BOK FINANCIAL CORPORATION
NASDAQ: BOKF
For Further Information Contact: Danny M. Boyd
Corporate Communications
(918) 588-6348
Jim Ulrich
Investor Relations
(918) 588-6135
BOK FINANCIAL CORPORATION REPORTS RECORD 2002 EARNINGS
Non-interest Revenue, Expansion Reinforce Growth
TULSA, Okla. (Wednesday, Jan. 22, 2003)--A combination of solid loan and
deposit growth, consistent increases in non-interest revenue and continued
expansion in high-growth markets contributed to record earnings for BOK
Financial Corporation in 2002.
The Tulsa-based financial services company reported net income of $150.4
million, a 29 percent increase over 2001 and an extension of the consistent
income growth experienced since the company's inception 12 years ago. For the
fourth quarter, net earnings were $38.8 million, up 29 percent from the same
period of 2001. Diluted earnings per share rose to $2.48 for the year, up 27
percent from the previous year. For the fourth quarter, diluted earnings per
share rose 26 percent, to 63 cents. BOK Financial adopted a new accounting
standard in 2002 that discontinued amortization of goodwill. If the standard had
been effective during 2001, net income that year would have been $122.9 million,
translating to a 22 percent increase in net income for 2002.
"The company's performance in 2002 continues to validate our strategy of
leveraging our market leadership in Oklahoma to expand in Texas and other high
growth markets," said Stan Lybarger, the company's president and chief executive
officer. "Our talented employees demonstrated once again the value of delivering
nationally competitive products with community bank service."
Page 2-BOKF 2002 Earnings
Total revenue for 2002 rose 18 percent over the previous year. Net interest
revenue, fee and commission revenue and net gains on securities and derivatives
all contributed to the revenue growth.
Net interest revenue was up 12 percent for the year due to growth in
earning assets. Despite a soft economy, total loans grew 10 percent and deposits
grew 18 percent, contributing to the growth in net interest revenue. Fee and
commission revenue also rose 12 percent. The increase in fee and commission
revenue was led by year-over-year increases in service charges and fees on
deposit accounts (32 percent), brokerage and trading revenue (24 percent) and
transaction card revenue (20 percent). Checking account overdraft protection
contributed to growth in revenue from service charges and fees on deposit
accounts while higher trading volume was a key factor in higher revenue from
brokerage and trading activities. The continued growth in debit card use and the
addition of new financial institution clients contributed to the increase in
transaction card revenue.
"We again demonstrated the value of our fee revenue sources that supplied
41 percent of our combined net interest and fee revenue base, which remains
ahead of our peer group," Lybarger said. "A diverse revenue base from products
and services that generate fees and commissions continues to contribute to
consistent income growth through economic cycles."
Overall, BOK Financial recognized gains on derivatives and sales of
securities of $65 million, up $38 million from 2001. Of the total gains, $26
million represented gains associated with the mortgage servicing rights (MSR)
hedge program. The company maintains a portfolio of securities as an economic
hedge of its MSR assets in addition to securities it holds for investment and
liquidity purposes. The $26 million gain from the MSR hedging strategy partially
offset the $46 million provision for impairment of MSR taken in 2002 as mortgage
rates hit historic lows.
"The importance of our hedging strategy is evident, and if rates rise as
the economy strengthens, we expect mortgage servicing valuations to rise,"
Lybarger said.
Page 3-BOKF 2002 Earnings
Net gains on the sale of other available-for-sale securities were $33
million compared to net gains of $18 million in 2001. BOK Financial followed its
strategy of managing for total return during 2002. Mortgage-backed securities
were sold to reduce the level of prepayment risk in the low interest rate
environment.
Operating expenses increased 15 percent to $426 million for the full year
2002. Excluding the provision for impairment and amortization of MSR, operating
expenses were up only 4 percent. Both the impairment and amortization were
extraordinarily high during 2002 as a result of record-high mortgage loan
refinance activity. Data processing and communications expenses rose 18 percent
for the year due to an increase in overall transaction volumes. Personnel
expenses were up 12 percent for the year due to increased compensation rates and
staffing and growth in incentive compensation.
Total assets rose 9 percent to $12.2 billion. Loans grew to $6.9 billion
during 2002. BOK Financial's Bank of Oklahoma subsidiary opened a Denver loan
production office last January that posted $65 million in loans outstanding by
year-end. The acquisition of Houston-based Bank of Tanglewood in October added
$132 million to the loan portfolio. Overall, commercial loans grew 9 percent,
commercial real estate loans 7 percent and residential mortgage loans 22
percent.
"The acquisition of Bank of Tanglewood in Houston and the opening of our
Denver loan production office contributed to growth in commercial lending in a
soft economy," Lybarger said. "Our Denver office demonstrated once again the
company's ability to leverage our strengths to target growth opportunities in
neighboring states. We believe our position in middle market lending, private
banking and trust services will continue to give us competitive advantages in
growing markets."
The quality of the loan portfolio continued to be evident. Nonperforming
assets totaled $57 million or 0.84 percent of period-end loans at December 31,
2002 compared with $51 million or 0.83 percent of period end loans for the
previous year end. The 2002 year-end allowance for loan losses was $116 million
or 1.72 percent of period end loans and 233 percent of nonperforming loans. Net
charge-offs to average loans declined to 0.33 percent for the year from 0.35
percent for the previous year.
Page 4-BOKF 2002 Earnings
Total deposits grew 18 percent to $8.1 billion during 2002. The increase
included a $604 million growth in interest-bearing transaction deposits and $447
million in time deposits. The growth in deposits enabled BOK Financial to reduce
its borrowed funds by $198 million and funded asset growth.
BOKF is a regional financial services company with total assets of $12.2
billion at Dec. 31, 2002. The company provides commercial and consumer banking,
investment and trust services, mortgage origination and servicing and an
electronic funds transfer network. Holdings include Bank of Oklahoma, N.A., Bank
of Texas, N.A., Bank of Albuquerque, N.A., Bank of Arkansas, N.A., the TransFund
electronic funds network and broker/dealer BOSC, Inc. Shares of BOK Financial
are traded on the NASDAQ under the symbol BOKF. For more information visit our
web site at www.bokf.com.
This news release contains forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and
projections about BOK Financial Corp., 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 judgements relating to, and discussion of the provision and allowance
for credit losses involve judgements as to future events and are inherently
forward-looking statements. Assessments that BOKF'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
BOKF 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 expressed, 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 BOKF 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 non-traditional competitors, (6) changes in banking regulations,
tax laws, prices, levies, and assessments, (7) the impact of technological
advances, and (8) trends in customer behavior as well as their ability to repay
loans. BOK Financial Corp. 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.