Aided by growth in net interest revenue as well as fees and
commissions revenue,
BOK Financial Corporation
(
BOKF
) posted first-quarter 2012 earnings of $1.22 per share, well above
the Zacks Consensus Estimate of $1.03. The company also reported
growth in commercial loan balances and announced a nickel's
increase in quarterly cash dividend.
BOK Financial's results also comfortably outshined prior-quarter
earnings of 98 cents per share and year-ago earnings of 94 cents
per share.
Net income in the reported quarter was $83.6 million compared
with $67.0 million in the prior quarter and $64.8 million in the
prior-year quarter.
Performance in Detail
BOK Financial's net interest revenue totaled $173.6 million in
the reported quarter, up 1.2% sequentially. However, net interest
margin decreased 1 basis point from the prior quarter to 3.19%.
However, the effect of lower interest rates on net interest revenue
was partially offset by earnings asset growth, which increased $192
million during the quarter.
BOK Financial's Fees and commissions revenue totaled $144.3
million, reflecting a sequential upside of 9.5%. The increase was
fueled by higher mortgage banking revenue as well as brokerage and
trading revenue.
Total operating expenses at BOK Financial were $185.2 million,
down 15.5% sequentially. Excluding changes in the fair value of
mortgage servicing rights, operating expenses totaled $192.4
million, down $21.6 million from the prior quarter. The company
experienced a decrease in both personnel costs as well as
non-personnel expenses in the reported quarter from the prior
quarter.
Credit Quality
The credit quality of BOK Financial's loan portfolio produced
improved results. Nonperforming assets totaled $336 million or
2.87% of outstanding loans and repossessed assets as of March 31,
2012, down from $357 million or 3.13%, respectively, as of December
31, 2011.
Net loans charged-off against the allowance for loan loss
amounted to $8.5 million or 0.30% on an annualized basis for the
reported quarter compared with $9.5 million or 0.34% on an
annualized basis for the prior quarter.
BOK Financial also experienced an improvement in other credit
factors. Moreover, economic indicators exhibited a stable or
improving trend in the company's primary markets and therefore,
after an evaluation of all credit factors, the company came to the
conclusion that no provision for credit losses was required in the
reported quarter.
Further, the combined allowance for credit losses totaled $254
million or 2.20% of outstanding loans as of March 31, 2012,
declining from $263 million or 2.33% of outstanding loans as of
December 31, 2011.
Capital Position
As of March 31, 2012, armed with strong capital ratios, BOK
Financial and its subsidiary bank exceeded the regulatory
definition of well capitalized. As of the same date, Tier 1 and
total capital ratios were 13.03% and 16.16%, respectively, compared
with 13.27% and 16.49%, respectively as of December 31, 2011.
Tangible common equity ratio improved to 9.75% from 9.56% as of
December 31, 2011.
Outstanding loans at BOK Financial as of March 31, 2012 were
$11.6 billion, up $308 million over December 31, 2011. Growth in
commercial loans was partially offset by decreases in commercial
real estate, residential mortgage and consumer loans. Period-end
deposits totaled $18.5 billion compared with $18.8 billion as of
December 31, 2011.
Share Repurchase and Dividend Update
BOK Financial remains committed to boost shareholders' wealth
and has bought back 345,300 common shares at an average price of
$53.38 per share during the reported quarter through a previously
announced share repurchase program.
During the reported quarter, the company paid a cash dividend of
33 cents per share. With a solid capital position and consistent
performance, BOK Financial announced a nickel's increase in its
quarterly cash dividend, which will now stand at 38 cents per
share, up from 33 cents per share. This marked the seventh
consecutive annual increase since the company paid its first cash
dividend in 2005. The increased dividend will be paid on or about
May 29, 2012 to shareholders of record as of May 15.
Our Take
The strategic expansions and local-leadership based business
model of BOK Financial, which has peers such as
Cullen/Frost Bankers Inc.
(
CFR
) and
First Financial Bankshares Inc.
(
FFIN
), have aided its expansion into a leading financial service
provider from a small bank in Oklahoma.
The company's diverse revenue stream, sturdy capital position
and expense control initiatives augur well for investors. The
dividend hike will also bode well and boost investors'
confidence.
Nevertheless, with a protracted economic recovery, we expect
revenue growth to be limited. Furthermore, we remain concerned
about the regulatory issues and the margin pressure resulting from
a highly liquid balance sheet.
The shares of BOK Financial currently retain a Zacks #3 Rank,
which translates into a short-term Hold' rating. Considering the
company's business model and fundamentals, we have a long-term
"Neutral" recommendation on the stock.
BOK FINL CORP (
BOKF
): Free Stock Analysis Report
CULLEN FROST BK (
CFR
): Free Stock Analysis Report
FIRST FIN BK-TX (
FFIN
): Free Stock Analysis Report
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