KGOU

Oklahoma Based Banks Post Strong Annual Earnings

Feb 6, 2019

Oklahoma-based Bank7 and BOK Financial Corp. recorded strong annual earnings for the year ended Dec. 31. Journal Record Editor Russell Ray discusses varying factors that contributed to each bank's positive reports.

FULL TRANSCRIPT

Katelyn Howard: This is the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Katelyn Howard. With me is Russell Ray, editor of The Journal Record. There are a couple of related stories I'd like to discuss today, Russell. The first one is about Oklahoma City-based Bank7's first report since becoming publicly traded on the Nasdaq stock exchange. It showed a 138.5 percent growth in adjusted income for the quarter and a 40.1 percent increase for the year ended December 31. Journal Record reporter Brian Brus writes Bank7 reported the company's results were impacted positively by the passing of the Tax Cuts and Jobs Act at the end of 2017. Can you elaborate on this?

Russell Ray: That's right, Katelyn. The company's results were helped by a decrease in the federal tax rate from 35 percent in 2017 to 21 percent in 2018. Now that decrease was provided by the passage of the Tax Cuts and Jobs Act in December 2017. So what that measure did was it significantly reduced the income tax rate for corporations by establishing a flat rate of 21 percent. Now the measure represents the biggest overhaul of the U.S. tax system since the Tax Reform Act of 1986.

Howard: Has that earnings report offered the bank perspective on how its results, such as adjusted net income per share amounts, were calculated?

Ray: Yes. The new accounting principles it uses as a public company emphasizes income before taxes, and so many investors see this as a much better way to compare results and to measure the company's true financial performance.

Howard: In related news, Tulsa-based BOK Financial Corporation reported a fourth-quarter net income of $108.5 million and $445.6 million for the year ended December 31. BOK Financial Corporation is the parent of the largest Oklahoma based bank and its operations in seven other states. With an income of $6.63 per diluted share, Brian Brus reports this is the largest annual earnings in the company's history. What are some of the factors that are attributed to the company's record year?

Ray: Well, tax reform was not the driver behind the record results. Instead, the company pointed to excellent operating performance as the main driver behind the record results. Growth in net interest margins, net interest income and loans were actually the biggest factors.

Howard: Even though the company had a record year, its quarterly earnings per share did not meet some of Wall Street's expectations. What are some of the challenges companies like BOK faced last year?

Ray: That's right. One investment firm was expecting earnings of $1.70 per share, which was just slightly below what BOK actually reported. But investors seemed pretty happy with the company's performance as shares rose $2.00 on the day the report was released, closing at $85.09 per share. As far as challenges other than a 15-cent-per-share reduction from the acquisition of bank branches in Colorado and Arizona, BOK saw very few challenges in 2018.

Howard: Russell Ray is editor of The Journal Record. Thanks for your time today, Russell.

Ray: My pleasure Katelyn, thank you.

Howard: KGOU and The Journal Record collaborate each week on The Business Intelligence Report. You can follow both of us on social media. We're on Facebook and Twitter, @journalrecord and @kgounews. You'll find links to the stories we discussed during this episode at JournalRecord.com. And this conversation, along with previous episodes of The Business Intelligence Report, are available on our website KGOU.org. While you're there, you can check out other features and podcasts produced by KGOU News and our StateImpact reporting team. For KGOU and The Business Intelligence report, I'm Katelyn Howard.

The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.

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