NASDAQ: BOKF
For Further Information Contact: Steven Nell
Chief Financial Officer
BOK Financial Corp.
(918) 588-6319
Danny M. Boyd
Corporate Communications Manager
BOK Financial Corp.
(918) 588-6348
BOK Financial Reports Solid Quarterly, Nine-Month Earnings
Colorado Acquisition Marks Continued Geographic Expansion
TULSA, Okla. (Wednesday, October 15, 2003)--BOK Financial Corporation
reported solid third quarter and nine-month results as revenue from fees and
commissions continued to grow.
Tulsa-based BOK Financial reported third quarter net income of $38.8
million, or 60 cents per share. Net income in the third quarter of 2002 was
$43.5 million, or 70 cents per share, which included $8.1 million from after-tax
gains on securities sales, less provision for impairment of mortgage servicing
rights, and mark-to-market gains on derivatives. These net gains were influenced
by declining interest rates at the time.
Net income for the first nine months of 2003 was up 12 percent to $123.1
million, or $1.91 per share, compared with $109.7 million, or $1.77 per share,
for the same period of 2002.
"Our 2003 third quarter and nine-month results show that we continue to
perform well despite pressure on our net interest margin from historically low
interest rates," said President and CEO Stan Lybarger. "Fee revenues were
particularly strong in the quarter, growing 24 percent over the same period a
year ago. During the third quarter of 2003, we closed on the acquisition of
Colorado State Bank and Trust substantially expanding our presence in the Denver
area."
BOK Financial adopted the accounting provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" during
the third quarter of 2003. This newly adopted accounting standard increased
third quarter operating expenses $1.2 million. Financial statements for previous
periods have been restated as required by this standard to consistently reflect
this accounting change.
The growth in non-interest revenue from fees and commissions of 24 percent
was derived from a number of sources. Brokerage and trading revenue more than
doubled to $11.6 million due primarily to increased sales to institutional
customers. Trust fees and commissions rose 22 percent, revenue from service
charges and fees on deposit accounts grew 15 percent, and transaction card
revenue increased 12 percent.
Mortgage banking revenue was unchanged as both quarters reflected the
effects of continued low interest rates. Revenue from mortgage loan production
was $7.6 million in 2003 compared to $5.5 million in 2002. Mortgage loans funded
totaled $425 million and $264 million in the third quarters of 2003 and 2002,
respectively. The increase in revenue from loan production was largely offset by
a $1.9 million decrease in servicing fees. The outstanding principal balance of
mortgage loans serviced decreased to $4.5 billion at Sept. 30, 2003, compared to
$5.8 billion at Sept. 30, 2002.
For the third quarter, the company recovered $16.2 million previously
accrued for impairment of mortgage servicing rights (MSR). This recovery offset
net losses of $16.6 million in sales of securities and derivatives, including a
net loss of $2.8 million on sales of securities held as an economic hedge
against impairment of MSR, a $4.6 million mark-to-market loss on interest rate
derivatives and a $9.2 million net loss on sales of other securities. The
company continues to reposition its securities portfolio by reinvesting in
instruments with less extension risk.
Net interest revenue rose 4 percent during the third quarter to $96.2
million, compared with $92.6 million a year ago, as growth in earning assets
partially offset a lower net interest margin. Average earning assets increased
$1.4 billion to $11.6 billion while the net interest margin decreased to 3.32
percent. Declining interest rates combined with a change in the mix of earning
assets decreased the yield on earning assets by 94 basis points. The cost of
interest-bearing deposits and other borrowed funds decreased 68 basis points.
Total assets rose to $13.1 billion at Sept. 30, 2003, compared with $11.9
billion a year earlier. Total loans were $7.3 billion, up $696 million from
Sept. 30, 2002. Commercial and commercial real estate loans were up 10 percent
and 12 percent, respectively, compared to last year.
Credit quality remains very stable. Non-performing assets to period end
loans were 0.82 percent and annualized net charge-offs to average loans were
0.36 percent, compared with 0.93 percent and 0.31 percent respectively, for the
third quarter of 2002. The provision for loan losses remained stable at $8.2
million compared with $8.0 million a year earlier. The allowance for loan losses
was 1.77 percent of outstanding loans and 250 percent of nonperforming loans at
Sept. 30, 2003, compared with 1.72 percent and 208 percent, respectively, at
Sept. 30, 2002.
Deposits were $8.9 billion at Sept. 30, 2003, up 19 percent from the third
quarter of 2002. Interest-bearing transaction accounts contributed most of the
growth.
Total operating expenses decreased $33 million due primarily to a $45
million reduction in the provision for impairment of MSRs. Excluding this change
in provision, operating expenses rose 13 percent over the third quarter of 2002.
Personnel expenses increased $10.9 million, or 24 percent, due primarily to a
$4.2 million increase in commissions that are directly based on revenue growth.
Additionally, the company recorded a $1.7 million charge for deferred
compensation. Data processing and communications fees grew $1.9 million, partly
from the growth in transaction volumes. Mortgage banking costs declined $3.4
million as rising interest rates decreased MSR amortization expense.
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., Colorado State Bank and Trust, 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.