Shares of BOK Financial Corporation BOKF gained nearly 1% following release of its fourth-quarter 2017 results. Adjusted earnings per share of $1.29 lagged the Zacks Consensus Estimate of $1.34. However, the bottom line compared favorably with 76 cents in the prior-year quarter.

Results reflected a decline in loans balance, partially offset by improved revenues and lower expenses. Also, improving credit quality and strong capital position acted as tailwinds.

After considering $11.7 million or 18 cents per share impact of the Tax Cuts and Jobs Act, net income attributable to common shareholders came in at $72.5 million compared with $50 million in the year-ago quarter.

For 2017, BancorpSouth reported net income of $334.6 million or $5.11 per share compared with $232.7 million or $3.53 per share as of Dec 31, 2016.

Revenues Increase and Costs Decline

Revenues came in at $390.7 million, up 13.5% year over year. However, the figure lagged the Zacks Consensus Estimate of $391.7 million.

For 2017, the company reported revenues of $1.54 billion, up 8.1% on a year-over-year basis. The figure came below the consensus estimate of $1.55 billion.

Net interest revenues came in at $216.9 million, up 11.7% year over year. Net interest margin also expanded 28 basis points year over year to 2.97%.

BOK Financial’s fees and commissions revenues amounted to $168.2 million, up3.8% on a year-over-year basis. The quarter witnessed growth in several income categories, partially offset by lower mortgage banking, deposit service charges, and brokerage and trading revenues.

Total other operating expenses were $264 million, down nearly 1% year over year. The fall can be attributed to lower professional fees, insurance and stationery expenses, mortgage banking costs and operating expenses of repossessed assets.

Total loans as of Dec 31, 2017 were $17.2 billion, marginally down from the prior quarter. As of the same date, total deposits amounted to $22.1 billion, up nearly 1% from the prior quarter.

Credit Quality Improves

The company recordeda benefit of $7 million during the quarter compared with no provisions for credit losses in the prior-year quarter. Further, the combined allowance for credit losses was 1.37% of outstanding loans as of Dec 31, 2017, down from 1.52% in the year-ago period.

Moreover, non-performing assets totaled $290.3 million or 1.69% of outstanding loans and repossessed assets as of Dec 31, 2017, down from $356.6 million or 2.09% in the prior-year period.

However, charge-offs of $11.7 million were reported against net recoveries of $1.2 million in the year-ago quarter.

Capital Position

Armed with healthy capital ratios, BOK Financial and its subsidiary banks exceeded the regulatory well-capitalized level. The company was subject to new regulatory rules on Jan 1, 2015. As of Dec 31, 2017, the common equity Tier 1 capital ratio was 11.95%.

Tier 1 and total capital ratios on Dec 31, 2017 were 11.95% and 13.43%, respectively, compared with 11.21% and 12.81% as of Dec 31, 2016. Leverage ratio was 9.31% compared with 8.72% as of Dec 31, 2016.

Our Viewpoint

BOK Financial’s consistent revenue growth keeps us optimistic about the stock. Moreover, continued growth in loan balances indicates an efficient organic growth strategy. Its diverse revenue mix and favorable geographic footprint are likely to keep supporting growth in the upcoming quarters. Also, declining expenses is a tailwind.

BOK Financial Corporation Price and EPS Surprise