial’s capital
ratios remained strong. The company and its subsidiary bank
exceeded the regulatory definition of well capitalized at June 30,
2011. Tier 1 and total capital ratios were 13.30% and 16.80%,
respectively, as of June 30, 2011 compared with 12.97% and 16.48%,
as of March 31, 2011. Moreover, its tangible common equity ratio
advanced to 9.71% as of June 30, 2011 from 9.54% as of March 31,
2011.
Dividend
Update
BOK Financial announced an
increase in the quarterly cash dividend to 27.5 cents per share
from 25 cents paid in the first quarter of 2011. The increased
dividend was paid during the second quarter of 2011.
On July 26, 2011, the board
of directors of BOK Financial approved a quarterly cash dividend of
27.5 cents per share payable on or about August 26, 2011, to
shareholders of record as of August 12, 2011.
Our
Take
The strategic expansions
and 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.
The
company’s diverse revenue stream, sturdy capital position and
expense control initiatives augur well for investors. The dividend
increase will also bode well and boost investors’
confidence.
However, with a sluggish
recovery of the economy, a significant turnaround in revenue would
remain elusive. Additionally, we also expect both top and bottom
lines to bear the brunt of regulatory issues.
BOK Financial shares are
maintaining a Zacks #3 Rank, which translates into a short-term
Hold recommendation.
BOK FINL CORP (BOKF): Free Stock Analysis Report
CULLEN FROST BK (CFR): Free Stock Analysis Report
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