BOK Financial earnings fall on MSR hedge decline, other costs

BOK Financial in Tulsa, Okla., was hurt by the effect of rising interest rates in the fourth quarter, as losses on the company’s hedge positions resulted in a profit decline.

The $33 billion-asset company’s net income fell 16% to $50 million compared with the fourth quarter of 2015. Earnings per share fell 15% to 76 cents.

The results included several one-time items that reduced earnings. BOK recorded a $57 million decrease in the value of hedges on its mortgage servicing rights as a result of the rise in long-term interest rates during the fourth quarter. That decline was partially offset by a $40 million increase in the value of its MSR assets. The net $17 million loss reduced quarterly earnings by 18 cents per share. BOK had previously announced that it would record the $17 million decline on MSR assets.

BOK also recorded a $5 million decrease in the value of its trading portfolio positions, reducing per-share earnings by 5 cents. Additionally, BOK booked $4.7 million of costs related to its acquisition of MBT Bancshares in Kansas City, Mo., cutting earnings by 5 cents per share. Finally, BOK recorded an additional $5 million of expenses because of staff reduction, which cut earnings an additional 5 cents per share.

Net interest income rose 22% to $194 million. BOK did not record a loan-loss provision, largely because of higher oil and gas prices.

Net loans, after the loan-loss allowance, rose 6.5% to $16.7 billion, with increases in business, commercial real estate, residential mortgage and personal loans.

Noninterest income rose 5.4% to $162 million. Noninterest expense rose 15.2% to $266 million.