Overall Earnings Dip for Tulsa Banks

Of the 62 banks with branches in the Tulsa Metropolitan Statistical Area, 26 showed returns on assets above 1 percent at year-end 2008, a review by the Tulsa Business Journal shows.
A year ago, 34 showed ROA above 1 percent, with two above 3 percent. No banks broke 3 percent in the current ranking.
Community banks dominated the best performance rankings for return on assets (See TBJ Bank Lists, pages 14-16).
The best ROA for Tulsa MSA S Corp banks was Armstrong Bank, Muskogee, at 2.48 percent. First Bank & Trust Co., Wagoner, was second among S Corps with a 2.22 percent ROA, and Morris State Bank, Morris, was close behind at 2.18 percent.
The best ROA for Tulsa MSA non-S Corp banks was reported by Community Bank, Bristow, at 1.89 percent. American Exchange Bank, Henryetta, ranked second for non-S Corps, at 1.2 percent, and 1st Bank of Oklahoma, Claremore, was third at 1.16 percent.
In reviews of bank performance in 2008 ranked by return on average equity and compiled by the ABA Banking Journal earlier this year, Community Bank ranked fourth in the nation in the non-S Corp banks and thrifts with less than $100 million in assets. It showed an ROAE of 26.10 percent with assets of $62.8 million.
Of the remaining banks in the Tulsa Business Journal’s rankings, eight reported losses in net income attributable to bank, according to FDIC reports.
Overall, earnings dropped 26.83 percent from $23.9 billion at Dec. 31, 2007, to $17.5 billion at Dec. 31, 2007, for banks that operate branches in the Tulsa MSA. With results from national money center banks Bank of America NA and JPMorgan Chase Bank NA stripped out, net income figures attributable to the banks show a 23.56 percent decline from $1.54 billion to $1.18 billion.
Net income attributable to the banks fell $17.4 million for all Okahoma-based institutions with branches in the Tulsa MSA, a -2.76 percent drop from $630.8 million to $613.4 million. Removing results from banks based outside the Tulsa MSA and Bank of Oklahoma NA, Tulsa MSA-based institutions reported a decline in income of $37.4 million, a 32.15 percent drop from $116.4 million to $79 million.
Assets increased 21.63 percent from $2.79 trillion to $3.39 trillion for the same period for banks that operate branches in the Tulsa MSA. With Bank of America and JPMorgan Chase Bank stripped out, assets showed a 10.67 percent increase from $153.7 billion to $170.1 billion.
Assets for all Okahoma-based institutions with branches in the Tulsa MSA grew 11.66 percent from $48 million to $53.6 million. Removing results from banks based outside the Tulsa MSA and Bank of Oklahoma NA, Tulsa MSA-based institutions sowed an increase of 8.49 percent from $10 million to $10.9 million.
The best increase in earnings for banks with branches in the Tulsa MSA banks for 2008 was reported by American Exchange Bank, Henryetta, at 73.1 percent with net income attributable to the bank of $798,000. Second best was 1st Bank of Oklahoma, Claremore, at 57.3 percent with a net income of $2.2 million. Security Bank, Pawnee, reported net income of $3.25 million, a 60.3 percent increase.
A 278 percent increase recorded by NBC Oklahoma was due to a merger of the NBC-Tulsa and NBC-Oklahoma City charters last year.
Owned by NBC Corp. of Oklahoma Holding Co., NBC Oklahoma has its corporate headquarters in Oklahoma City.
In a year in which the FDIC said “almost one in four institutions was unprofitable … and almost two out of every three institutions reported lower full-year earnings than in 2007,” Oklahoma banks managed strong showings in national rankings based on performance.
In the reviews of bank performance compiled by the ABA Banking Journal, two Oklahoma banks were at the top of their categories and state institutions dominated three other divisions of Top 25 rankings.
Ranked by return on average equity, MidFirst Bank, based in Oklahoma City, was the No. 1 performer in the category for private and foreign owned banks and thrifts with total assets of $3 billion or more. With $14.6 billion in assets, MidFirst showed a 33.89 percent ROAE for 2008.
MidFirst ranked fifth among S Corp banks with branches in the Tulsa MSA based on ROA in the TBJ rankings. MidFirst showed an ROA of 1.97 with net income attributable to the bank of $277.9 million, an increase of 23.88 percent, at Dec. 31, 2008.
Security First National Bank of Hugo topped the ABA Banking Journal performance list for non-S Corp. banks and thrifts between $100 million and $3 billion in assets. Its ROAE was 29.89 with assets of $101 million.
BancFirst Corp. of Oklahoma City was the highest ranking state bank among public banks with total assets of $3 billion or more, in the ABA Banking Journal list. Ranked 18, its ROAE was 11.33 with assets of $3.9 billion. Tulsa-based BOK Financial Corp. was 42nd on the list with an ROAE of 7.87 and assets of $22.7 billion.
In the TBJ rankings, BancFirst ranked fourth among the non-S Corp banks with an ROA of 1.18 percent and net income of $44.7 million.
BOk ranked 10th in the TBJ list of non-S Corp institutions with an ROA of 0.92 percent.
MidFirst ranked fifth among S Corp banks with branches in the Tulsa MSA based on ROA in the TBJ rankings. MidFirst showed an ROA of 1.97 with net income attributable to the bank of $277.9 million, an increase of 23.88 percent, at Dec. 31, 2008.
The ABABJ study of domestic publicly held depository institutions with assets over $3 billion as of Dec. 31, 2008, found 145 public banks, thrifts, and holding companies qualified under its selection criteria.
“In a year where the average ROAE for the pool of analyzed institutions was -4.21%, the strong performance of this year’s top 25 is all the more extraordinary,” the report said. “And yet, most of 2008’s top performers generated strong earnings through relatively ordinary banking activities–generating low-cost deposits, making quality loans, and focusing on serving one particular segment extremely well, all while keeping a sharp eye on non-interest expenses.”
“The top performing private institutions used two of the same strategies applied by top performing public institutions to counter the effects of these events—a return to core banking and a focus on niche market segments,” the report said.
For example, this year’s top performer, Midfirst Bank of Oklahoma City, focuses on FHA and VA mortgage lending and benefited from the significant ramp-up in activity under these two government programs in 2008 as the number of other secondary market participants declined. One- to four-family mortgage loans increased from 38.3 percent of Midfirst’s portfolio in 2007 to 44.5 percent in 2008. This increased lending activity brought Midfirst both additional interest income and additional servicing fee income. ?′
Both Midfirst and the second place private institution—Intrust Financial Corp. of Wichita, Kan., also benefited from the unique tax treatment available to Subchapter S Corporations. At S-corps, income taxes are assessed on shareholder’s returns and therefore the corporation does not pay income tax.
For the banks and thrifts with assets under $3 billion, the ABA Banking Journal said, “The best got there by attracting low-cost deposits and focusing their lending on (or benefitting from) healthy economic sectors.”
Community banks and savings institutions, on average, remained profitable in 2008.
“With a few exceptions, this year’s top performers gathered lower cost funding faster; made greater numbers of higher yielding loans; and maintained lower levels of non-interest expenses than other community banks,” the ABABJ said. “Two primary methods were used to achieve these results: maintaining a low-cost deposit base and focusing on healthier industry sectors, such as agriculture.”
At Security First National Bank of Hugo, the top performing non-S bank with assets of between $100 million and $3 billion, about 40 percent of total loans fell into agribusiness categories. Of the remainder of the bank’s loan portfolio, the bulk is made up of one- to four-family mortgage loans (29 percent) and CRE loans (18 percent), all funded primarily by transaction accounts (43 percent of total deposits). These high-yield loans helped Security First post a ratio of interest income to average assets that, at 7.18 percent, was over 100 basis points higher than the average for all larger non-S institutions.
Data for the ABA Banking Journal report was provided by SNL Financial LC as of December 2008. Securities and Exchange Commission filings were the source for public company data. The full reports and consolidated rankings—and charter-level rankings—are available at www.ababj.com.



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