It has been about a month since the last earnings report for BOK Financial (BOKF Quick QuoteBOKF - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is BOK Financial due for a pullback? 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 catalysts.

BOK Financial Beats Q4 Earnings Estimate on High Revenues

BOK Financial reported an earnings surprise of 11.1% for fourth-quarter 2020. Earnings per share of $2.21 handily surpassed the Zacks Consensus Estimate of $1.99. Further, the bottom line compares favorably with the prior-year quarter’s $1.56.

Top-line strength on fee income and net interest income growth, along with rise in deposits, were driving factors. Moreover, benefit provision was a tailwind. However, elevated expenses and pressure on margin were major drags. In addition, soft loan growth was visible.

Net income attributable to shareholders came in at $154.2 million compared with the $110.4 million recorded in the year-ago quarter.

For 2020, net income was $435 million or $6.19 per share compared with the $500.8 million or $7.03 reported in 2019. The results also surpassed the Zacks Consensus Estimate of $6.00.

Revenues Climb, Costs Up, Loans Decrease

For 2020, net revenues came in at $1.95 billion, up 7.7% year over year. The revenue figure is in line with the Zacks Consensus Estimate.

Net revenues in the fourth quarter came in at $494 million, up 10.1% year on year. The reported figure also handily outpaced the Zacks Consensus Estimate of $487.2 million.   

Net interest revenues totaled $297.2 million, up 10% year over year. Yet, net interest margin (NIM) shrunk 16 basis points year on year to 2.72%.

BOK Financial’s fees and commissions revenues amounted to $181.1 million, up around 1% on a year-over-year basis. Higher mortgage banking revenues primarily led to this upswing. This was partly offset by lower brokerage and trading revenues, transaction card revenues, deposit service charges and fees, fiduciary and asset management revenues, along with reduced other revenues.

Total other operating expenses were $300.7 million, flaring up 4.1% year on year. This uptick mainly stemmed from rise in almost all components of expenses, including a 4.6% jump in personnel expenses.

Efficiency ratio improved to 62.36% from the prior years’ 63.65%. Generally, a lower ratio indicates rise in profitability.

Total loans as of Dec 31, 2020, were $23 billion, down 3.4% sequentially. As of the same date, total deposits amounted to $36.1 billion, up 3.1% sequentially.

Credit Quality: A Mixed Bag

During the December-end quarter, credit metrics was a mixed bag. Provisions for credit losses were a benefit of $6.5 million compared with the provision of $19 million witnessed in the prior-year quarter. However, the combined allowance for credit losses was 1.69% of outstanding loans as of Dec 31, 2020, up from the year-ago period’s 0.97%.

Additionally, non-performing assets totaled $477 million or 2.07% of outstanding loans and repossessed assets as of Dec 31, 2020, up from the $293.8 million or 1.35% recorded in the prior-year period. Net charge-offs were $16.7 million, up 33.6% year over year.

Capital Position

Armed with healthy capital ratios, BOK Financial and its subsidiary banks exceeded the regulatory well-capitalized level. As of Dec 31, 2020, the common equity Tier 1 capital ratio was 11.94% as compared with 11.39% as of Dec 31, 2019.

Tier 1 and total capital ratios on Dec 31, 2020, were 11.94% and 13.81%, respectively, compared with 11.39% and 12.94% as of Dec 31, 2019. Leverage ratio was 8.28% compared with 8.40% as of Dec 31, 2019.

Return on average equity was 11.75% compared with the year-earlier quarter’s 9.05%. Return on average assets was 1.22% compared with the 0.99% witnessed in the year-ago quarter.

Capital Deployment Update

During the fourth quarter, the company repurchased 665,100 shares of common stock at an average price of $63.82 per share.

Outlook

Management estimates loan growth to remain soft in the short term but accelerate in second-half 2021. Loans are expected to grow in the low single-digit range for 2021, excluding the impact of any PPP activity.

Available-for-sale security portfolio yield might decrease as prepayments force reinvestment at lower rates.

Interest-bearing deposit costs will remain near a bottom.

The combination of securities reinvestment at lower rates and minimal room to further lower deposit costs will strain net interest margin.

Fee revenue categories are expected to grow modestly, with the exception of brokerage and trading and mortgage.

Operating expenses budgeted to grow at a low single-digit pace.

Additional loan loss reserve release is projected with an improving economic outlook and further oil price stability. Management believes 2021 net charge-offs to be on the lower end of the 30-50 basis point range.

Quarterly cash dividend is likely to remain in place.

Opportunistic share-repurchase activity will continue.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, BOK Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

BOK Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.