It has been about a month since the last earnings report for BOK Financial (BOKF Quick QuoteBOKF - Free Report) . Shares have lost about 1.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is BOK Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BOK Financial Q3 Earnings Beat, Revenues Dip

BOK Financial’s third-quarter 2022 earnings per share of $2.32 easily surpassed the Zacks Consensus Estimate of $2.05. However, the bottom line declined 15.3% from the prior-year quarter.

Results were aided by an improvement in net interest revenues, driven by higher rates and loan growth. Also, total fees and commissions witnessed a rise in the quarter under review. However, an increase in expenses hurt the results to some extent.

Net income attributable to shareholders was $156.5 million, down 16.9% year over year.

Revenues Decline, Costs Rise

Net revenues of $506 million (including net interest revenues and total other operating revenues) were down 1% year over year. Nonetheless, the top line surpassed the Zacks Consensus Estimate of $459.7 million.

Net interest revenues were $316.3 million, up 12.9% year over year. Net interest margin expanded 58 basis points (bps) year over year to 3.24%.

Total fees and commissions were $192.6 million, up 1.2%. The rise was driven by an increase in almost all fee income components except for mortgage banking revenues and other revenues.

Total other operating expenses were $294.8 million, up 1.2% year over year. The rise was due to an increase in almost all cost components except for personnel costs, and costs related to the amortization of intangible assets.

The efficiency ratio decreased to 57.35% from the prior year’s 61.23%. A decline in the efficiency ratio indicates an improvement in profitability.

As of Sep 30, 2022, total loans were $21.79 billion, up 2.3% sequentially. As of the same date, total deposits amounted to $36.42 billion, down 5.7% from the prior quarter.

Credit Quality: Mixed Bag

Non-performing assets were $336.5 million or 1.54% of outstanding loans and repossessed assets as of Sep 30, 2022, down from $349.3 million or 1.71% recorded in the prior-year period.

The company recorded net charge-offs of $0.5 million in the reported quarter, down 94.1% from the prior-year quarter.

Allowance for loan losses was 1.11% of outstanding loans as of Sep 30, 2022, down 25 bps year over year. However, in the reported quarter, the company recorded provisions of $15 million against a provision benefit of $23 million in the prior-year quarter.

Capital & Profitability Ratios Deteriorate

As of Sep 30, 2022, the common equity Tier 1 capital ratio was 11.80%, down from 12.26% as of Sep 30, 2021. Tier 1 and total capital ratios on Sep 30, 2022, were 11.82% and 12.81%, respectively, down from 12.29% and 13.38% as of Sep 30, 2021.

The leverage ratio was 9.76%, up from 8.77% as of Sep 30, 2021.

Return on average equity was 13.01% compared with the year-earlier quarter’s 13.78%. Return on average assets was 1.38%, down from 1.51% recorded in the year-ago quarter.

Share Repurchase Update

In the reported quarter, the company repurchased 548,034 shares at an average price of $91.20 per share.

2022 Outlook

Management expects loan growth to continue, with annualized growth in the mid- to upper-single-digit range. Demand deposits are expected to be stable.

Assuming a 75-bps rate hike in November and December 2022, and a 25-bps hike in February 2023, NIM is anticipated to reach 3.5% by the first half of 2023.

The company expects expenses to rise over the next five quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 13.62% due to these changes.

VGM Scores

At this time, BOK Financial has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise BOK Financial has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

BOK Financial is part of the Zacks Banks - Southwest industry. Over the past month, First Horizon National (FHN Quick QuoteFHN - Free Report) , a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended September 2022 more than a month ago.

First Horizon reported revenues of $875 million in the last reported quarter, representing a year-over-year change of +18.4%. EPS of $0.44 for the same period compares with $0.50 a year ago.

For the current quarter, First Horizon is expected to post earnings of $0.50 per share, indicating a change of +4.2% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for First Horizon. Also, the stock has a VGM Score of B.