BOK Financial Corporation
) fourth-quarter 2013 earnings of $1.06 per share were in line
with the Zacks Consensus Estimate. However, results compared
unfavorably with the prior-year quarter earnings of $1.21.
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Lower net interest revenues and reduced fees and commissions
negatively impacted the results. However, reduced operating
expenses reflected disciplined expense management. Further,
improved credit quality and increased loans were the tailwinds.
Net income attributable to the shareholders of BOK Financial in
the reported quarter was $73 million, compared with $83 million
in the prior-year quarter.
For full-year 2013, net income was $317 million or $4.59 per
share, down from $351 million or $5.13 per share in the prior
year. Results also lagged the Zacks Consensus Estimate by 3 cents
Performance in Detail
BOK Financial's net interest revenues totaled $166 million in the
reported quarter, down 4.6% year over year. Net interest margin
fell 21 basis points from 2.95% in the prior-year quarter to
2.74% in the reported period.
Yield on average earning assets also declined 28 basis points
year over year. Moreover, loan yields decreased 35 basis points,
partially mitigated by lower funding costs.
BOK Financial's fees and commissions revenue amounted to $142
million, down 13.9% on a year-over-year basis. Reduced mortgage
banking and brokerage and trading revenues along with lower
deposit service charges and fees were partially offset by
elevated transaction card revenues.
Total operating expenses at BOK Financial were $215 million, down
5.3% year over year. The company experienced a fall in personnel
costs in the reported quarter compared with the prior-year
Notably, in Dec 2013, federal banking agencies issued final rules
implementing Section 619 of the Dodd-Frank Wall Street Reform and
Consumer Act, commonly known as the Volcker Rule. Section 619 is
effective Apr 1, 2014. During the final quarter of 2013, BOK
Financial recognized a $1.4 million impairment charge as the
company might require depriving a portion of its ownership
interests in private equity funds by Jul 21, 2015.
The credit metrics of BOK Financial's loan portfolio improved in
the reported quarter. Net recoveries amounted to $3.0 million in
the reported quarter compared with net charge-offs of $4.3
million in the prior-year quarter.
Further, the combined allowance for credit losses was 1.47% of
outstanding loans as of Dec 31, 2013, declining from 1.77% as of
Dec 31, 2012. As a result, BOK Financial recorded negative
provision for credit losses of $11.4 million as against negative
$14.0 million in the prior-year quarter.
Moreover, nonperforming assets totaled $247.7 million or 1.92% of
outstanding loans and repossessed assets as of Dec 31, 2013, down
from $276.7 million or 2.23% of outstanding loans and repossessed
assets as of Dec 31, 2012.
As of Dec 31, 2013, armed with strong capital ratios, BOK
Financial and its subsidiary banks exceeded the regulatory
definition of well capitalized. As of the same date, Tier 1 and
total capital ratios were 13.73% and 15.52%, respectively,
compared with 12.78% and 15.13%, respectively as of Dec 31, 2012.
Leverage ratio was 10.05%, up from 9.01% as of Dec 31, 2012.
BOK Financial's Tier 1 common equity ratio under existing Basel I
standards was 13.55% compared with 12.59% in the prior-year
Notably in Jul 2013, the final revision of regulatory capital
rules for substantially all U.S. banking organizations were
released, effective from Jan 1, 2015. Therefore, based on the new
capital rule, the company's estimated Tier 1 common equity ratio
stood at 12.60%, up 560 basis points from the 7% regulatory
Outstanding loans at BOK Financial as of Dec 31, 2013 were $12.8
billion, up 4.1% year over year, mainly due to a rise in
commercial loans. Further, commercial real estate loans and
residential mortgage loans increased. As of Dec 31, 2013, period
end deposits amounted to $20.3 billion, down from $21.2 billion
as of Dec 31, 2012.
The strategic expansions and local-leadership based business
model of BOK Financial, with peers such as
Texas Capital Bancshares Inc.
First Financial Bankshares Inc.
), helped it transform into a leading financial service provider
from a small bank in Oklahoma. Going forward, we believe BOK
Financial's diverse revenue mix and favorable geographic
footprint would support its growth.
Though regulatory issues and lower fee growth remain concerns, we
believe that its sturdy financial position and expense control
initiatives and efficiency will help it navigate through the
BOK Financial currently carries a Zacks Rank #3 (Hold).