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BOK Financial's Margin Pressure Lingers Amid Low Rate
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On Sep 28, 2016, we issued an updated research report on BOK Financial Corporation (BOKF - Free Report) . The Oklahoma-based company exhibits strength in several areas, including growing loans and deposits and a strong capital position. However, it continues to face challenges amid the persistent low-rate environment and other macro headwinds.
While net interest margin (NIM) has been declining over the past several years, net interest income (NII) has showed muted growth. The Dec 2015 rate hike was not enough to result in significant improvement. During the first six months of 2016, NII and NIM reflected only a slight increase. Though management expects NII to increase for this year, NIM is expected to trend stable.
Further, the company faces operational risks from escalating costs. Operating expenses increased at a CAGR of 3% over the last six years (2010-2015). This trend continued in first-half 2016 as well.
Additionally, the current stringent regulations and higher capital requirements limits business growth opportunities in several spaces, including interchange revenue, mortgage banking and consumer products.
Nevertheless, BOK Financial’s consistent improvement in loan and deposit balances highlights its organic growth. For full-year 2016, the company expects mid single-digit loan growth. Apart from rising loan balances, BOK Financial is strengthening its balance sheet with improving credit quality.Also, driven by a solid capital position, the company remains focused on expansion through strategic acquisitions.
The company recorded a year-to-date return of 14%.
Over the past 60 days, the Zacks Consensus Estimate for 2016 declined slightly to $3.86per share.
BOK Financial currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some-better ranked stocks in the finance sector include Republic Bancorp Inc. (RBCAA - Free Report) , Enterprise Financial Services Corp. (EFSC - Free Report) and German American Bancorp Inc. (GABC - Free Report) . While Republic Bancorp sports a Zacks Rank #1(Strong Buy), Enterprise Financial Services and German American Bancorp carry a Zacks Rank #2 (Buy).
Republic Bancorp has been witnessing upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 climbed more than 10% to $2.04 per share. The company’s share price surged over 16% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enterprise Financial has been recording upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 advanced 2.7% to $2.30 per share. Year to date, the company’s share price was up around 13%.
German American Bancorp has been witnessing upward estimate revisions as well. The Zacks Consensus Estimate inched up nearly 1% to $2.40 per share for 2016, over the last 60 days. The company gained more than 18% year to date.
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BOK Financial's Margin Pressure Lingers Amid Low Rate
On Sep 28, 2016, we issued an updated research report on BOK Financial Corporation (BOKF - Free Report) . The Oklahoma-based company exhibits strength in several areas, including growing loans and deposits and a strong capital position. However, it continues to face challenges amid the persistent low-rate environment and other macro headwinds.
While net interest margin (NIM) has been declining over the past several years, net interest income (NII) has showed muted growth. The Dec 2015 rate hike was not enough to result in significant improvement. During the first six months of 2016, NII and NIM reflected only a slight increase. Though management expects NII to increase for this year, NIM is expected to trend stable.
Further, the company faces operational risks from escalating costs. Operating expenses increased at a CAGR of 3% over the last six years (2010-2015). This trend continued in first-half 2016 as well.
Additionally, the current stringent regulations and higher capital requirements limits business growth opportunities in several spaces, including interchange revenue, mortgage banking and consumer products.
Nevertheless, BOK Financial’s consistent improvement in loan and deposit balances highlights its organic growth. For full-year 2016, the company expects mid single-digit loan growth. Apart from rising loan balances, BOK Financial is strengthening its balance sheet with improving credit quality.Also, driven by a solid capital position, the company remains focused on expansion through strategic acquisitions.
The company recorded a year-to-date return of 14%.
BOK FINL CORP Price
BOK FINL CORP Price | BOK FINL CORP Quote
Over the past 60 days, the Zacks Consensus Estimate for 2016 declined slightly to $3.86per share.
BOK Financial currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some-better ranked stocks in the finance sector include Republic Bancorp Inc. (RBCAA - Free Report) , Enterprise Financial Services Corp. (EFSC - Free Report) and German American Bancorp Inc. (GABC - Free Report) . While Republic Bancorp sports a Zacks Rank #1(Strong Buy), Enterprise Financial Services and German American Bancorp carry a Zacks Rank #2 (Buy).
Republic Bancorp has been witnessing upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 climbed more than 10% to $2.04 per share. The company’s share price surged over 16% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enterprise Financial has been recording upward estimate revisions over the last 60 days. The Zacks Consensus Estimate for 2016 advanced 2.7% to $2.30 per share. Year to date, the company’s share price was up around 13%.
German American Bancorp has been witnessing upward estimate revisions as well. The Zacks Consensus Estimate inched up nearly 1% to $2.40 per share for 2016, over the last 60 days. The company gained more than 18% year to date.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>