BOK Financial Earnings Fall on MSR Hedge Decline, Other Costs


BOK Financial in Tulsa, Okla., was victimized by the effect of rising interest rates in the fourth-quarter profit, 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 from the same period in 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 due to the rise in 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.

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