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BOK Financial Corporation reported net income of $64.8 million or $0.94 per diluted share for the first quarter of 2011, up from $58.8 million or $0.86 per diluted share for the fourth quarter of 2010 and $60.1 million or $0.88 per diluted share for the first quarter of 2010.
“BOK Financial is pleased to announce a strong start to 2011 with record earnings for the first quarter,” said President and CEO Stan Lybarger. “The Company’s performance and capital position allows us to increase our quarterly cash dividend. This is the sixth consecutive annual increase since we paid our first cash dividend in the second quarter of 2005. Outstanding commercial loan balances were up in most of our markets and net interest revenue increased over the previous quarter. We continue to see steady credit quality improvements.”
Highlights of first quarter of 2011 included:
Net interest revenue totaled $170.6 million compared to $163.7 million for the fourth quarter of 2010. Net interest margin increased to 3.46% for the first quarter of 2011 compared to 3.19% for the fourth quarter of 2010. The yield on the securities portfolio improved as actual and expected prepayment speeds slowed in response to an increase in interest rates which began in the previous quarter.
Fees and commissions revenue totaled $123.3 million compared to $136.0 million for the fourth quarter of 2010. Mortgage banking revenue decreased $7.8 million due to reduced origination volumes.
Changes in the fair value of mortgage servicing rights, net of economic hedge, decreased pre-tax net income for the first quarter of 2011 by $2.8 million and increased pre-tax net income for the fourth quarter of 2010 by $6.6 million.
Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $181.6 million, down $21.9 million compared to the prior quarter. Personnel expenses decreased $6.8 million due primarily to lower incentive compensation expense. Non-personnel expenses decreased $15.1 million due primarily to lower mortgage banking expenses and other operating expense.
Provision for credit losses totaled $6.3 million for the first quarter of 2011 compared to $7.0 million for the fourth quarter of 2010. Net loans charged off decreased to $10.3 million from $14.2 million for the previous quarter.
Combined allowance for credit losses totaled $303 million or 2.86% of outstanding loans at March 31, 2011 and $307 million or 2.89% of outstanding loans at December 31, 2010. Nonperforming assets totaled $379 million or 3.54% of outstanding loans and repossessed assets at March 31, 2011 and $394 million or 3.66% of outstanding loans and repossessed assets at December 31, 2010.
Outstanding loan balances were $10.6 billion at March 31, 2011, down $53 million since December 31, 2010. Commercial loan balances increased $114 million during the first quarter of 2011 primarily in the manufacturing, energy and healthcare sectors. Lower outstanding construction and land development loan balances decreased commercial real estate loans by $54 million. Residential mortgage loans decreased $51 million and consumer loans decreased $62 million.
Total period end deposits increased $694 million during the first quarter of 2011 to $17.9 billion. All categories of deposits increased during the first quarter. Deposit growth was largely centered on commercial customers across most of our markets.
Tangible common equity ratio increased to 9.54% at March 31, 2011 from 9.21% at December 31, 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 (“TARP”). 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 12.97% at March 31, 2011 and 12.69% at December 31, 2010.
The Company paid a cash dividend of $17.1 million or $0.25 per common share during the first quarter of 2011. The Company will increase the quarterly cash dividend to $0.275 per common share payable on or about May 27, 2011 to shareholders of record as of May 13, 2011.
Net Interest Revenue
Net interest revenue increased $7.0 million over the fourth quarter of 2010. Net interest margin increased 27 basis points over the prior quarter to 3.46%. Average earning assets decreased $491 million.