BOK achieves near-record profit on acquisition, lower credit costs

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Profits at BOK Financial in Tulsa, Okla., more than doubled in the first quarter, aided by improved credit quality, stronger net interest income resulting in part from a recent acquisition, increased revenue from asset management and disciplined expense management.

Net income for the $33 billion-asset company rose to $88.4 million in the first quarter, compared with $42.6 million in the same period last year. Earnings per share more than doubled as well, to $1.35, beating by 30 cents the average estimates of analysts compiled by FactSet Research Systems.

Improved credit quality, particularly in BOK’s energy portfolio, was a key contributor to what the company said was the second-highest quarterly net income in its history. BOK took no provision for credit losses in the quarter, versus a $35 million loss provision in last year’s first quarter. Total nonaccrual loans declined 14% to $207.6 million.

In a press release, President and CEO Steven G. Bradshaw said the results were also aided by BOK's acquisition of MBT Bancshares, now Mobank, which closed in February.

Net interest revenue increased 10% year over year to $201.2 million in the first quarter as BOK felt the first full quarter impact of the acquisition. Average loans increased 6% from the year-earlier period to $17 billion. The net interest margin increased 16 basis points from the year-ago period to 2.81%, largely due of the Fed’s short-term rate hike in December.

The MBT acquisition also helped drive double-digit growth in deposits year over year. “Our deposit franchise provides a significant funding advantage, and while we continue to believe that some demand deposits will migrate into interest-bearing accounts in the current rising rate environment, to date we have seen very limited pressure on deposit costs,” Bradshaw said in the release.

Fees and commission revenues totaled $164.4 million in the first quarter, remaining fairly flat from the year-ago quarter. Fiduciary and asset management revenue grew 20% year over year to $38.6 million, boosted by a $2.6 billion increase in the value of assets under administration. Meanwhile, mortgage banking revenue and transaction card revenue fell on a year-over-year basis.

Operating expenses remained level at $244.7 million compared with the first quarter of 2016.

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