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TheStreet Open House

BOK Financial Reports Quarterly Earnings Of $76 Million

BOK Financial Corporation reported net income of $75.7 million or $1.10 per diluted share for the third quarter of 2013. Net income was $79.9 million or $1.16 per diluted share for the second quarter of 2013 and $87.4 million or $1.27 per diluted share for the third quarter of 2012.

Net income for the nine months ended September 30, 2013 totaled $243.6 million or $3.54 per diluted share compared to $268.6 million or $3.92 per diluted share for the nine months ended September 30, 2012.

"This quarter proved to be challenging as uncertainty over government policies continued to drive higher long-term interest rates. Our mortgage banking revenue declined 36% due to a combination of narrowed gain on sale margins and lower production volumes," said President and Chief Executive Officer Stan Lybarger. "BOK Financial remains committed to driving long-term growth in non-interest income. We recently announced the acquisition of GTRUST Financial Corporation, a Topeka, Kansas-based independent trust and asset management company which will increase assets under management and provide new wealth management capability that can be leveraged across our entire geographic footprint."

Mr. Lybarger continued, "Credit quality remains solid, which required an $8.5 million reduction in our combined allowance for credit losses. BOK Financial remains extremely well capitalized. Our Tier 1 common equity ratio stands at 13.33%. Recognizing our strong capital position, the Company's board of directors approved an increase in the quarterly dividend to 40 cents per share."

Highlights of third quarter of 2013 included:

  • Net interest revenue totaled $166.4 million for the third quarter of 2013 compared to $167.2 million for the second quarter of 2013. Net interest margin was 2.80% for the third quarter of 2013 and 2.81% for the second quarter of 2013.
  • Fees and commissions revenue totaled $146.8 million, a decrease of $14.1 million compared to the second quarter of 2013. Mortgage banking revenue decreased $13.1 million as gain on sale margins compressed and production activity slowed. Mortgage loans funded for sale were down 10% and mortgage commitments decreased 36%.
  • Operating expenses, excluding changes in the fair value of mortgage servicing rights, totaled $210.3 million, largely unchanged compared to the previous quarter. Personnel expense decreased $2.3 million. Non-personnel expense increased $1.7 million.
  • An $8.5 million negative provision for credit losses was recorded in the third quarter of 2013 and no provision for credit losses was recorded in the second quarter. Net charge-offs in the third quarter of 2013 totaled $299 thousand or 0.01% of average loans on an annualized basis compared to $2.3 million or 0.08% of average loans on an annualized basis in the second quarter.
  • The combined allowance for credit losses totaled $196 million or 1.59% of outstanding loans at September 30, 2013 compared to $205 million or 1.65% of outstanding loans at June 30, 2013. Nonperforming assets that are not guaranteed by U.S. government agencies totaled $183 million or 1.49% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at September 30, 2013 and $200 million or 1.62% of outstanding loans and repossessed assets (excluding those guaranteed by U.S. government agencies) at June 30, 2013.
  • Average loans increased $125 million over the previous quarter due primarily to growth in commercial real estate loans. Average commercial loans were unchanged. Period-end outstanding loan balances were $12.4 billion at September 30, 2013, a decrease of $91 million compared to June 30, 2013. Commercial loan balances decreased $137 million during the third quarter, partially offset by a $32 million increase in commercial real estate loans.
  • Average deposits decreased $80 million compared to the previous quarter, principally due to a decline in time deposits. Growth in demand deposits was offset by lower interest-bearing transaction accounts. Period end deposits totaled $19.5 billion at September 30, 2013 largely unchanged compared to June 30, 2013. Demand deposit account balances increased $187 million during the third quarter, offset by a $147 million decrease in interest-bearing transaction accounts and a $48 million decrease in time deposits.
  • Tangible common equity ratio was 9.73% at September 30, 2013 and 9.38% at June 30, 2013. 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 13.51% at September 30, 2013 and 13.37% at June 30, 2013.
  • The Company paid a regular quarterly cash dividend of $26 million or $0.38 per common share during the third quarter of 2013. On October 29, 2013, the board of directors approved an increase in the quarterly cash dividend to $0.40 per common share payable on or about November 29, 2013 to shareholders of record as of November 16, 2013.

Net Interest Revenue

Net interest revenue decreased $805 thousand compared to the second quarter of 2013. Net interest margin was 2.80% for the third quarter of 2013 compared to 2.81% for the second quarter of 2013.

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