BOK Financial Reports Quarterly Earnings Of $60 Million Or $0.88 Per Share

BOK Financial Corporation (NASDAQ: BOKF) reported net income for the first quarter of 2010 of $60.1 million or $0.88 per diluted share, up from $42.8 million or $0.63 per diluted share for the fourth quarter of 2009 and $55.0 million or $0.81 per diluted share for the first quarter of 2009. Net income for the first quarter of 2010 included a $6.5 million or $0.10 per share day-one gain from the purchase of the rights to service $4.2 billion of residential mortgage loans on favorable terms.

“BOK Financial is pleased to announce a strong start to 2010,” said President and CEO Stan Lybarger. “Our performance continues to be among the best performing banks $12 billion and larger in the country. Credit quality indicators continue to migrate in a positive direction. Total nonperforming assets are declining and net loans charged off have stabilized in a range between $34 million and $36 million per quarter for the past four quarters. We have modestly lowered our quarterly provision for credit losses in each of the past two quarters.”

Highlights of first quarter of 2010 included:

• Net interest revenue totaled $182.6 million compared to $184.5 million for the fourth quarter of 2009. Net interest margin was 3.68% for the first quarter of 2010 and 3.64% for the fourth quarter of 2009. Average earning assets for the first quarter of 2010 decreased $23 million from the previous quarter.
• Fees and commissions revenue totaled $115.3 million, down $634 thousand from the previous quarter. Deposit service charges decreased $2.7 million and mortgage banking revenue increased $1.5 million.
• Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $177.7 million, down $4.1 million from the prior quarter. Decreases in mortgage banking costs and most other operating expense categories were partially offset by higher personnel expenses and net losses and operating expenses on repossessed assets.
• Combined reserves for credit losses totaled $314 million or 2.86% of outstanding loans at March 31, 2010, up from $306 million or 2.72% of outstanding loans at December 31, 2009. Net loans charged off and provision for credit losses were $34.5 million and $42.1 million, respectively, for the first quarter of 2010 compared to $35.0 million and $48.6 million, respectively for the fourth quarter of 2009.
• Nonperforming assets totaled $483 million or 4.36% of outstanding loans and repossessed assets at March 31, 2010 compared to $484 million or 4.24% of outstanding loans and repossessed assets at December 31, 2009. Nonaccruing loans increased $4.2 million and real estate and other repossessed assets decreased $7.1 million during the first quarter.
• Available for sale securities totaled $8.9 billion at March 31, 2010, up $32 million since December 31, 2009 due primarily to an increase in the fair value of portfolio. Other-than-temporary impairment charges on certain privately-issued residential mortgage backed securities reduced pre-tax income by $4.2 million during the first quarter of 2010 and $14.5 million during the fourth quarter of 2009.
• Outstanding loan balances were $11.0 billion at March 31, 2010, down $308 million since December 31, 2009 largely due to reduced customer demand and normal repayment trends. Unfunded loan commitments totaled $4.9 billion at March 31, 2010 and $5.0 billion at December 31, 2009.
• Total period end deposits increased $9.3 million during the first quarter of 2010 to $15.5 billion. Growth in interest-bearing transaction deposits was offset by a decrease in higher-costing time deposits and a seasonal decrease in demand deposits.
• Tangible common equity ratio increased to 8.46% at March 31, 2010, from 7.99% at December 31, 2009, due to an increase in the fair value of the securities portfolio and retained earnings growth. The tangible common equity ratio is a non-GAAP measure of capital strength used by the Company and investors based on shareholders’ equity minus intangible assets and equity that does not benefit common shareholders, such as equity provided by the U.S. Treasury’s Asset Relief Program (“TARP”). We chose not to participate in the TARP Capital Purchase Program. The Company’s Tier 1 capital ratios as defined by banking regulations were 11.45% at March 31, 2010 and 10.86% at December 31, 2009.
• The Company paid a cash dividend of $16.3 million or $0.24 per common share during the first quarter of 2010. Subject to approval on April 27, 2010, the board of directors expects to increase the quarterly cash dividend to $0.25 per common share payable on or about May 28, 2010 to shareholders of record as of May 14, 2010.

Net Interest Revenue

Net interest revenue totaled $182.6 million for the first quarter of 2010, down $1.9 million compared to the fourth quarter of 2009. Net interest margin increased over the previous quarter. However, average earning assets were lower.