BOK Financial Corporation reported net income of $87.4 million or $1.27 per diluted share for the third quarter of 2012, compared to net income of $97.6 million or $1.43 per diluted share for the second quarter of 2012 and net income of $85.1 million or $1.24 per diluted share for the third quarter of 2011. A gain on the sale of common stock received in settlement of a defaulted loan and a negative provision for credit losses increased net income by $14 million or $0.21 per diluted share in the second quarter of 2012.
Net income for the nine months ended September 30, 2012 totaled $268.6 million or $3.92 per diluted share compared to $218.9 million or $3.19 per diluted share for the nine months ended September 30, 2011.
“BOK Financial's strong financial results for the third quarter continue to reflect the strength of our diversified revenue business model,” said President and CEO Stan Lybarger. “The prolonged low interest rate environment has enabled our mortgage banking professionals to assist a record number of customers in the purchase or refinance of their home. We experienced strong commercial loan growth and continued growth in our deposit base. We are also very pleased to welcome The Milestone Group to BOK Financial. The Milestone Group is a Denver-based registered investment adviser which provides wealth management services to high net worth clients in Colorado and Nebraska."
Highlights of third quarter of 2012 included:
- Net interest revenue totaled $176.0 million for the third quarter of 2012 compared to $181.4 million for the second quarter of 2012. Net interest margin was 3.12% for the third quarter of 2012 and 3.30% for the second quarter of 2012. The yield on our securities portfolio continued to decline as cash flows are reinvested at lower rates. In addition, net interest revenue for the second quarter of 2012 included $2.9 million from the full recovery of a nonaccruing commercial loan. Excluding this recovery, net interest margin for the second quarter was 3.25%.
- Fees and commissions revenue totaled $166.3 million, up $11.9 million or 8% over the second quarter of 2012. Mortgage banking revenue increased $10.7 million due to record mortgage loan production volumes and improved pricing of loans sold.
- Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $212.8 million, up $1.2 million or less than 1% over the previous quarter. Personnel expense increased $478 thousand. Non-personnel expense increased $725 thousand.
- No provision for credit losses was recorded in the third quarter of 2012 compared to an $8.0 million negative provision for credit losses in the second quarter of 2012. Net charge-offs totaled $5.7 million or 0.19% of average loans on an annualized basis in the third quarter of 2012 compared to net charge-offs of $4.8 million or 0.17% of average loans on an annualized basis in the second quarter of 2012. Gross charge-offs continue to decline, down $2.6 million from the previous quarter. Third quarter recoveries were reduced by $7.1 million due to the refund of a settlement between BOK Financial and the City of Tulsa.
- The combined allowance for credit losses totaled $236 million or 1.99% of outstanding loans at September 30, 2012 compared to $241 million or 2.09% of outstanding loans at June 30, 2012. Nonperforming assets totaled $264 million or 2.21% of outstanding loans and repossessed assets at September 30, 2012 and $279 million or 2.38% of outstanding loans and repossessed assets at June 30, 2012.
- Outstanding loan balances were $11.8 billion at September 30, 2012, up $256 million over the prior quarter. Commercial loan balances grew by $221 million or 13% on an annualized basis over June 30, 2012. Commercial real estate loans grew by $39 million and residential mortgage loans grew by $14 million, partially offset by an $18 million decrease in consumer loans.
- Available for sale securities grew by $1.1 billion during the third quarter to $11.5 billion at September 30, 2012. The Company increased its holdings of short-duration U.S. government guaranteed residential mortgage-backed securities during the third quarter.
- Period end deposits totaled $19.1 billion at September 30, 2012 compared to $18.4 billion at June 30, 2012. Interest-bearing transaction accounts increased $451 million and demand deposit accounts increased $408 million, partially offset by an $86 million decrease in time deposits.
- Tangible common equity ratio was 9.67% at September 30, 2012 and 10.07% at June 30, 2012. 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. The Company and its subsidiary bank continue to exceed the regulatory definition of well capitalized. The Company's Tier 1 capital ratios, as defined by banking regulations, were 13.21% at September 30, 2012 and 13.62% at June 30, 2012.
- The Company paid a cash dividend of $26 million or $0.38 per common share during the third quarter of 2012. On October 30, 2012, the board of directors approved a quarterly cash dividend of $0.38 per common share payable on or about November 30, 2012 to shareholders of record as of November 16, 2012.
- On October 30, 2012, the board of directors also approved a special cash dividend of $1.00 per common share payable on or about November 30, 2012 to shareholders of record as of November 16, 2012.