We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BOK Financial (BOKF) Aided by Loan Growth Despite Higher Costs
Read MoreHide Full Article
BOK Financial Corporation (BOKF - Free Report) is poised to benefit from loan growth and high rates in the near term. Its capital distribution initiatives seem sustainable. Improving asset quality is another tailwind.However, the persistently escalating cost base is affecting the bank’s bottom-line growth. Lower transaction volumes affecting brokerage and trading revenues, and limited liquidity are other concerns.
BOK Financial has been witnessing continuous loan growth on a diverse business model and increased loans to individuals. The company has been focused on diversifying its loan portfolio to energy, healthcare and service lending. Given the strong loan pipeline, BOKF will be well-poised for organic growth. Management expects loan growth in the high-single digits for 2023, while deposits are expected to be stable or grow modestly.
Given the high interest rates and decent loan growth, BOK Financial’s net interest income and net interest margin are expected to witness moderate growth due to increased funding costs.
We find the improved asset quality trends at BOK Financial encouraging. The trailing 12 months’ net charge-off ratio stood at 13 basis points (bps) as of the third-quarter 2023 end. With a history of outperformance during credit cycles, BOK Financial is believed to be well-positioned amid expectations of an economic slowdown.
BOKF has a steady capital distribution plan in place. The company has been hiking dividends every year, with the latest hike of 1.9% to 54 cents per share being announced in November 2022. Also, the company has a share repurchase authorization of five million (announced in November 2022). It expects to execute share buybacks opportunistically, while maintaining its strong capital position.
However, the bank is exposed to operational risks. Operating expenses escalated, seeing a CAGR of 0.9% over the last three years (2019-2022) due to a rise in personnel, data processing, and net occupancy and equipment costs. The upward trajectory persisted in the first nine months of 2023. Any further escalation in costs is expected to cause operational inefficiency and might hinder bottom-line expansion.
As of Sep 30, 2023, the company had a total debt (comprising funds purchased and repurchase agreements, as well as other borrowings) of $8.9 billion, whereas cash and due from banks, as well as interest-bearing cash and cash equivalents, aggregated to $1.37 billion. The company’s debt level seems unmanageable, given a comparatively low cash balance.
Lastly, changing global financial market situations and general economic conditions could affect BOK Financial’s businesses. Notably, brokerage and trading revenues constituted more than 30% of fees and commissions in the first nine months of the current year. Therefore, any potential reduction or normalization in transaction volumes might affect the top line in the coming quarters.
Over the past month, BOKF shares have gained 7.8% compared with the industry’s rise of 19.2%.
A couple of better-ranked stocks from the banking space are Independent Bank (IBCP - Free Report) and Park National (PRK - Free Report) .
Earnings estimates for IBCP have been revised marginally upward to $2.87 for 2023 over the past week. The company’s shares have gained 55.9% over the past six months. IBCP currently carries a Zacks Rank #2 (Buy).
Park National’s earnings estimates have been unchanged for 2023 over the past 30 days at $8.21. In six months’ time, PRK shares have risen 31.6%. The company has a Zacks Rank #2 at present.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
BOK Financial (BOKF) Aided by Loan Growth Despite Higher Costs
BOK Financial Corporation (BOKF - Free Report) is poised to benefit from loan growth and high rates in the near term. Its capital distribution initiatives seem sustainable. Improving asset quality is another tailwind.However, the persistently escalating cost base is affecting the bank’s bottom-line growth. Lower transaction volumes affecting brokerage and trading revenues, and limited liquidity are other concerns.
BOK Financial has been witnessing continuous loan growth on a diverse business model and increased loans to individuals. The company has been focused on diversifying its loan portfolio to energy, healthcare and service lending. Given the strong loan pipeline, BOKF will be well-poised for organic growth. Management expects loan growth in the high-single digits for 2023, while deposits are expected to be stable or grow modestly.
Given the high interest rates and decent loan growth, BOK Financial’s net interest income and net interest margin are expected to witness moderate growth due to increased funding costs.
We find the improved asset quality trends at BOK Financial encouraging. The trailing 12 months’ net charge-off ratio stood at 13 basis points (bps) as of the third-quarter 2023 end. With a history of outperformance during credit cycles, BOK Financial is believed to be well-positioned amid expectations of an economic slowdown.
BOKF has a steady capital distribution plan in place. The company has been hiking dividends every year, with the latest hike of 1.9% to 54 cents per share being announced in November 2022. Also, the company has a share repurchase authorization of five million (announced in November 2022). It expects to execute share buybacks opportunistically, while maintaining its strong capital position.
However, the bank is exposed to operational risks. Operating expenses escalated, seeing a CAGR of 0.9% over the last three years (2019-2022) due to a rise in personnel, data processing, and net occupancy and equipment costs. The upward trajectory persisted in the first nine months of 2023. Any further escalation in costs is expected to cause operational inefficiency and might hinder bottom-line expansion.
As of Sep 30, 2023, the company had a total debt (comprising funds purchased and repurchase agreements, as well as other borrowings) of $8.9 billion, whereas cash and due from banks, as well as interest-bearing cash and cash equivalents, aggregated to $1.37 billion. The company’s debt level seems unmanageable, given a comparatively low cash balance.
Lastly, changing global financial market situations and general economic conditions could affect BOK Financial’s businesses. Notably, brokerage and trading revenues constituted more than 30% of fees and commissions in the first nine months of the current year. Therefore, any potential reduction or normalization in transaction volumes might affect the top line in the coming quarters.
Over the past month, BOKF shares have gained 7.8% compared with the industry’s rise of 19.2%.
Image Source: Zacks Investment Research
BOKF currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bank Stocks Worth a Look
A couple of better-ranked stocks from the banking space are Independent Bank (IBCP - Free Report) and Park National (PRK - Free Report) .
Earnings estimates for IBCP have been revised marginally upward to $2.87 for 2023 over the past week. The company’s shares have gained 55.9% over the past six months. IBCP currently carries a Zacks Rank #2 (Buy).
Park National’s earnings estimates have been unchanged for 2023 over the past 30 days at $8.21. In six months’ time, PRK shares have risen 31.6%. The company has a Zacks Rank #2 at present.