On Nov 27, 2013, we downgraded our long-term recommendation on
BOK Financial Corp.
) to Underperform from Neutral based on disappointing
third-quarter 2013 results. The company's reported earnings were
below the Zacks Consensus Estimate as well as the prior-year
quarter earnings. Regulatory issues and a low-interest rate
environment remain headwinds.
BOK Financial's third-quarter 2013 earnings of $1.10 per share
lagged the Zacks Consensus Estimate by a nickel. Moreover,
results compared unfavorably with the prior-year quarter earnings
of $1.27. Lower-than-expected results were primarily aided by
reduced net interest revenues.
The company is experiencing a declining trend in the net interest
margin (NIM), which fell 27 basis points (bps) year over year to
2.92% in the first quarter of 2013 and continued its downward
trend with a decline of 49 bps to 2.81% in the second quarter of
2013 and 32 bps in the third quarter. Management expects NIM to
continue to go down as chances of a further decrease in funding
costs are limited. Though interest rates have started increasing,
looking at the upcoming quarters, net interest margin is expected
to remain under pressure due to the still low interest rate
A significant part of BOK Financial's loans are generated in
Oklahoma and other markets in the southwest region. This
increases the company's risks related to concentration of
business activities as any poor economic conditions in Oklahoma
or other markets in the southwest region might lead to BOK
Financial incurring losses associated with higher default rates
and decreased collateral values in its loan portfolio.
Over the last 30 days, the Zacks Consensus Estimate for 2013
declined 2.5% to $4.62 per share. For 2014, the Zacks Consensus
Estimate decreased 7.2% to $4.39 per share, over the same time
frame. Hence, BOK Financial carries a Zacks Rank #4 (Sell).
Other Banks Worth Considering
Some better-ranked Southwest stocks in the banking sector include
Southside Bancshares Inc.
First Financial Bankshares Inc.
). While SBSI carries a Zacks Rank #1 (Strong Buy), BANF and FFIN
hold a Zacks Rank #2 (Buy).
BANCFIRST OKLA (BANF): Free Stock Analysis
BOK FINL CORP (BOKF): Free Stock Analysis
FIRST FIN BK-TX (FFIN): Free Stock Analysis
SOUTHSIDE BANCS (SBSI): Free Stock Analysis
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