NASDAQ: BOKF
For Further Information Contact: Steven Nell
Chief Financial Officer
(918) 588-6319
Danny M. Boyd
Corporate Communications Manager
(918) 588-6348
Non-Interest Revenue Bolsters Solid Second Quarter at BOK Financial
TULSA, Okla. (Wednesday, July 16, 2003)--Non-interest revenue continues
to contribute to solid earnings growth at BOK Financial Corporation, which
reported a 20 percent increase in second quarter net income.
BOK Financial reported net income of $41.5 million for the second
quarter 2003 compared with $34.6 million for the same quarter the previous year.
Earnings per diluted share were 64 cents, up 14 percent from the second quarter
of 2002.
"We continue to benefit from our strategy of developing and growing a
variety of sources of non-interest revenue," said President and CEO Stan
Lybarger. "This approach enables us to succeed through economic cycles in which
loan growth has moderated."
Non-interest revenue from fees and commissions rose 24 percent compared
with the second quarter of 2002. Leading the growth was a $5.8 million, or 54
percent, increase in mortgage banking revenue. Additionally, brokerage and
trading revenue grew $3.7 million, or 59 percent, due primarily to increased
sales of fixed income securities to institutional customers. Service charges and
fees on deposit accounts increased $3.2 million, or 20 percent.
Record low interest rates continue to generate high levels of mortgage loan
activity. Mortgage banking revenue grew as secondary marketing gains totaled
$11.0 million during the second quarter of 2003 compared with $3.6 million in
2002. Total mortgage loans funded during each of these periods were $400 million
and $185 million. The growth in secondary marketing revenue was partially offset
by a $1.6 million decrease in servicing revenue. The outstanding principal
balance of mortgage loans serviced decreased to $4.8 billion at June 30, 2003,
compared to $6.1 billion at June 30, 2002. Amortization expense related to
mortgage servicing rights (MSR) was $10.1 million for the quarter compared with
$6.3 million for the second quarter of 2002. However, provisions for the
impairment of MSR were $3.4 million compared with a $23.8 million provision for
the second quarter of 2002. Gains on the sales of securities held as an economic
hedge against impairment of MSR totaled $4.4 million compared to $11.5 million
in the second quarter of 2002.
The company continues its strategy of mitigating the impact of the high
volume of mortgage prepayments on the securities portfolio by continuing to
favor securities with less prepayment risk coupled with acceptable extension
risk. Net gains from sales of securities, excluding securities held as an MSR
hedge, totaled $6.1 million compared with $10.1 million for the second quarter
of 2002.
Net interest revenue rose 8 percent to $97.6 million before provisions
for loan losses. Declining interest rates continue to moderate the net effect of
growth in average earning assets. Net interest margin was 3.47 percent for the
second quarter of 2003 compared with 3.77 percent for the same period the
previous year.
Total assets rose to $13.6 billion at June 30, 2003, compared with
$11.2 billion a year earlier. The securities portfolio grew 33 percent over the
past year. These investments were made to reduce the company's overall interest
rate risk. Deposit growth and a moderation in loan demand funded these
investments.
Total loans were $7 billion at the end of the quarter, up 12 percent
over June 30, 2002. Commercial loans and mortgage loans provided the growth.
"While loan growth has slowed, our commercial lenders continue to seek
solid opportunities in each of our markets," Lybarger said. "The quality of our
loan portfolio is in line with expectations based on the current soft economy."
Nonperforming assets to period end loans were .89 percent and net
charge-offs to average loans were .38 percent compared with .72 percent and .30
percent, respectively, for the second quarter of 2002. The provision for loan
losses increased to $9.5 million compared with $6.8 million for the second
quarter of 2002. The allowance for loan losses was 1.78 percent of outstanding
loans and 221 percent of nonperforming loans at June 30, 2003, compared with
1.73 percent and 282 percent, respectively, at June 30, 2002.
Deposits were $8.7 billion at June 30, 2003, up 21 percent from the
second quarter of 2002. Demand deposit and interest-bearing transaction accounts
provided most of the growth.
Total operating expenses declined $2.0 million due primarily to a $16.5
million reduction in MSR impairment and amortization expenses. Personnel
expenses increased $7.5 million due to growth in incentive compensation, which
is directly related to revenue growth, and employee medical costs. Data
processing expense rose $2.8 million, due to growth in transaction volumes and
an upgrade in core processing systems that is in process.
As previously announced, BOK Financial entered into a definitive
agreement to acquire Colorado Funding Company and its wholly owned subsidiary,
Colorado State Bank and Trust. Colorado State Bank and Trust has assets of $316
million and four full-service Denver locations. The Colorado bank is also
responsible for more than $1.6 billion in trust assets.
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 Arkansas, N.A., Bank of Oklahoma,
N.A., Bank of Texas, 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.