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Bok Financial Corp (BOKF) Tops Q3 EPS by 63c

October 21, 2020 7:59 AM EDT

Bok Financial Corp (NASDAQ: BOKF) reported Q3 EPS of $2.19, $0.63 better than the analyst estimate of $1.56.

Third Quarter 2020 Financial Highlights

  • Net income was $154.0 million or $2.19 per diluted share for the third quarter of 2020 and $64.7 million or $0.92 per diluted share for the second quarter of 2020. Pre-provision net revenue was $204.6 million for the third quarter of 2020 compared to $215.0 million for the prior quarter. No provision for expected credit losses was necessary in the third quarter, while the second quarter of 2020 included a pre-tax provision for expected credit losses of $135.3 million. Our forecasts of economic conditions have improved since the previous quarter.
  • Net interest revenue totaled $271.8 million, a decrease of $6.4 million. Discount accretion on acquired loans totaled $13.3 million in the third quarter of 2020 and $3.3 million in the prior quarter. Net interest margin was 2.81 percent compared to 2.83 percent in the second quarter of 2020. Excluding discount accretion, net interest margin was 2.67 percent compared to 2.80 percent in the prior quarter.
  • Fees and commissions revenue totaled $222.9 million, an increase of $9.2 million. Brokerage and trading revenue increased $7.5 million, largely due to an increase trading revenue and customer hedging revenue.
  • Operating expense was $301.3 million, an increase of $5.9 million. Personnel expense increased $3.6 million. Incentive compensation increased $5.6 million, largely related to vesting assumptions regarding the Company's earnings per share growth relative to a defined peer group. Non-personnel expense increased $2.3 million compared to the second quarter of 2020. Increases in net losses and expenses on two repossessed properties, professional fees and data processing and communications expense were partially offset by decreases in occupancy and equipment expense and other expenses. In addition, the second quarter of 2020 included a $3.0 million charitable contribution to the BOKF Foundation.
  • Changes in the fair value of mortgage servicing rights and related economic hedges added $6.5 million during the third quarter of 2020 and $9.3 million in the prior quarter.
  • Period-end loans decreased $353 million to $23.8 billion at September 30, 2020, primarily due to continued paydowns of commercial loans. Average loans were relatively consistent with the second quarter at $24.1 billion.
  • The allowance for loan losses totaled $420 million or 1.76 percent of outstanding loans at September 30, 2020. The combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $448 million or 1.88 percent of outstanding loans at September 30, 2020. Excluding Paycheck Protection Program (PPP) loans, the allowance for loan losses was 1.93 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was 2.06 percent. Excluding PPP loans, the allowance for loan losses was $436 million or 1.97 percent of outstanding loans and the combined allowance for loan losses and accrual for off-balance sheet credit risk from unfunded loan commitments was $469 million or 2.12 percent of outstanding loans at June 30, 2020.
  • Average deposits increased $2.0 billion to $34.6 billion and period-end deposits increased $1.1 billion to $35.0 billion, largely due to growth in commercial and wealth management balances. Continued deposit growth was due primarily to customers retaining higher balances in the current economic environment.
  • The company's common equity Tier 1 capital ratio was 12.07 percent at September 30, 2020. In addition, the company's Tier 1 capital ratio was 12.07 percent, total capital ratio was 14.05 percent, and leverage ratio was 8.39 percent at September 30, 2020. At June 30, 2020, the company's common equity Tier 1 capital ratio was 11.44 percent, Tier 1 capital ratio was 11.44 percent, total capital ratio was 13.43 percent, and leverage ratio was 7.74 percent.

CEO Commentary

"Building off prior quarters, our large percentage of fee-based revenues provided a differentiated earnings outcome compared to many similar-sized financial institutions," said Steven G. Bradshaw, president and chief executive officer. "Both our Wealth Management and Mortgage businesses delivered impressively in a time of compressed net interest margin and unsure credit outcomes across the industry."

Bradshaw continued, "Beyond the financial success we've had this quarter, I'm incredibly proud of the impact we've made in our communities. We have increased our charitable investments from the BOKF Foundation and our employees also stepped up their collective volunteer hours to help address needs across our communities. Our top ranking in the 2020 American Banker reputation survey is a testament to the level of leadership and engagement our employees provide in our banking communities. We have earned the reputation as an organization known for unwavering integrity, and that is demonstrated in everything that we do. Whether it's the role we play in our communities or the financial results for our shareholders - it's more about actions than words at BOK Financial."

For earnings history and earnings-related data on Bok Financial Corp (BOKF) click here.



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