BOK Financial Reports $55 Million First Quarter Earnings

Business Wire, April 29, 2009

Announces Increase in Cash Dividend

TULSA, Okla. -- BOK Financial Corporation (NASDAQ: BOKF) reported net income of $55.0 million or $0.81 per diluted share for the first quarter of 2009, up $19.6 million or 55% over the fourth quarter of 2008. Net income for the first quarter of 2008 was $62.3 million or $0.92 per diluted share including after-tax gains from the sale of Visa, Inc. Class B common stock and reversal of accrued contingent liabilities related to Visa of $6.2 million or $0.09 per diluted share.

“BOK Financial is pleased to report a strong start to 2009 as we continue to manage the challenges of the current recession,” said President and CEO Stan Lybarger. “Our solid capital and liquidity positions and diverse revenue sources have allowed us to perform much better than the industry as a whole. This prompted us to increase our quarterly cash dividend by 7% beginning in the second quarter.”

Highlights of the first quarter of 2009 included:

• Pre-tax net operating income, which we define as net interest revenue plus fees and commissions revenue less operating expenses (excluding changes in the fair value of mortgage servicing rights) was $123.6 million for the first quarter of 2009, $128.4 million for the fourth quarter of 2008 and $109.3 million for the first quarter of 2008. Pre-tax net operating income is a measure of the Company’s ongoing ability to generate earnings to absorb credit, impairment and other losses.
• Net interest revenue totaled $169.8 million, down $6.6 million compared to the fourth quarter of 2008 and up $22.7 million or 15% over the first quarter of 2008. Net interest margin was 3.47% for the first quarter of 2009, 3.57% for the fourth quarter of 2008 (3.42% excluding the 15 basis point favorable LIBOR spread, as previously disclosed) and 3.31% for the first quarter of 2008.
• Fees and commissions revenue totaled $121.5 million for the first quarter of 2009, $110.9 million for the fourth quarter of 2008 and $113.9 million for the first quarter of 2008. Mortgage banking revenue grew $11.3 million or 156% over the fourth quarter of 2008 driven by increased volume in refinancing due to government initiatives to lower national mortgage interest rates.
• Other-than-temporary impairment charges reduced pre-tax income by $15.0 million in the first quarter of 2009 and $5.3 million in the first quarter of 2008. No other-than-temporary impairment charges were recognized in the fourth quarter of 2008. Impairment charges were recognized for certain preferred stocks and privately-issued mortgage-backed securities.
• Combined reserve for credit losses totaled $262 million or 2.07% of outstanding loans at March 31, 2009, up from $248 million or 1.93% of outstanding loans at December 31, 2008. Net loans charged off and provision for credit losses were $31.9 million and $45.0 million, respectively for the first quarter of 2009. Net loans charged off and provision for credit losses were $33.7 million and $73.0 million, respectively, for the fourth quarter of 2008 and $8.9 million and $17.6 million, respectively, for the first quarter of 2008.
• Non-performing assets totaled $414 million or 3.26% of outstanding loans and repossessed assets at March 31, 2009. Non-performing assets totaled $342 million or 2.65% of outstanding loans and repossessed assets at December 31, 2008.
• Average deposit accounts totaled $14.9 billion for the first quarter of 2009, up $756 million compared with average deposits for the fourth quarter of 2008. Total period-end deposits were $15.3 billion at March 31, 2009.
• The Company’s Tier 1 and tangible common equity ratios were 9.76% and 6.84%, respectively at March 31, 2009. Tier 1 and tangible common equity ratios were 9.42% and 6.64%, respectively, at December 31, 2008. The Company chose not to participate in the U.S. Treasury’s TARP Capital Purchase Program.
• The Company paid a cash dividend of $15.0 million or $0.225 per common share during the first quarter of 2009. On April 28, 2009, the board of directors declared an increase in the cash dividend to $0.24 per common share payable on or about May 29, 2009 to shareholders of record as of May 15, 2009.

Net Interest Revenue

Net interest revenue totaled $169.8 million, down $6.6 million compared to the fourth quarter of 2008 and up $22.7 million or 15% over the first quarter of 2008. Net interest margin was 3.47% for the first quarter of 2009, 3.57% for the fourth quarter of 2008 and 3.31% for the first quarter of 2008. As previously disclosed, the decrease in the net interest margin from the fourth quarter of 2008 was primarily due to the spread between LIBOR and the federal funds rate returning to a historically normal level. LIBOR is the basis for interest earned on many of our loans and the federal funds rate is the basis for interest paid on many interest-bearing liabilities. This spread positively impacted net interest margin in the fourth quarter of 2008 by 15 basis points. Net interest margin excluding the narrowed LIBOR / federal funds rate spread increased by 5 basis points over the fourth quarter of 2008.