BOK Financial Reports $55 Million First Quarter Earnings

Business Wire, April 29, 2009

Real estate and other repossessed assets totaled $61 million at March 31, 2009, up $32 million from December 31, 2008. Real estate and other repossessed assets included $34 million of 1-4 family residential properties and residential land development properties, $11 million of developed commercial real estate properties, $8 million of equipment, $6 million of undeveloped land and $2 million of automobiles. The distribution of real estate owned and other repossessed assets among various markets included $16 million in Arizona, $12 million in Texas, $9 million in Kansas City, $8 million in New Mexico 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 $379 million at March 31, 2009. All of these loans are to borrowers in the Company’s primary market areas, including $266 million in Oklahoma, $41 million in Arkansas, $21 million in New Mexico, $18 million in Kansas City and $17 million in Texas. At March 31, 2009, approximately 3.71% of these loans are non-performing. A separate reserve for credit risk of $9.2 million is available for losses on these loans.

Securities and Derivatives

The Company’s securities portfolio totaled $7.7 billion at March 31, 2009, up $665 million since December 31, 2008. The increase in securities portfolio included $589 million of net securities purchased and a $69 million increase in the net fair value of available for sale securities. The available for sale portfolio consisted primarily of mortgage-backed securities, including $5.6 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 $262 million at March 31, 2009, a $69 million improvement from December 31, 2008. The decrease in net unrealized losses during the first quarter included a $52 million decrease in net unrealized losses on U.S. government-issued mortgage-backed securities and a $17 million decrease in net unrealized losses on privately-issued mortgage-backed securities.

Approximately $437 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 $160 million at March 31, 2009. The Company completed an other-than-temporary impairment analysis using criteria recently issued by the Financial Accounting Standards Board. Based on this analysis, the Company determined that mortgage-backed securities with unrealized losses of $46 million were other-than-temporarily impaired. Further analysis determined that the estimated credit loss to be recognized in earnings on these securities was $7.0 million. The remaining impairment was recognized in equity.