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BOK Financial (BOKF) Gains 5.7% as Q2 Earnings Beat Estimates

·4-min read

BOK Financial Corporation’s BOKF shares gained 5.7% following the release of its second-quarter 2022 results earlier this week.  Earnings per share of $1.96 easily surpassed the Zacks Consensus Estimate of $1.44. However, the bottom line declined 18% from the prior-year quarter.

The results of BOK Financial were backed by higher fee income and lower expenses. The rise in total loans and impressive credit quality were other positives. However, the fall in net interest revenues was a matter of concern.

Net income attributable to shareholders was $132.9 million, down 20% year over year.

Revenues & Costs Decline, Loans Up

Net revenues of $442.6 million (including net interest revenues and total other operating revenues) were down 6% year over year. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $420 million.

Net interest revenues were $274 million, down 2% year over year. Net interest margin rose 16 basis points (bps) to 2.76%.

Total fees and commissions were $173.4 million, up 2%. The rise was mainly driven by high brokerage and trading revenues, transaction card revenues and fiduciary and asset management revenues.

Total other operating expenses were $273.7 million, down 6%. The decline was primarily due to lower personnel and mortgage banking costs.

Efficiency ratio decreased to 60.65% from the prior year’s 64.20%. A decline in efficiency ratio indicates an improvement in profitability.

As of Jun 30, 2022, total loans were $21.29 billion, up 3% sequentially. As of the same date, total deposits, amounting to $38.62 billion, were down 2% from the prior quarter.

Strong Credit Quality

Non-performing assets were $332.8 million or 1.56% of outstanding loans and repossessed assets as of Jun 30, 2022, down from $408.3 million or 1.90% recorded in the prior-year period.  

The company recorded net recovery of $0.8 million in the reported quarter against net-charge-offs of $ 15.4 million in the prior-year quarter.

Allowance for loan losses was 1.13% of outstanding loans as of Jun 30, 2022, down 33 bps year over year. The company recorded no provisions in the reported quarter against a provision benefit of $35 million in the prior-year quarter.

Capital & Profitability Ratios Deteriorate

As of Jun 30, 2022, common equity Tier 1 capital ratio was 11.61%, down from 11.95% as of Jun 30, 2021. Tier 1 and total capital ratios on Jun 30, 2022, were 11.63% and 12.59%, respectively, down from 12.01% and 13.61% as of Jun 30, 2021.

Nonetheless, the leverage ratio was 9.12%, up from 8.58% as of Mar 31, 2021.
Return on average equity was 11.27% compared with the year-earlier quarter’s 12.58%. Return on average assets was 1.13%, down from 1.33% recorded in the year-ago quarter.

Share Repurchase Update

In the reported quarter, the company repurchased 294,084 shares at an average price of $82.98 per share.

Our View

BOK Financial’s results were affected to some extent by a decline in net revenues. Nonetheless, the improvement in NIM is encouraging. In addition, strong credit quality will aid the financials in the upcoming period.

BOK Financial Corporation Price, Consensus and EPS Surprise

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

UMB Financial Corporation UMBF reported a second-quarter 2022 net operating income per share of $2.83, surpassing the Zacks Consensus Estimate of $1.88. The bottom line also compares favorably with the prior-year quarter’s earnings of $1.79.

UMBF’s results were supported by higher revenues, driven by increases in net interest income and fee income. A rise in average loans was another positive. Yet, increased expenses and deteriorating capital ratios were concerning.

Commerce Bancshares Inc.’s CBSH second-quarter 2022 earnings of 96 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line, however, plunged 27.3% from the prior-year quarter.

Results benefited from an improvement in net interest income, a rise in loan balance and a modest increase in non-interest income. However, an increase in non-interest expenses and higher provisions were the major headwinds for CBSH.

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