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BOK Financial (BOKF) Up 10.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for BOK Financial (BOKF - Free Report) . Shares have added about 10.6% 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 Q3 Earnings Misses Estimate
BOK Financial’s third-quarter 2023 earnings per share of $2.04 missed the Zacks Consensus Estimate of $2.12. The bottom line also decreased 12.1% from the prior-year quarter.
Results were adversely affected by a rise in expenses and a decline in net interest revenues. However, total fees and commissions witnessed a rise in the reported quarter. Also, loan and deposit balances improved sequentially.
Net income attributable to shareholders was $134.5 million, down 14.1% year over year.
Revenues Decline, Expenses Rise
Quarterly net revenues of $499 million (including net interest revenues and total other operating revenues) were down 1.4% year over year. Further, the top line missed the Zacks Consensus Estimate of $517.4 million.
Net interest revenues were $300.9 million, down 4.9% year over year. Net interest margin (NIM) shrunk 55 basis points (bps) year over year to 2.69%.
Total fees and commissions were $197.9 million, up 2.7% year over year. The rise was driven by an increase in almost all fee income components except for deposit service charges and fees.
Total other operating expenses were $324.3 million, up 10% year over year. The rise was due to an increase in almost all cost components, except for printing, postage and supplies expenditures, amortization of intangible assets and mortgage banking costs.
The efficiency ratio increased to 64.01% from the prior year’s 57.33%. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Sep 30, 2023, total loans were $23.72 billion, up 2.1% sequentially. As of the same date, total deposits amounted to $33.65 billion, up 1.1% from the prior quarter.
Credit Quality Improves
Non-performing assets were $123.3 million or 0.52% of outstanding loans and repossessed assets as of Sep 30, 2023, down from $336.5 million or 1.54% recorded in the year-ago period.
Allowance for loan losses was 1.15% of outstanding loans as of Sep 30, 2023, down 4 bps year over year. Moreover, it recorded provisions for credit losses of $7 million in the reported quarter compared to provisions of $15 million in the prior-year quarter.
However, the company recorded net charge-offs of $6.5 million compared to $0.5 million in the prior-year quarter.
Capital Ratios Improve & Profitability Ratios Decline
As of Sep 30, 2023, the common equity Tier 1 capital ratio was 12.06%, up from 11.80% as of Sep 30, 2022. Tier 1 and total capital ratios were 12.07% and 13.16%, up from 11.82% and 12.81%, respectively, as of Sep 30, 2022.
The leverage ratio was 9.52%, down from 9.76% as of Sep 30, 2022.
Return on average equity was 10.88% compared with the year-earlier quarter’s 13.01%. Return on average assets was 1.08%, down from 1.38% in the year-ago quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 700,500 shares at an average price of $84.17 per share.
2023 Outlook
The company expects loan growth in the high-single digits, supported by economic conditions in its geographic footprints, along with business in-migration from other markets. It projects total deposits to be stable or to grow modestly. Further, the loan-to-deposit ratio is to remain in the low 70s.
It expects NIM to decline due to funding pressure.
Total fees and commission revenues are anticipated to grow in the mid-single-digit range.
Expenses are likely to increase modestly.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -15.36% due to these changes.
VGM Scores
At this time, BOK Financial has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BOK Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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BOK Financial (BOKF) Up 10.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for BOK Financial (BOKF - Free Report) . Shares have added about 10.6% 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 Q3 Earnings Misses Estimate
BOK Financial’s third-quarter 2023 earnings per share of $2.04 missed the Zacks Consensus Estimate of $2.12. The bottom line also decreased 12.1% from the prior-year quarter.
Results were adversely affected by a rise in expenses and a decline in net interest revenues. However, total fees and commissions witnessed a rise in the reported quarter. Also, loan and deposit balances improved sequentially.
Net income attributable to shareholders was $134.5 million, down 14.1% year over year.
Revenues Decline, Expenses Rise
Quarterly net revenues of $499 million (including net interest revenues and total other operating revenues) were down 1.4% year over year. Further, the top line missed the Zacks Consensus Estimate of $517.4 million.
Net interest revenues were $300.9 million, down 4.9% year over year. Net interest margin (NIM) shrunk 55 basis points (bps) year over year to 2.69%.
Total fees and commissions were $197.9 million, up 2.7% year over year. The rise was driven by an increase in almost all fee income components except for deposit service charges and fees.
Total other operating expenses were $324.3 million, up 10% year over year. The rise was due to an increase in almost all cost components, except for printing, postage and supplies expenditures, amortization of intangible assets and mortgage banking costs.
The efficiency ratio increased to 64.01% from the prior year’s 57.33%. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Sep 30, 2023, total loans were $23.72 billion, up 2.1% sequentially. As of the same date, total deposits amounted to $33.65 billion, up 1.1% from the prior quarter.
Credit Quality Improves
Non-performing assets were $123.3 million or 0.52% of outstanding loans and repossessed assets as of Sep 30, 2023, down from $336.5 million or 1.54% recorded in the year-ago period.
Allowance for loan losses was 1.15% of outstanding loans as of Sep 30, 2023, down 4 bps year over year. Moreover, it recorded provisions for credit losses of $7 million in the reported quarter compared to provisions of $15 million in the prior-year quarter.
However, the company recorded net charge-offs of $6.5 million compared to $0.5 million in the prior-year quarter.
Capital Ratios Improve & Profitability Ratios Decline
As of Sep 30, 2023, the common equity Tier 1 capital ratio was 12.06%, up from 11.80% as of Sep 30, 2022. Tier 1 and total capital ratios were 12.07% and 13.16%, up from 11.82% and 12.81%, respectively, as of Sep 30, 2022.
The leverage ratio was 9.52%, down from 9.76% as of Sep 30, 2022.
Return on average equity was 10.88% compared with the year-earlier quarter’s 13.01%. Return on average assets was 1.08%, down from 1.38% in the year-ago quarter.
Share Repurchase Update
In the reported quarter, the company repurchased 700,500 shares at an average price of $84.17 per share.
2023 Outlook
The company expects loan growth in the high-single digits, supported by economic conditions in its geographic footprints, along with business in-migration from other markets. It projects total deposits to be stable or to grow modestly. Further, the loan-to-deposit ratio is to remain in the low 70s.
It expects NIM to decline due to funding pressure.
Total fees and commission revenues are anticipated to grow in the mid-single-digit range.
Expenses are likely to increase modestly.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -15.36% due to these changes.
VGM Scores
At this time, BOK Financial has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BOK Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.