TULSA, Okla.--(BUSINESS WIRE)--
BOK Financial Corporation (NASDAQ:BOKF) reported net income for the
fourth quarter of 2008 of $35.4 million, down 31% from the fourth
quarter of 2007. Net income per diluted share was $0.53 for the fourth
quarter of 2008 and $0.76 for the fourth quarter of 2007. Net income for
2008 was $153.2 million, down 30% from the previous year. Net income per
diluted share was $2.27 for 2008 and $3.22 for 2007.
"BOK Financial ended 2008 with over $153 million in earnings, a larger
reserve for credit losses and a strong capital position," said President
and CEO Stan Lybarger. "BOK Financial was also the largest traditional
commercial bank in the country to decline participation in the U.S.
Treasury's TARP Capital Purchase Program. We increased our reserve for
credit losses by $101 million during 2008, in anticipation of continued
deterioration in the nation's economy and increased pressure on our
customers. Despite the environment, revenues continued to increase in
2008. Total revenue increased by $111 million as a result of continued
loan growth and improved margins."
Highlights of fourth quarter of 2008 included:
-- Net interest revenue totaled $176.4 million, up $12.1 million over the
third quarter of 2008 and $35.2 million over the fourth quarter of 2007.
Net interest margin was 3.57% for the fourth quarter of 2008, 3.48% for
the third quarter of 2008 and 3.22% for the fourth quarter of 2007.
-- Combined reserves for credit losses totaled $248 million or 1.93% of
outstanding loans at December 31, 2008, up from $209 million or 1.65% of
outstanding loans at September 30, 2008. Net loans charged off and
provision for credit losses were $33.7 million and $73.0 million,
respectively for the fourth quarter of 2008. Net loans charged off and
provision for credit losses were $20.2 million and $52.7 million,
respectively for the third quarter of 2008 and $7.3 million and $13.2
million, respectively, for the fourth quarter of 2007.
-- Non-performing assets totaled $342 million or 2.65% of outstanding loans
and repossessed assets at December 31, 2008, up from $252 million or
1.98% of outstanding loans and repossessed assets at September 30, 2008.
-- The Company's Tier 1 and tangible common equity ratios were 9.42% and
6.64%, respectively at December 31, 2008. Tier 1 and tangible common
equity ratios were 9.25% and 7.16%, respectively at September 30, 2008.
-- The Company elected to participate in the FDIC's Temporary Liquidity
Guarantee Program. This Program provides full deposit insurance coverage
of non-interest bearing, transaction deposit accounts and guarantees
certain newly issued senior unsecured debt. The Company has not issued
any guaranteed debt under this Program.
-- The Company paid a cash dividend of $15.4 million or $0.225 per common
share during the fourth quarter of 2008. On January 27, 2009, the board
of directors declared a cash dividend of $0.225 per common share payable
on or about February 27, 2009 to shareholders of record as of February
13, 2009.
Net Interest Revenue
Net interest revenue totaled $176.4 million for the fourth quarter of
2008, up $12.1 million or 29% annualized over the third quarter of 2008
and $35.2 million or 25% over the fourth quarter of 2007. Net interest
margin was 3.57% for the fourth quarter of 2008, 3.48% for the third
quarter of 2008 and 3.22% for the fourth quarter of 2007. The widening
of the spread between LIBOR and the federal funds rate, which began in
the third quarter of 2008 continued into the fourth quarter. LIBOR is
the basis for interest earned on many of our loans. The federal funds
rate is the basis for interest paid on many of our interest-bearing
liabilities. The widening spread increased net interest margin by
approximately 15 basis points in the fourth quarter and 8 basis points
in the third quarter. This spread has largely narrowed to a historically
normal level by the end of the fourth quarter.
Average earning assets for the fourth quarter of 2008 increased $767
million compared to the previous quarter, including a $230 million
increase in average loans before allowance for loan losses, and a $578
million increase in average securities. Average commercial loans
increased $224 million. The securities portfolio added government issued
mortgage-backed securities during the fourth quarter to lock-in widening
spreads.
Average other borrowed funds, which consists primarily of Federal Home
Loan Bank advances, increased $597 million. Average deposits decreased
$163 million during the fourth quarter of 2008. Average interest-bearing
transaction accounts decreased $449 million in the fourth quarter due to
falling energy prices. Interest-bearing transaction accounts had
increased by $704 million over the previous three quarters as high
prices provided liquidity to many of our energy-producing customers.
Average time deposits increased $317 million.
Credit Quality
Non-performing assets totaled $343 million or 2.65% of outstanding loans
and repossessed assets at December 31, 2008, up $90 million since
September 30, 2008. Non-performing assets included $10 million of
restructured residential mortgage loans guaranteed by agencies of the
U.S. government and $15 million of loans and repossessed assets acquired
with First United Bank in the second quarter of 2007. The Company will
be reimbursed by the sellers up to $5.3 million for any losses incurred
during a three-year period after the acquisition date.
"Weakness in the national economy, first seen in residential real estate
in certain regions of the country is progressively spreading to other
regions and other sectors of the economy," said Lybarger. "As expected,
we are seeing increased signs of weakness in commercial real estate and
other business sectors. We have long maintained total commercial real
estate loans below 25% of our loan portfolio, which will be beneficial
in the current environment."
Non-accruing commercial loans totaled $135 million or 1.82% of total
commercial loans at December 31, 2008. Non-accruing commercial loans
increased $29 million since September 30, 2008. Non-accruing loans in
the wholesale/retail, services and healthcare sectors of the commercial
loan portfolio increased $11 million, $10 million and $9 million,
respectively during the fourth quarter. The distribution of non-accruing
commercial loans among our various markets included $75 million in
Oklahoma, $22 million in Colorado, $20 million in Texas and $11 million
in Kansas City.
Non-accruing commercial real estate loans totaled $137 million or 5.08%
of outstanding commercial real estate loans at December 31, 2008. Total
non-accruing commercial real estate loans increased $59 million since
September 30, 2008, including a $24 million increase in multifamily
residential loans and a $22 million increase in loans secured by land,
residential lots and residential construction properties. Non-accruing
land and residential construction loans totaled $76 million or 8.21% of
the respective loan portfolio sector at December 31, 2008. Other
increases in non-accruing commercial real estate loans spread across all
sectors of the commercial real estate loan portfolio. Non-accruing
commercial real estate loans attributed to our various markets included
$76 million to Arizona, $23 million to Oklahoma, $14 million to Texas,
$10 million to Colorado and $8 million to New Mexico.
Our consumer credit exposure consists primarily of permanent residential
mortgage loans, home equity loans and indirect automobile loans.
Non-accruing permanent residential mortgage loans totaled $26 million or
2.06% of outstanding residential mortgage loans at December 31, 2008.
Non-accruing home equity loans totaled $1.2 million or 0.24% of
outstanding home equity loans. The distribution of non-accruing
residential mortgage loans among our various markets included $10
million in Oklahoma, $8 million in Texas, $3 million in New Mexico and
$3 million in Arizona.
At December 31, 2008, the distribution of our $693 million portfolio of
indirect automobile loans among various markets was $434 million in
Oklahoma, $170 million in Arkansas and $88 million in Texas.
Approximately 3.36% of the indirect automobile loan portfolio is past
due 30 days or more, including 3.25% in Oklahoma, 3.74% in Arkansas and
3.17% in Texas. At September 30, 2008, approximately 2.29% of the
indirect automobile loan portfolio was past due 30 days or more. This
compares to a national average of 3.06% for indirect automobile loans
past due 30 days or more at September 30, 2008.
The combined allowance for loan losses and reserve for off-balance sheet
credit losses totaled $248 million or 1.93% of outstanding loans and 83%
of non-accruing loans at December 31, 2008. The allowance for loan
losses was $233 million and the reserve for off-balance sheet credit
losses was $15 million. At September 30, 2008, the combined allowance
for loan losses and off-balance sheet credit losses was $209 million or
1.65% of outstanding loans and 99% of non-accruing loans.
Real estate and other repossessed assets totaled $29 million at December
31, 2008, up from $28 million at September 30, 2008. Real estate and
other repossessed assets included $18 million of 1-4 family residential
properties and residential land development properties, $5 million of
developed commercial real estate properties, $3 million of undeveloped
land and $3 million of automobiles. Real estate owned and other
repossessed assets are primarily located in Texas, Colorado, Arkansas,
and Oklahoma.
The Company also has off-balance sheet obligations related to certain
community development residential mortgage loans sold to U.S. government
agencies with recourse. These mortgage loans were underwritten to
standards approved by the agencies, including full documentation and
originated under programs available only for owner-occupied properties.
The outstanding principal balance of these loans totaled $391 million at
December 31, 2008. All of these loans are to borrowers in our primary
market areas, including $274 million in Oklahoma, $44 million in
Arkansas, $22 million in New Mexico and $19 million in Kansas City. At
December 31, 2008, approximately 3.39% of these loans are
non-performing. A separate reserve for credit risk of $8.8 million is
available for losses on these loans.
Securities and Derivatives
The Company's securities portfolio totaled $7.1 billion at December 31,
2008, up $364 million since September 30, 2008. The portfolio consisted
primarily of mortgage-backed securities, including $5.4 billion fully
backed by U.S. government agencies and $1.2 billion privately issued by
publicly owned financial institutions. The portfolio does not hold any
securities backed by sub-prime mortgage loans, collateralized debt
obligations or collateralized loan obligations. The Company holds no
debt of corporate issuers. Net unrealized losses on the Company's
portfolio of available for sale debt securities totaled $323 million at
December 31, 2008. These unrealized losses were determined to be
temporary based on an assessment of the underlying cash flows,
collateral values and credit enhancements along with current and
anticipated market conditions and the Company's intent and ability to
hold the securities until their fair values recover.
Approximately $390 million of the privately issued mortgage-backed
securities consisted of Alt-A mortgage loans. Approximately 82% of these
securities are credit enhanced with additional collateral support and
approximately 86% of our Alt-A mortgage-backed securities represents
pools of fixed-rate mortgage loans. None of the adjustable rate
mortgages are payment option ARMs. Approximately $252 million of the
privately issued mortgage-backed securities were rated below investment
grade by at least one nationally recognized rating agency. The aggregate
unrealized losses on securities rated below investment grade totaled $92
million at December 31, 2008.
The securities portfolio also included $32 million of preferred stocks
issued by seven financial institutions. None of these institutions is in
default and all of the issuers are rated investment grade. The fair
value of these preferred stocks was $22 million at December 31, 2008.
Based on an assessment of current and anticipated market conditions, the
Company determined that the $11 million of unrealized losses on these
securities were temporary.
The Company also has a portfolio of derivative contracts held for
customer risk- management programs and internal interest rate risk
management programs. At December 31, 2008, the fair value of all asset
contracts totaled $453 million, net of cash margin held by the Company.
The largest net amount due from a single counterparty, a subsidiary of
an international energy company, to these contracts at December 31 was
$64 million. Letters of credit issued by independent financial
institutions further reduce our exposure to this customer to $14 million.
Net losses on securities, derivatives and mortgage servicing rights
totaled $8.5 million for the fourth quarter of 2008, compared with net
gains of $915 thousand for the third quarter of 2008 and net losses of
$8.1 million for the fourth quarter of 2007.
Quarter Ended
December 31 September 30 December 31
2008 2008 2007
Gain on available for sale securities $ 5,067 $ 917 $ 1,102
Other than temporary impairment of - - (8,641)
preferred stocks
Gain (loss) on derivative contracts (2,219 ) 4,366 1,529
Gain on mortgage hedge securities 15,089 1,186 1,288
Loss on change in fair value of (26,432 ) (5,554 ) (3,344)
mortgage servicing rights
Loss on mortgage servicing rights net (11,343 ) (4,368 ) (2,056)
of mortgage hedge securities
Net gain (loss) on securities,
derivatives and mortgage servicing $ (8,495 ) $ 915 $ (8,066)
rights
The fair value of our mortgage servicing rights was $43 million at
December 31, 2008. During the fourth quarter of 2008, the fair value of
mortgage servicing rights declined by $26.4 million due largely to a
significant increase in anticipated prepayment speeds in response to
government programs to lower mortgage interest rates. We maintain a
portfolio of mortgage-backed securities as an economic hedge against
changes in the fair value of our servicing rights. However,
disconnection between current yields on these securities and current
commitment rates for mortgage loans limited the effectiveness of the
economic hedge.
Liquidity and Capital
The Company maintains diverse sources of liquidity, including deposits,
federal funds purchased from other banks and borrowings from the Federal
Home Loan Banks. Liquidity improved during the fourth quarter by
decreasing net amounts funded into margin accounts to support customer
derivative contracts by $311 million and increasing deposit account
balances by $396 million. The decrease in net amounts funded into margin
accounts was due to effect of lower energy prices on the fair value of
derivative contracts. Time deposits increased by $366 million due
primarily to a $209 million increase in deposits placed by other
financial institutions through the CDARS deposit program and a $150
million increase in retail time deposits. Increased liquidity funded a
$337 million net increase in the available for sale securities
portfolio, net loan growth of $196 million and a $197 million reduction
in borrowed funds.
Net loan growth consisted of a $138 million increase in commercial loans
and an $83 million increase in residential mortgage loans, partially
offset by a $13 million decrease in commercial real estate loans and a
$12 million decrease in consumer loans. The outstanding balance of
energy loans increased $212 million, partially offset by decreases in
the manufacturing, agriculture and wholesale/retail sectors. Residential
construction and land development loans decreased $42 million, largely
offset by growth in the multifamily residential sector of the commercial
real estate loan portfolio.
The Company elected to participate in the FDIC's Temporary Liquidity
Guaranty Program. This program provides deposit insurance coverage for
the full amount of customer funds in non-interest bearing, transaction
accounts through the end of 2009. It also fully guarantees certain debt
issued on or before June 30, 2009 through the earlier of maturity of the
debt or June 30, 2012.
The Company and each of its subsidiary banks exceeded the regulatory
definition of well capitalized at December 31, 2008. The Company's Tier
1 and tangible common equity ratios were 9.42% and 6.64%, respectively,
at December 31, 2008. The decrease in tangible common equity ratio was
due primarily to an increase in temporary unrealized losses on available
for sale securities. Tier 1 and tangible common equity ratios were 9.25%
and 7.16%, respectively, at September 30, 2008. In addition, the
Company's total capital ratio was 12.84% at December 31, 2008 and 12.55%
at September 30, 2008. The Company maintained its cash dividend of
$0.225 per common share during the fourth quarter.
The Company evaluated the U.S. Treasury's TARP Capital Purchase Program.
The TARP program allows participating banks to increase capital by
issuing preferred stock and common stock warrants to the U.S.
government. The Company elected not to participate in the TARP program.
Fees and Commission Revenue
Fees and commissions revenue totaled $109.9 million for the fourth
quarter of 2008, $126.7 million for the third quarter of 2008, and
$113.4 million for the fourth quarter of 2007. The $16.8 million
reduction in fees and commissions revenue from the previous quarter was
due primarily to a $7.3 million decrease in brokerage and trading
revenue, a $3.0 million decrease in trust fees and a $1.6 million
decrease in fees earned on margin assets. Brokerage and trading revenue
for the third quarter of 2008 included a $6.7 million net partial
recovery of losses on derivative contracts with two bankrupt
counterparties that did not recur in the fourth quarter. The fair value
of trust assets at December 31, 2008 decreased $2.8 billion or 8%
compared with September 30, 2008. The fair value of trust assets is a
primary driver of trust fees. Average margin assets, which are held
primarily as part of the Company's customer derivative programs, totaled
$121 million in the fourth quarter of 2008 and $532 million in the third
quarter of 2008. An increase in net interest revenue due to lower
funding costs offset the decrease in revenue from margin assets.
Operating Expenses
Operating expenses totaled $185.4 million for the fourth quarter of
2008, up $21.2 million over the preceding quarter. Excluding changes in
the fair value of mortgage servicing rights, operating expenses
increased $274 thousand over the third quarter of 2008. Personnel
expense increased $146 thousand. Lower incentive compensation largely
offset growth in salary expense. In addition, the Company reversed a
$1.7 million charge for its obligation to support a settlement of
litigation between Visa, Inc and Discover Financial Services initially
recognized in the third quarter of 2008.
About BOK Financial Corporation
BOK Financial is a regional financial services company that provides
commercial and consumer banking, investment and trust services, mortgage
origination and servicing, and an electronic funds transfer network.
Holdings include Bank of Albuquerque, N.A., Bank of Arizona, N.A., Bank
of Arkansas, N.A., Bank of Oklahoma, N.A., Bank of Texas, N.A., Colorado
State Bank & Trust, N.A., Bank of Kansas City, N.A., BOSC, Inc., Cavanal
Hill Investment Management, Inc., the TransFund electronic funds
network, and Southwest Trust Company, N.A. Shares of BOK Financial are
traded on the NASDAQ under the symbol BOKF. For more information, visit www.bokf.com.
The Company will continue to evaluate critical assumptions and
estimates, such as the adequacy of the allowance for credit losses and
asset impairment as of December 31, 2008 through the date its financial
statements are filed with the Securities and Exchange Commission and
will adjust amounts reported if necessary.
This news release contains forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and
projections about BOK Financial, the financial services industry and the
economy generally. Words such as "anticipates," "believes," "estimates,"
"expects," "forecasts," "plans," "projects," variations of such words
and similar expressions are intended to identify such forward-looking
statements. Management judgments relating to and discussion of the
provision and allowance for credit losses involve judgments as to future
events and are inherently forward-looking statements. Assessments that
BOK Financial's acquisitions and other growth endeavors will be
profitable are necessary statements of belief as to the outcome of
future events based in part on information provided by others which BOK
Financial has not independently verified. These statements are not
guarantees of future performance and involve certain risks,
uncertainties, and assumptions which are difficult to predict with
regard to timing, extent, likelihood and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what
is expected, implied or forecasted in such forward-looking statements.
Internal and external factors that might cause such a difference
include, but are not limited to (1) the ability to fully realize
expected cost savings from mergers within the expected time frames, (2)
the ability of other companies on which BOK Financial relies to provide
goods and services in a timely and accurate manner, (3) changes in
interest rates and interest rate relationships, (4) demand for products
and services, (5) the degree of competition by traditional and
nontraditional competitors, (6) changes in banking regulations, tax
laws, prices, levies and assessments, (7) the impact of technological
advances and (8) trends in consumer behavior as well as their ability to
repay loans. BOK Financial and its affiliates undertake no obligation to
update, amend or clarify forward-looking statements, whether as a result
of new information, future events, or otherwise.
BALANCE SHEETS
BOK FINANCIAL CORPORATION
(In thousands)
Period Ended
December 31, December 31,
2008 2007
(Unaudited)
ASSETS
Cash and due from banks $ 581,133 $ 717,259
Trading securities 99,601 45,724
Funds sold and resell agreements 113,809 173,154
Securities:
Available for sale 6,444,178 5,650,540
Investment 242,344 247,949
Mortgage trading securities 399,211 154,701
Total securities 7,085,733 6,053,190
Residential mortgage loans held for sale 129,246 76,677
Loans:
Commercial 7,411,603 6,737,505
Commercial real estate 2,701,248 2,750,472
Residential mortgage 1,752,574 1,531,296
Consumer 1,010,581 921,297
Total loans 12,876,006 11,940,570
Less reserve for loan losses (233,236 ) (126,677 )
Loans, net of reserve 12,642,770 11,813,893
Premises and equipment, net 277,458 258,786
Accrued revenue receivable 96,673 128,350
Intangible assets, net 361,209 368,353
Mortgage servicing rights, net 42,752 70,009
Real estate and other repossessed assets 29,179 9,475
Bankers' acceptances 12,913 1,780
Derivative contracts 452,604 502,446
Cash surrender value of bank-owned life 237,006 229,540
insurance
Receivable on unsettled securities trades 186,747 19,964
Other assets 385,815 199,101
TOTAL ASSETS $ 22,734,648 $ 20,667,701
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand $ 3,082,379 $ 2,768,769
Interest-bearing transaction 6,562,350 6,203,516
Savings 154,635 156,368
Time 5,183,243 4,330,638
Total deposits 14,982,607 13,459,291
Funds purchased and
repurchase agreements 3,025,399 3,225,131
Other borrowings 1,522,054 1,027,564
Subordinated debentures 398,407 398,273
Accrued interest, taxes, and expense 133,220 124,029
Bankers' acceptances 12,913 1,780
Derivative contracts 667,034 341,677
Other liabilities 146,757 154,572
TOTAL LIABILITIES 20,888,391 18,732,317
Shareholders' equity:
Capital, surplus and retained earnings 2,069,143 1,966,618
Accumulated other comprehensive loss (222,886 ) (31,234 )
TOTAL SHAREHOLDERS' EQUITY 1,846,257 1,935,384
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 22,734,648 $ 20,667,701
AVERAGE BALANCE SHEETS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
Quarter Ended
December 31, September 30, June 30, March 31, December 31,
2008 2008 2008 2008 2007
ASSETS
Trading $ 78,840 $ 66,419 $ 74,058 $ 74,957 $ 29,303
securities
Funds sold and
resell 48,246 79,862 72,444 80,735 86,948
agreements
Securities:
Available for 6,409,906 5,945,220 5,880,844 5,438,655 5,574,417
sale
Investment 242,503 239,655 249,723 248,974 249,350
Mortgage trading 237,319 126,837 155,612 201,199 138,306
securities
Total securities 6,889,728 6,311,712 6,286,179 5,888,828 5,962,073
Residential
mortgage loans 121,184 116,533 105,925 84,291 75,082
held for sale
Loans:
Commercial 7,452,799 7,228,814 6,976,292 6,841,006 6,619,760
Commercial real 2,716,465 2,696,503 2,802,292 2,784,640 2,702,449
estate
Residential 1,641,023 1,655,710 1,606,518 1,510,238 1,504,594
mortgage
Consumer 1,016,409 1,015,796 1,035,985 961,104 904,358
Total loans 12,826,696 12,596,823 12,421,087 12,096,988 11,731,161
Less allowance (209,319 ) (182,844 ) (145,524 ) (131,709 ) (125,996 )
for loan losses
Total loans, net 12,617,377 12,413,979 12,275,563 11,965,279 11,605,165
Total earning 19,755,374 18,988,504 18,814,168 18,094,090 17,758,570
assets
Cash and due 534,039 499,992 524,922 543,232 546,704
from banks
Cash surrender
value of 235,195 232,465 229,731 230,283 227,810
bank-owned life
insurance
Derivative 352,083 900,777 896,569 513,696 387,876
contracts
Other assets 1,394,960 1,199,425 1,142,910 1,115,752 1,061,655
TOTAL ASSETS $ 22,271,651 $ 21,821,163 $ 21,608,300 $ 20,497,053 $ 19,982,615
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Deposits:
Demand $ 2,712,384 $ 2,739,209 $ 2,634,038 $ 2,443,201 $ 2,448,011
Interest-bearing 6,116,465 6,565,935 6,420,291 6,267,021 5,861,544
transaction
Savings 155,784 159,856 159,798 156,953 160,170
Time 5,109,303 4,792,366 4,076,167 4,225,141 4,544,802
Total deposits 14,093,936 14,257,366 13,290,294 13,092,316 13,014,527
Funds purchased
and repurchase 3,095,054 3,061,186 3,126,110 3,061,783 3,158,153
agreements
Other borrowings 1,986,857 1,390,233 2,267,076 1,340,846 936,353
Subordinated 398,392 398,361 398,336 398,241 398,109
debentures
Derivative 494,778 509,057 239,211 297,660 276,992
contracts
Other 312,962 278,363 302,482 321,061 303,582
liabilities
TOTAL 20,381,979 19,894,566 19,623,509 18,511,907 18,087,716
LIABILITIES
Shareholders' 1,889,672 1,926,597 1,984,791 1,985,146 1,894,899
equity
TOTAL
LIABILITIES AND $ 22,271,651 $ 21,821,163 $ 21,608,300 $ 20,497,053 $ 19,982,615
SHAREHOLDERS'
EQUITY
- - - - -
STATEMENTS OF EARNINGS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except per share data)
Quarter Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
Interest revenue $ 262,160 $ 297,096 $ 1,061,645 $ 1,160,737
Interest expense 85,713 155,807 414,783 616,252
Net interest 176,447 141,289 646,862 544,485
revenue
Provision for 73,001 13,200 202,593 34,721
credit losses
Net interest
revenue after 103,446 128,089 444,269 509,764
provision for
credit losses
Other operating
revenue
Brokerage and 23,507 20,402 42,804 62,542
trading revenue
Transaction card 25,177 23,512 100,153 90,425
revenue
Trust fees and 17,143 20,145 78,979 78,231
commissions
Deposit service 29,239 29,938 117,528 109,218
charges and fees
Mortgage banking 6,429 6,912 27,074 22,275
revenue
Bank-owned life 2,682 2,614 10,681 10,058
insurance
Margin asset 187 2,012 8,548 4,800
fees
Other revenue 5,503 7,819 28,233 28,073
Total fees and 109,867 113,354 414,000 405,622
commissions
Gain (loss) on (2 ) (1,316 ) (660 ) (928 )
asset sales
Gain (loss) on 20,156 (6,251 ) 21,637 (8,328 )
securities, net
Gain (loss) on (2,219 ) 1,529 1,299 2,282
derivatives, net
Total other
operating 127,802 107,316 436,276 398,648
revenue
Other operating
expense
Personnel 87,695 84,512 352,947 328,705
Business 7,283 6,528 23,536 21,888
promotion
Professional
fees and 7,923 6,209 27,045 22,795
services
Net occupancy 14,901 15,466 60,632 57,284
and equipment
Insurance 3,216 843 11,988 3,017
Data processing
and 19,720 19,086 78,047 72,733
communications
Printing,
postage and 3,823 4,221 16,433 16,570
supplies
Net (gains)
losses and
operating 1,006 120 1,019 691
expenses of
repossessed
assets
Amortization of
intangible 1,967 2,382 7,661 7,358
assets
Mortgage banking 4,967 4,225 22,513 13,111
costs
Change in fair
value of 26,432 3,344 34,515 2,893
mortgage
servicing rights
Visa
retrospective (1,700 ) 2,767 (2,767 ) 2,767
responsibility
obligation
Other expense 8,209 8,024 28,835 25,175
Total other
operating 185,442 157,727 662,404 574,987
expense
Income before 45,806 77,678 218,141 333,425
taxes
Federal and
state income 10,363 26,518 64,909 115,761
taxes
Net income $ 35,443 $ 51,160 $ 153,232 $ 217,664
Average shares
outstanding:
Basic 67,294,069 67,051,499 67,274,457 67,083,200
Diluted 67,489,533 67,482,798 67,557,220 67,550,538
Net income
(loss) per
share:
Basic $ 0.53 $ 0.76 $ 2.28 $ 3.24
Diluted $ 0.53 $ 0.76 $ 2.27 $ 3.22
FINANCIAL HIGHLIGHTS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except ratio and share data)
Quarter Ended
December 31, September 30, June 30, March 31, December 31,
2008 2008 2008 2008 2007
Capital:
Period-end
shareholders' $ 1,846,257 $ 1,940,503 $ 1,942,376 $ 1,992,570 $ 1,935,384
equity
Risk-based
capital
ratios:
Tier 1 9.42 % 9.25 % 8.69 % 9.35 % 9.38 %
Total capital 12.84 % 12.55 % 11.69 % 12.44 % 12.54 %
Leverage 7.89 % 7.94 % 7.83 % 8.23 % 8.20 %
ratio
Period-end
tangible 6.64 % 7.16 % 7.15 % 7.83 % 7.72 %
common equity
ratio
Common stock:
Book value $ 27.36 $ 28.78 $ 28.78 $ 29.57 $ 28.75
per share
Market value
per share:
High $ 54.42 $ 53.94 $ 60.74 $ 55.23 $ 55.43
Low $ 38.40 $ 38.61 $ 49.11 $ 46.82 $ 51.44
Cash
dividends $ 15,358 $ 15,170 $ 15,180 $ 13,484 $ 13,438
paid
Dividend 43.33 % 26.76 % (1307.49 %) 21.66 % 26.27 %
payout ratio
Shares
outstanding, 67,473,086 67,433,837 67,488,388 67,383,318 67,306,380
net
Stock
buy-back
program:
Shares - 75,000 - 91,114 33,583
repurchased
Amount $ - $ 3,337,000 $ - $ 4,655,477 $ 1,770,368
Average price $ - $ 44.49 $ - $ 51.10 $ 52.72
per share
Performance
ratios
(quarter
annualized):
Return on
average 0.63 % 1.03 % (0.02 %) 1.22 % 1.02 %
assets
Return on
average 7.46 % 11.70 % (0.24 %) 12.62 % 10.71 %
equity
Net interest 3.57 % 3.48 % 3.44 % 3.31 % 3.22 %
margin
Efficiency 55.14 % 54.19 % 70.56 % 57.60 % 60.04 %
ratio
Other data:
Gain (loss)
on economic
hedge of $ 15,089 $ 1,186 $ (5,518 ) $ 191 $ 1,288
mortgage
servicing
rights
Trust assets $ 30,454,512 $ 33,242,296 $ 34,433,874 $ 35,524,730 $ 36,288,592
Mortgage
servicing $ 5,256,159 $ 5,167,584 $ 5,075,285 $ 4,967,384 $ 4,893,011
portfolio
Mortgage loan
fundings $ 214,521 $ 258,171 $ 288,937 $ 256,617 $ 239,620
during the
quarter
Mortgage loan
refinances to 34.84 % 25.14 % 36.76 % 51.19 % 35.49 %
total
fundings
Tax
equivalent $ 2,063 $ 1,927 $ 2,084 $ 2,154 $ 2,502
adjustment
Unrealized
gain (loss)
on available $ (330,973 ) $ (158,652 ) $ (91,226 ) $ (28,375 ) $ (37,362 )
for sale
securities
QUARTERLY EARNINGS TRENDS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except ratio and per share data)
Quarter Ended
December 31, September 30, June 30, March 31, December 31,
2008 2008 2008 2008 2007
Interest $ 262,160 $ 263,358 $ 260,086 $ 276,041 $ 297,096
revenue
Interest 85,713 99,010 101,147 128,913 155,807
expense
Net interest 176,447 164,348 158,939 147,128 141,289
revenue
Provision for 73,001 52,711 59,310 17,571 13,200
credit losses
Net interest
revenue after 103,446 111,637 99,629 129,557 128,089
provision for
credit losses
Other
operating
revenue
Brokerage and
trading 23,507 30,846 (35,462 ) 23,913 20,402
revenue
Transaction 25,177 25,632 25,786 23,558 23,512
card revenue
Trust fees and 17,143 20,100 20,940 20,796 20,145
commissions
Deposit
service 29,239 30,404 30,199 27,686 29,938
charges and
fees
Mortgage
banking 6,429 6,230 7,198 7,217 6,912
revenue
Bank-owned 2,682 2,829 2,658 2,512 2,614
life insurance
Margin asset 187 1,934 4,460 1,967 2,012
fees
Other revenue 5,503 8,691 7,824 6,215 7,819
Total fees and 109,867 126,666 63,603 113,864 113,354
commissions
Gain (loss) on (2 ) (839 ) 216 (35 ) (1,316 )
asset sales
Gain (loss) on
securities, 20,156 2,103 (5,242 ) 4,620 (6,251 )
net
Gain (loss) on
derivatives, (2,219 ) 4,366 (2,961 ) 2,113 1,529
net
Total other
operating 127,802 132,296 55,616 120,562 107,316
revenue
Other
operating
expense
Personnel 87,695 87,549 89,597 88,106 84,512
Business 7,283 5,837 5,777 4,639 6,528
promotion
Professional
fees and 7,923 6,501 6,973 5,648 6,209
services
Net occupancy 14,901 15,570 15,100 15,061 15,466
and equipment
Insurance 3,216 2,436 2,626 3,710 843
Data
processing and 19,720 19,911 19,523 18,893 19,086
communications
Printing,
postage and 3,823 4,035 4,156 4,419 4,221
supplies
Net (gains)
losses and
operating 1,006 (136 ) (229 ) 378 120
expenses of
repossessed
assets
Amortization
of intangible 1,967 1,884 1,885 1,925 2,382
assets
Mortgage 4,967 5,811 6,054 5,681 4,225
banking costs
Change in fair
value of
mortgage 26,432 5,554 767 1,762 3,344
servicing
rights
Visa
retrospective (1,700 ) 1,700 - (2,767 ) 2,767
responsibility
obligation
Other expense 8,209 7,638 7,039 5,949 8,024
Total other
operating 185,442 164,290 159,268 153,404 157,727
expense
Income before 45,806 79,643 (4,023 ) 96,715 77,678
taxes
Federal and
state income 10,363 22,958 (2,862 ) 34,450 26,518
taxes
Net income $ 35,443 $ 56,685 $ (1,161 ) $ 62,265 $ 51,160
Average shares
outstanding:
Basic 67,294,069 67,263,317 67,452,181 67,202,128 67,051,499
Diluted 67,489,533 67,471,376 67,452,181 67,549,960 67,482,798
Net income
(loss) per
share:
Basic $ 0.53 $ 0.84 $ (0.02 ) $ 0.93 $ 0.76
Diluted $ 0.53 $ 0.84 $ (0.02 ) $ 0.92 $ 0.76
LOANS BY PRINCIPAL MARKET AREA - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
Quarter Ended
December 31, September June 30, March 31, December 31,
30,
2008 2008 2008 2008 2007
Oklahoma:
Commercial $ 3,356,520 $ 3,368,823 $ 3,228,179 $ 3,248,424 $ 3,219,176
Commercial 843,576 827,357 875,546 940,686 890,703
real estate
Residential 1,196,924 1,134,066 1,099,277 1,080,882 1,080,483
mortgage
Consumer 579,809 580,211 601,184 586,695 576,070
Total 5,976,829 5,910,457 5,804,186 5,856,687 5,766,432
Oklahoma
Texas:
Commercial 2,353,860 2,205,169 2,166,925 2,124,192 1,985,645
Commercial 825,769 853,653 889,364 838,781 846,303
real estate
Residential 315,438 307,655 299,996 262,305 275,533
mortgage
Consumer 212,820 214,133 204,081 168,949 142,958
Total Texas 3,707,887 3,580,610 3,560,366 3,394,227 3,250,439
New Mexico:
Commercial 418,732 442,644 451,225 472,543 473,262
Commercial 286,574 281,061 271,177 258,731 252,884
real estate
Residential 98,018 95,165 89,469 85,834 84,336
mortgage
Consumer 18,616 18,296 16,977 14,977 16,105
Total New 821,940 837,166 828,848 832,085 826,587
Mexico
Arkansas:
Commercial 103,446 104,630 96,775 100,489 106,328
Commercial 134,015 127,925 124,049 130,956 124,317
real estate
Residential 16,875 16,941 19,527 16,621 16,393
mortgage
Consumer 175,647 183,543 197,979 180,551 163,626
Total 429,983 433,039 438,330 428,617 410,664
Arkansas
Colorado:
Commercial 660,546 598,519 489,844 486,525 490,373
Commercial 261,820 266,739 276,062 261,099 252,537
real estate
Residential 53,875 49,676 38,517 31,011 26,556
mortgage
Consumer 16,141 18,328 16,367 17,552 16,457
Total 992,382 933,262 820,790 796,187 785,923
Colorado
Arizona:
Commercial 211,356 213,861 207,173 174,360 157,341
Commercial 319,525 326,615 351,058 361,567 342,673
real estate
Residential 62,123 58,800 53,321 50,719 46,269
mortgage
Consumer 6,075 5,551 5,315 6,815 5,522
Total 599,079 604,827 616,867 593,461 551,805
Arizona
Kansas:
Commercial 307,143 340,156 398,452 350,325 305,380
Commercial 29,969 30,642 40,241 40,104 41,055
real estate
Residential 9,321 7,650 7,490 2,397 1,726
mortgage
Consumer 1,473 2,161 2,468 1,665 559
Total 347,906 380,609 448,651 394,491 348,720
Kansas
TOTAL BOK $ 12,876,006 $ 12,679,970 $ 12,518,038 $ 12,295,755 $ 11,940,570
FINANCIAL
DEPOSITS BY PRINCIPAL MARKET AREA - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
Quarter Ended
December 31, September June 30, March 31, December 31,
30,
2008 2008 2008 2008 2007
Oklahoma:
Demand $ 1,683,374 $ 1,681,325 $ 1,455,997 $ 1,464,258 $ 1,394,861
Interest-bearing:
Transaction 4,117,729 4,151,430 3,997,136 3,659,002 3,477,208
Savings 86,476 86,900 90,100 88,141 80,467
Time 3,104,933 3,036,297 2,672,401 2,230,110 2,426,822
Total 7,309,138 7,274,627 6,759,637 5,977,253 5,984,497
interest-bearing
Total Oklahoma 8,992,512 8,955,952 8,215,634 7,441,511 7,379,358
Texas:
Demand 1,067,456 956,846 1,046,651 940,141 1,035,134
Interest-bearing:
Transaction 1,460,576 1,543,974 1,713,131 1,708,424 1,753,843
Savings 32,071 32,400 33,207 32,191 34,618
Time 857,416 794,911 723,146 759,892 800,460
Total 2,350,063 2,371,285 2,469,484 2,500,507 2,588,921
interest-bearing
Total Texas 3,417,519 3,328,131 3,516,135 3,440,648 3,624,055
New Mexico:
Demand 155,345 176,477 168,621 169,449 151,231
Interest-bearing:
Transaction 397,382 376,941 417,607 425,976 432,919
Savings 16,289 16,316 16,432 16,141 15,146
Time 522,894 475,560 445,505 455,861 486,868
Total 936,565 868,817 879,544 897,978 934,933
interest-bearing
Total New Mexico 1,091,910 1,045,294 1,048,165 1,067,427 1,086,164
Arkansas:
Demand 16,293 23,565 21,142 20,493 13,247
Interest-bearing:
Transaction 38,566 19,146 24,524 22,091 19,027
Savings 1,083 865 895 945 883
Time 75,579 47,684 39,305 39,803 40,692
Total 115,228 67,695 64,724 62,839 60,602
interest-bearing
Total Arkansas 131,521 91,260 85,866 83,332 73,849
Colorado:
Demand 116,637 115,677 109,697 99,584 117,939
Interest-bearing:
Transaction 480,113 440,888 507,260 529,771 446,427
Savings 17,660 19,300 20,245 22,233 23,806
Time 532,475 428,872 423,014 455,262 539,523
Total 1,030,248 889,060 950,519 1,007,266 1,009,756
interest-bearing
Total Colorado 1,146,885 1,004,737 1,060,216 1,106,850 1,127,695
Arizona:
Demand 39,424 45,725 49,895 46,508 46,701
Interest-bearing:
Transaction 56,985 64,463 73,034 84,648 65,788
Savings 1,014 1,033 1,233 878 1,435
Time 34,290 14,433 6,364 8,395 11,603
Total 92,289 79,929 80,631 93,921 78,826
interest-bearing
Total Arizona 131,713 125,654 130,526 140,429 125,527
Kansas:
Demand 3,850 5,548 7,157 6,580 9,656
Interest-bearing:
Transaction 10,999 9,780 10,342 8,754 8,304
Savings 42 33 26 92 13
Time 55,656 19,794 51,649 33,837 24,670
Total 66,697 29,607 62,017 42,683 32,987
interest-bearing
Total Kansas 70,547 35,155 69,174 49,263 42,643
TOTAL BOK $ 14,982,607 $ 14,586,183 $ 14,125,716 $ 13,329,460 $ 13,459,291
FINANCIAL
NET INTEREST MARGIN TREND - UNAUDITED
BOK FINANCIAL CORPORATION
Quarter Ended
December 31, September June 30, March 31, December 31,
30,
2008 2008 2008 2008 2007
TAX-EQUIVALENT
ASSETS YIELDS
Trading securities 6.55 % 5.61 % 6.88 % 7.69 % 6.62 %
Funds sold and 0.76 % 1.44 % 1.97 % 4.18 % 5.95 %
resell agreements
Securities:
Taxable 5.12 % 5.09 % 5.08 % 5.11 % 4.86 %
Tax-exempt 6.43 % 6.64 % 6.46 % 6.38 % 7.19 %
Total securities 5.17 % 5.15 % 5.14 % 5.17 % 4.99 %
Total loans 5.27 % 5.69 % 5.79 % 6.59 % 7.50 %
Less Allowance for - - - - -
loan losses
Total loans, net 5.35 % 5.77 % 5.86 % 6.66 % 7.58 %
Total
tax-equivalent 5.28 % 5.55 % 5.61 % 6.17 % 6.70 %
yield on earning
assets
COST OF
INTEREST-BEARING
LIABILITIES
Interest-bearing
deposits:
Interest-bearing 1.51 % 1.72 % 1.74 % 2.71 % 3.34 %
transaction
Savings 0.37 % 0.37 % 0.37 % 0.61 % 0.86 %
Time 3.28 % 3.39 % 3.77 % 4.35 % 4.68 %
Total
interest-bearing 2.29 % 2.39 % 2.50 % 3.33 % 3.88 %
deposits
Funds purchased and
repurchase 0.94 % 1.98 % 1.95 % 3.11 % 4.42 %
agreements
Other borrowings 1.51 % 2.56 % 2.49 % 3.51 % 4.92 %
Subordinated debt 5.48 % 5.55 % 5.88 % 5.45 % 5.69 %
Total cost of
interest-bearing 2.02 % 2.41 % 2.47 % 3.36 % 4.10 %
liabilities
Tax-equivalent net
interest revenue 3.26 % 3.14 % 3.14 % 2.81 % 2.60 %
spread
Effect of
noninterest-bearing 0.31 % 0.34 % 0.30 % 0.50 % 0.62 %
funding sources and
other
Tax-equivalent net 3.57 % 3.48 % 3.44 % 3.31 % 3.22 %
interest margin
CREDIT QUALITY INDICATORS
BOK FINANCIAL CORPORATION
(In thousands, except ratios)
Quarter Ended
December 31, September June 30, March 31, December 31,
30,
2008 2008 2008 2008 2007
Nonperforming
assets:
Nonaccruing
loans (B):
Commercial $ 134,846 $ 105,757 $ 69,679 $ 41,966 $ 42,981
Commercial 137,279 78,235 60,456 40,399 25,319
real estate
Residential 27,387 27,075 17,861 15,960 15,272
mortgage
Consumer 561 758 611 812 718
Total
nonaccruing $ 300,073 $ 211,825 $ 148,607 $ 99,137 $ 84,290
loans
Renegotiated 13,039 12,326 11,840 11,850 10,394
loans (A)
Real estate
and other 29,179 28,088 21,025 15,112 9,475
repossessed
assets
Total
nonperforming $ 342,291 $ 252,239 $ 181,472 $ 126,099 $ 104,159
assets
Nonaccruing
loans by
principal
market (B):
Oklahoma $ 108,367 $ 87,885 $ 57,155 $ 52,211 $ 47,977
Texas 42,934 29,141 20,860 8,157 4,983
New Mexico 16,016 12,293 9,838 7,497 11,118
Arkansas 3,263 3,386 2,924 2,866 1,635
Colorado 32,415 20,980 23,812 8,101 9,222
Arizona 80,994 54,832 33,482 18,811 9,355
Kansas 16,084 3,308 536 1,494 -
Total
nonaccruing $ 300,073 $ 211,825 $ 148,607 $ 99,137 $ 84,290
loans
- - - - -
Nonaccruing
loans by loan
portfolio
sector (B):
Commercial:
Energy $ 49,364 $ 49,839 $ 12,342 $ 475 $ 529
Manufacturing 7,343 6,479 6,731 9,274 9,915
Wholesale / 18,773 7,806 3,735 3,868 3,792
retail
Agriculture 680 755 811 1,848 380
Services 36,873 26,581 30,080 23,849 25,468
Healthcare 12,118 3,300 3,791 2,079 2,301
Other 9,695 10,997 12,189 573 596
Total 134,846 105,757 69,679 41,966 42,981
commercial
Commercial
real estate:
Land
development 76,082 53,624 45,291 29,439 13,466
and
construction
Retail 15,625 13,011 7,591 5,258 5,259
Office 7,637 3,022 3,304 1,985 1,013
Multifamily 24,950 896 896 1,906 3,998
Industrial 6,287 390 396 - -
Other
commercial 6,698 7,292 2,978 1,811 1,583
real estate
Total
commercial 137,279 78,235 60,456 40,399 25,319
real estate
Residential
mortgage:
Permanent 26,233 26,401 17,039 15,135 14,541
mortgage
Home equity 1,154 674 822 825 731
Total
residential 27,387 27,075 17,861 15,960 15,272
mortgage
Consumer 561 758 611 812 718
Total
nonaccruing $ 300,073 $ 211,825 $ 148,607 $ 99,137 $ 84,290
loans
- - - - -
Performing
loans 90 days $ 19,123 $ 20,213 $ 10,683 $ 11,266 $ 5,575
past due
Gross $ 35,681 $ 33,926 $ 41,526 $ 11,078 $ 8,930
charge-offs
Recoveries 2,022 13,712 2,535 2,221 1,584
Net $ 33,659 $ 20,214 $ 38,991 $ 8,857 $ 7,346
charge-offs
Provision for $ 73,001 $ 52,711 $ 59,310 $ 17,571 $ 13,200
credit losses
Reserve for
loan losses 1.81 % 1.47 % 1.23 % 1.11 % 1.06 %
to period end
loans
Combined
reserves for
credit losses 1.93 % 1.65 % 1.41 % 1.27 % 1.24 %
to period end
loans
Nonperforming
assets to
period end 2.65 % 1.98 % 1.45 % 1.02 % 0.87 %
loans and
repossessed
assets
Net
charge-offs
(annualized) 1.05 % 0.64 % 1.26 % 0.29 % 0.25 %
to average
loans
Reserve for
loan losses
to 77.73 % 88.05 % 103.64 % 137.77 % 150.29 %
nonaccruing
loans
Combined
reserves for
credit losses 82.78 % 98.69 % 118.81 % 157.60 % 175.03 %
to
nonaccruing
loans
(A) includes
residential
mortgage
loans
guaranteed by
agencies of
the U.S.
government.
These loans $ 10,396 $ 9,604 $ 8,638 $ 8,386 $ 7,550
have been
modified to
extend
payment terms
and/or reduce
interest
rates to
current
market.
(B) includes
loans subject
to First $ 13,181 $ 13,262 $ 11,973 $ 8,101 $ 8,412
United Bank
sellers
escrow
Source: BOK Financial Corporation
Contact: BOK Financial Corporation
Steven Nell, 918-588-6000
Chief Financial Officer
or
Jesse Boudiette, 918-588-6532
Corporate Communications Manager