Shares of BOK Financial (BOKFFree Report) rallied 2.4% in response to better-than-expected second-quarter 2021 results. Earnings per share of $2.40 handily surpassed the Zacks Consensus Estimate of $1.84. The bottom line compared favorably with the prior-year quarter’s 92 cents.

Results benefited from lower expenses, modest rise in net interest income and provision benefits. However, lower fees and commissions, and decline in loan and deposit balances were the undermining factors.

Net income attributable to shareholders was $166.4 million, up significantly from $64.7 million recorded in the year-ago quarter.

Revenues, Costs & Loans Balance Down

Net revenues of $471.8 million declined 7.7% year over year. The top line beat the Zacks Consensus Estimate of $451.4 million.

Net interest revenues were $280.3 million, up almost 1% year over year. Net interest margin shrunk 23 basis points (bps) to 2.60%.

Total fees and commissions amounted to $169.4 million, down 20.7%. The fall was largely due to lower brokerage and trading revenues, and mortgage banking revenues.

Total other operating expenses were $291.2 million, down 1.5%. The fall was mainly due to absence of charitable contributions to BOKF Foundation and lower personnel costs, net occupancy and equipment expenses, and mortgage banking costs.

Efficiency ratio rose to 64.20% from the prior year’s 59.68%. A rise in efficiency ratio indicates deterioration in profitability.

As of Jun 30, 2021, total loans were $21.4 billion, down 5% sequentially. As of the same date, total deposits amounted to $37.4 billion, down 1.1%.

Credit Quality: A Mixed Bag

Provisions for credit losses were a benefit of $35 million against the provision of $135.3 million in the prior-year quarter. Allowance for loan losses was 1.46% of outstanding loans as of Jun 30, 2021, down 34 bps year over year.

However, non-performing assets were $408.3 million or 1.90% of outstanding loans and repossessed assets as of Jun 30, 2021, up from the $405.3 million or 1.68% recorded in the prior-year period. Net charge-offs were $15.4 million, up 9.7% year over year.

Capital & Profitability Ratios Improve

As of Jun 30, 2021, the common equity Tier 1 capital ratio was 11.95%, up from 11.44% as of Jun 30, 2020.

Tier 1 and total capital ratios on Jun 30, 2021, were 12.01% and 13.61%, respectively, compared with 11.44% and 13.43% as of Jun 30, 2020. Leverage ratio was 8.58%, up from 7.74% as of Jun 30, 2020.

Return on average equity was 12.58% compared with the year-earlier quarter’s 5.14%. Return on average assets was 1.33%, inching up from the 0.52% recorded in the year-ago quarter.

Share Repurchase Update

During the reported quarter, the company repurchased 492,994 shares at an average price of $88.84 per share.

Our View

BOK Financial’s diverse revenue mix and favorable geographic footprint are likely to keep aiding its financials. Solid deposits and loan balances reflect an efficient organic-growth strategy. However, elevated expenses and margin pressure due to lower rates are concerns.

BOK Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

First Republic Bank (FRCFree Report) delivered an earnings surprise of 14.04% in second-quarter 2021 on solid top-line strength. Earnings per share of $1.95 surpassed the Zacks Consensus Estimate of $1.71. Additionally, the bottom line climbed 45.3% from the year-ago quarter.

Washington Federal‘s (WAFDFree Report) third-quarter fiscal 2021 (ended Jun 30) earnings of 61 cents per share surpassed the Zacks Consensus Estimate of 52 cents. The figure reflects a year-over-year rise of 32.6%.

Zions Bancorporation‘s (ZIONFree Report) second-quarter 2021 net earnings per share of $2.08 surpassed the Zacks Consensus Estimate of $1.25. The bottom line marks a significant improvement from 34 cents earned in the year-ago quarter.

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