BOK Financial Corp. Reports Operating Results (10-Q)
Bok Financial Corp. has a market cap of $3.83 billion; its shares were traded at around $55.68 with a P/E ratio of 18.8 and P/S ratio of 2.7. The dividend yield of Bok Financial Corp. stocks is 1.8%. Bok Financial Corp. had an annual average earning growth of 0.6% over the past 10 years. GuruFocus rated Bok Financial Corp. the business predictability rank of 2-star.BOKF is in the portfolios of John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:BOK Financial Corporation (“the Company”) reported net income of $60.1 million or $0.88 per diluted share for the first quarter of 2010 compared to $55.0 million or $0.81 per diluted share for the first quarter of 2009 and $42.8 million or $0.63 per diluted share for the fourth quarter of 2009. Net income for the first quarter of 2010 included $6.5 million or $0.10 per diluted share from the purchase of the rights to service $4.2 billion of residential mortgage loans on favorable terms.
Growth in average earning assets was funded by a $542 million increase in average deposits and a $104 million increase in average borrowed funds. Average demand deposits for the first quarter of 2010 were up $621 million over the first quarter of 2009. In addition, average interest-bearing transaction accounts increased $1.4 billion over the first quarter of 2009. Average time deposits decreased $1.4 billion compared with the first quarter of 2009 as we continued to decrease brokered deposits and other higher costing time deposits.
Average earning assets for the first quarter of 2010 decreased $23 million compared to the fourth quarter of 2009. Average securities increased $346 million. Growth in average securities was due to purchases of additional U.S. government agency issued residential mortgage-backed securities in the fourth quarter of 2009 as well as increases in the fair value of securities held by the Company in the first quarter of 2010. Average loans, net of allowance for loan losses, decreased $316 million. Commercial, commercial real estate and consumer loan categories decreased in the first quarter of 2010. Residential mortgage loans increased slightly over the fourth quarter of 2009. Average deposits decreased $179 million compared with the fourth quarter of 2009, including a $230 million decrease in average time deposits and a $181 million decrease in average demand deposits offset by a $229 million increase in average interest-bearing transaction accounts. Average borrowed funds increased $270 million from the fourth quarter of 2009.
Our overall objective is to manage the Company s balance sheet to be relatively neutral to changes in interest rates as is further described in the Market Risk section of this report. Approximately two-thirds of our commercial and commercial real estate loan portfolios are either variable rate or fixed rate that will re-price within one year. These loans are funded primarily by deposit accounts that are either non-interest bearing, or that re-price more slowly than the loans. The result is a balance sheet that would be asset sensitive, which means that assets generally re-price more quickly than liabilities. Among the strategies that we use to manage toward a relatively rate-neutral position, we purchase fixed-rate, residential mortgage-backed securities and fund them with market rate sensitive liabilities. The liability-sensitive nature of this strategy provides an offset to the asset-sensitive characteristics of our loan portfolio. We also use derivative instruments to manage our interest rate risk. Interest rate swaps with a combined notional amount of $35 million convert fixed rate liabilities to floating rate based on LIBOR. Net interest revenue increased $658 thousand in the first quarter of 2010, $584 thousand in the fourth quarter of 2009 and $4.7 million in the first quarter of 2009 from periodic settlements of these contracts. This increase in net interest revenue contributed 1 basis point to net interest margin in the first quarter of 2010, 1 basis point in the fourth quarter of 2009 and 9 basis points in the first quarter of 2009. Derivative contracts are carried on the balance sheet at fair value. Changes in fair value of these contracts are reported in income as derivatives gains or losses in the Consolidated Statements of Earnings.
Other operating revenue was $113.9 million for the first quarter of 2010 compared to $125.1 million for the first quarter of 2009. Fees and commissions revenue decreased $6.2 million or 5% compared with the first quarter of 2009. Net gains on securities, derivatives and other assets decreased $18.4 million. Other-than-temporary impairment charges recognized in earnings were $10.8 million lower in the first quarter of 2010.
Other operating revenue increased $5.7 million compared to the fourth quarter of 2009. Other-than-temporary impairment charges recognized in earnings were $10.3 million lower compared with the fourth quarter of 2009. Fees and commissions revenue decreased $634 thousand and net gains on securities, derivatives and other assets decreased $3.9 million.
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