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Net income for the nine months ended September 30, 2009 totaled $157.8 million or $2.33 per diluted share compared with $117.8 million or $1.74 per diluted share for the nine months ended September 30, 2008. Net income for the nine months ended September 30, 2008 was impacted by $67.6 million of pre-tax charges for loan and energy derivative credit exposure related to a customer bankruptcy filing which reduced net income by approximately $43.9 million or $0.65 per diluted share. "BOK Financial is pleased with solid performance this quarter, especially considering the continued challenges we see in the economy," said President and CEO Stan Lybarger. "Earnings for the third quarter were based on continued net interest revenue growth, solid fee revenue and controlled operating expenses. The fair value of our securities portfolio improved by $159 million which further strengthened our balance sheet and capital position. However, we recognize the banking industry is far from the end of this depressed credit cycle and we added $19 million to our reserves for credit losses in response to an increase in our non-performing assets." Highlights of the third quarter of 2009 included: -- Net interest revenue totaled $180.5 million, up $4.9 million compared to the second quarter of 2009. Net interest margin was 3.63% for the third quarter of 2009, up 8 basis points over the second quarter of 2009 largely due to higher loan yields and lower funding costs. -- Fees and commission revenue totaled $120.0 million, down $3.1 million from the previous quarter. Mortgage banking revenue decreased $6.7 million due to lower volume of loans originated during the quarter. Brokerage and trading revenue and deposit service charges increased over the previous quarter. -- Operating expenses totaled $178.7 million, up $3.0 million over the second quarter of 2009. Net losses and operating expenses of repossessed assets and personnel expenses increased over the previous quarter. -- Combined reserve for credit losses totaled $293 million or 2.52% of outstanding loans at September 30, 2009, up from $274 million or 2.27% of outstanding loans at June 30, 2009. Net loans charged off and provision for credit losses were $36.0 million and $55.1 million, respectively, for the third quarter of 2009. -- Non-performing assets totaled $490 million or 4.19% of outstanding loans and repossessed assets at September 30, 2009 compared to $446 million or 3.67% of outstanding loans and repossessed assets at June 30, 2009. -- Available for sale securities totaled $8.4 billion, at September 30, 2009, up $1.1 billion since June 30, 2009. The increase consisted of $1.0 billion of net securities purchased during the quarter and a $159 million net increase in the fair value of securities held in the portfolio. Purchased securities consisted primarily of mortgage-backed securities issued by U.S. government agencies. -- Outstanding loan balances were $11.6 billion at September 30, 2009, down $458 million since June 30, 2009. All major loan categories decreased during the third quarter largely due to reduced customer demand, normal repayment trends and management decisions to exit certain loan types. -- Average deposit balances totaled $15.1 billion for the third quarter of 2009, down $202 million compared with average deposits for the second quarter of 2009. Total period-end deposits grew $440 million in the third quarter of 2009 to $15.1 billion. Growth in demand and interest-bearing transaction deposits was partially offset by decreases in higher-costing time deposits. -- Tangible common equity ratio and tier 1 common equity ratio increased to 7.78% and 10.45%, respectively, at September 30, 2009 from 7.55% and 9.77%, respectively, at June 30, 2009 largely due to lower unrealized losses on securities. The tangible common equity ratio and tier 1 common equity ratio are non-GAAP measures of capital strength used by the Company and investors based on shareholders' equity as defined by generally accepted accounting principles in the United States of America ("GAAP") minus intangible assets and equity that does not benefit common shareholders such as preferred equity and equity provided by the U.S. Treasury's Troubled Asset Relief Program ("TARP") Capital Purchase Program. We chose not to participate in the TARP Capital Purchase Program. Tier 1 capital ratios were 10.56% at September 30, 2009 and 9.86% at June 30, 2009. -- The Company paid a cash dividend of $16.3 million or $0.24 per common share during the third quarter of 2009. On October 27, 2009, the board of directors declared a cash dividend of $0.24 per common share payable on or about December 2, 2009 to shareholders of record as of November 16, 2009. Net Interest Revenue Net interest revenue totaled $180.5 million, up $4.9 million over the second quarter of 2009. Net interest margin was 3.63% for the third quarter of 2009 and 3.55% for the second quarter of 2009. The increase in net interest margin over the previous quarter resulted from improved loan pricing and lower funding costs. Loan yield increased 3 basis points over the previous quarter as wider spreads continue to be priced into the loan portfolio. The increased loan yield partially offset a 33 basis point decrease in securities portfolio yield. The cost of interest-bearing liabilities decreased 22 basis points, including a 26 basis point decrease in the cost of interest-bearing deposits and a 9 basis point decrease in the cost of other borrowed funds. Average earning assets decreased $237 million during the third quarter of 2009, primarily due to a decrease of $516 million in average outstanding loans and a $110 million decrease in average residential mortgage loans held for sale, partially offset by a $406 million increase in average securities, primarily mortgage-backed securities issued by U.S. government agencies. Average deposits decreased $202 million compared with the second quarter of 2009, due primarily to a $719 million decrease in average time deposits. The Company chose not to renew certain higher-costing time deposits as they matured. The decrease in time deposits was partially offset by a $308 million increase in average interest-bearing transaction accounts and a $209 million increase in average demand deposits. Average funds purchased, repurchase agreements and other borrowed funds increased $189 million from the second quarter of 2009. Fees and Commissions Revenue Fees and commissions revenue totaled $120.0 million for the third quarter of 2009, down from $123.1 million for the second quarter of 2009. Mortgage banking revenue totaled $13.2 million for the third quarter of 2009 and $19.9 million for the second quarter of 2009, still well above historic levels. Mortgage loan originations totaled $536 million for the third quarter of 2009, down from the historic high of $1.0 billion in the second quarter of 2009 as the impact of government initiatives to lower national mortgage interest rates began to lessen. The decrease in mortgage-banking revenue was partially offset by growth in brokerage and trading revenue and deposit service charges. Brokerage and trading revenue increased $3.2 million primarily due to investment banking activity. Deposit service charges increased $2.0 million due to higher overdraft fees. Operating Expenses Operating expenses totaled $178.7 million for the third quarter of 2009, up $3.0 million from the preceding quarter. Operating expenses increased $10.8 million due to changes in the fair value of mortgage servicing rights and decreased $11.8 million due to an FDIC special assessment in the second quarter of 2009. Excluding the impact of the change in the fair value of the mortgage servicing rights and the FDIC special assessment, operating expense increased $3.9 million. Personnel expenses were up $1.8 million and net losses and operating expenses of repossessed assets were up $2.5 million. All other operating expenses were down $433 thousand due to Company-wide initiatives to control operating expenses. Credit Quality Non-performing assets continued to increase across most sectors of the loan portfolio and geographic markets during the third quarter of 2009. Non-performing assets totaled $490 million or 4.19% of outstanding loans and repossessed assets at September 30, 2009 which consisted of non-accruing loans of $383 million, renegotiated loans of $17 million (including $11 million of residential mortgage loans guaranteed by U.S. government agencies) and $90 million of real estate and other repossessed assets. Total non-performing assets increased $44 million during the third quarter. Non-accruing loans totaled $383 million or 3.30% of outstanding loans at September 30, 2009, compared with $353 million or 2.92% of outstanding loans at June 30, 2009. Approximately $111 million of non-accruing loans have been charged-down from original values of $234 million to amounts management expects to recover. During the third quarter of 2009, $105 million of new non-accruing loans were identified, offset by $28 million in charge offs, $21 million in foreclosures and $13 million in payments received. In addition, the Company sold $25 million of the face amount of its SemGroup bankruptcy claims which reduced non-accruing energy loans by $13 million. Non-accruing commercial loans totaled $128 million or 2.01% of total commercial loans at September 30, 2009. Non-accruing commercial loans increased $1.8 million since June 30, 2009. Newly identified non-accruing commercial loans totaled $36 million, primarily in the energy and services sector of the portfolio. Non-accruing commercial real estate loans totaled $212 million or 8.30% of outstanding commercial real estate loans at September 30, 2009. Total non-accruing commercial real estate loans increased $23 million since June 30, 2009, including a $16 million increase in loans secured by land, residential lots and residential construction properties, $4.7 million increase in loans secured by retail facilities and a $3.7 million increase in loans secured by commercial office buildings. Non-accruing commercial real estate loans attributed to various markets included $99 million or 38% of commercial real estate loans in Arizona, $39 million or 16% of commercial real estate loans in Colorado, $31 million or 4% of commercial real estate loans in Oklahoma, $22 million or 6% of commercial real estate loans in New Mexico and $16 million or 3% of commercial real estate loans in Texas. Non-accruing residential mortgage loans totaled $38 million or 2.09% of outstanding residential mortgage loans at September 30, 2009, a $2.4 million increase over June 30, 2009. The distribution of non-accruing residential mortgage loans among various markets included $14 million or 4% of mortgage loans in Texas, $12 million or 1% of mortgage loans in Oklahoma and $6 million or 11% of mortgage loans in Arizona. Mortgage loans past due 30 to 89 days were $32 million compared to $27 million at June 30, 2009. The combined reserve for credit losses totaled $293 million or 2.52% of outstanding loans and 77% of non-accruing loans at September 30, 2009. The allowance for loan losses was $281 million and the reserve for off-balance sheet credit losses was $12 million. During the third quarter of 2009, the Company recognized a $55.1 million provision for credit losses. Net losses charged against the allowance for loan losses totaled $36.0 million or 1.21% annualized of average outstanding loans. Real estate and other repossessed assets totaled $90 million at September 30, 2009, up $14 million from June 30, 2009. Real estate and other repossessed assets increased by $21 million in additions offset by $4 million in sales and $3 million in write-downs based on updated appraisals. Real estate and other repossessed assets included $50 million of 1-4 family residential properties and residential land development properties, $22 million of developed commercial real estate properties, $8 million of undeveloped land, $7 million of equipment, and $3 million of automobiles. The distribution of real estate owned and other repossessed assets among various markets included $35 million in Arizona, $18 million in Texas, $8 million in New Mexico, $8 million in Colorado, $7 million in Kansas City, $7 million in Oklahoma and $6 million in Arkansas. 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 $345 million at September 30, 2009. These loans are primarily to borrowers in the Company's primary market areas, including $242 million in Oklahoma, $38 million in Arkansas, $20 million in New Mexico, $17 million Kansas City and $16 million in Texas. At September 30, 2009, approximately 4.81% of these loans are non-performing and 6.27% were past due 30 to 89 days. A separate reserve for credit risk of $11 million is available for losses on these loans. Securities and Derivatives Available for sale securities totaled $8.4 billion at September 30, 2009, up $1.1 billion since June 30, 2009. The increase in the securities portfolio included $1.0 billion of net securities purchased and a $159 million increase in the net fair value. The available for sale portfolio consisted primarily of mortgage-backed securities, including $6.9 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. The Company continued a strategy to increase holdings of mortgage-backed securities during the third quarter. This strategy recognizes attractive spreads over funding costs on these securities. Credit risk is controlled by investing in securities fully backed by U.S. government agencies. Interest rate risk is mitigated by investing in short-duration securities that would have limited extension exposure from rising interest rates. The portfolio of available for sale securities had a net unrealized gain of $31 million at September 30, 2009, a $159 million improvement from June 30, 2009. Net unrealized gains on mortgage-backed securities issued by U.S. government agencies increased by $59 million and net unrealized losses on privately-issued mortgage backed securities decreased by $82 million. Approximately $635 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 $137 million at September 30, 2009. Aggregate losses on these same securities were $182 million at June 30, 2009. The Company recognized a $3.4 million other-than-temporary impairment charge against earnings in the third quarter related to certain mortgage-backed securities due to further declines in the projected cash flows. Net gains on securities totaled $12.3 million for the third quarter of 2009, compared with $6.5 million for the second quarter of 2009 and $2.1 million for the third quarter of 2008. Three Months Ended
Sept. 30, June 30, Sept. 30, 2008
2009 2009
Net gain on available for sale securities $ 8,706 $ 16,670 $ 917
Gain (loss) on mortgage hedge securities 3,560 (10,199 ) 1,186
Net gain on securities $ 12,266 $ 6,471 $ 2,103
Gain (loss) on change in fair value of mortgage servicing rights
$ (2,981 ) $ 7,865 $ (5,554 )
The Company recognized $8.7 million of net gains on the sale of $377 million of available for sale securities in the third quarter of 2009 and $16.7 million of gains on the sale of $1.2 billion of available for sale securities in the second quarter of 2009. This continues a program to sell low-coupon mortgage-backed securities that were purchased at deep discounts near the beginning of the current market disruption. Securities sold are replaced with securities that are expected to have superior future total returns. BOK Financial also maintains a portfolio of mortgage-backed securities issued by U.S. government agencies as an economic hedge against changes in the fair value of mortgage servicing rights. The fair value of mortgage servicing rights decreased $3.0 million and the fair value of mortgage hedge securities increased $3.6 million during the third quarter of 2009. The Company has a portfolio of derivative contracts held for customer risk management programs and internal interest rate risk management programs. At September 30, 2009, the fair value of all asset contracts totaled $397 million, net of cash margin held by the Company. The largest net amount due from a single counterparty, a domestic subsidiary of a major energy company, at September 30, 2009 was $116 million. This amount was entirely offset by letters of credit issued by independent financial institutions. Loans, Deposits and Capital Outstanding loans at September 30, 2009 were $11.6 billion, down $458 million from June 30, 2009. Loan balances were lower across most sectors of the loan portfolio and markets due to reduced customer demand in response to current economic conditions, normal repayment trends and management decisions to mitigate credit risk by exiting certain loan types. Commercial loans decreased $346 million from June 30, 2009, primarily due to a decrease of $116 million in service sector loans, $110 million in energy sector loans and $87 million in wholesale/retail sector loans. Commercial real estate loans decreased $51 million compared to the prior quarter, primarily due to an $84 million decrease in construction and land development offset by a $34 million increase in multifamily sector loans. Residential mortgage loans decreased $4 million from the prior quarter primarily due to a $14 million decrease in permanent mortgage loans offset by a $10 million increase in home equity loans. Consumer loans decreased $57 million compared to the prior quarter primarily due to a $66 million decrease in indirect automobile loans related to the previously announced decision to curtail that business during the first quarter of 2009 in favor of a customer-focused direct approach to consumer lending. Total deposits increased $440 million during the third quarter and totaled $15.1 billion at September 30, 2009. Demand and interest-bearing transaction deposits increased $637 million and $289 million, respectively, offset by a $487 million decrease in time deposit balances as the Company decreased higher-cost certificates of deposit. Among the lines of business, commercial banking deposits increased $519 million during the third quarter of 2009, offset by decreased consumer banking deposits of $91 million and decreased wealth management deposits of $48 million. The Company and each of its subsidiary banks exceeded the regulatory definition of well capitalized at September 30, 2009. The Company's Tier 1 and total capital ratios were 10.56% and 14.10%, respectively, at September 30, 2009. The Company's Tier 1 and total capital ratios were 9.86% and 13.34%, respectively, at June 30, 2009. In addition, the Company's tangible common equity ratio, a non-GAAP measure, was 7.78% at September 30, 2009 and 7.55% at June 30, 2009. The increase in tangible common equity ratio was primarily due to retained earnings growth and reduced net unrealized losses on available for sale securities. 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 September 30, 2009 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
September 30, June 30, September 30,
2009 2009 2008
(Unaudited) (Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 1,383,244 $ 470,553 $ 669,914
Trading securities 100,898 84,548 92,588
Funds sold and resell agreements 39,465 112,128 105,594
Securities:
Available for sale 8,358,562 7,224,673 6,279,530
Investment 238,101 269,844 243,617
Mortgage trading securities 320,971 222,864 198,201
Total securities 8,917,634 7,717,381 6,721,348
Residential mortgage loans held for sale 172,301 326,363 113,121
Loans:
Commercial 6,370,056 6,715,851 7,273,802
Commercial real estate 2,560,335 2,611,693 2,713,992
Residential mortgage 1,829,824 1,833,975 1,669,953
Consumer 851,349 908,409 1,022,223
Total loans 11,611,564 12,069,928 12,679,970
Less reserve for loan losses (280,902 ) (263,309 ) (186,516 )
Loans, net of reserve 11,330,662 11,806,619 12,493,454
Premises and equipment, net 286,702 286,295 267,749
Accrued revenue receivable 68,617 118,718 118,096
Intangible assets, net 356,152 357,838 363,177
Mortgage servicing rights, net 66,689 67,413 68,680
Real estate and other repossessed assets 89,507 75,243 28,088
Bankers' acceptances 9,882 8,260 23,933
Derivative contracts 397,110 462,971 572,391
Cash surrender value of bank-owned life insurance 244,456 241,792 234,293
Receivable on unsettled securities trades - 237,200 169,494
Other assets 413,522 394,997 335,882
TOTAL ASSETS $ 23,876,841 $ 22,768,319 $ 22,377,802
LIABILITIES AND EQUITY
Deposits:
Demand $ 3,462,188 $ 2,825,179 $ 3,005,163
Interest-bearing transaction 7,380,449 7,091,471 6,606,622
Savings 167,896 166,806 156,847
Time 4,084,813 4,571,933 4,817,551
Total deposits 15,095,346 14,655,389 14,586,183
Funds purchased and repurchase agreements
2,198,900 2,798,274 3,667,225
Other borrowings 3,189,948 2,152,177 1,077,450
Subordinated debentures 398,502 398,465 398,372
Accrued interest, taxes, and expense 123,409 119,003 120,280
Bankers' acceptances 9,882 8,260 23,933
Due on unsettled securities trades 133,974 - -
Derivative contracts 395,197 445,463 377,973
Other liabilities 127,689 125,126 166,597
TOTAL LIABILITIES 21,672,847 20,702,157 20,418,013
Shareholders' equity:
Capital, surplus and retained earnings 2,185,776 2,149,020 2,046,752
Accumulated other comprehensive loss (763 ) (98,448 ) (106,249 )
TOTAL SHAREHOLDERS' EQUITY 2,185,013 2,050,572 1,940,503
Non-controlling interest 18,981 15,590 19,286
TOTAL EQUITY 2,203,994 2,066,162 1,959,789
TOTAL LIABILITIES AND EQUITY $ 23,876,841 $ 22,768,319 $ 22,377,802
AVERAGE BALANCE SHEETS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
ASSETS
Trading securities $ 64,763 $ 112,960 $ 111,962 $ 78,840 $ 66,419
Funds sold and resell agreements 67,032 29,277 50,701 48,246 79,862
Securities:
Available for sale 7,782,254 7,242,931 6,645,086 6,409,906 5,945,220
Investment 235,967 271,068 238,562 242,503 239,655
Mortgage trading securities 267,591 365,434 453,304 237,319 126,837
Total securities 8,285,812 7,879,433 7,336,952 6,889,728 6,311,712
Residential mortgage loans held for sale 176,403 286,077 201,135 121,184 116,533
Loans:
Commercial 6,521,438 6,901,057 7,182,481 7,452,799 7,228,814
Commercial real estate 2,621,176 2,684,020 2,762,789 2,716,465 2,696,503
Residential mortgage 1,873,457 1,884,023 1,841,006 1,641,023 1,655,710
Consumer 871,347 933,950 998,489 1,016,409 1,015,796
Total loans 11,887,418 12,403,050 12,784,765 12,826,696 12,596,823
Less allowance for loan losses (281,289 ) (273,335 ) (252,734 ) (209,319 ) (182,844 )
Total loans, net 11,606,129 12,129,715 12,532,031 12,617,377 12,413,979
Total earning assets 20,200,139 20,437,462 20,232,781 19,755,374 18,988,504
Cash and due from banks 828,965 638,791 661,433 534,039 499,992
Cash surrender value of bank-owned life insurance 242,715 240,199 237,805 235,195 232,465
Derivative contracts 401,887 493,448 476,091 352,083 900,777
Other assets 1,376,828 1,264,131 1,335,259 1,394,960 1,199,425
TOTAL ASSETS $ 23,050,534 $ 23,074,031 $ 22,943,369 $ 22,271,651 $ 21,821,163
LIABILITIES AND EQUITY
Deposits:
Demand $ 3,392,578 $ 3,183,338 $ 2,864,751 $ 2,712,384 $ 2,739,209
Interest-bearing transaction 7,162,477 6,854,003 6,610,805 6,116,465 6,565,935
Savings 167,677 167,813 159,537 155,784 159,856
Time 4,404,854 5,123,947 5,215,091 5,109,303 4,792,366
Total deposits 15,127,586 15,329,101 14,850,184 14,093,936 14,257,366
Funds purchased and repurchase agreements
2,284,985 2,316,990 2,562,066 3,095,054 3,061,186
Other borrowings 2,173,103 1,951,699 2,158,963 1,986,857 1,390,233
Subordinated debentures 398,484 398,456 398,425 398,392 398,361
Derivative contracts 392,277 536,232 641,974 494,778 509,057
Other liabilities 539,129 534,889 416,242 293,752 258,775
TOTAL LIABILITIES 20,915,564 21,067,367 21,027,854 20,362,769 19,874,978
Total equity 2,134,970 2,006,664 1,915,515 1,908,882 1,946,185
TOTAL LIABILITIES AND EQUITY $ 23,050,534 $ 23,074,031 $ 22,943,369 $ 22,271,651 $ 21,821,163
STATEMENTS OF EARNINGS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except per share data)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Interest revenue $ 226,246 $ 263,358 $ 690,158 $ 799,485
Interest expense 45,785 99,010 164,272 329,070
Net interest revenue 180,461 164,348 525,886 470,415
Provision for credit losses 55,120 52,711 147,280 129,592
Net interest revenue after provision for credit losses
125,341 111,637 378,606 340,823
Other operating revenue
Brokerage and trading revenue 24,944 30,846 71,437 19,297
Transaction card revenue 26,264 25,632 79,225 74,976
Trust fees and commissions 16,315 20,100 49,685 61,836
Deposit service charges and fees 30,464 30,404 86,290 88,289
Mortgage banking revenue 13,197 7,145 51,577 23,382
Bank-owned life insurance 2,634 2,829 7,369 7,999
Margin asset fees 51 1,934 186 8,361
Other revenue 6,087 7,768 18,794 20,124
Total fees and commissions 119,956 126,658 364,563 304,264
Gain (loss) on other assets 3,223 (841 ) 4,339 (1,986 )
Gain (loss) on derivatives, net (294 ) 4,366 (2,995 ) 3,518
Gain (loss) on securities, net 12,266 2,103 38,845 6,787
Total other-than-temporary impairment losses (6,133 ) - (61,764 ) (5,306 )
Portion of loss recognized in other comprehensive income (2,752 ) - (41,839 ) -
Net impairment losses recognized in earnings (3,381 ) - (19,925 ) (5,306 )
Total other operating revenue 131,770 132,286 384,827 307,277
Other operating expense
Personnel 98,012 87,549 286,830 265,252
Business promotion 4,827 5,837 13,824 16,253
Professional fees and services 7,555 6,501 21,430 19,122
Net occupancy and equipment 15,884 15,570 48,115 45,731
Insurance 6,092 2,436 17,628 8,772
FDIC special assessment - - 11,773 -
Data processing and communications 20,413 19,911 60,171 58,327
Printing, postage and supplies 3,716 4,035 12,359 12,610
Net (gains) losses and operating expenses of repossessed assets
3,497 (136 ) 6,299 13
Amortization of intangible assets 1,686 1,884 5,058 5,694
Mortgage banking costs 8,065 5,811 24,868 17,546
Change in fair value of mortgage servicing rights 2,981 5,554 (6,839 ) 8,083
Visa retrospective responsibility obligation - 1,700 - (1,067 )
Other expense 6,004 7,638 18,780 20,626
Total other operating expense 178,732 164,290 520,296 476,962
Net income before taxes 78,379 79,633 243,137 171,138
Federal and state income taxes 24,772 22,958 81,925 54,546
Net income before non-controlling interest 53,607 56,675 161,212 116,592
Net income (loss) attributable to non-controlling interest 2,947 (10 ) 3,405 (1,197 )
Net income attributable to BOK Financial Corporation $ 50,660 $ 56,685 $ 157,807 $ 117,789
Average shares outstanding:
Basic 67,392,059 67,263,317 67,351,436 67,305,916
Diluted 67,513,700 67,432,444 67,450,172 67,463,012
Net income per share:
Basic $ 0.75 $ 0.84 $ 2.33 $ 1.75
Diluted $ 0.75 $ 0.84 $ 2.33 $ 1.74
FINANCIAL HIGHLIGHTS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except ratio and share data)
Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
Capital:
Period-end shareholders' equity $ 2,185,013 $ 2,050,572 $ 1,931,300 $ 1,846,257 $ 1,940,503
Risk weighted assets $ 17,515,147 $ 18,338,540 $ 18,355,862 $ 18,401,051 $ 18,347,504
Risk-based capital ratios:
Tier 1 10.56 % 9.86 % 9.66 % 9.40 % 9.31 %
Total capital 14.10 % 13.34 % 13.08 % 12.81 % 12.62 %
Leverage ratio 8.16 % 7.97 % 7.85 % 7.89 % 7.94 %
Tangible common equity ratio (A) 7.78 % 7.55 % 6.84 % 6.64 % 7.16 %
Tier 1 common equity ratio (B) 10.45 % 9.77 % 9.58 % 9.32 % 9.20 %
Common stock:
Book value per share $ 32.27 $ 30.30 $ 28.57 $ 27.36 $ 28.78
Market value per share:
High $ 48.10 $ 43.02 $ 40.71 $ 54.42 $ 53.94
Low $ 34.81 $ 34.46 $ 22.95 $ 38.40 $ 38.61
Cash dividends paid $ 16,280 $ 16,184 $ 15,027 $ 15,358 $ 15,170
Dividend payout ratio 32.14 % 31.05 % 27.31 % 43.33 % 26.76 %
Shares outstanding, net 67,707,547 67,674,442 67,589,045 67,473,086 67,433,837
Stock buy-back program:
Shares repurchased - - - - 75,000
Amount $ - $ - $ - $ - $ 3,337,000
Average price per share $ - $ - $ - $ - $ 44.49
Performance ratios (quarter annualized):
Return on average assets 0.87 % 0.91 % 0.97 % 0.63 % 1.03 %
Return on average equity 9.41 % 10.42 % 11.65 % 7.39 % 11.59 %
Net interest margin 3.63 % 3.55 % 3.47 % 3.57 % 3.48 %
Efficiency ratio 58.09 % 61.02 % 57.10 % 54.94 % 54.19 %
Other data:
Gain (loss) on economic hedge of mortgage servicing rights $ 3,560 $ (10,199 ) $ (2,118 ) $ 15,089 $ 1,186
Trust assets $ 29,945,585 $ 29,288,041 $ 28,700,791 $ 30,454,512 $ 33,242,296
Mortgage servicing portfolio $ 6,339,764 $ 6,082,501 $ 5,515,893 $ 5,256,159 $ 5,167,584
Mortgage loan fundings during the quarter $ 536,173 $ 1,023,272 $ 708,561 $ 214,521 $ 258,171
Mortgage loan refinances to total fundings 49.00 % 71.00 % 73.51 % 34.84 % 25.14 %
Tax equivalent adjustment $ 1,982 $ 1,791 $ 2,105 $ 2,063 $ 1,927
Unrealized gain (loss) on available for sale securities $ 30,898 $ (128,492 ) $ (261,856 ) $ (330,973 ) $ (158,652 )
(A) Tangible common equity ratio is a non-GAAP measure.
Reconciliation to a GAAP financial measure follows:
Total shareholders' equity $ 2,185,013 $ 2,050,572 $ 1,931,300 $ 1,846,257 $ 1,940,503
Less: intangible assets, net (356,152 ) (357,838 ) (359,523 ) (361,209 ) (363,177 )
Tangible common equity $ 1,828,861 $ 1,692,734 $ 1,571,777 $ 1,485,048 $ 1,577,326
Total assets $ 23,876,841 $ 22,768,319 $ 23,333,442 $ 22,734,648 $ 22,377,802
Less: intangible assets, net (356,152 ) (357,838 ) (359,523 ) (361,209 ) (363,177 )
$ 23,520,689 $ 22,410,481 $ 22,973,919 $ 22,373,439 $ 22,014,625
Tangible common equity ratio 7.78 % 7.55 % 6.84 % 6.64 % 7.16 %
(B) Tier 1 common equity ratio is a non-GAAP measure.
Reconciliation to a GAAP financial measure follows:
Tier 1 capital $ 1,849,254 $ 1,807,705 $ 1,773,576 $ 1,728,926 $ 1,707,390
Less: non-controlling interest (18,981 ) (15,590 ) (14,751 ) (13,855 ) (19,286 )
Tier 1 common equity $ 1,830,273 $ 1,792,115 $ 1,758,825 $ 1,715,071 $ 1,688,104
Risk weighted assets $ 17,515,147 $ 18,338,540 $ 18,355,862 $ 18,401,051 $ 18,347,504
Tier 1 common equity ratio 10.45 % 9.77 % 9.58 % 9.32 % 9.20 %
QUARTERLY EARNINGS TRENDS - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands, except ratio and per share data)
Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
Interest revenue $ 226,246 $ 230,685 $ 233,227 $ 262,160 $ 263,358
Interest expense 45,785 55,105 63,382 85,713 99,010
Net interest revenue 180,461 175,580 169,845 176,447 164,348
Provision for credit losses 55,120 47,120 45,040 73,001 52,711
Net interest revenue after provision for credit losses
125,341 128,460 124,805 103,446 111,637
Other operating revenue
Brokerage and trading revenue 24,944 21,794 24,699 23,507 30,846
Transaction card revenue 26,264 27,533 25,428 25,177 25,632
Trust fees and commissions 16,315 16,860 16,510 17,143 20,100
Deposit service charges and fees 30,464 28,421 27,405 29,239 30,404
Mortgage banking revenue 13,197 19,882 18,498 7,217 7,145
Bank-owned life insurance 2,634 2,418 2,317 2,682 2,829
Margin asset fees 51 68 67 187 1,934
Other revenue 6,087 6,124 6,583 5,778 7,768
Total fees and commissions 119,956 123,100 121,507 110,930 126,658
Gain (loss) on other assets 3,223 973 143 (7,420 ) (841 )
Gain (loss) on derivatives, net (294 ) (1,037 ) (1,664 ) (2,219 ) 4,366
Gain (loss) on securities, net 12,266 6,471 20,108 20,156 2,103
Total other-than-temporary impairment losses (6,133 ) (1,263 ) (54,368 ) - -
Portion of loss recognized in other comprehensive income (2,752 ) 279 (39,366 ) - -
Net impairment losses recognized in earnings (3,381 ) (1,542 ) (15,002 ) - -
Total other operating revenue 131,770 127,965 125,092 121,447 132,286
Other operating expense
Personnel 98,012 96,191 92,627 87,695 87,549
Business promotion 4,827 4,569 4,428 7,283 5,837
Professional fees and services 7,555 7,363 6,512 7,923 6,501
Net occupancy and equipment 15,884 15,973 16,258 14,901 15,570
Insurance 6,092 5,898 5,638 3,216 2,436
FDIC special assessment - 11,773 - - -
Data processing and communications 20,413 20,452 19,306 19,720 19,911
Printing, postage and supplies 3,716 4,072 4,571 3,823 4,035
Net (gains) losses and operating expenses of repossessed assets
3,497 996 1,806 1,006 (136 )
Amortization of intangible assets 1,686 1,686 1,686 1,967 1,884
Mortgage banking costs 8,065 9,336 7,467 4,967 5,811
Change in fair value of mortgage servicing rights 2,981 (7,865 ) (1,955 ) 26,432 5,554
Visa retrospective responsibility obligation - - - (1,700 ) 1,700
Other expense 6,004 5,326 7,450 8,209 7,638
Total other operating expense 178,732 175,770 165,794 185,442 164,290
Net income before taxes 78,379 80,655 84,103 39,451 79,633
Federal and state income taxes 24,772 28,315 28,838 10,363 22,958
Net income before non-controlling interest 53,607 52,340 55,265 29,088 56,675
Net income (loss) attributable to non-controlling interest 2,947 225 233 (6,355 ) (10 )
Net income attributable to BOK Financial Corporation $ 50,660 $ 52,115 $ 55,032 $ 35,443 $ 56,685
Average shares outstanding:
Basic 67,392,059 67,344,577 67,315,986 67,294,069 67,263,317
Diluted 67,513,700 67,448,029 67,387,102 67,456,267 67,432,444
Net income per share:
Basic $ 0.75 $ 0.77 $ 0.81 $ 0.53 $ 0.84
Diluted $ 0.75 $ 0.77 $ 0.81 $ 0.52 $ 0.84
LOANS BY PRINCIPAL MARKET AREA - UNAUDITED
BOK FINANCIAL CORPORATION
(In thousands)
Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
Oklahoma:
Commercial $ 2,738,217 $ 2,918,478 $ 3,119,362 $ 3,356,520 $ 3,368,823
Commercial real estate 815,362 855,742 881,620 843,576 827,357
Residential mortgage 1,245,917 1,249,104 1,234,417 1,196,924 1,134,066
Consumer 483,369 521,431 562,021 579,809 580,211
Total Oklahoma 5,282,865 5,544,755 5,797,420 5,976,829 5,910,457
Texas:
Commercial 2,075,379 2,182,756 2,277,186 2,353,860 2,205,169
Commercial real estate 734,742 741,199 816,830 825,769 853,653
Residential mortgage 335,797 345,780 337,044 315,438 307,655
Consumer 188,374 196,752 214,134 212,820 214,133
Total Texas 3,334,292 3,466,487 3,645,194 3,707,887 3,580,610
New Mexico:
Commercial 344,910 380,378 393,180 418,732 442,644
Commercial real estate 344,988 313,190 315,511 286,574 281,061
Residential mortgage 88,271 90,944 99,805 98,018 95,165
Consumer 18,176 18,826 19,900 18,616 18,296
Total New Mexico 796,345 803,338 828,396 821,940 837,166
Arkansas:
Commercial 99,559 97,676 99,955 103,446 104,630
Commercial real estate 128,984 133,026 133,227 134,015 127,925
Residential mortgage 19,128 19,015 17,145 16,875 16,941
Consumer 136,461 152,620 168,971 175,647 183,543
Total Arkansas 384,132 402,337 419,298 429,983 433,039
Colorado:
Commercial 569,549 595,858 675,223 660,546 598,519
Commercial real estate 249,879 269,923 267,035 261,820 266,739
Residential mortgage 68,667 58,557 59,120 53,875 49,676
Consumer 18,272 14,097 14,599 16,141 18,328
Total Colorado 906,367 938,435 1,015,977 992,382 933,262
Arizona:
Commercial 219,330 215,540 211,953 211,356 213,861
Commercial real estate 257,169 262,607 285,841 319,525 326,615
Residential mortgage 57,304 58,265 61,605 62,123 58,800
Consumer 4,826 3,229 5,261 6,075 5,551
Total Arizona 538,629 539,641 564,660 599,079 604,827
Kansas:
Commercial 323,112 325,165 324,671 307,143 340,156
Commercial real estate 29,211 36,006 32,017 29,969 30,642
Residential mortgage 14,740 12,310 10,814 9,321 7,650
Consumer 1,871 1,454 1,469 1,473 2,161
Total Kansas 368,934 374,935 368,971 347,906 380,609
TOTAL BOK FINANCIAL $ 11,611,564 $ 12,069,928 $ 12,639,916 $ 12,876,006 $ 12,679,970
DEPOSI 
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