BOK is optimistic despite losses: The firm sees a third-quarter net income drop of 10.6 percent.

Oct 29, 2009 (Tulsa World - McClatchy-Tribune Information Services via COMTEX) -- BOKF | Quote | Chart | News | PowerRating -- BOK Financial Corp. saw its third-quarter net income drop 10.6 percent from the same time a year ago, the company reported Wednesday.

BOK -- the parent of Bank of Oklahoma -- recorded a net income of $50.7 million, or 75 cents a diluted share, compared with $56.7 million, or 84 cents a share, in the same period a year ago.

That figure was also down from the second and first quarters of this year when BOK posted net income of $52.1 million and $55.0 million, respectively, the company reported.

Despite the lower earnings, BOK Financial Corp. officials remain pleased with the company's performance, pointing to many positive aspects.

"BOK Financial is pleased with solid performance this quarter, especially considering the continued challenges we see in the economy," said President and CEO Stan Lybar- ger, in a written statement. "Earnings for the third quarter were based on continued net interest revenue growth, solid fee revenue and controlled operating expenses.

BOK has continued to perform "very well in a recessionary period," with earnings above $50 million every quarter this year, noted Steven Nell, the company's chief financial officer, in a phone interview.

BOK tracks itself against 20 other regional bank holding companies -- 10 of which are larger and 10 smaller -- and half of those banks lost money in the third quarter and the second quarter, he said.

"The fact that we continue to generate good earnings every quarter this year, I think

in this environment is certainly an accomplishment," Nell added.

The 2008 third quarter included about $4 million in a "one-time pick up from a derivative business," said Nell, explaining one reason for the higher net income last year compared with this year's third quarter.

Nell highlighted that BOK's capital levels and its tangible common equity ratio was 7.78 percent for the quarter, an improvement from the second quarter's 7.55 percent. That is a gauge the market uses to judge the strength of a banking organization, he said.

BOK declined to participate in the Treasury's Capital Purchase Program, administered by the Troubled Asset Relief Program, or TARP. The government started the program last year in efforts to stabilize the financial and banking system and support the economy.

BOK's capital levels are in "very, very good" shape and above the well-capitalized levels required by government regulators. "For us to grow our capital levels ... without taking any government-assisted capital or without going to market and raising capital speaks well to our organization," Nell said.

Net interest revenue for the third quarter totaled $180.5 million, up from $175.6 million in the second quarter and $164.3 million the same time a year ago. After provisions for credit losses, net interest revenue totaled $125.3 million for the quarter compared with $111.6 million a year ago.

"Brokerage and trading activity continues to do well, and our other fee categories, like trust revenues are pretty stable as well," Nell said.

Fees and commissions revenue were lower for the third quarter at $120.0 million, compared with $126.7 million a year ago at the same time.

Mortgage banking revenue is still well above historic levels. Mortgage loan originations totaled $536 million for the quarter, down from the historic high of $1 billion in the second quarter as the impact of government initiatives to lower national mortgage interest rates began to lessen, according to the bank company.

As expected, refinance activity has slowed throughout the United States, Nell said.

Operating expenses totaled $178.7 million, up $3.0 million from the preceding quarter. In part, those expenses rose as BOK spent a little more money to manage some of the expenses related to its repossessed assets, Nell said.

Nonperforming assets con- tinued to increase across most sectors of the loan portfolio and geographic markets during the third quarter, the bank reported.

Non-performing assets totaled nearly $490 million or 4.19 percent of outstanding loans and repossessed assets at the end of September. Non-accruing loans totaled $382.8 million at the end of September compared with $211.8 million a year ago.

"During this recessionary environment, you continue to see some loans that move over into nonaccrual status and nonperforming status. That has increased every quarter for the last several quarters. I don't' know when that will end, but as long as we're in this recession you certainly still have the risk that will increase some," Nell said.

The bank company's Arizona market has been the biggest metropolitan area affected by the recession so far, while Oklahoma and Texas have fared much better compared to others in BOK's market, Nell said.

While the Arizona market has seen more challenges than other markets, BOK is well prepared to address the issues and is committed to the market and ready to move forward and see growth there, Nell added.

At the end of the quarter, BOK had total deposits of $15.1 billion, total loans of $11.6 billion and total assets of $23.9 billion.

In addition to Bank of Oklahoma, BOK Financial has bank holdings in New Mexico, Arizona, Arkansas, Texas, Colorado and the Kansas City area.

Laurie Winslow 581-8466 laurie.winslow@tulsaworld.com

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