BOK Financial Upped to Neutral - Analyst Blog

On Jan 13, 2014, we upgraded our recommendation on BOK Financial Corp. (BOKF) to Neutral from Underperform. The revision was based on the company's endeavors to diversify its portfolio and its steady capital deployment activities.

Why Neutral?

We commend BOK Financial's diversifying efforts. Over the past several years, from being merely a bank in Oklahoma, the company has emerged as a chief financial service provider. Overall, BOK Financial operates in economically diverse markets comprising the Southwest, Midwest and Rocky Mountain states. Notably, 62% of BOK Financial's consolidated net income for the third quarter of 2013 was derived from overseas markets.

BOK Financial is an asset for yield-seeking investors due to its healthy capital levels and consistent capital deployment activities. Additionally, the company chose not to participate in the Treasury's Capital Purchase Program as its own capital levels were adequate for its operations and expansion.

Apart from having a strong capital position, the company is committed to increasing shareholders' wealth through dividend hikes and share repurchases. Notably, since 2005, the company has announced a dividend hike every year till 2013 with the latest hike of 5% in Oct 2013.
 
However, stringent regulations with regard to capital requirement, liquidity and leverage ratio are expected to limit BOK Financial's ability to exploit business opportunities.

For BOK Financial, the Zacks Consensus Estimate remained stable at $4.62 and $4.39 per share for 2013 and 2014, respectively, over the last 60 days. Hence, the company now carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in the banking sector include Waddell & Reed Financial, Inc. (WDR), First Interstate Bancsystem Inc. (FIBK) and First Bancorp (FBNC). All these sport a Zacks Rank #1 (Strong Buy).