BOK Financial Corporation’s (BOKF) fourth quarter earnings of 63 cents per share were 3 cents below the Zacks Consensus Estimate of 66 cents. The company had earned 52 cents in the year-ago period. Results reflected a lower-than-expected increase in revenue and higher expenses but were partially offset by a decrease in loan loss provisions.

For the full-year 2009, BOK Financial reported a net income of $200.6 million or $2.96 per share, compared to $153.2 million or $2.27 per share for 2008.

For the fourth quarter, net interest revenue totaled $184.5 million, up 2.2% sequentially and 4.6% year-over-year. Net interest margin was 3.64%, up 1 basis point sequentially and 7 basis points (bps) year-over-year. The increase in net interest margin over the previous quarter resulted from improved loan yields and lower funding costs.

Outstanding loan balances were $11.3 billion as of Dec 31, 2009, down $332 million since Sep 30, 2009. All major loan categories decreased during the reported quarter, largely due to reduced customer demand and normal repayment trends. Average deposit balances totaled $15.6 billion, up $444 million from the prior quarter.

The deterioration in credit quality has somewhat moderated. Non-performing assets decreased $5.4 million during the reported quarter to $484 million. However, non-performing assets equaled 4.24% of the loan portfolio plus other real estate owned assets, up 5 bps sequentially and 159 bps year-over-year.

Net charge-offs as a percentage of average loans were 122 bps, up 1 basis point sequentially and 17 basis points year-over-year. Provision for loan losses decreased to $48.6 million from $55.1 million in the prior quarter and $73.0 million in the year-ago quarter.

Fees and commissions revenue totaled $115.9 million, down 3.3% sequentially but up 4.5% year-over-year. The sequential decrease is driven by a decline in brokerage and trading revenue. The year-over-year increase stemmed from an improvement in mortgage banking revenue.

Operating expenses (excluding the impact of the change in the fair value of the mortgage servicing rights) were $181.7 million, up $6.0 million from the prior quarter. While personal expenses decreased due to lower incentive compensation expense, mortgage banking costs, occupancy costs and net losses and expenses of repossessed assets increased over the prior quarter.

Tangible common equity ratio increased to 7.99% as of Dec 31, 2009, from 7.78% as of Sep 30, 2009, primarily due to growth in retained earnings. The Tier 1 capital ratios were 10.86% as of Dec 31, 2009 compared to 10.56% as of Sep 30, 2009. The company chose not to participate in the Treasury’s Capital Purchase Program, as its own capital levels were adequate for its operations and expansion.

Given the current economic environment, we do not expect any significant improvement in the asset quality in the next couple of quarters. Nevertheless, BOK Financial’s diverse revenue stream and operating platform should benefit it going forward.

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