BOK Financial Corporation reported record net income for 2010 of $246.8 million or $3.61 per diluted share, up 23% over 2009 on diversified fee income growth and improved credit quality. Net income was up 15% over last year excluding 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 in 2010 and a $7.7 million or $0.11 per share special assessment charge by the FDIC in 2009.
Net income for the fourth quarter of 2010 totaled $58.8 million or $0.86 per diluted share, up $16.1 million or 38% over the fourth quarter of 2009. Net income for the third quarter of 2010 totaled $64.3 million or $0.94 per share.
“We are proud to report record earnings of $247 million in our Company’s 100 th year,” said President and CEO Stan Lybarger. “Diversified sources of fee and commission revenue grew $36 million over last year. Our mortgage banking division originated nearly $2.8 billion in new loans in 2010 and our portfolio of mortgage loans serviced grew by $4.7 billion, more than 70% over last year. Improved credit quality and lower non-performing assets reduced the provision for credit losses by $91 million.”
“Fourth quarter net income of $59 million finished a year of strong performance for BOK Financial,” said Lybarger. “Low interest rates and continued soft commercial loan demand did challenge net interest revenue during the quarter, but our fee-based business lines continued to grow. We exited 2010 with annual earnings in excess of levels seen before the recession and with strong capital resources to take advantage of an improving economy in 2011.”Highlights of fourth quarter of 2010 included:
- Net interest revenue totaled $163.7 million for the fourth quarter of 2010 and $180.7 million for the third quarter of 2010. Net interest margin was 3.19% for the fourth quarter of 2010 and 3.50% for the third quarter of 2010. Net interest revenue decreased as cash flows from the securities portfolio increased during the third and fourth quarters. Prepayments spiked as interest rates declined, resulting in portfolio reinvestment at lower rates.
- Fees and commissions revenue totaled $136.0 million, essentially unchanged from the third quarter of 2010. Mortgage banking revenue decreased $4.1 million. Brokerage and trading revenue grew $1.5 million and trust fees and commissions grew $1.4 million.
- Changes in the fair value of mortgage servicing rights, net of economic hedge, increased fourth quarter pre-tax net income by $6.6 million and decreased pre-tax net income $7.9 million in the third quarter of 2010.
- Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $203.5 million, up $14.2 million over the prior quarter. Personnel expenses increased $5.6 million due primarily to increased incentive compensation expense.
- Provision for credit losses totaled $7.0 million for the fourth quarter of 2010, down $13.0 million from the previous quarter. Net loans charged off decreased to $14.2 million for the fourth quarter of 2010 from $20.1 million for the third quarter of 2010.
- Combined allowance for credit losses totaled $307 million or 2.89% of outstanding loans at December 31, 2010 and $314 million or 2.91% of outstanding loans at September 30, 2010. Nonperforming assets totaled $394 million or 3.66% of outstanding loans and repossessed assets at December 31, 2010 compared to $421 million or 3.85% of outstanding loans and repossessed assets at September 30, 2010.
- Outstanding loan balances were $10.6 billion at December 31, 2010, down $163 million since September 30, 2010. All major loan categories decreased during the fourth quarter. Unfunded commercial loans increased $237 million during the fourth quarter to $4.6 billion.
- Total period end deposits increased $356 million during the fourth quarter of 2010 to $17.2 billion due primarily to growth in interest-bearing transaction and demand deposits, partially offset by a decrease in higher costing time deposits.
- Tangible common equity ratio increased to 9.21% at December 31, 2010 from 8.96% at September 30, 2010, due to 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. BOK Financial chose not to participate in the TARP Capital Purchase Program. The Company and each of its subsidiary banks exceeded the regulatory definition of well capitalized. The Company’s Tier 1 capital ratios, as defined by banking regulations, were 12.69% at December 31, 2010 and 12.30% at September 30, 2010.
- The Company paid a cash dividend of $17.0 million or $0.25 per common share during the fourth quarter of 2010. On January 25, 2011, the board of directors approved a quarterly cash dividend of $0.25 per common share payable on or about February 25, 2011 to shareholders of record as of February 11, 2011.